October 8, 2025 • 22 mins
Watch Scarlet and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu
-Ed Ludlow, BTech Co-Anchor, discusses news that Elon Musk’s artificial intelligence startup xAI is raising more financing than initially planned, tapping backers including Nvidia Corp. to lift its ongoing funding round to $20 billion.
- Matthew Schettenhelm, Bloomberg Intelligence Media Litigation Analyst, discusses his research on why TV broadcasters likely won’t win easing of FCC's caps in October.
- Woo Jin Ho, Bloomberg Intelligence Senior Technology Analyst, discusses highlights from Dell investor day. He also talks about how legacy tech companies are finding their footing with AI.
-Steve Man, Bloomberg Intelligence Global Autos and Industrials Research Analyst, discusses the latest autos news. He discusses BMW shares sliding the most since November after the company lowered its financial guidance on weak sales in China and tariff costs. He also talks about Tesla introducing new versions of its top-selling models priced at under $40,000 to counteract the loss of US incentives for electric cars.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
All right, let's stay with the tech space and move
over to Xai, which is Elon Musk's ai startup. It's
raising more financing than initially planned, and Ed Ludlow, our
Bloomberg Tech co host, joining us from San Francisco to
give us a little more context here. Xai is backed
by a number of big companies, including in Nvidia.
Speaker 3 (00:44):
Tell us how much money it's raising.
Speaker 4 (00:46):
Yes, So it's a very specific mechanism where a special
purpose vehicle will split between about twelve and a half
billion dollars of debt and seven and a half billion
dollars of equity, use the funds to go out and
buys specifically in video GPUs. Xai then basically rents or
(01:06):
leases those GPUs from the investment vehicle over a period
of five years. Is what we've been reporting and is
our understanding. And as part of that, we have broken
the news that Nvidia is going to contribute about two
billion dollars to the equity piece. But basically what it
means is that the investors own the GPUs, they get
(01:26):
guaranteed return because Xai has to pay them a fee
or a rental fee over the course of the term.
But Xai doesn't take all the debt onto its balance sheet,
and so this could be a bit of a template,
you know, for how these mega infrastructure deals go going forward.
Speaker 5 (01:42):
Where is Xai ed in this Ai story here?
Speaker 6 (01:47):
What's the feeling in the inally?
Speaker 4 (01:50):
Yeah, it's very hard to place because Xai and in
particular Elon Musk move very quickly, and they have two
specific data enters. One is more complete Colossus one, and
what we're reporting around this financing is the chips for
Colossus two, which they started building in March. And so
from an infrastructure standpoint, Jensen Wong has talked about this,
(02:12):
saying that he's betting Elon Musk can get to one
giga what of capacity first, because that's what Elon Musk does.
On the actual output side, their large language model and GROC.
We don't have as much evidence or data of the
user base and usership of GROC like in the enterprise setting,
(02:33):
for example, we don't know it about how that particular
software that Xai develops is in a competitive environment against
like an open Ai or Enthropic, but largely noises from
Xai themselves, but others in the valley talk about how
it's somewhere that people really want to work, you know,
they want to go and work for Elon, and in
(02:55):
the talent war context, that's you know, a big story.
Speaker 3 (02:58):
Okay, thanks for that context.
Speaker 2 (03:00):
One thing you mentioned when explaining this deal that Xai
has put together the fundraising is that in Video is
one of the backers, but the SPV, the special purpose Vehicle,
is going to then go out and buy in Video chips.
This all feels kind of circular, incestuous if you want
to put it in another way, is this going to
create problems? I mean, are people raising their eyebrows over this?
(03:21):
That this all feels very like I'm putting money in
so that you can go then buy some of my
other stuff.
Speaker 4 (03:27):
So important. Jensen Wang, the in Video CEO, went on
another network an hour ago and basically confirmed our reporting
that in Video was going to participate that he wished
he could have put more money into this what he called,
you know, fundraising, But he also talked about the idea
that this mechanism was not traditional venture and it nor
(03:50):
is it straight vendor vendor financing. The circular part is
the is the bit that people are most focused on,
because on page it's in Vidia saying here's two billion dollars,
which we know Xai is going to use indirectly through
the SPV to buy two billion dollars worth of Nvidia chips.
(04:10):
But Jensen Wog did go on to say in that
interview that if you take, for example, the open ai
deal announced in the last ten days, that's a one
hundred billion dollar agreement over many years, and according to
Nvidia and Jensen Wang, there is no mandatory requirement that
open Ai used that.
Speaker 6 (04:30):
Money.
Speaker 4 (04:30):
I'm pausing, guys, because we actually have no idea if
it's cash. We have no idea if it's just equity.
But according to Gensen Wong, it's not mandatory for open
Ai to use the proceeds to buy in video gear.
They are free to go out and do other deals
like they did with AMD.
