Michael Nathanson: Disney Going All In On Streaming

companies as a Walt Disney company. Here's a company that a couple of years ago really made a hundred eighty degree pivot in their business to really focus on streaming UH and they're starting to get some rewards there. And there's absolutely nobody better to walk us through the Walt Disney story than Michael Nathanson. Michael is one of the leading research analysts on Wall Street. He's a founding partner and senior research analyst at Moffatt. Nathan said, Mike, thanks

so much for joining us here. Some some numbers last night out of Disney. I'd love to get your takeaway because this is a company that right before our eyes, it's really changing its entire business, isn't it. Yep, Good morning to you, Paul Paul Um. What's amazing is, you know,

two years. I give them credit because two years ago they made a really difficult decision of pulling back content that they had sold to other people and forging revenues and profits in cash and having to go build it themselves, right, and you know, people were a bit dismissive of that decision, uh, doubting whether or not they could pull it off. And what they've done in the past, you know, two years he's just remarkable, it really is. You know, almost a

hundred million subscribers at Disney Plus. Um. You know, they've taken control of Hulu from comcasts and that's going very nicely. And it's really interesting to me is that then, you know, the focus from the investment community had always been on court cutting and ESPN is you know, which you know very well, and that doesn't come up anymore, right like that, those questions are no longer relevant now it's really about the size and the profitability potential of this new director

consumer business at their building. So Michael, you know, obviously there are so many elements of this to talk about, but just briefly before we move back to what I'm sure will be most of the conversation. What does Doesney do with his theme parks? Does it downplay them completely? Does it make them smaller? Does it stop expanding? Okay, hi Vanni, Notice that's a good question. Theme parks are really important to the Walt Disney Company. H Here's why.

Because they are a source of cash and there's a source of growth. You look at theme parks the past decades, so it has become the engine. So it used to be cable networks, but theme parks really became very important to Disney's financial picture. Um. They run the theme parks, you know, amazingly in terms of their ability to drive pricing and profits, and I think it remains a central

piece of the Disney you know, the Disney machine. I think over time the question will be is when did Disney start opening up theme parks in other parts of the world. As you know, they're in Hong Kong and Shanghai. But you know, is there a Latin American theme park coming? Is there an Indian theme park coming? Um? You know, you know, I think as time goes on and streaming becomes a more successful and more global, you know, maybe Disney starts opening up theme parks in other parts of

the world. But so I think theme parks are core intential to what Disney does. And Michael, I'd love to get your thoughts on their filmed entertainment business. You know, obviously just the dominant, dominant player in UM Hollywood with all the brands that they have, but now with this pandemic um the traditional windowing where they could make money in the theaters and then the pay television and someone that just you know, window after window monetize an asset.

Is that permanently changed, Mike? Yeah, Paul, you know that is purbently changed. We cover the theater industry too, and and you know what what Wall Street has done is we've incentivize film studios that own GtC companies to go more direct, right, to go direct and summer and you're gonna see less films being put into theater um only the big ten poles and blockbusters. And even when they're in the theater, the question is will they be released

day and date on DCC on direct consumer platforms? Right, So you know, we are applotting Disney's ability to grow their address and tumor business. And you know, Wall Street, as you know because you've been analynced like me for a while has put a very low evaluation on anything really to film, and very high valuation on things you

know that are streaming. So they'll still be filmed and device question at theme parks, they're still the films that benefit the entire Disney enterprise, you know, ten poles, you know, but those are gonna be fewer and far between, uh for the industry, and Disney will move those movies much more quickly onto their own platforms to drive more value for consumers and then drive pricing. How do they keep

the quality up over time? It seems like now you know, there's a writer's room for every you know, New York condo building, and they're necessary, you know, But we're getting content. I feel like the newer content out of Netflix, these these movies that they're premiering on Fridays, they're they're just they're just okay, They're not great. Can they keep up the the quality that will keep people attached to Disney Plus? Yeah, you know, that is a great question that we don't

get enough of. Um there's just an assumption that you know, content easy to make, and you know, and there's not much of a of any kind of measure of of quality. Right. Um, if you look at HBO for the for many years, HBO just somehow year in year out produced great quality content.

