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M and A Media m and A pending big, big deal Warner Brothers Discovery. It's in discussions and accepted bids from Paramount, sky Dance, from Netflix, maybe even Comcast. Now, I guess we wait and see what happens. But this is when this deal crosses a tape, it's going to be a big deal. It's gonna have enterprise value of north of ninety billion.
I can't wait for them to make a limited TV series about this parting process.
Yes, it's gonna be great.
Yeah, exactly right, coming to Netflix on soon. Keitha rang Andathen She covers the media space for Bloomberg Intelligence as the media analyst there Ethan. What's the latest on Warner Brothers Discovery. I guess the question now is that BIS has been accepted. What are next steps? Yeah?
Next steps, Paul is that these were just first round bids. They're non binding bids. You know, as far as the news reports go, it looks like all three companies that were in the race, Paramount skuy Dance for all of Warner Brothers, and then Netflix and Comcast for just the studio and streaming assets, have all placed their bids. This is going to be a very long drawn process, so we're going to have multiple rounds.
You know.
We've had some conflicting reports actually on what Paramount sky Dance was offering. There was something earlier this week but suggested they were offering something north of twenty eight dollars per share. They came out refuted that report, and the latest reports seemed to suggest that it might be it's definitely going to be something much lower than that, probably
something above twenty five, but still below twenty seven. But let's remember David Zaslav has publicly said that he wants something north of thirty dollars per share, So this is going to play out for quite a while.
I think, yeah, that is a pretty big gap between what David Zaslov wants and what the reporting indicates Paramounts Guidance is likely to pay. So if this is going to be a long drawn out process, does that benefit Warner Brothers Discovery or these bidders, who comes out ahead in that kind of scenario.
Yeah, I mean, the long drawn out processes is really not good, I think for for Warner Brothers Discovery. But having said that, let's remember that they do have another plan B in place, and the Plan B is that they are going to go ahead and split their company into two parts, so you have the TV Networks business and the streaming and studio business. And the good news for them is that the studio turnaround, which was you know, kind of in progress, is now really kind of taking shape.
We're seeing some really tangible, you know, growth come out of both streaming as well as studio. And so worst comes to worst if nothing you know, materializes from all of these bids and from all of this same chatter and buzz, they are still on track to separate their businesses, and who knows, maybe that would be the better path for them going forward. So all is not lost even if you know these bids don't work out.
KEITHA, I know you've done the work. What do you think the entire company is worth?
So, Paul, you know, it all again depends here on who's making the bid for what parts of the business they're making. But so as we kind of look at it right now, I don't think David Zaslav is far off when he says he wants thirty dollars per share for all of the company. We think majority of that value will actually rest with the studio and streaming network. So we when we kind of crunch the numbers, we get twenty five to twenty eight dollars just for the
studio and the streaming business. But at the end of the day, Paul, it all comes down to synergy. So if you look at you know, combining the entire corporation, all of Warner Brothers Discovery with all of Paramount for instance, and they both have you know, substantial linear network exposure, they both have studios, they both have streaming assets. You know, we're looking like something like at about four or five billion dollars in synergies, which you know, then then adds to the deal value.
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A column that I read this week really resonated because it hits upon three key themes that we're seeing across the markets. Retail earnings, tech forward companies, and people worried about losing their jobs in this AI era. Beth cow It is a Bloomberg opinion columnist, and she's written a
story about Walmart and it's masterclass and reputation rehab. But it really rests on this idea that Walmart invested in its workforce and its treatment of workers at a time when it was being criticized for not treating its workers well, and this is paid off in many ways. Beth joins us now in our bloom Work Interactive Brokers studio. So Beth, just take us back a couple of years to when Walmart decided that it was going to spend on its workforce.
It was going to invest money into the workforce, and investors did not like hearing that.
Yeah, I mean, it's hard to think about this now, but a decade ago, Walmart was one of the most reviled companies in America. Right it was being criticized for paying its employees low wages. For wiping out mom and pop retailers for basically creating a culture of disposable consumerism. So it really was getting hit from a lot of different angles. And rather than just ignore the bad press or army, you know, hire an army of pr people,
it decided to do something about it. And Doug McMillan decided, we're going to invest in our people and two point seven billion dollars over a couple of years, and we now know this really paid off.
