Streaming Could Kill Cable In 4-5 Years: Porter Bibb

at Bloomberg dot com. Well after the close today, the Walt Disney Company scheduled to release its first quarterly earning since it acquired most of the assets of the twenty one century Fox Company for over seventy billion dollars. To break down those numbers, we've welcome our good friend Porter bib Porters and managing partner at Media Tech Capital Partners. He joins us live here on our Bloomberg Interactive Broker

studio Supporter. I think when these numbers come out, one of the things that people are really going to focus on is Bob Biker's plan for transforming this company into a streaming company. What's your take on their ability to do that. Well, they've got the ability, but Bob Bikers a little late to the game, so it's going to cost him a lot more than it might have if he jumped in two or three or four years ago

when he started talking about streaming. But there's no question that Disney has the content and the management and the capabilities of of making Disney plus and not not to exclude ESPN and ESPN plus absolute winners. It's going to cost them a lot more than I've seen the numbers. People are talking about hundreds of millions. I think it's gonna be if you look at at what what Netflix is spending now last year, thirteen billion this year probably

close to fifteen billion for new content. Disney doesn't have to do all of that, but they're gonna have to market the hell out of their services, and it's gonna be billions of dollars before they start to make profit. So that's the big cost is the marketing. It's a big cost now, But the marketing is the big marketing because they they've announced that they're going to open up

their entire archive of Disney and Fox. Everything that Fought and Disney have ever produced in history is going Instead of holding it back for five to seven years for each next generation of viewers, they're opening it up now on day one and that's going to be a huge asset if if you're a parent and you have kids, you you cannot survive if you don't subscribe to Disney Plus. So the real the bear case for Disney over the last several years has just been this court cutting issue

and the impact that it has on ESPN. Yet, we just saw Disney sold some of the regional sports networks to Sinclair for what I think the market thought was a very low price, half of the estimated value. So what is your view of sports? And you know, sports programming, sports rights and all that Sports is propping up cable right now because so much of live sports is still

on cable and not streaming. But once those rights run out and the streamers start to spend money for sports rights, uh, Cable is going to be in a very vulnerable position, maybe not even survive more than four or five years. Okay, So if Cable doesn't survive four or five years, who gets destroyed and who gets to win the game? Here?

The big question that that all the content producers are facing right now when they look at that the opportunities and streaming is how are they going to make the same kind of money they were getting from the cable companies who pay them billions of dollars in transmission fees for the content that they were giving to the cable distributors. They don't get that from anybody when they're streaming their own content. And the only two revenue streams they have

are subscriptions and advertising. Disney has said initially no advertising on Disney plus the sports channels probably are going to have to have sponsorship and significant rights payments and advertising to make a profit, but they're they're going to be Uh, there's a serious shortfall in revenue generation from streaming versus cable in the near term. Well, I think you know, on the earnings called tonight for the for Disney, they can certainly take a well deserved victory lab for Avengers

any game. I mean, I think over two billion dollars in global box office. There's a lot of folks out there saying it will be come the number one film, passing Avatar, which was at two point seven billion dollar global box office. What how does your view or what is your view of the Disney theatrical business over the next several years, Disney owned over sixty of the box office revenues from from eighteen when they add Fox on top of it, they've got nearly eight percent of the

box office. They announced yesterday they they release dates theatrically of all of their blockbusters through seven and they are going to own the theatrical box office. Right. They pushed Avatar out a year was gonna be I guess in one right. Yeah, So for the Avatar fans at least I know you're diehard Avatar fan, you have to wait another year. Okay, thank you very much. And you probably know that you've seen Endgame about fifteen times, so you've

added to the real unspoken potential for Disney. Though. Is China in streaming? Um? It's remarkable that Avengers Endgame generated three hundred and fifty million dollars at the box office in China, the biggest box office score that any American

film has ever created in China. And there are legal and regulatory problems, but China is gonna I mean, Disney is going to solve those uh and partner with ten Center or uh e. She she the big streaming dominant factor in China, and that's a market that will generate billions of dollars of new revenue for Disney. What's Funny you mentioned China because Lisa and I all day and you know, all across the Bloomberg media obviously talking about the trade talks and the US and China, and one

of the big parts of those trade talks. It's not just you know, soybeans and microchips, it's also movies and TV. That's right. So what do you expect to happen in these trade talks as it relates to some of those restrictions on Western As far as I've been able to discern, Uh, creative content is not even on the table in these trade talks. And to me this we're going to have an agreement because both the President g and President Trump

need a success and need need a deal. But it's going to be a sham because they're they're staying way away from any of the technology transfer issues. They're staying way away from currency and currency manipulation. UM will buy some Chinese products, they will buy billions of dollars worth of soy and pork because they have a crisis in in pork in China right now with with swine disease.