Speaker 6 (04:45):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (04:52):
You're listening to the Bloomberg Intelligence podcast. Catch US Live
weekdays at ten am Eastern on Apple Coarclay, and Android
Otto with the Bloomberg Business app, Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (05:06):
A new administration had a lot of industry saying, hey,
maybe we're gonna get some deregulation in our business with
this Trump administration. One of those industries is a television
broadcast industry. There are limits on how many stations you
can own nationally. A company can own nationally, there's limits
on how many stations a company can own it in
a particular market. But there was recently those would be
(05:28):
loosened and maybe significantly. And actually some couple M and
A deals have been announced in anticipation of those rules loosing.
So let's check out with the expert here, Matt Schuttinghelm,
these immediate litigation analyts for Bloomberg Intelligence.
Speaker 6 (05:38):
He's down there in DC.
Speaker 5 (05:40):
So, Matt, my FCC they meet I think sometime this month.
Are they going to loosen TV ownership rules?
Speaker 7 (05:46):
Yeah, there was some expectation that the deregulatory actions could
start as early as this month for the TV broadcasters. Unfortunately,
for the industry, it doesn't look like October is going
to be the month for movement on that national ownership cap.
Brendan Carr, the FCC chairman, put out the agenda for
(06:08):
the FCC's monthly meeting, and this item was not listed
on that agenda. Now, he could still add it as
late as seven days before the meeting, but that's unlikely.
Typically these things are announced three weeks before, so I
still expect the FCC to move pretty quickly on this.
The FCC took comments on this earlier in the summer.
(06:31):
It really should should be a pretty simple order to
write up to ease that thirty nine percent US ownership limit.
It's just a matter of getting it done. And also
the FCC is, you know, eighty percent of the employees
are off right now because we have a government shutdown
which could be impacting things.
Speaker 2 (06:48):
Okay, So which companies, first of all, are most affected
by this. Paul mentioned that there was some deal making
and anticipation of this. We know that next Our Media
made a bid for Tegna. It was a six point
two billion dollars all cash deal. Is that the most
glaring example of companies that are directly affected.
Speaker 7 (07:04):
That's the biggest one Scarlett Sinclair is also a big
name in this space. Scripts Gray Media also big owners
of TV stations. But the one you pointed to, the
Next Star TEG deal is the biggest one. Is six
point two billion dollar deal announced in August. And as
we as we said, currently the LAG limits you to
(07:25):
basically reaching thirty nine percent of US households. That deal
would let Nextstar reach seventy eighty percent of US households.
So the deal only can move ahead if this rule
is changed. If the rule is eased by the FCC,
there's no way the FCC can approve the deal without
a change in that rule making first. And so that's
(07:47):
what we're really waiting for is action on to ease
those rules. And then we're inevitably going to have a
court fight on that question because there are wrong arguments
on both sides of that one. One side says, look,
the FCC might like to do that, but this is
Congress's role to ease that thirty nine percent US cap.
(08:10):
The FCC can't do it itself. I think there's going
to be a tough fight on that. The FCC probably
can win it, but it's coming.
Speaker 5 (08:18):
It just seems kind of silly in digital world here
that there are ownership caps for traditional broadcasters which are
fighting for their lives in the world.
Speaker 6 (08:27):
Of cord cutting. I mean, the economics seem like, why wouldn't.
Speaker 8 (08:30):
You do it?
Speaker 7 (08:31):
That's exactly the case that the National Association of Broadcasters
have been pushing with the FCC really for many years,
but they've really raised the volume on that argument recently,
and it's really resonating with Republicans at the FCC. I
think Brendan Carr, the FCC Chairman, is really sympathetic to
(08:52):
that argument that look, in this world of all forms
of new media online, all the ways that can get
media today, and most of those are largely unregulated, that
the traditional TV broadcast industry would face these these strict
limits on how many stations they can own in local
(09:13):
markets in each you know, in Chicago, in New York,
in DC, and a national cap. Both of those don't
really make as much sense, according to NAB and I
think that that argument is really resonating with Republicans. Republicans
have a majority at the FCC, so they're likely to
do their best to move ahead to ease these rules
if they can.
Speaker 2 (09:35):
That's for traditional broadcasting, then you've got the streamers right. Skydance,
which is of course the owner of Paramount Global is
or was reportedly planning to make a bit for Warner
Brothers Discovery that actually hasn't come through yet, but that
is something that is outside the FCC's jurisdiction. The SEC
plays no part in any of this.
Speaker 7 (09:52):
Well, so it's it's a debated point that some have
pushed to say, Look, maybe the FCC should be regulating
those over the top video providers like YouTube TV, like
these streamers. Again, the problem though, is that the FCC
is confined by a law that was written in nineteen
thirty four and then updated in nineteen ninety six, and
(10:14):
it's often a struggle for the FCC to extend its
authority to online providers. And so the Obama FCC was
actually ready to move ahead with a rulemaking to do
just that, but it never went anywhere. And I think
the reason is when you read the law, it's really
(10:34):
a stretch to say that the FCC can reach those
new online providers the way it has traditionally regulated broadcasters.