So I mean, for Doug McMillan, I mean to me, after reading your article, this could be one of his as he's stepping down, could be one of his lasting legacies at the company.
I really think so.
I think I think that you know, he's been at the company now more than a decade. I think this will be amongst the most enduring things that he has done. I think this. I'm not sure that the company would be in the place it's at today if he had not really addressed this.
And let's be clear about what exactly he did with that two point seven sharing dollars. Pay increases, there is training and really just attracting a better quality worker.
Yeah, and the way he did this was right. It was pay increases, but more than anything else, it was creating not low paying jobs, but a career.
Right.
There was now a path.
For people who started at Walmart to move up the ranks, and that was really important, right to attracting more ambitious employees, to getting them to stay, and I think that that shifted the whole culture of the company.
So what's the company saying about AI? Because there's a lot of answer just in the overall economy about what the impact AI will have upon jobs. One could look at big box stores as industry that might be at risk because.
They do employ so many people.
What does Walmart say.
Walmart's taken a very different approach, I think than some other big employers, and it has embraced a EYE. Let's be clear, Like there's a AI is throughout embedded throughout the company, but it has not used a EE to have some of these mass layoffs that were justify some of these mass layoffs that we've seen at other companies. And I think part of that is this history, like it knows how important these entry level workers are and that they need a path, they need this workforce to
sort of grow the company. So it said AI will change every job. It knows that, but it is trying to get every worker through to the other side, so whether that's retraining, finding new rules, rules for them. So it's just a very different outlook, I think than what we're hearing from others.
And you've noted as well that the last ten years at Walmart has led to tremendous return for shareholders, but also it's become a case study at heart Heard Business school on how to on how an experiment on paying your workers war or investing your workers can pay off.
Absolutely.
I mean we you mentioned this at the beginning, but Wall Street hated this plan. I mean the company lost tremendous value, about that much tremendous value when they announced it, and now you know, we have the receipts a decade later, and the I think the market gap has tripled. The stock has returned more than four hundred percent. So they really took a gamble on this and stuck with it, and it really has it has paid off for them.
I mean, every time I look at the dees screen on the Bloomberg terminal for Walmart, had just blown away by the fact that they have two point one million employees. What's the retention of those employees. I'm wondering if there's like I would think in the warehouses it might be really really high.
I'm not sure about the stores. How is retention sure?
So they've actually increased retention by ten percent since twenty fifteen they when they started this plan. And another thing is that they've some of the more management len roles. Seventy five percent of those are hired from with it. So this pipeline is really critical for them. And so that's why I think that they are so focused on creating a place where people stay.
That's key.
And you only have to look at the outgoing CEO and the NTO, right, Both Doug McMillan and John Ferner, the successor, are Walmart lifers. They started off as hourly workers there.
Right, They know the importance of that and having worked their way up, that needs to be something that continues.
There is this something that you think the new CEO is as committed to as the prior CEO.
I would think so because he has the same background. I mean, I think he knows the importance of emerging technologies. He's really focused on that. But I think because of his history and he's worked very closely with McMillan for a long time, so they must be aligned on this.
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Jody Lori joints us here in our Bloomberg Interactive Broker studio in the Big Town.
How about that, Jody.
We love your coverage.
You covered from the credit perspective, all the fun industries like hotels, like cruise ships and all that kind of stuff. I know, you guys put out a survey talking about how people are spending their vacation money.
What'd you learn?
So we do the survey every half a year, and so we just got the results out for the most recent one that we ran last week. And what's interesting is that we're seeing more people planning on keeping their budgets the same.
But what's more interesting is.
That if costs succeed, budgets fewer people than last year.
So they'd increase their budget.
And that's on the back of them knowing that inflation is a much higher risk for them for their portfolio.
So in other words, people are making room for time off, but they're going to have to scrimp more in order to make it happen because their money is not going to take them as far as it used to correct.
