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Broadcom surges as it signs a multi year agreement with OPENINGI to design.
Custom chips and networking equipment.
Plus market spouts back as President Trump signaled open US to a deal with China. Amid the latest trade showdown what it means Tech.
And Rare Earth and Warner Brothers.
Discovery has read buffed Paramounts Guide Dancer's initial takeover approach for being too low according to sources. We'll have the latest, but first we go out to the Middle East, where President Trump is in the middle of a visit in recognition of the end of the war in Gaza, with both Hamas and Israel releasing hostages and prisoners. Today, let's go live now to Bloomberg's Oliver Crok, who's injury for the latest sun setting with you. We understand now President Trump has arrived in Egypt.
Yeah, that's right.
Really the sun setting here and closing what is a truly historic day for the region and certainly for the Israelis. Where we've see, as you said to Caroline, the release of the last twenty living hostages into Israeli custody there now back on Israeli soil, the release of those prisoners from the jails and being held by the Israelis, back to the West Bank, back to Gaza, back to a number of other places. A deal that was struck by President Trump through his sort of unorthodox foreign policy, and
something that really was inconceivable two weeks ago. The next step, now, the next chapter is beginning in Egypt. As you can see Donald Trump sitting next to LCCI, the President of Egypt, to try to figure out the sort of very difficult phase two of this, which is what do security conditions look like going forward? In Gaza. Hamas is still armed. They have not agreed to put down their arms. That is really a precondition to make any of the sort of US plans of the Trump twenty point plan come
into being. That is a requirement. And of course the question long term of governance of Goza and this so called Board of Peace that will be chaired by Donald Trump and potentially other leaders. Those are the conversations that will beginning be beginning right now in Egypt.
Bloomberg's Oliver Crook A long day. Let's now listen in to President Trump as he speaks in Egypt.
And it continues till today. So I want to thank you all very much. I appreciate the way you covered this really momentous. I've never seen anything like it, the level of love, the level of respect for what it is, and it's you know, it's pieces of the Middle East, and everybody said it's not impossible to do, and it's going to happen, and it is happening, is before you very eyes, and that's why it's become so fascinating.
Marco, do you have anything to.
Say to Egypt's been a phenomenal participant. I think Golo, Steven Jerry will tell you the critical role they played, and they can tell you themselves. They hosted the talks here and they're going to play a very important role now in the follow up implementation of this, which is really it's not simply about restoring Gaza, it's about transforming the region. So we have an incredible partner along the Alliance, very capable partner here and a tremendous collection of leaders.
This is clearly in my mind.
I think, in the mind of everyone in this room, probably one of the most important days for world peace in fifty years. That's not an exaggeration, only fifty, maybe one.
Hundred in the World War two.
Mister Wickcof and mister Kushner, I'm curious you've played such an important role in the tactical negotiations here.
Or its as a lot more has to be brought to the table here.
Oh, the minute, the minute we at ink the deal, Jared and I were already working on the implementation side of the deal, so we've dug in.
We'll be here quite a bit. That's at the direction of the President.
That's probably when it's going to be one of the most important pass here.
Jared is remarkable to work with.
I talk about it all the time, and of course we both love working for the president.
So I would say, uh, feels like.
A very honorable job.
Mister President, Would you like to say something would be a bit better?
I guess.
So, what do you if the bead in a a hub of a coup of dice and that's hanged with putty, shot out this shotting shit, it's.
It's wickyser this way this way they put in the sweet.
When we can had the but wouldn't have you.
Set out and look at like.
The hanger type.
I had to hang it as at right as a rounds. Well.
First of all re elections say I welcome to you between each other. It's a great pleasure and the honor to have you with us here in the city of peast tram Shaknus would extend uh on behalf of all reluctions and the beasts lovers around your elds, so you your appreciation. I never facts as I'm president and momentus accomplished by your hands.
And they're going to do the hypercundaries and they can hate the cold.
Where ahead.
I'm very confident that your Excellency is the only one who's killed of bringing this about and bringing them to this war, whether you're been.
To start the counties, because that was the bitter counties.
And then I had a conclusion. I had a pers people.
Contin are you even said that very precisely during my communication with your excess, that you are the only one who is able to bring about peace and to achieve.
Peace in this moment.
We head back now to Juristen and Bloomberg's Oliver Crook stands by to interpret what is currently momentous occasion in Egypt, President Trump, alongside the leader of Egypt, of just interpret the next steps that everyone.
Now focuses on.