Speaker 6 (10:42):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (10:49):
You're listening to the Bloomberg Intelligence podcast. Catch us Live
weekdays at ten am Eastern on Apple Coarclay, and Android
Auto with the Bloomberg Business app. Listen on demand, hover
you get your podcasts, or watch us live on YouTube.
Speaker 2 (11:04):
One of the big movers of late, of course, is Dell,
and that's because of its AI server business. That part
of the business has really taken off, and we want
to bring in now Wujin Ho Bloomberg Intelligence senior technology
analysts on the highlights from Dell's investor day and Ujin
One of the things that Dell did was kind of
layout a vision as Ed Ludlow was telling us an outlook,
(11:26):
a plan for the next couple of years, which I
find remarkable given that this is such a fast moving
industry that you know, companies need to update their guidance
every quarter, and this company is talking about it's guidance
out to twenty thirty.
Speaker 9 (11:40):
Yeah.
Speaker 10 (11:41):
Hey, Scarlet, so I know how you ended the last
segment with Kyle Bunga. I'm going to start this segment
with to get you got to get a Dell, right,
So look, this is this is a very seasoned management team.
They have a tendency to give out three to four
year guidance plans. I think the surprise here is what's
driving that seventy nine percent growth outlook for from twenty
(12:06):
twenty six to twenty twenty twenty thirty, And it's going
to be AI servers, right, And one of the things
that they said at the analyst day that AI servers
are going to grow at a twenty to twenty five
percent compounded rate. I think there was some skepticism there
heading into the print in terms of is there an
AI bubble? And by laying out a twenty to twenty
five percent AI server growth going through twenty thirty off
(12:29):
of already high numbers, shows that there is some durability
to the aserver demand.
Speaker 5 (12:34):
All right, I'm looking at the ANR function for Dell Technologies.
Speaker 6 (12:37):
Twenty three buys on the wall street.
Speaker 5 (12:39):
Six holds and no cells. So it looks like the
streets buying off on what on the message here? So
when you get an analyst meaning together, it's a big
day for a company. They put a lot of time
and effort in putting getting their senior management together, putting
together presentations, presenting a vision here.
Speaker 6 (12:54):
What were some of the two or three.
Speaker 5 (12:55):
Takeaways from you from this Investor Day yesterday.
Speaker 10 (12:58):
Yeah, So the one highlight here is the a server demand,
their durability of a sever demand. But more importantly, and
we talk about this all the time, you know, Paul,
It's about earnings and cash flow, right And at the
end of the day, we're talking about EPs growth about
fifteen percent, and how do we get to that fifteen percent?
(13:20):
We're talking about eight percent of the sales growth dropping
down to the bottom line. But given all of that
cash generation that they're given, all that cash generation, there's
going to be a fair amount of capital returns through buybacks,
So you're going to get a lift on EPs there.
So share olders aren't going to be happy from an
EPs standpoint, and we're already seeing that from evaluation standpoint,
(13:42):
because it is lifting from an eight to ten times
PE to about fifteen times growth, which makes it into
a one times.
Speaker 2 (13:49):
Peg Wogin another story that we're tracking here and that
I've been fascinated by, is this idea of legacy tech
companies finding their feet in this AI wave, whether it's Oracle,
whether it's Dell, and now.
Speaker 3 (14:03):
Cisco as well.
Speaker 2 (14:04):
Cisco is releasing a new chip and networking system to
connect AI data centers, and this is a move that
pretty much puts it in more direct competition with Broadcom.
How big of an opportunity is this for Cisco? And
should Broadcome be worried?
Speaker 10 (14:20):
Yeah, so we published and react this morning, and essentially
I don't think Broadcom should be fully worried. There's a
couple of things that I'll say, Right, Cisco is actually
one of the biggest chip networking chip manufacturers globally, but
more for their legacy enterprise IT chips. Right, they produce
their own chips that powers their own networking gear. They're
(14:42):
fairly newer to the game in the networking chip side.
From a revenue standpoint, it's really not a big driver,
but it may be able to push more boxes. A
couple of things that I'll say, They did about one
billion dollars in AI back end revenue, but to put
that into context, you know they're doing about fifty five
(15:04):
to fifty six billion dollars in total sales. So you know,
from from an overall percentage of AI as an overall
percentage of sales, it's still about two to three percent
of total sales. Are they going to challenge Broadcom? I
doubt it, but I do think there'll be a second
source to the cloud providers versus Broadcom.
Speaker 6 (15:24):
Which in your coverage area.
Speaker 5 (15:26):
What's your best AI play, because I'm sure you get
that call from clients all the time.
Speaker 10 (15:32):
You know, I mean I have a handful. Dell was one,
you know. Hp is another one to take a look
out for. They have an analyst day next week. But
from from a networking standpoint, Arista has actually been one
of the high flyers from from a from from a
networking standpoint, so I will look at Arista and people
(15:53):
have been taking the AI networking angle and using Arista
as one of the tools.
Speaker 3 (16:01):
I like that Arisa.