And Scarlett, I mean, I think to piggyback on that.
If you look the eating out, anticipation of spending is higher this year than last year, and I think that's lesser reflection of people wanting to eat out, but more that they're expecting eating out is going to be more expensive.
And so even though we're seeing people want to spend on paid activities and experiences, which could bode well for the cruise lines and the theme parks, at the end of the day, when cost succeed budgets, more people this year over last year are planning on cutting and looking at free options. So going to the free museums, going to low cost.
Options, well, now that the government is open DC is an option once again. How about in terms of destination, maybe staying closer to home, maybe not going quite as far internationally, Yes.
And staying closer to home is very very much key if we see the data, the international trend is to Canada. Canada bumped up to the second spot. So we saw that in the midyear, and it was pretty curious for US, particularly because when you look at it the opposite way, and we did this announced a few months ago. Canada is not coming to the US. They don't want to
come to the US. It's too expensive for them, they don't really like the current government situation, and on top of it, I think they're scared about crossing the border and what it means for immigration. So we're seeing Canadians not come to the US, and we're seeing a lot of companies comment on that.
But we are seeing a lot of Americans go to Canada.
And I am curious how much and this is going to come in further reports. How much of the Canada move is a reflection of the World Cup next year. There's a lot of people going to Vancouver, for instance, for the World Cup. I'll actually be there during the World Cup, but not going to the World Cup.
Why we.
Might be doing a very family friendly cruise to Alaska.
Nice.
It just works out that that's the same time as it was bad timing.
It's bad time, all right, talk to me. This is when I go to Aruba, we go to an all inclusive. How come I didn't know about this all inclusive thing when I had four little kids.
I mean, were they were they a thing back then?
I don't know, but I mean I would get the bill which would be five inches thick with like smoothies and chicken fingers and all that kind of crap that they'd eat throughout.
The day four kids.
Man if if I knew about the all inclusive, that would have been a savior for me. What are people doing when they are they willing to still pay it for travel? Because I still here people going to Europe and stuff like that. I mean, they're not going to Poughkeepsie, They're going to Parish and things.
Yeah, I mean Japan is certainly a popular destination. Strong dollar there, yeah, very much increased.
Italy has increased.
We're seeing among the upper income level, you know, Portugal and Spain as popular destinations. And I think probably what's even more interesting is onboard spending for cruises is still continuing to have momentum.
At the moment, I.
Think where we're watching is when that onboard spending shifts and then the cruise lines, for example, don't get that.
Gravy for cash flow.
And to your point, Paul, I mean, even though you have something called all inclusives, even though you have the cruise lines, that they all are considered these package deal what every company is doing, and we're talking the rental car companies. You know, Avius is doing this too, obviously, the airlines is they're all.
Doing these premium products.
These you know, you do different tiers of products, so the add on so you can get the base level, which is really the skeleton package. But anyone from cruise lines to you know, theme parks, to some extent, to the all inclusives, to the airlines, to the rental car companies are all segmenting to give you know, the lower income consumer the ability to say that they traveled and the higher income consumer the ability to travel luxury. And in terms of the add ons, what are these add
ons are they? You know, things that they used to offer for free and now charge.
You for for some of it.
It is so you know, a good example I have is anecdotally, I know that some of the cruise lines that used to not charge to get people into the center of a city, say in Europe, you're on a European cruise.
They used to give that for free.
Now they say no, you have to be a part of one of our you know, expeditions, one of one of our excursions in order to get that for free. Otherwise we charge you twenty dollars to get into the Senate's colwn in you know, Czechoslovakia and not Checklisvokia, check Republic.
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Obviously, the theme this week, one of the things has been Nvidian It's strong earnings. AI fight has been really a driving theme for this overall market for going on three years now, and Investor has been looking for your privative ways to play that theme, and one of that has been how do you get tompower all these data centers out there? And that leads you to utilities, and that leads you to our next guest, Calvin Butler, CEO
of exelon it is a publicly traded company. EXC is the ticker of the stocks up about one percent today, up about twenty two percent year to date, so certainly performing well with the other utility stocks. Calvin, thank you so much for joining us here. Again, when I look at your industry, you guys are critical to the rollout of AI because we've got to power this stuff, these data centers.