So uh, everybody wins, but nothing really changes. So just just to sort of pit Disney versus Netflix, because as he is going to give some guidance I'm sure from their streaming service. Looking at Netflix right now, shares up about thirty six percent so far year today. Eat, what will it take for Disney service to really be a Netflix killer? As you have said in the past, it's in my perspective, it's not a Disney is not a

Netflix killer. What is a Netflix killer is the failure of individuals to bundle Netflix, Disney, maybe two or three other HBO maybe UH Comcasts, NBC universal streaming service that's going to launch this autumn. Uh. My sense is that people are gonna gonna put five or six of these streaming services together. That'll raise the cost to them the subscription cost of maybe seventy five dollars. It's still almost half of what you're paying cable. But if Netflix is

not a part of that, they're they're gonna lose. And the big problem Netflix is facing right now is when can that company actually make a profit. That is a key question, especially given how much debt they currently have. Por Bib thank you so much for being with us here in our Bloomberg Actor Brokers Studios. Portabib Managing partner for Media Tech Capital Partners talking about all things Disney. Well, it's not just equity markets that have put in stellar

performance this year. The credit markets have also performed exceptionally well. And also the FED appears to I guess, remain content to remain on the sidelines. So to get a sense of what that all means for the fixing can market, we talked to Randy Brown. Randy as a chief investment officer for sun Life Financial. Randy, thanks so much for joining us. Just want to get your sense where you might see value in the corporate bond market today. Um, yeah,

so good morning. Um we see value in the corporate bond market today really in the private corporate market, its public markets, and um really I put that on a couple of different reasons. One is, at this point in the cycle, which we think we're sort of late stages of the cycle. Everyone loves to ask what inning, we would say, seventh inning. We just don't know how many innings in the game anymore, so late late stages in

the cycle. Certainly the runway has been extended. But um, we're seeing a lot of a lot of corporations that we believe are a bit over levered in the market in the public market. So we've moved a bit to the private markets where we're able to pick up spread, pick up um covenant protection, pick up collateral behind us UM as opposed to an unsecured credit, and so we've

we've found value there. Okay, So this is actually really interesting because, uh, perhaps you give up a little bit of liquidity, but you get the extra spread and the extra protection on the covenants. And I'm just wondering how much access you're starting to see baked into private debt kets. I'm thinking, for example, Black Rocks CEO Larry Fink said yesterday at the n EPC Investment Conference in Boston, UH that perhaps investors are now overallocating to alternatives, and he

was including private debt in that. What's your take on it, um, So I do agree with Larry, but we're talking about two different parts in the market. So I believe what Larry is speaking to UH in private debt is typically in the US, most investors when they speak a private debt are talking about middle market loans, and so there has been a huge amount of capital raised in that sector. UM. So those look more like the syndicated loan market, just in private space where we've been focusing as a life

insurance company with UM capital, UM capital constraints, etcetera. We look at the at the investment grade part of the private debt market and there that's really typically the purview of the life insurance companies. A little bit in the in pension funds, that is not a particularly overcrowded space.

It's really the middle market space. I believe that Larry refers to so many give us a sense of kind of you know, what are the sectors that you are attracted to the private equity or the private bond market, other sectors or types of issuers that are most attracted to that market. UM, It's really a broad swath. I think what I'd say is is UM it's a very

diverse market. Anything from some corporates, some of the smaller UM corporates that don't feel that they want to take the UM operational overhead to go to the public market UM, but they think that they can access capital, which they can from from private sources with much less reporting burden. So you see it there. You've seen some sort of innovative structures where people need as an issuer, we need flexibility so flexibility in terms of terms, in terms of

um of tenor um those sorts of things. So the private market gives the issuer a lot more flexibility as opposed to typically issuing five years, seven year, ten year, thirty year debt. Randy, I assume that you it's in life, You're not alone among insurers and going into this area. Correct,

that's correct. Yeah, I've heard of this is sort of being an increasingly popular area over the past bunch of years, and I'm just wondering, what's the risk on the liquidity side if there was some sort of need to either read you your portfolio or for whatever reasons, sell these bonds, how much of an audience would there be for them? Um? Well, I I'd separate a good question, and it's one certainly