Speaker 2 (16:02):
I haven't heard that one come up yet, you know,
HPE or HPQ Just to clarify, oh, HPE.
Speaker 10 (16:07):
So think of it as a mini Dell and a
mini Cisco in one.
Speaker 6 (16:13):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (16:19):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 5 (16:34):
Let's get back to the market here, the auto business
in particular, BMW took some guidance down here today's citing
week demand out of China.
Speaker 6 (16:41):
That can't be good.
Speaker 5 (16:42):
So let's get the latest on what's happening in the
global auto space. Here, Steve Man joins his Bloomberg Intelligence
Global autos and Industrials research analysts. So let's start with
the BMW news here, Steve, BMW cuts annual guidance on
week China sales and tariff costs.
Speaker 6 (16:58):
What's going on there?
Speaker 8 (17:00):
Yeah, it seems like it never It seems like it's
a never ending cycle here. What's happening to BMW in
China is not new, It's not new to them. Everybody,
every foreign automaker is actually facing the pressure there. It's
a hyper competitive market. Pricing has been spiraling down, and
you know, the the automakers, the local automakers there are
(17:23):
actually gaining a lot of traction with the consumer. Consumers
there are you know, tech savvy. They're looking for tech
heavy vehicles. And even though the foreign automakers are you know,
redesigning the screens to make it look jazzy, colorful, but
it's still I think lacks the capabilities that the consumer
(17:45):
wants over there.
Speaker 2 (17:46):
Are there any foreign automakers that are holding on to
market share.
Speaker 9 (17:51):
Not really, I mean relatively speaking.
Speaker 8 (17:53):
I think the Japanese are a little bit better, but
they are still losing market share, you know, like companies
like Ford has you know, dwindled down the operation to
a minimum over there. Even other European automakers like Pugio Citron,
you know, they've essentially exited that market. So you know,
(18:15):
the Chinese local automakers like by D and j Ly
are really coming out with really attractive product and at
prices that are you know, hard to beat.
Speaker 2 (18:26):
Yeah, I remember a long time ago it seemed like
every Chinese government official was in a black Audi. Audi
was like the car, the foreign car in China. Those
are those days are long gone, aren't they?
Speaker 9 (18:36):
Those days are long gone. You know, when chi Jin
Pain came in and.
Speaker 8 (18:40):
Started cracking down on corruption, those types of exhibition of
wealth is pretty much disappeared. And you know, then the
consumer there are actually getting more sophisticated, right, They're looking
for value for money.
Speaker 9 (18:56):
And over the past couple of.
Speaker 8 (18:58):
Decades, you know, the low automakers have actually learned quite
a bit from the foreign automakers setting up shops there
and They've learned a lot about product design, They've learned
about a lot about manufacturing, and obviously the local automakers
there have an advantage, right they understand the consumer over
there and what they want, really want.
Speaker 5 (19:21):
Switch Gears, Steve Ta Tesla. They've launched their cheaper version.
I guess it's under forty thousand dollars. What's your reaction,
what's the market's reaction?
Speaker 8 (19:31):
Yeah, I think the market is somewhat disappointed because Elon
Musk has projected, you know, for the last few years
that they would introduce a vehicle that's twenty five thousand
dollars or maybe even cheaper. Obviously there's inflation, but I
think the market is expecting something more price competitive. But
(19:53):
in any case, it is a cheaper model. It's about,
you know, six seven thousand dollars cheaper than the higher
the next variant up for the Model Y Model three.
Speaker 9 (20:06):
Really look, it's I don't.
Speaker 8 (20:08):
Think it's going to make a huge impact on Tesla sales,
given that a lot of sales being pulled forward right
just before the end of the seventy five hundred EV
tax credit. But it does create a more intense competitive
market in the US. Look these vehicles are actually directly
competing with the likes of the Chevy Equinox EV from
(20:29):
GM and the Ford Monkey. So you know, I think,
you know, we got cheaper vehicles coming in in a
softening market, so it's going to be interesting to see.
Speaker 2 (20:41):
Wait, so the Ford and the Chevy cars, those models
you cited, those are the cheapest on the market right now.
Speaker 3 (20:46):
What do they retail for right now?
Speaker 8 (20:48):
Yeah, they're around thirty three thirty four to thirty five thousand.
Speaker 3 (20:52):
Okay, which is the same five thousand then?
Speaker 9 (20:56):
Uh no, well not yet. I think we'll have to see.
Speaker 8 (21:00):
It looks like, you know, GM will is expected to
launch the Chevy Bolt if you remember, Chevy Bolt is
you know, one of the most popular.
Speaker 9 (21:09):
GM EV's, and it's like a relaunch pop.
Speaker 8 (21:11):
Yeah, it's a relaunch redesign with new battery, a lower
cost structor. Now, I don't think that vehicles are going
to get down to twenty five thousands. It looks like
it's going to be below thirty thousand.
Speaker 6 (21:24):
So what I mean, are you an EV person?
Speaker 2 (21:27):
No, because I don't have a garage, and so if
I don't have a garage, how am I going to
charge this vehicle point.