I think it comes down to, Um, the people who are green lighting these these productions at Disney, they've got really strong creative executives, and then it comes down to the people you hire to actually make this vision and and and tell the story. Um. That's the question I had for the management team a couple of quarters ago. I said, look, you know you guys, but Didney did really well? Was they made less films? Those films were better?

So I don't know. That's certainly a risk. Right when you expand your your output, do you have the same quality control? We don't know. HBO has done it. But then to your point in Netflix, Netflix has a lot of things that miss. Um. You know, we're aware of the things that are really good because they become you know, front page, streaming, streaming, you know content. But there's a lot of misses. And their model it's kind of built for that because they take a ton of shots on

goal with a huge budget. Did think he has always been a company that's just had less shots on goal and those shots are always gone in. It's a great question. It bears watching. But the people who are making those decisions are still top of their field and that that hasn't changed yet. I'm more worried, let's say, at HBO and A T and T, because Warner Brothers HBO have seen a change of leadership, and you wonder, like, will that lead down the road to a quality change they

need to clone Joel Kinnaman. I think Michael Nathanson, he seems to be doing everything these days. Michael Nathanson, thank you so much for that wonderful analysis and context. Michael a senior research analyst at Malford Nathanson. On Disney There which is now down seven tenths of represent well. Western Union, we know the name for decades and it's a global name. Just had earnings and we've got to welcome in now chief financial officer Raj agre Wall, who is their chief

financial officer. As I already mentioned, Raj, just briefly tell us about the trends that you saw during the pandemic. Did people need to use Western Union more? Hey, thanks for having me. Yes, absolutely. Um, you know, we actually saw that the need to receive money during the pandemic over the course of the last twelve months was greater than ever before. Um. We also saw shifts in terms

of how people were using our business. You know, we have obviously a very broad retail network, but we have also a fantastic, um you know, well growing digital business that is now present in more than seventy five countries, and so we saw a tremendous growth in our digital business because people were looking very frequently for online ways of sending money to their loved ones. And you can

imagine that during the pandemic. Um you know, in many of these other countries were going through a very difficult time, which they continue to do so, and the people who had the ability to send continue to send money, and they used our business quite frequently. So, you know, we really saw a mixed shift not only in our business but also in the market overall, where digital parts of

the market really took off during the course of last year. Roger, we still have persistent higher than we would like unemployment in the United States. How has that impacted your flows and your business? Yeah, I mean, we we were very much a global business, Paul. You know, we we are present in two hundred countries and territories around the world. Um, the US is obviously a very important market for us. But yeah, we we certainly saw, you know, some impacts

in the unemployment. The pandemic is not behind us yet. We need to see how things play out. We are uming that the second half of this year will be in a better position economically, not only in the US but also globally as the vaccines are more widely distributed. So we're hoping for a better second half economically. And uh, you know, I think that again, people who have had the ability to send money, people who are still employed and making money, they've continued to use our business at

a at a high rate. And uh, we've also seen the amount of principle going through our business go up quite quite a bit. We grew a cross border principle by twelve percent last year, whereas the entire market was probably down a little bit. So, you know, I think we're still getting good, good traffic and people still have a need to receive money. I'm a customer myself of our business, and I've spent more money in the last twelve months and I have historically because my you know,

my relatives have a need to get that money. So why the decision to increase the dividend. It's a it's really a trend. We've had a track record over the last fourteen years. We've increased the dividend by in thirteen of those fourteen years. So we have a lot of confidence in the strength of our business. We know that regenerated a strong, you know, large amount of cash flow last year, regenerated about nine million dollars of cash operating cash flow. We'll have another good year this year, and