Yeah, I mean, what is going to be the next step is really marking the moment for which we shouldn't sort of undervalue how significant it is, and that is going to be the signing of the sort of peace document, sort of ceremonial moment by presumably Donald Trump and a number of others who have been very active in the negotiations here. I mean there have been a few nations that Trump has talked about a lot being very actively
involved in the negotiations. Of course, the Egyptians having played a crucial role, the Kataris of course, as we know, but then quite unexpectedly and quite significantly, the Turks and President Erduwan who really came in and put a lot of pressure to bear on Hamas, which we understand it was really the Kataris and Turkey that put that pressure onto Hamas that got them really over the line to come to this agreement and finally release those last twenty hostages.
That has been the sort of one of the main war aims of the Israelis. One was to destroy Hamas. The other was the release of the hostages. And as far as Hamas will be viewing, the situation really relinked puishing their last sort of piece of leverage that they have against the Israelis, so absolutely significant. So bringing all of these nations together to start to discuss what the sort of posts war the day after Architecture looks like
is I think has gone. It was always going to be the most difficult part of this conversation, and that is a conversation that begins now with President Trump sitting alongside President Cci and Charmel Shaik and starting to begin to build those coalitions of trying to build a security apparatus within Gaza, one that is both credible to the Israelis and to the Palestinian people, in order to bring in this sort of technocratic, Palestinian led governance structure that
can sit a top of Gaza in order to facilitate the rebuilding and of course getting aid and ultimately potentially and this is a provision theoretically that is possible with this twenty point plan, a Palestinian state.
Oliver Krook life from Jerusalem. We thank you very much.
Indeed, now let's turn out attentions to the broader markets right now. It has been a risk on mood to those that are participating one and a half percent on the Nasdaq one hundred a bounce back from Friday when the anxiety around US China relationship du back risk taking. We now see one and a half points added. It's interesting that, of course we've got to dive into the Ai side of the story.
The key deal that you've got to keep.
An eye on is that between Broadcom and open Ai, absolute surge in this particular chip stock. It's going to design not only chips, we're also networking equipment. We're up nine one hundred and fifty billion dollars being added to the market capitalization of Broadcom. We're going to dig into that exact story right now because Bloomberg, Seth Spiegerman joins us.
And this is interesting because and.
Video and AMD seemed to be able to get deals but had to sweeten them for open Ai. This time it's just plain old ten billion dollars to ten giga what's it feeans Seth.
Yeah, I mean, we're still trying to figure out the exact financial contours of this deal book. It's also a bit different than some of the other deals that we've seen Opening Idea recently. I mean, they're trying not only to pave the way for more computing capacity, but also to play a more central role in sort of the stack that supports AI by working with Broadcom to begin
customs designing their own chips. And I think we should expect to see more of this from open Ai in the next couple of years, as they want to be, you know, kind of simultaneously owning the AI models but also having startain to have some proprietary intelligence into how to best set up data centers and chips to facilitate those models.
And it's interesting Braallcom of course doesn't supply the data centers, but it provides a lot of the equipment that's going.
To be going into them.
Seth, what is the argument, how much more efficient can your own design chips be? Alphabet already does it for example with will come.
Yeah, I mean it remains to be seen, but I think for OpenAI, there's a couple of clear incentives here. One, it doesn't have to you know, it's at the front of the line for these chips. Two, as it is closest to its own AI models, its own needs, and the future of AI development, the company might be the best position to figure out what it most needs from the chips out there. And three, Opening has a lot
of experience now and setting up these data centers. When you think about the chips, rats and servers like, it has a unique proprietary perspective on how to best design these data centers. All that combined might help Opening I cut costs and also build more efficient.
System berg Seth Figerman. We so appreciate you joining. Let's get a portfolio management perspective right now. Ude Charuvu is portfolio manager Harding Lovner, and I'm really interested in the fact that you've got holdings in VideA. You're clearly a supporter of the AI theory. But are we looking at a bubble and you get these sorts.
Of deals, Well, go to look at a cho race one in terms of timing of the deals. If it is a bubble, it's potentially an MPV issue. Is it Are we going to get all this revenue.
In ten years time?
For five years time? And that's what the market is trying to figure out right now. People try to compare this to the dot com bubble, et cetera. But there's a difference here. A lot of the companies who are buying a lot of these products are supported by strong cash flows, free cash flows, which means that there is potential for these revenues to come through, especially if AI demand take up goes along the lines of what we're seeing in the last two three years.
I mean, none more so have the financial flex than in video.