Speaker 6 (21:32):
You know, I want the hybrid route for the most
recent I like the.
Speaker 2 (21:35):
Idea of a hybrid route, but apparently those I don't
know the car parts, but it's easy to steal, and
therefore you can be lauch you know. Thanks.
Speaker 1 (21:42):
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Speaker 7 (22:08):
MHM
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
All right, let's stay with the tech space and move
over to Xai, which is Elon Musk's ai startup. It's
raising more financing than initially planned, and Ed Ludlow, our
Bloomberg Tech co host, joining us from San Francisco to
give us a little more context here. Xai is backed
by a number of big companies, including in Nvidia.
Speaker 3 (00:44):
Tell us how much money it's raising.
Speaker 4 (00:46):
Yes, So it's a very specific mechanism where a special
purpose vehicle will split between about twelve and a half
billion dollars of debt and seven and a half billion
dollars of equity, use the funds to go out and
buys specifically in video GPUs. Xai then basically rents or
(01:06):
leases those GPUs from the investment vehicle over a period
of five years. Is what we've been reporting and is
our understanding. And as part of that, we have broken
the news that Nvidia is going to contribute about two
billion dollars to the equity piece. But basically what it
means is that the investors own the GPUs, they get
(01:26):
guaranteed return because Xai has to pay them a fee
or a rental fee over the course of the term.
But Xai doesn't take all the debt onto its balance sheet,
and so this could be a bit of a template,
you know, for how these mega infrastructure deals go going forward.
Speaker 5 (01:42):
Where is Xai ed in this Ai story here?
Speaker 6 (01:47):
What's the feeling in the inally?
Speaker 4 (01:50):
Yeah, it's very hard to place because Xai and in
particular Elon Musk move very quickly, and they have two
specific data enters. One is more complete Colossus one, and
what we're reporting around this financing is the chips for
Colossus two, which they started building in March. And so
from an infrastructure standpoint, Jensen Wong has talked about this,
(02:12):
saying that he's betting Elon Musk can get to one
giga what of capacity first, because that's what Elon Musk does.
On the actual output side, their large language model and GROC.
We don't have as much evidence or data of the
user base and usership of GROC like in the enterprise setting,
(02:33):
for example, we don't know it about how that particular
software that Xai develops is in a competitive environment against
like an open Ai or Enthropic, but largely noises from
Xai themselves, but others in the valley talk about how
it's somewhere that people really want to work, you know,
they want to go and work for Elon, and in
(02:55):
the talent war context, that's you know, a big story.
Speaker 3 (02:58):
Okay, thanks for that context.
Speaker 2 (03:00):
One thing you mentioned when explaining this deal that Xai
has put together the fundraising is that in Video is
one of the backers, but the SPV, the special purpose Vehicle,
is going to then go out and buy in Video chips.
This all feels kind of circular, incestuous if you want
to put it in another way, is this going to
create problems? I mean, are people raising their eyebrows over this?
(03:21):
That this all feels very like I'm putting money in
so that you can go then buy some of my
other stuff.
Speaker 4 (03:27):
So important. Jensen Wang, the in Video CEO, went on
another network an hour ago and basically confirmed our reporting
that in Video was going to participate that he wished
he could have put more money into this what he called,
you know, fundraising, But he also talked about the idea
that this mechanism was not traditional venture and it nor
(03:50):
is it straight vendor vendor financing. The circular part is
the is the bit that people are most focused on,
because on page it's in Vidia saying here's two billion dollars,
which we know Xai is going to use indirectly through
the SPV to buy two billion dollars worth of Nvidia chips.
(04:10):
But Jensen Wog did go on to say in that
interview that if you take, for example, the open ai
deal announced in the last ten days, that's a one
hundred billion dollar agreement over many years, and according to
Nvidia and Jensen Wang, there is no mandatory requirement that
open Ai used that.
Speaker 6 (04:30):
Money.
Speaker 4 (04:30):
I'm pausing, guys, because we actually have no idea if
it's cash. We have no idea if it's just equity.
But according to Gensen Wong, it's not mandatory for open
Ai to use the proceeds to buy in video gear.
They are free to go out and do other deals
like they did with AMD.
Speaker 6 (04:45):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (04:52):
You're listening to the Bloomberg Intelligence podcast. Catch US Live
weekdays at ten am Eastern on Apple Coarclay, and Android
Otto with the Bloomberg Business app, Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (05:06):
A new administration had a lot of industry saying, hey,
maybe we're gonna get some deregulation in our business with
this Trump administration. One of those industries is a television
broadcast industry. There are limits on how many stations you
can own nationally. A company can own nationally, there's limits
on how many stations a company can own it in
a particular market. But there was recently those would be
(05:28):
loosened and maybe significantly. And actually some couple M and
A deals have been announced in anticipation of those rules loosing.
So let's check out with the expert here, Matt Schuttinghelm,
these immediate litigation analyts for Bloomberg Intelligence.