How do you guys view it?
Yeah, Paul, thank you for having me and exactly how you said it. We're critical to the development of AI data centers and large load quantum and we take that responsibility very serious. And from a standpoint of building that infrastructure, protecting that grid, it's going to be the backbone of all this. We always say that the energy in sector there is five percent of the GDP, but we power the next ninety five and we take that very seriously.
You take it seriously.
So walk us through some of the plans you're making, how you're preparing for this transition, for this increase in demand.
Yeah, thank you, Scarlett. What we have done, We've done a few things. Is one understanding for your listeners, excellent. We are truly a transmission and distribution company, you know, proud to have six utilities operating the electric gas side through the pipes and wires. So having said that, being the backbone of that, we're encouraging those data centers and large developers to come into the states in which we operate, and we put together a comprehensive plan to get them online,
up and running sooner rather than later. Speed is everything for them, and so what it takes is a coordinated effort, and we've worked very hard to move upstream to get them online so they can do what they do, which is on the technology side. Now, as we do that, we have to keep in mind first and foremost the affordability factor for all of our communities, and that's where we're working with them to identify sites that are more ready to put their equipment and their technology in place.
We had a couple of governor races recently in New Jersey and in Virginia, and affordability was one of the big issues. And in New Jersey the governor elect who actually won, one of her number one issues was bringing down electric utility bills. So this is an issue we got to fund, We got to I guess create and develop these data centers, but we got to do it in a way that it doesn't cause.
Everybody's power bills to go up.
How do you think about that transition.
Paul, You're absolutely right. It was a race in both New Jersey and Virginia, an issue, and we believe it's going to be an issue in the twenty twenty six elections because of affordability. Pocketbook issues are going to be key. So let me tell you what we're doing from excellent perspective. We are protecting our residential customers. You know, we serve almost eleven million customers. So as as important as it is for data center development, it's more important for me
to protect the other customers in this process. So we've come up with what we consider a rather innovative solution in creating a tear up a transmission security agreement. So what that does is we require a letter of credit or a cash deposit from these large developers speculating are identifying what thir ten year revenue projections or cost projections coming back to our utility is, and anytime that they do not meet eighty percent of that load projections or
cash projections, we draw down from that deposit. And what it does it protects the other customers on the systems for the investments that we're making. So we're being very intentional about protecting the other users on the system because when it's done right, it should reduce the cost for everyone. But when it's done haphazardly or piecemeal, it can have ramifications that everyone else has impacted. But what you're seeing not just from the capital investment. You're seeing the supply
costs go up. Supply costs are going up because of the increased demand, and we have inadequate generation on the system to do that. You use New Jersey as an example. Let me give you a real example of what happened to New Jersey customers last year. New Jersey customers average residential customers bill rose thirty eight dollars thirty four dollars.
I'm sorry, thirty four dollars. Thirty eight dollars was due to supply because they were reconciling our bill, our bill, our cost the demand, the transmission and distribution part went down four dollars, but the bill still went up thirty four. That's how important it is to get this supply stack right to help lower all customers' bills.
Kevin, let me ask you about nuclear because this week the government announced it plans to buy and own up to ten large new nuclear reactors that could be paid for using Japan's pledge to fund five hundred and fifty billion dollars of investments in the US. Of course, this is part of a push to meet surging demand for electricity, and nuclear is increasingly seen as a solution to this need.
What's your take.
I think it's critical. I truly believe in a all of the above approach and that nuclear base load generation is going to be critical to us meeting this effort. As you know, again, we've always taken an approach that every electron matters to help unaffordability, and that's why it's so critical. I use an example the Crane Center that's coming back online in Pennsylvania. That's critical because it's new
generation coming back online. A large Microsoft is paying for it, and that billion dollar loan is exactly what we need to encourage reopening of these former facilities to get more electrons back on. And that was one of the best operating nuclear plants prior to its shuttering.
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