And it's interesting that in Vidia when signing that ten gig or what compute capacity with open Ai, did give one hundred million dollars in terms of support buying equity. Is those sort of circular financing deals something that gives you pause or do you think that that's part.
Of what the deal needs to be?
No, that does give us posts.
You do look at that and say, hang on, this is not clear blue sky. There are some things need we need to think of. So that's why the next two three is are going to be really important because what we want to see is the return on the capis that companies like Alphabet Meta, a lot of these big companies are spending to show up. If it shows up, then what you realize is that this hundred billion dollars is not circular but just the kickstart. So that's what that's what we want to try and see.
I mean, you own meta.
A meta has shown up in terms of generative AI being folded into the advertising model being able to be built in and bring real revenue to bear right here right now.
But how long you're.
Going to have to weigh for Alphabet's bet to really pay off? For we already see a nvideo, but do you think more broadly opening eye eventually really showing that productivity is going to gain them in terms of revenue.
So from an Alphabet from the software companies perpective, we do think that the next twelve months are going to be really important. What you do need to see is not just the return on capex going through, but the revenue growth coming through to support that in twenty seven twenty eight that we are going to see a continued
acceleration or at least stability in revenue growth. Without that, it's very hard to see how the market gets really comfortable with the amount of capics that's being spent right now.
I mean, you just said it does give you pause, and there isn't just blue sky when it comes to in video.
So have you just been trimming some of the exposure.
Has now been the time to just stay holding pat and not adding to some of the overall portfolio exposure.
To some of these names.
So we tend to think of in terms of longer terms. So what does this look like in the next five years? When we look at from that perspective, the evaluation doesn't look extreme at this.
Point in time.
It does look at a point give us a pause in terms of, look, what else do we need to factor in to keep buying more? But at the same time, it doesn't give us any fear that, hey, this is an imminent bubble as you want, As.
You asked at the start well on Friday, there was a lot of pause between US and China and particularly access with some of these companies to rare earth that ultimately are very dependent on China. How much have you been making that into a supply chain headache for some of the companies you own.
So that's again it's a timing issue.
So there's two parts.
The first part is is this has become a prolonged issue due a political issue. Then there's a lot of other things that you think of, not just the semiconductor companies, with all the FMCG companies, all the other companies that sell into emerging markets, and all global treats.
So let's set that aside, that this is.
A solvable problem that gets solved at some point in the time, then it's a timing issue already. What the companies are telling us is there's a real supply issue that they don't have enough computing power. So that means that people who make these chips benefit from any of these supply chain issues because to them they get pricing power in the short term, but in the long term
this gets solved, so it's a temporary issue. So if anything, these sort of market dips is an opportunity that you look at saying, what are the good quality companies that you do know have pricing power that you want to buy into right now.
And what are they If it's not the obvious AI winners and darlings who've already seen hit are trillion dollars.
No, No, they still remain as I said, they still remain attractive.
But there's there's a broader spectrum out there.
If you look at companies like Delta Electronics, which provides electronics and cooling, coqruitment to data centers. You look at Schneider, you look at SAP, which is going to benefit from the fact that AI gets taken up by more and more enterprise. So there's a bigger ecosystem than just the semiconducted companies or just the cloud companies, and.
A global ecosystem. Your name and a couple of Europeans. Then Ude Charuva is so good to have him in Harding Lovner. We have come back soon. Meanwhile, coming up rare earth stocks, they've been surging. We've just been talking about them. US trying to trade spats have reignited. We're going to dig into that next. This has been bad tech.
Rare ear and.
Critical minerals producers surged after President Trump and China reignited fears of a potential trade spat between the two countries. But just today JP Morgan articulating it will funnel one and a half trillion dollars into companies that will US security and resiliency, including earth minerals from all.
Bloomberg Senior Tech.
Editor Mike Shepper joins us on what is a geopolitical story that is really affecting some of these stocks.
What's your key takeaway today, Well.
The key takeaway is that the ball is still moving between the two sides.
We are seeing JD.
Van's playing bad cop in the discussions. Right after Donald Trump signals some openness to trying to back away from this standoff that just erupted over the past several days, Jdvan saying, look, it is up to China now to make the next move. Beijing in turn responding with the same saying, look, it is Washington that now needs to make some sort of concession for US to relax.
Some of these newly imposed export controls.
And what is really hitting a nerve here in Washington is that it is a reimposition of export controls on rareerads that are critical to so many industries here in the US, everything from consumer electronics to defense. It is also the imposition of controls and the technology used to extract it, and that poses a complication for US efforts potentially to try to do more of this at home.