Speaker 6 (05:38):
He's down there in DC.
Speaker 5 (05:40):
So, Matt, my FCC they meet I think sometime this month.
Are they going to loosen TV ownership rules?
Speaker 7 (05:46):
Yeah, there was some expectation that the deregulatory actions could
start as early as this month for the TV broadcasters. Unfortunately,
for the industry, it doesn't look like October is going
to be the month for movement on that national ownership cap.
Brendan Carr, the FCC chairman, put out the agenda for
(06:08):
the FCC's monthly meeting, and this item was not listed
on that agenda. Now, he could still add it as
late as seven days before the meeting, but that's unlikely.
Typically these things are announced three weeks before, so I
still expect the FCC to move pretty quickly on this.
The FCC took comments on this earlier in the summer.
(06:31):
It really should should be a pretty simple order to
write up to ease that thirty nine percent US ownership limit.
It's just a matter of getting it done. And also
the FCC is, you know, eighty percent of the employees
are off right now because we have a government shutdown
which could be impacting things.
Speaker 2 (06:48):
Okay, So which companies, first of all, are most affected
by this. Paul mentioned that there was some deal making
and anticipation of this. We know that next Our Media
made a bid for Tegna. It was a six point
two billion dollars all cash deal. Is that the most
glaring example of companies that are directly affected.
Speaker 7 (07:04):
That's the biggest one Scarlett Sinclair is also a big
name in this space. Scripts Gray Media also big owners
of TV stations. But the one you pointed to, the
Next Star TEG deal is the biggest one. Is six
point two billion dollar deal announced in August. And as
we as we said, currently the LAG limits you to
(07:25):
basically reaching thirty nine percent of US households. That deal
would let Nextstar reach seventy eighty percent of US households.
So the deal only can move ahead if this rule
is changed. If the rule is eased by the FCC,
there's no way the FCC can approve the deal without
a change in that rule making first. And so that's
(07:47):
what we're really waiting for is action on to ease
those rules. And then we're inevitably going to have a
court fight on that question because there are wrong arguments
on both sides of that one. One side says, look,
the FCC might like to do that, but this is
Congress's role to ease that thirty nine percent US cap.
(08:10):
The FCC can't do it itself. I think there's going
to be a tough fight on that. The FCC probably
can win it, but it's coming.
Speaker 5 (08:18):
It just seems kind of silly in digital world here
that there are ownership caps for traditional broadcasters which are
fighting for their lives in the world.
Speaker 6 (08:27):
Of cord cutting. I mean, the economics seem like, why wouldn't.
Speaker 8 (08:30):
You do it?
Speaker 7 (08:31):
That's exactly the case that the National Association of Broadcasters
have been pushing with the FCC really for many years,
but they've really raised the volume on that argument recently,
and it's really resonating with Republicans at the FCC. I
think Brendan Carr, the FCC Chairman, is really sympathetic to
(08:52):
that argument that look, in this world of all forms
of new media online, all the ways that can get
media today, and most of those are largely unregulated, that
the traditional TV broadcast industry would face these these strict
limits on how many stations they can own in local
(09:13):
markets in each you know, in Chicago, in New York,
in DC, and a national cap. Both of those don't
really make as much sense, according to NAB and I
think that that argument is really resonating with Republicans. Republicans
have a majority at the FCC, so they're likely to
do their best to move ahead to ease these rules
if they can.
Speaker 2 (09:35):
That's for traditional broadcasting, then you've got the streamers right. Skydance,
which is of course the owner of Paramount Global is
or was reportedly planning to make a bit for Warner
Brothers Discovery that actually hasn't come through yet, but that
is something that is outside the FCC's jurisdiction. The SEC
plays no part in any of this.
Speaker 7 (09:52):
Well, so it's it's a debated point that some have
pushed to say, Look, maybe the FCC should be regulating
those over the top video providers like YouTube TV, like
these streamers. Again, the problem though, is that the FCC
is confined by a law that was written in nineteen
thirty four and then updated in nineteen ninety six, and
(10:14):
it's often a struggle for the FCC to extend its
authority to online providers. And so the Obama FCC was
actually ready to move ahead with a rulemaking to do
just that, but it never went anywhere. And I think
the reason is when you read the law, it's really
(10:34):
a stretch to say that the FCC can reach those
new online providers the way it has traditionally regulated broadcasters.
Speaker 6 (10:42):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (10:49):
You're listening to the Bloomberg Intelligence podcast. Catch us Live
weekdays at ten am Eastern on Apple Coarclay, and Android
Auto with the Bloomberg Business app. Listen on demand, hover
you get your podcasts, or watch us live on YouTube.
Speaker 2 (11:04):
One of the big movers of late, of course, is Dell,
and that's because of its AI server business. That part
of the business has really taken off, and we want
to bring in now Wujin Ho Bloomberg Intelligence senior technology
analysts on the highlights from Dell's investor day and Ujin
One of the things that Dell did was kind of
layout a vision as Ed Ludlow was telling us an outlook,
(11:26):
a plan for the next couple of years, which I
find remarkable given that this is such a fast moving
industry that you know, companies need to update their guidance
every quarter, and this company is talking about it's guidance
out to twenty thirty.