we think it's really what our shareholders want. And so we've raised the dividend um in in thirteen of the last fourteen years and this is just a continuation of that trend. And uh, you know, we're looking for good things. We have a good strategic agenda this year, and paying a good, healthy dividend there's a key part of that for us. Roger talked to us about the competitive landscape

for Western Union. You guys have obviously been in this business for a long long time, have tremendous brand value, but just a lot of technological competitors, whether it's you know, the apps, Venmo or something like that. Talk to us about the competitive landscape for Western Union. Sure, yeah, and then before we have a very large and strong and

faster growing digital business. Our digital business will be about a billion dollars in size this year in terms of revenue side, and we are very focused on the cross border remittance market as you know, and there are many acts like Venbo is much more of a domestically oriented product here in the US, so ours is much more about spending money all around the world, and that's really where our strength is. We have the ability to settle in a hundred and thirty currencies in a matter of minutes.

We have the regulatory and compliance capabilities that go with it. We serve a number of different kinds of partners. We have a white label offering that we've you know that we're partnering with banks and other fintech type players, so we can really be the back end providers to other companies, even other digital players that may not have the reach that we do. Uh Saudi Telecom is one example that's

been very successful for us in Saudi Arabia. We have another one in Russia with Spare, which is a bank is one of ourgest bank in Russia, and so we really have a number of different angles. We have a branded Westernunion dot Com offering and uh, it's you know, I use our services as well, and you can you can initiate and complete a transaction in a matter of thirty seconds, and I can deliver the money from my

loved one in India in a matter of seconds. Very briefly, Ange, if fees are quite high, considering some competitors don't charge really at all, are you going to do anything about that? You know, our our fees are very representative of the costs of doing business that we you know, it's not simple, it's not free to really move money around the world. Um, you know, to to have the regulatory and compliance capabilities and to actually protect consumers in terms of when they

send their money. Uh, there's a cost of doing business and two hundred markets and that's where we're doing. We're in the business to make money, and the other others who are are not charging a fee, it's not a sustainable business all for them. So that's really the way we look at it. Okay, Ros, thanks so much for joining us. Really appreciated raj Agrea Wall he's a chief financial officer for Western Union, So we were wondering about this question. We have a little bit of an insight

now into the U. S. China relationship going forward. Joe Biden had his first conversation as president with the Chinese leaders. She's in pay and spoke of concern about China's coercive and unfair economic practices. Let's bring in someone who knows a lot more about all of this. Leland Miller is CEO of China beige Book International. Leland, did you think the tone was just a little bit sharp, a little bit harsh. What did it indicate to you about the

relationship going forward? Well, I think the call was essentially a box checking exercise. Biden at some point had to talk to she. But then I want to talk about in the early going, there's there's nothing that that you know, that the Biden administration wants to rush on in terms of China policy. The focus is quite clearly domestic and focused on COVID. So I think that the coal set the tone that the White House wanted to to sort of lay down. You know, we're gonna be tough on you,

that you are a big time competitor. Uh, this is a change relationship, but it wasn't deeply substantive. It was just sort of a box checking exercise. All right, Leland, at some point it has to be something more than a box checking exercise here. Um, it appears that you know, the US's view of China has changed since uh the Obama years. The last time President Biden, you know, was you know, in in power. There's as we're what do

you think his policy will be going forward? Well, I think he he looks at his congressional majority, which is very slight and and steves very little allowance for there to be a let up in in in toughness on China. So going forward, what he's essentially planning to do is to keep most of the Trump policies intact, at least for the or term, maybe even the medium term. Uh. Now, you're you may see some good will measures. You could see the two sides decide to open consulates or you know,

re re reduce each other's journalists. But essentially you're gonna have the same type of China policy carried through for a while. Now. When Biden gets into more of the foreign policy, uh, you know, COVID's passed, and you start looking at other foreign policy moves for the Biden administration, whether it's Iran, whether they get tripped up by North Korea and all of a sudden United States needs China's help.