I get internally and externally quite a bit. So I would say, first of all, we um we run a lot of liquidity stress tests, so we're not going into this sector with the idea that in a in a crisis we're going to need to sell it, because it really is pretty much a buy and whole type of product. That being said, in two thousand and eight, we as a company were able to sell quite a bit um,

particularly in the one part of the market. Um, you know, the beauty of of of the life insurance model versus let's say the bank model is it's very hard to have a run quote run on the bank on a life insurance company. So we are we in pension funds really can take a very long perspective on our investments because we don't have those, um, those heightened liquidity and leverage constraints the banks have. So really just real quick here, how much have you increased your allocation to the private

debt market. We've increased it about three percent of our assets over the last several years. It doesn't sound like a big move, but actually for for a life crow, that's actually a fairly big move from from zero percent allocation. No, no, we we've been in these markets for you know, over fifty years, so we're currently at about asset allocation in in just a private death space. Randy Brown, thank you

so much for taking the time. Really interesting area and one that I hope we have you back to talk about. Randy Brown, Chief Investment Officer of sun Life and head of Investments for sun Life Investment Management. Well, I ran it is threatening to abandon limits on uranium enrichment unless Europe throws it an economic lifeline within sixty days, basically putting in peril potentially the Nuclear Accord joining US now to talk about this aerial coh and senior fellow at

the Atlantic Council in Washington, D c Ariel. How scary is this? I mean, are we looking at what is ultimately a likely devolution of this nuclear treaty? Indeed, and I am wondering if this is walking into a mind filled without a map. Um, we have not just Iran being extremely aggressive. Uh. The more we push the Mulla regime, UH, the nasty they become. They funded uh the extremists in the Daza strip and organization called Palestine Islamic Jihad to

shoot rockets in Israel. And then CAMAS, which also received support from Iran in the past and possibly is still receiving it. Uh. They chimed in shooting over six hundred

rockets into Israel. Uh. They fund the fully owned subsidiary in Lebanon, Colchizbala, which our government, the US government said that it is um the prime the the a league of terrorists organizations around the world, and UH, unfortunately for US, UH, the Europeans, the Russians, and the Chinese are on the Iranians side and not on the U S side, And UH, walking into something like that without allies is really a

questionable proposition. I would say so, Ariel, the Trump administration walked away from this nuclear agreement about a year ago, So from you know, given that perspective, how would you characterize the US position towards Iran? Now? Uh, the Trump administration, correctly in my opinion, disliked and President Trump disliked the

deal negotiated by the Obama administration. It UH put at the clock kicking in terms of Iran being capable of developing nuclear weapons and still developing ballistic missiles UM as we speak. But at the same time, I think the Trump administration wanted to impose sanctions on Iran and bring that regime under pressure from its own people. Whether it's happening or not, I think is happening somewhat. But at the same time, we're targeting the Iranian Revolutionary Guard Core,

and that is a nasty organization. Think about a combination of Buffon Assas and KGB. It has a military component and a security police component, and we declared these guy's terrorists. They declared us our troops in the Middle East terrorists. They said, we're going to they're going to target our troops in Iraq and elsewhere. Um Pompeo went to Iraq unannounced.

So the things are escalating pretty fast. And again I am not sure whether this is the trump um strategy of making a lot of noise and scaring the opponent.

We're trying to do it with the Chinese now with a threat of tariffs on Friday or uh this will go straight to a military clash and if it happens, the Iranians can mind can block the straight off for moose through which of exported oil in the world is flowing, right, and that will bring the oil prices way a bob hundred and twenty into range for a short time, but it will be a huge, huge spike in the oil price,

and that may or may not. Going back to Ran and this idea where they're basically saying that Europe needs to send it to provide it through an economic lifeline within sixty days, This specific request actually is something that is written into the agreement, right, I mean, it's not that outrageous for you're on to be asking for this because the European region has promised to continue trading and engaging with with Iran if it did adhere to this agreement.

So how does this how does this work out? Given Europe's relationship with the US not wanting to anchor them as well as frankly their promise under this pact. Indeed, UH, the chief of European the EU foreign Policy, we're not talking specific countries, We're talking Brussels. The EU, the chief of their foreign policy as a woman, culled Frederica Margarini. She was a former Italian foreign minister and she is

not exactly a friend of the United States. UH. Nor by the way, in this position as Germany, Germany wants to continue to trade with Iran. There are a lot of interest for the German companies, and what the Europeans did was to set up this separate facility to trade with Iran. UH. The Iranians, in the meantime are reportedly setting up new oil prospecting licenses that will favor the Europeans. Those The Iranians are playing the oldest game in the book.