Speaker 9 (11:40):
Yeah.
Speaker 10 (11:41):
Hey, Scarlet, so I know how you ended the last
segment with Kyle Bunga. I'm going to start this segment
with to get you got to get a Dell, right,
So look, this is this is a very seasoned management team.
They have a tendency to give out three to four
year guidance plans. I think the surprise here is what's
driving that seventy nine percent growth outlook for from twenty
(12:06):
twenty six to twenty twenty twenty thirty, And it's going
to be AI servers, right, And one of the things
that they said at the analyst day that AI servers
are going to grow at a twenty to twenty five
percent compounded rate. I think there was some skepticism there
heading into the print in terms of is there an
AI bubble? And by laying out a twenty to twenty
five percent AI server growth going through twenty thirty off
(12:29):
of already high numbers, shows that there is some durability
to the aserver demand.
Speaker 5 (12:34):
All right, I'm looking at the ANR function for Dell Technologies.
Speaker 6 (12:37):
Twenty three buys on the wall street.
Speaker 5 (12:39):
Six holds and no cells. So it looks like the
streets buying off on what on the message here? So
when you get an analyst meaning together, it's a big
day for a company. They put a lot of time
and effort in putting getting their senior management together, putting
together presentations, presenting a vision here.
Speaker 6 (12:54):
What were some of the two or three.
Speaker 5 (12:55):
Takeaways from you from this Investor Day yesterday.
Speaker 10 (12:58):
Yeah, So the one highlight here is the a server demand,
their durability of a sever demand. But more importantly, and
we talk about this all the time, you know, Paul,
It's about earnings and cash flow, right And at the
end of the day, we're talking about EPs growth about
fifteen percent, and how do we get to that fifteen percent?
(13:20):
We're talking about eight percent of the sales growth dropping
down to the bottom line. But given all of that
cash generation that they're given, all that cash generation, there's
going to be a fair amount of capital returns through buybacks,
So you're going to get a lift on EPs there.
So share olders aren't going to be happy from an
EPs standpoint, and we're already seeing that from evaluation standpoint,
(13:42):
because it is lifting from an eight to ten times
PE to about fifteen times growth, which makes it into
a one times.
Speaker 2 (13:49):
Peg Wogin another story that we're tracking here and that
I've been fascinated by, is this idea of legacy tech
companies finding their feet in this AI wave, whether it's Oracle,
whether it's Dell, and now.
Speaker 3 (14:03):
Cisco as well.
Speaker 2 (14:04):
Cisco is releasing a new chip and networking system to
connect AI data centers, and this is a move that
pretty much puts it in more direct competition with Broadcom.
How big of an opportunity is this for Cisco? And
should Broadcome be worried?
Speaker 10 (14:20):
Yeah, so we published and react this morning, and essentially
I don't think Broadcom should be fully worried. There's a
couple of things that I'll say, Right, Cisco is actually
one of the biggest chip networking chip manufacturers globally, but
more for their legacy enterprise IT chips. Right, they produce
their own chips that powers their own networking gear. They're
(14:42):
fairly newer to the game in the networking chip side.
From a revenue standpoint, it's really not a big driver,
but it may be able to push more boxes. A
couple of things that I'll say, They did about one
billion dollars in AI back end revenue, but to put
that into context, you know they're doing about fifty five
(15:04):
to fifty six billion dollars in total sales. So you know,
from from an overall percentage of AI as an overall
percentage of sales, it's still about two to three percent
of total sales. Are they going to challenge Broadcom? I
doubt it, but I do think there'll be a second
source to the cloud providers versus Broadcom.
Speaker 6 (15:24):
Which in your coverage area.
Speaker 5 (15:26):
What's your best AI play, because I'm sure you get
that call from clients all the time.
Speaker 10 (15:32):
You know, I mean I have a handful. Dell was one,
you know. Hp is another one to take a look
out for. They have an analyst day next week. But
from from a networking standpoint, Arista has actually been one
of the high flyers from from a from from a
networking standpoint, so I will look at Arista and people
(15:53):
have been taking the AI networking angle and using Arista
as one of the tools.
Speaker 3 (16:01):
I like that Arisa.
Speaker 2 (16:02):
I haven't heard that one come up yet, you know,
HPE or HPQ Just to clarify, oh, HPE.
Speaker 10 (16:07):
So think of it as a mini Dell and a
mini Cisco in one.
Speaker 6 (16:13):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (16:19):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 5 (16:34):
Let's get back to the market here, the auto business
in particular, BMW took some guidance down here today's citing
week demand out of China.
Speaker 6 (16:41):
That can't be good.
Speaker 5 (16:42):
So let's get the latest on what's happening in the
global auto space. Here, Steve Man joins his Bloomberg Intelligence
Global autos and Industrials research analysts. So let's start with
the BMW news here, Steve, BMW cuts annual guidance on
week China sales and tariff costs.
Speaker 6 (16:58):
What's going on there?
Speaker 8 (17:00):
Yeah, it seems like it never It seems like it's
a never ending cycle here. What's happening to BMW in
China is not new, It's not new to them. Everybody,
every foreign automaker is actually facing the pressure there. It's
a hyper competitive market. Pricing has been spiraling down, and
you know, the the automakers, the local automakers there are
(17:23):
actually gaining a lot of traction with the consumer. Consumers
there are you know, tech savvy. They're looking for tech
heavy vehicles. And even though the foreign automakers are you know,
redesigning the screens to make it look jazzy, colorful, but
it's still I think lacks the capabilities that the consumer
(17:45):
wants over there.
Speaker 2 (17:46):
Are there any foreign automakers that are holding on to
market share.
Speaker 9 (17:51):
Not really, I mean relatively speaking.
Speaker 8 (17:53):
I think the Japanese are a little bit better, but
they are still losing market share, you know, like companies
like Ford has you know, dwindled down the operation to
a minimum over there. Even other European automakers like Pugio Citron,
you know, they've essentially exited that market. So you know,
(18:15):
the Chinese local automakers like by D and j Ly
are really coming out with really attractive product and at
prices that are you know, hard to beat.
Speaker 2 (18:26):
Yeah, I remember a long time ago it seemed like
every Chinese government official was in a black Audi. Audi
was like the car, the foreign car in China. Those
are those days are long gone, aren't they?
Speaker 9 (18:36):
Those days are long gone. You know, when chi Jin
Pain came in and.
Speaker 8 (18:40):
Started cracking down on corruption, those types of exhibition of
wealth is pretty much disappeared. And you know, then the
consumer there are actually getting more sophisticated, right, They're looking
for value for money.
Speaker 9 (18:56):
And over the past couple of.
Speaker 8 (18:58):
Decades, you know, the low automakers have actually learned quite
a bit from the foreign automakers setting up shops there
and They've learned a lot about product design, They've learned
about a lot about manufacturing, and obviously the local automakers
there have an advantage, right they understand the consumer over
there and what they want, really want.
Speaker 5 (19:21):
Switch Gears, Steve Ta Tesla. They've launched their cheaper version.
I guess it's under forty thousand dollars. What's your reaction,
what's the market's reaction?
Speaker 8 (19:31):
Yeah, I think the market is somewhat disappointed because Elon
Musk has projected, you know, for the last few years
that they would introduce a vehicle that's twenty five thousand
dollars or maybe even cheaper. Obviously there's inflation, but I
think the market is expecting something more price competitive. But
(19:53):
in any case, it is a cheaper model. It's about,
you know, six seven thousand dollars cheaper than the higher
the next variant up for the Model Y Model three.
Speaker 9 (20:06):
Really look, it's I don't.
Speaker 8 (20:08):
Think it's going to make a huge impact on Tesla sales,
given that a lot of sales being pulled forward right
just before the end of the seventy five hundred EV
tax credit. But it does create a more intense competitive
market in the US. Look these vehicles are actually directly
competing with the likes of the Chevy Equinox EV from
(20:29):
GM and the Ford Monkey. So you know, I think,
you know, we got cheaper vehicles coming in in a
softening market, so it's going to be interesting to see.
Speaker 2 (20:41):
Wait, so the Ford and the Chevy cars, those models
you cited, those are the cheapest on the market right now.
Speaker 3 (20:46):
What do they retail for right now?
Speaker 8 (20:48):
Yeah, they're around thirty three thirty four to thirty five thousand.
Speaker 3 (20:52):
Okay, which is the same five thousand then?
Speaker 9 (20:56):
Uh no, well not yet. I think we'll have to see.
Speaker 8 (21:00):
It looks like, you know, GM will is expected to
launch the Chevy Bolt if you remember, Chevy Bolt is
you know, one of the most popular.
Speaker 9 (21:09):
GM EV's, and it's like a relaunch pop.
Speaker 8 (21:11):
Yeah, it's a relaunch redesign with new battery, a lower
cost structor. Now, I don't think that vehicles are going
to get down to twenty five thousands. It looks like
it's going to be below thirty thousand.
Speaker 6 (21:24):
So what I mean, are you an EV person?
Speaker 2 (21:27):
No, because I don't have a garage, and so if
I don't have a garage, how am I going to
charge this vehicle point.
Speaker 6 (21:32):
You know, I want the hybrid route for the most
recent I like the.
Speaker 2 (21:35):
Idea of a hybrid route, but apparently those I don't
know the car parts, but it's easy to steal, and
therefore you can be lauch you know. Thanks.
Speaker 1 (21:42):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
ten am to noon Eastern on Bloomberg dot com, the
iHeartRadio app tune In, and the Bloomberg Business app. You
can also want us live every weekday on YouTube and
always on the Bloomberg terminal
Speaker 7 (22:08):
MHM
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