Then you may start seeing some more outreach, but right now there's very little upside for Biden to offer much to she Well, what happened with the yuan leland and what should we be on the lookout for. Is there any way that China can send a message by setting the yuan differently? Well, I mean, look, the reason that you want has been surging, uh for for for many months now is because of good reasons. Essentially, the Chinese economy has been healing much faster than than the U.

S economy or or other economies around the world. And you also have higher rates in China, so there's been an appetite for for for capital influence into China, and uh, you know these are these are good reasons, but they're they're turning the situation into a problematic one for China because it's looking at its exchange rate and it's a little bit worried that you know, it could be creeping

towards the towards an area where of real concerns. So you know, there are political sensitivities around where they plug the rate. But right now it's not problem territory. But if you if you see a reversal in the US, so you see some more bad news coming out of US and Europe and more good news coming out of China.

This is actually gonna be a mixed bag for Beijing and the PBS, d L. And do you think the Biden administration will, I guess, re embrace kind of an internationalism approach to China, whether it's some form of the you know, the Pacific you know alliance. How do you think the US is is ultimately maybe has the best shot of achieving some of its goals visa of each China. Yeah, I mean, certainly the talking points are, you know, renewing

alliances in in consultation with our allies. But you know, for for all to talk about that, that's not a strategy, that's that's a process. And so what will the bidens strategy on China and Asia at large? B That hasn't written itself yet. I think it's easy to look at this with within certain parameters and say Biden is not going to pull back the tariffs, at least in the early going. Biden is not going to pull back a lot of the technology or export controls and the early going,

you know, but how does things develop from there? They haven't addressed it. Everything is part of a review and now there's reviews to review the reviews, and so this has basically been a giant punt by the administration. It's fair enough they want to focus on COVID, but at some point they're going to have to to address these and they just haven't given a you know, a preview yet of where they're going. Is there any danger in

taking too stern a tone with China? I mean, obviously we saw at the end of the Top administration that there were some sanctions placed by China on some of people, the people that are in the Trump administration. I sort of wondered if that was a message to the Widen administration, Look, we want to start again, we want to start fresh. We're done with the old administration. And it seems like the Widen administrations ignored that message. If there was one. Well,

I think they're smart to ignore it. Uh one, because the Chinese reactor strength, not weakness. But more telling, Lee Biden does not have a tough on China reputation over the years. I mean, as a senator, he wasn't tough on China as VT under Obama, he certainly wasn't tough on China. So this is a different political climate. I think what the what the White House would like to do right now is step the stage saying the times

have changed. This president is not going to be weak on China, and I think that's setting that down as sort of the baseline, the fundamental you know, pre step governing. The relationship is actually important and it gives them a little more wiggle room to do things you know, either you know, either strongly or more weak going forward. Leilan, thank you so much for joining us. We appreciate your perspective as always on all things China and Asia. Leland Miller.

He's the CEO of the China Basebook International based in New York. It is time for we'll be check in with Laurence Sour, John's Tompkins University Associate Professor of the Emergency Medicine, and for once, perhaps most of this conversation will be very upbeat. Dr Sour, we have now enough vaccine apparently for everybody in the country by July. Is that does that tally with what you know? Your maths says,

I think UM. Conceptually it does. So it's it's exciting to see that these contracts have been signed and that there's pushed to move to create vaccine and move it forward into the hands of vaccinators. I think UM, where well, time will tell how effective our strategies are is in the space of making sure that people are there, ready to receive it, and that we have the health care staff to deliver the vaccine. So it's great to see those numbers get up to be able to vaccinate the

whole country and hopefully support vaccination efforts efforts across the globe. UM, and the key will be to convince people to take it, especially those hesitant and hard to reach population. So, Lauren, the image of the day for me as it relates to the pandemics when I saw this morning and it was of Dodger Stadium parking lot, and they had all the cones set up, all the lines set up, all the tents set up, but it was absolutely empty because

they had no vaccines. Um, what is your experience at Johns Hopkins in terms of supply of vaccines and kind of the rate at which you are receiving vaccines. Yeah, I mean it's a it's a I saw that same image and it is like very telling of where we are right now as a country and even as a world in delivering vaccines to people. So the creation of the vaccine and how quickly we got there so impressive.