They're trying to split the adversaries, split the EU from the United States, and the EU is planning right into the Iranian sands. Hary o' cohen, thank you so much. Ariels, a senior fellow the Atlantic Council, joining us on the phone from Washington, d C. As I mentioned earlier, IBM is in the market as we speak, with a twenty billion dollar corporate bond deal that marks, uh, you know, a very busy We've got Bristol Myers earlier this week, so shaping up to be a very busy week in

the corporate bond new issue market. To dive a little bit deeper into what's going on in that market, we turned to Molly Smith. Molly's a corporate finance reporter for Bloomberg News. She joins us on the phone. Molly, thanks so much for joining us. So just give us the details here on this IBM deal. Thanks Ball. So, yeah,

this was pretty well forecast. We all knew that UM IBM was going to be in the cards sometime this week, and they were really UM proactive in reaching out to make calls to investors yesterday while Bristol Myers was unfolding.

UM it's been a very busy week and we've got an other busy one coming up next week with a lot of other forecast M n A deals, So a lot of supplot coming into the market right now, But these are all M and A transactions that investors have been waiting for and preparing their portfolios for to participate.

One thing that's sort of interesting, Molly, is that you've seen a little bit of tumult in US equity markets, and you've seen spreads widen a little bit, and I want to emphasize little here, uh in the corporate debt markets. So it's interesting to see these huge deals coming and they're getting done. How well are they getting done? What's the pricing like, well, Bristol Paris yesterday? Um, extremely well. And again it really speaks to that these are not

surprises these deals coming forward. When you're going to come forward with a top ten largest deal of all time in like the Neighborhood of twenty billion dollars, you're going to make sure that the demand is there on the investor base, so no one is being caught off guard. Investors have been preparing to participate in these deals. We saw IBM bon selling off yesterday, the people preparing to get more exposure or to that name today. Um and yeah. It is interesting when you see a little bit of

that disconnects that equities have been plumping. Volatility is high, but when you have deals that people know are coming, and it's a bit of a you know, seasonality factor to that. We know that May is typically a heavier month heading into the summer months really starts to quiet down. So if you have these kinds of deals that you need to get done, this is the time to go forward. Although it is interesting, you know, yes, there have these have been well telegraphed deals. These do not come as

a surprise. The demand has been there, but the question is still at what price And the fact that people are willing to price these deals a very attractive terms still for the issue or is despite some of the uncertainty, really sort of underscores the unbelievable demand for this debt that we have seen just persistently this year and frankly throughout the past decade. You know, it has been incredible.

And even looking at the Bristol deal yesterday, I mean, the book ended up being what I mean more than it was three times oversubscribed in that neighborhood, so you could have even seen like the deal go bigger understandably and even just looking at how much of a bridge loan they had taken out that maybe they could have borrowed more, but UM speaking to a bit of the discipline that borrowers have had to and like staying within their lane and not trying to push the leverage too high,

because obviously that's been a concerned in our market as well, especially with those single A names pursuing M and A and possibly going down to triple B, which it looks like so far Bristol Myers is dick clear of and IBM will probably as well. So'm only what are the use of proceeds by and large for some of these big monster deals? Are these to refinance existing debt? Are these for the fund M and A to fund capital spendaitures?

What's kind of been the use of proceeds? This is a largely M and A so bristoally yesterday within the market to help fund to the takeover of Celgene there was a seventy four billion dollar transaction, the largest merger and pharmaceutical history. UM I believe some of the proceeds as well could be earbarnes for general corporate purposes and UM and also Bristol is pursuing them a five billion dollars share repurchase program them, so some of the proceeds

may be used for that as well. IBM today this is us for their redhead trent Um takeover. That's the largest one that IBM has done in its history, and we've got next week coming up. T mobile Um likely will be moving forward Um with its bond sales help fund the Sprint acquisition, as well as on Fidelity National and World Pay. Molly Smith, thank you so much for

being with us. Molly Smith is a corporate finance reporter for Bloomberg News, talking about the bon bonanza currently going on in the investment grade space and frankly we are seeing at the high old debts space as well, with the busiest day in about three months recently at people basically saying now is the time we've had these deals in the works, let's unrule them. Thanks for listening to

the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa Bramwoy. It's I'm on Twitter at Lisa Bramwoy its one before the podcast. You can always catch us worldwide. I'm Bloomberg Radio thakak