China is exerting what it sees as leverage in rare roots because it holds roughly half of the world's reserves in rare orts and It dominates production and refining of these materials which are used, as I said, across the economy, and iPhones in consumer electronics, even smart vision goggles, night vision goggles used by the military. So we are seeing
something crucial for the US. But China is also trying to exert this leverage to perhaps get some concessions from the US on export controls governing things such as semiconductor manufacturing equipment and AI chips as well, and so this will be playing out rapidly. They don't have a lot of time to solve this before those tarifts that Donald Trump threatened take effect on November first.
Now, the key thing Caro to watch this week.
Later this week will be that there will be a Chinese delegation here in DC for the IMF World Bank Annual semi annual meetings. We'll want to see what may emerge in terms of first steps toward a rap Rochemont.
Mike Shephard, we appreciate the breakdown and let's stick with China and joining us as Michelle Guide, our CEO of the CROC Institute for Tech Topomacy and Purdue. Are we expecting a dayton? Are we expecting a pullback? From the brink, because Friday it.
Felt very much live and well when it comes to anxiety, well.
I think what we're seeing is that this type of volatility is just the cost of doing business with a totalitarian state, and as long as it involves China, volatility and uncertainty in the market is really going to be a fat rather than a problem.
And so there's two really important.
Things here for business leaders to understand as we watch these negotiations continue. First is that every time that there's a ninety day extension here, it's not really a pause. We're just entering an other inning of negotiations, and so this type of posturing is going to continue to happen, and markets need to bake that in. So it's like make a note for February, because if we get to November and then we get another extension, then this is all going to happen again.
So it's peace number one.
Second, and even more importantly.
Is even when we have an agreement, we are doing business with a totalitarian state in the Chinese Communist Party, So we still can't relax because they aren't in the business of honoring agreements until the point that it becomes inconvenient for them, and so real stability here in the long term isn't going to happen until not just when there's another agreement, but real stability is going to come from when there's total American dominance in the next generation
of industry. So it China becomes a non issue.
Well, let's talk about rare US. For example.
We had the CTO of Palanteer Michelle on the show on Friday, and really sham Sanka was saying he thinks the leverage is being exerted by China and right here right now because of the independence starting to be shown with MP materials in the state being built there. The idea that the US has got the memo that they need to be more dependent on themselves for rare US.
Is that the reality here? And how quickly can that unfold?
Yeah?
I think all of this is going to be a tit for tat and a grinding, incremental struggle until the United States pulls away. And you know you mentioned Palentier. I know you were also talking to Palmer Lucky at
and Roll last week. When you think about total American dominance in the next generation of industries that's going to come from the private sector and so what we're watching on a day by day basis is the governments go back and forth, and our government in the United States plays a really important role when it comes to defense export controls, leveling the playing field like with tariffs. But when it comes to offense, that is going to be a private sector role. We have to build new technologies,
we have to manufacture them here at home. We have to create new categories. We have to regain control over materials over all of our supply chains. We have to
move really fast. And so you mentioned the investment at JP Morgan now pumping billions or trillion and a half dollars into really important national security industries you talked about palanteer anderl I was in Austin last week with the team at Saronic doing really amazing things with the next generation of autonomous vessels, building them here at home with speed and scale.
That is what victory looks like, the.
JP and Morgan event and well signaling it's five hundred billion dollars more than perhaps would have been down anticipated one and a half trillion. What really can they do in terms of funneling channeling money to these sorts of key industries because many would say, look, this is just the right sort of lip service you need to pay to the current administration.
Well, I think when they're pumping capital into really important businesses and industries, what they're allowing them to do is go faster. And I think that's been the name of the game here. China has a competitive edge because they can move fast. Since they're a very top down totalitarian state.
Here in the United States, speed has to be our next weapon, and so pumping capital into these really important industries are just going to enable us to move faster, to build, to rebuild, and to dominate these important sectors in order for us to leave the twenty first century shell geide.
At Psoronic two, I've had them on the show and can't wait to talk more a little bit about autonomous vessels from the Kruck Institute.
We so appreciate your time.
Meanwhile, coming up, elol Musk's Dubai loop set to open in twenty twenty six, according to Amorati official.
We'll talk about that plan next. This has been bed tech.
Commuters in Dubai could travel along Elon Musk's underground transit system as soon as next year, as according to an Emarati official now. The project, announced back in February by Musk's boring company, would be a rare success for the tunneling startup. The first phase is set to span ten point six miles and carry twenty thousand passengers an hour, and it is part of the UAE's broader push to
ease congestion from its growing population. Let's put it now and look at what's happening in the crypto markets, because Bitcoin, boy, did we have a significant sell off in the last three days. We want to push back to what happened on Friday evening. It crypto marketing experience a brief but so is the intense crash that was particularly felt in the old coins at one point, using much as forty percent within minutes as the one hundred percent tariff on
Chinese imputs came from President Trump. Critics really talking about crypto market structure here, a lack of liquidity, excesses, leverage and particular some glitches that seem to occur and autoly leveraging control mechanisms over in exchanges like finance. But we keep an eye Bitcoin now up and flat over the course of three days. We're coming up plenty more on Open AIM Broadcom a multi year arrangement for custom chips and networking equipment. Then is sent broad comstock soaring from
New York. That's a Bloomberg Tech. Welcome back to Blomberg Tech. We check in on these markets that are back in rally mode after Friday's anxiety China US dialing up once again the trade tensions. We bounced back as both seem to calm rhetoric on the day. We are almost two percentage points, particularly chip stocks. Let's just dive in and see what's happening in terms of the Semiconductor Index, which is basically got every single member in the green.
All bar one in video up two point eight percent.
As we continue to dial in on the AI opportunity, AMD is at one point six percent, but Broadcom it leads the charge more than nine percent one hundred and fifty billion dollars added in market capitalization, as we see a deal to be helping with custom chips and indie networking gear for Open AI, and they don't you even have to spend their own equity, it seems. Let's get to that key story of the day between Broadcom and Open AI. We Mandat seeing his BlueBag Intelligence, Global head
of tech Research. And what's been so interesting about these golden touches from open ai for some of the big publicly traded companies is usual. Open ai has been given a sweetename buying video by IMD Broadcom.
It just seems to be independence that they give to open Ai.
Yeah, and I think the model here is the Google GPU model. I mean, when you think about Broadcom's almost twenty billion dollars rund rate for AI chips, more than half of that.
Is from Google GPUs.
So what open ai is saying is you help us get there in terms of the ramp up like Google TPUs, which is in their seventh version of chips.
I mean, and they've done it at a very quick pace.
So from that perspective, it will help open ai produce costs of up to thirty to forty percent per gigawat. If you think about, you know, one gigawatt takes forty to fifty billion. One gigawat with Broadcom chips would be at least thirty to forty percent cheaper because the cost of those chips is the highest component in that gigawat buildout.
So Broadcom helps you lower that cost of chips, and I think that's some here that yes, we want merchant silicon, but we also want custom silicon with Broadcom because that's the kind of diversification Google has and that's why their cost of infrastructure is the lowest among all the hyperscalites.
Well, do the read a cross for the TPUs from and from Google? Who else is in the mix there? Because hair Broadcom says I'll help you custom designer chip, I'll help you with networking gear. But there's a lot more to an AI data center than all of that.
Absolutely, and you need to source the power you need. All the other deals fit in the end when you look at you know what Amazon is trying to do with Tranium, they're doing that with Marvel. Microsoft is doing that with Marvel as well, and they haven't had the same kind of success that Google has had with TPUs
with Broadcom. So to my mind, you know, it was natural for open AI to try with Broadcom given the success that again Google has had compared to everyone else who is trying to do custom silicon.
And yeah, they will do deals for power.
That's what open EI is good at in terms of sourcing different providers. That's what Sam Altman has shown. But clearly chips is the component that costs sixty to seventy percent of the data center, so you want to make sure you get that at the lowest cost.
You won't be able to do that with Nvidia.
Vidia will still be the highest cost chip provider, even though they are making an investment. AMD has will likely cut its cost, but it won't be the same performance per What Broadcom will do it custom specs for you, and then they can do it at scale that Google is doing.
And it's for inference.
And I'm interested if you can interpret when open Ai, Sam and hop Tan get together on a podcast and announce this sort of a deal. What is it by understanding your own large language model and the needs of it that can really be built into the custom silicon.
I mean, just this past weekend I read about tiny recursive models. So everyone is looking at how these large models can be run more efficiently in terms of inferencing costs. And you know, whether it's tiny recursive models or some other farm, you want minimum latency as well as you know power is your real constraints, so you want maximum performance per Why so if you're optimizing for those two, you are going to go with custom silicon because that's
what Google has shown us. They can run YouTube videos best because it's their custom silicon. No other merchant silicon can give you that kind of performance, and I think that's what Open Eye is.
Going after multi year deal.
Ten million dollars is what they signal back on their earnings of the villion. In September, mandep seeing BlueBag Intelligence really breaking down the why. Now let's go to Bluemoe's tech equity reporter round Blastelica. Now, who can help talk through the US tech stocks, the rebound that we're seeing at the moment, and indeed what Oracle is up to on the day. But first Rhyn, we talk about the
rally we're seeing in tech stoks. How much is that a relief from some of the talk between US and China of the weekend or indeed this latest bro Con deal.
Hey, good morning.
So when I came in this morning, everything was pretty broadly higher, which did seem to be some relief over the latest developments with respected China. But certainly when we got the news about Broadcom and open Ai, that' stock absolutely skyrocket. I think you mentioned before one hundred and forty or so billion dollars in added market cap really helped augment the moves that we are seeing in the
chip space today. And obviously this comes in the week of several other deals involving open Ai, AMD, Oracle and Video, so on and so forth. Obviously this has become an incredibly influential company that is really destriving massive gains across the space.
I'm talking of massive gains throughout the year, but now perhaps also rallying on the day is Oracle. We've had an interesting narrative come back to a really realization last week that maybe Oracle doesn't make that much margin every time that it's selling compute to open Ai. What has Oracle got on the agenda this week and the time that they need.
To prove it well.
They have their Ai World conference this week. I believe it starts today and goes all the way to a Thursday. A lot of highlights. There's going to be a couple of keynotes tomorrow, including from Larry Elson and the new co CEO. There's going to be an analyst day on Thursday where they people are expecting some updated financial targets. So there is a lot that's going on this week and there's going to be a lot that people are
going to be paying attention to. One person I spoke to said he's actually hoping Oracle increases its CAPEX guidance here at the conference, because that would be an indication that people are feeling pretty confident that the recent deal they announced with open Ai, which was I think for three hundred billion over five years, that that money is going to be a pretty reliable driver for them. There is some concern right now about, you know, where's all
this money coming from. How is open ai going to finance all these massive deals it's doing right now? So maybe getting some more CAPEX erg is there. That's something people are watching out for to maybe justify some of the moves that we've been seeing.
I mean, and thirty five billion was where capex was meant to be hitting in fiscal twenty twenty six.
They see that that was at more than.
Sixty percent year on years, So Ryan talk to some of that anxiety about where money is ultimately coming from. Do you think this week we will still see the concerns around an AI bubble.
I think it's going to be hard to ease those concerns completely unless we get some real sort of updated numbers out of some of these companies. I know a lot of people are really looking ahead to the upcoming Earth Earning season and see what we get out of Microsoft and Amazon and Alphabet and Meta, you know, all the major cloud companies, all the major customers to Nvidia and the other AI infrastructure stocks. That's going to be really key for people to feel like that the spending
train continues to move on. And of course anything we get that sort of speaks to the ROI that these companies are seen from AI, that's going to help ease concerns as well.
Make Sure and Vasilica thank you very much indeed for joining.
While coming up Warner Brothers Robusts to takeover approach from Paramount Skydunce. While on that next in the future of the companies, this will be back tech.
You actually need more content to yield more engagement, and so we would actually want to be in the business throughout whatever lens we're looking at of actually producing more you know, more movies, more television series, more at the scale because you need that content, you need that great storytelling to yield engagement. And from that standpoint, we're also in the business first and foremost of creating long term value creation.
David Ellison, their CEO of Paramount Skuidance of course our screen Time summit last week for a moment, his company seems won't be getting more content from a takeover of Warner brother Discovery. According to sources, Warner Brothers rejected Paramount's offer for being too low.
Let's get more on this from LEITHA.
Wraganath, and she's a US media analyst from Bloomberg Intelligence. And it seemed from your analysis that really Paramount needs the content, perhaps more than Warner Brothers needs the price point.
Absolutely, Paramount really needs a strategy, Caroline.
So yes, they have skydanced that deal.
It took, as you well not, it took months, played out for months, but finally everything was done and dusted in early August. But really, I mean, as you kind of look at Paramount, you kind of look at the assets, you look at the business, there's really not a whole lot get excited about. You know, you have the linear TV networks they bring in majority of the profits, but remember that's a declining business. We've seen profits almost being halved over the past you know four to five years.
You have streaming, which is the way of the future. But it's really not generating profits yet, and it's a subscale business when you compare it to the likes of Netflix or Amazon or even Disney. Plus they have only about seventy million subscribers, so they absolutely need content. There's no doubt about it. Warner Brothers arguably one of the best businesses out there in the media ecosystem. You just look at some of the you know the IP. It's
top tier IP. I mean, whether you're thinking of Game of Thrones or you know, Harry Potter or DC Comics, they have it all. So I think definitely that you know, Paramount needs them pretty badly.
Let's talk about what Warner Brothers Discovery is currently up to. Though they're splitting in two feeling that more or certain more value can be accreted to the streaming and the movie side, what then happens to your average cable that they continue to have as a separate part of the company.
Yeah, So that really, I think is the major dilemma right now for david'sazz Loave and his team at Warner Brothers Discovery, because they know very well that once they split the company, I mean streaming and studios will be off to a fabulous start. There's going to be a lot of demand of you know, in terms of content. The profitability looks good. The real problem is with what is called the global networks business in which is being called Discovery Global just to kind of reflect all of
the cable networks. So the problem here again is right now, actually it brings in majority of the company's profits, so it's about seventy five to eighty percent of the company's profit.
But again here it's the same old story, which is, you know, advertising revenue, affiliate revenue in decline, so we're going to see you know, EBITDA fall and so that's kind of where really the big head scratcher is for David's as love because the offer that Paramount is giving now is for the entire company, so he's also kind of he can get to offload the TV networks basically kind of say bye bye and not have to worry about it if you go through with the split. The
problem is what happens to the TV networks. There's not a whole lot of bright prospects in terms of growth, and the bigger problem is that it will also have.
A lot of the debt.
Remember Warner Brothers right now has about thirty to thirty five billion dollars in debt, majority of which will travel with that Global Networks segment.
The story will keep on folding.
We thank you Ethan Ranganath and US Media and analyst for Bloomberg Intelligence. Sticking on entertainment, jares A Disney. They spiked earlier this morning after Taylor Swift announced new content, including a docu series that were premiere on Disney Plus in December. Company, as you see, shares at one and a half percent at one point up three and a half percent in pre market training. Really another sign of
the economic power of Taylor Swift. Meanwhile, President Trump's proposed TikTok transfer plan will give Washington greater oversight over the apps safety and data security, and could allow US authorities access to use a data For more on the future of TikTok, Bloomberg's Alex Ravine, who covers the platform, joins US now and we we've got to put us in the context of US China diplomacy or lack there of at the moment, and the worries about dining up of trade tensions.
And what that means. A TikTok But Alex, what's really.
Important about your BusinessWeek's story is it shows how much control the.
US government can have over data, not just the Chinese government.
Now, absolutely, you know, there's still lots of details around the steal that are being worked out, and as you've said, there's questions about US China relations and how things could really change as they have over the last couple of
days that could affect how this steal plays out. But one thing we've been very interested in focusing on is the role that the US government could play, really raising the question that the US government may be able to do some things on TikTok here that Americans have for many years been concerned China is doing on its own version of TikTok there in potentially determining, you know, inspecting code on the app, and in potentially determining how the
algorithm is retrained. There's some sort of reading between the lines in the executive order that President Trump signed on TikTok and some briefing that the White House put out with reporters that can suggest that the White House may actually have more sway over a future TikTok than people may be aware of.
Yet there's a line in your story when President Trump was quoted as saying, if I can make it one percent, Magga, I would, he said from the Oval Office, set Tom and the twenty fifth.
But I'm not going it's not going to work out that way.
Just Alex, we have so many questions around ensuring that these social media companies aren't biased in any way. So what do you think ultimately will become of trying to signal that lack of bias or not in the future for TikTok.
Well, I think what Trump's you know, the rest of that quote is that Trump really wants to ensure that there is no bias on the platform. But I think that based on what we have seen with other social media platforms and the way that they have gone, especially since since President Trump has taken office again, we know that there are really.
No guarantees and also that ownership of these platforms really matters.
When Elon Musk took over took over Twitter, which he now renamed to X, it became a very political platform.
Even though he allowed a lot more.
Speech to flourish on the platform than previously, it really became a bullhorn for his own politics. Similarly, since Trump took office. We saw that Mark Zuckerberg has made meta platforms more in line with the Trump administration's policies and
allowing more speech. So I think even though Trump, you know, reassured everybody in the Oval office and that statement that you that you just pointed to, that he does want this to be a platform that's not just one hundred percent MAGA, but that does include, you know, perspectives and philosophies and ideologies from across the spectrum. There is always the chance that the ownership could have some sort of a role in what people ultimately see on the platform.
And talking of that platform, TikTok has not been pulled off the table at this point, according to James Singwere, he's negotiating with China Lumbags.
Alex Slovene, thanks for the update.
Coming up, we'll discuss the business of space and growing space tourism industry ESNE. It was Okoro from that Harvard Belfa Center as a brute meg Tech SpaceX plans to launch flight eleven of its Starship Mega Rocket tonight, the last one using Starship version two. This is the company prepares to transition to Starship Version three, which is expected to perform orbital launches and recoveries. Joining us now is
Sna Zookoro, senior fellow at the Harvard Belfer Center. You used to be serving as a NASA executive and a former assistant director of Space Policy at the White House, so you are in the know. Just how crucial is this test later this evening.
Oh, it's critically important because what we're going to see.
Are thermal tests, some stress tests, some flight maneuvers as they prepare for the next version, as you indicated, and it's going to take them several months because they are going to ensure that Starship version three will go into orbit, conduct some recoveries, and it will be very exciting to see what's coming down from SpaceX After that. I think that the market will be very interested in where this unstoppable company is headed.
And put into the context of how unstoppable it is. Because we've had a slight delay on delivering Amazon's Kaiper satellites into low mid Earth orbit, but that's still on track.
And the fact that.
Basically SpaceX is helping other competitors enter and get into space, what does that signal about its dominance?
Still any lamsques, I think that it's.
Just clear how important this company is as a whole, not just as a competitor, but as a leader in the sector.
So as a leader in.
Space at launch, they are able to help competitors get up to space, and as a leader in broadband communications and in the space sector writ large, they are able
to continue to accelerate their progress. So this is very big and with Kuper, we also have to acknowledge that what this does is it's great news for the US to use strategically, since that we will now have two major at least two major players in the broadband from space ecosystem, as other countries you know, continue to build their satellite constellations to provide the same service.
When we think about dominance not only in the provision of satellite communication but just in rockets full blown, how are we seeing other companies perform? I mean, Blue Origin has been active in the last month.
They have been and they have been doing quite well.
So you see New Shepherd, which was designed for commercial purposes, has taken six additional people up to space and their numbers.
Are totally at about eighty six, which is exciting for space tourism. You know, you and I should be able to.
Get on.
Their backlog of space, the tourist tickets, you know, perhaps soon as they continue to complete these these launches. So it's really important to see the companies continue to show consistency.
You know, when you particularly in a business, it's so complex.
And that consistency really helps to ensure that, you know, the market keeps moving, the space economy keeps growing bigger and bigger.
Are they getting consistency from NASA at the moment? I put a pointed question to you, because our own ed Ludlow has been breaking extraordinary stories here at Bloomberg, and really one of them being that Jared Isaacman is perhaps back back in the mixed discussions with President Trump to potentially lead NASA him of course of shift for payments and close relationship with himself being an astronaut and having
relationship with with of course Elon Musk. Is there need to avoid felt in NASA right now without someone at the helm.
The agencies closed at the moment given the government shutdowns?
So true is that political.
Political pause? And secondly, you have to think of this technically as well as economically.
So technically, while NASA's needed, these companies are mature enough that they can continue to show consistency and their products without NASA conducting reviews, which is fantastic news. And then economically, quite like with space tourism and with SpaceX's starship tests, you don't really need the agency around as these companies continue to show the commercial space sector continues to grow, so we do need them politically and strategically for the future.
But the companies are showing that they are part of a growing.
Asset class, and they're part of a mature sector, and they are not completely reliant on an agency that is currently closed.
What it seems though, is that perhaps miss operations over NASA have been saying perhaps look, then will still be stop start when it comes to getting to the Moon or getting to Mars. Just update us on what the longer term goals are for NASA and for US space more poorly briefly.
So, currently the Trump administration is supportive of US.
Returning to the Moon and then moving on to Mars. They are interested in moving that timeline closer so that we get there.
Sooner than probably twenty twenty eight.
And at the intersection of all those timelines is SpaceX, and not a surprise, they are going to supply some of the critical transportation, and there are some NASA vehicles that are going to also conduct these transportation to the Moon and elsewhere. But we do stand a good chance to meet both the administration's goals and NASA's goals of exploration, given how mature.
As the technical team are.
As the name of OCORRA, we appreciate your time at the Harvard Belfare Center.
Thank you.
That does it for this edition of Bloomberg Tech Markets Rally Today.
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