But you know, here at Hopkins we're doing we're working really hard to vaccinate our healthcare worker staff just so that we can be ready at another comes, particularly um, if we see a surge after things like the Super Bowl or with varying centering into our population. We want to be ready and we want to protect our healthcare stuff. That being said, I think what we're seeing is that there's this group of people who are ready and willing to be vaccinated, and then very quickly, once we get

them vaccinated, the supplies body. So we don't always know exactly what we're going to get UM. And I think that's the story across the board is you know, you get, you get what you get when you get it, and you don't always know what it's going to look like. UM. But then I think what we're worried about seeing is that we're going to get to a certain point and then suddenly there's going to be no one who's showing up for vaccinations, and so that's that's that's the place

where we're focusing right now. Yeah, that'll be difficult. What do you do with those vaccines at that point? I mean do they do they keep for a long time? Will they work next year if there's another resurgence? Do you shift them all to other countries? Yeah? I think it's going to be probably a mix. Um. The different

vaccines have different storage capabilities. Um. And what we really want to focus on is making sure we're not defrosting and preparing individual doses until we have identified enough people to take that whole bio or that whole set right um and so um. The concern I think is is that we need to focus more efforts on getting to those populations that aren't just gonna be waiting in line

and ready to show up for those vaccines. And I think we There is still a bit of a question on whether or not the variances will change the seasonality of the of the or the utility of the vaccine seasonally. So um, will we need regular vaccinations like we do with flu um or is this a once or a couple of times in a lifetime vaccine? I think you know there's evidence towards leaning towards that seasonality, but what

we'll have to wait and see. And so we want to use as much of the vaccine that's coming off the line as absolutely possible, as soon as possible to get that protection level up um and reduce the number of infections so our hospitals and our healthcare workers can have of de breeze. So Lauren, if when a patient gets admitted, say today, with COVID, how has that experience different for that patient, say from a year ago. I think a couple of things are vastly different. One is

how we manage that patient. Right, So we've learned so much in the last year about the course of disease and cloviding team UM and and how to treat people who are sick with our Scooby too. And so the the hospital environment's going to look the same, the PPE

is gonna look the same. But but the what we do for those patients, what drugs are available to some extent for those patients, even where the patient ends up within the hospital or health care system, like, we have the capacity to provide supportive care and get people home and out faster, which is always great. The last time you could stay in the hospital, the better. Um And I think we're seeing more of an ability to manage the surgence in some places because we're getting better treating

the individual patient. Still, in many places across the country, our hospitals are overwhelmed as these patients. So some things haven't changed as much as we'd like them to. Lauren, do you imagine that schools will be fully up and running by September, by by the new semester. I think that's definitely the hope. I think we have a lot of work to do in building the trust back in the educational system, so both with the teachers and with

the people who are sending their kids to school. UM And we have a lot of education around what's safe and what isn't. So we want to get teachers vaccinated. We want to make sure that we have enough vaccine to support teachers getting back into the classroom and then getting kids back into the classroom. But we also have to think about what does COVID look like in kids? Can kids get there for you know, can kids pick

up COVID and get their families sick? And so how do we create safe spaces and give the schools themselves the tools to to create the safest space for these kids possible. I think getting kids back to school should be our absolute number one priority in that in that area, it's it's good for kids to be in school, and we have a whole group of kids who have not experienced that for almost a year, so it has to be a priority. Hey, Lauren, thank you so much once

again for joining us. We always appreciate at your time. Lauren Soer, Social Professor of Emergency Medicine at the Johns Hopkins School of Medicine. We should know that the Bloomberg School of Public Health is supported by Michael R. Bloomberg, founder, Bloomberg LP, and Bloomberg Philanthropies and this radio station. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever a podcast

platform you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn and I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio