December 5, 2025 • 42 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss Netflix’s agreement to buy Warner Bros. Discovery after it completes the planned spinoff of its cable channels. Plus, the European Union Ambassador to the US responds to criticism of the $140 million fine the bloc has levied on Elon Musk’s social media platform X. And HPE CEO, Antonio Neri, discusses the company’s outlook after reporting disappointing 4Q AI server sales.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Va Loow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up a historic media shakeup
as Netflix agrees to buy Warner Brothers Discovery. Details on
the seventy two billion dollar cash and stock deal throughout
the hour.
Speaker 3 (00:33):
Plus continued clash between the US and EU on free
speech as the European Union finds Elon Musk's X platform
one hundred and forty million dollars.
Speaker 2 (00:42):
An HPES outlook disappoints on slower AI server deals.
Speaker 4 (00:46):
We speak to the CEO. Let's get right to it.
Speaker 2 (00:50):
Netflix buying Warner Brothers Discovery.
Speaker 4 (00:53):
The value of the.
Speaker 2 (00:54):
Deal seventy two billion dollars. Warner Brothers Discovery shareholders set
to receive twenty seven dollars seventy five per cents per
share in cash and stock. The value of the deal
or value of Warner Brothers almost eighty three billion dollars
when you take into account debt.
Speaker 4 (01:09):
This is going to go on for a while.
Speaker 2 (01:11):
The expectations it could close within eighteen months. A lot
of questions. Carro on the why and also about the
price when you consider the bidding war that was going
on for this name.
Speaker 3 (01:21):
And this is for streaming, this is for studios only.
Earlier today, Ted Sarandas spoke on a conference call and
about this deal. What he had to.
Speaker 5 (01:29):
Say, I know some of your surprise that we're making
this acquisition, and I certainly understand why. Over the years
we have been known to be builders not buyers. We
already have. We already have incredible shows and movies and
a great business model, and it's working for talent, it's
working for consumers, and it's working for shareholders. But this
(01:51):
is a rare opportunity. It's going to help us achieve
our mission to entertain the world and to bring people
together through great stories.
Speaker 3 (01:59):
Puy Magsalue, for sure to lead Bloomberg's coverage and media
and entertainment, joins us Now and Lucas. Those exact words,
builders not buyers, was exactly what Greg Peter's, the other
co CEO, said to you on a stage but a
few months ago, did it take you by surprise.
Speaker 6 (02:15):
By this point, No, it's funny that you asked that.
I've spoken with a few different people at Netflix this morning,
and they all asked me if I was surprised or shocked,
and it's true that they've never done anything like this before.
It represents a huge change for the business. It'll, you know,
if this deal gets true, and I know we may
get there, it'll double in size pretty much as soon
as they add.
Speaker 4 (02:35):
All these folks.
Speaker 6 (02:36):
But Netflix has always been a company where they kind
of never say never. They say they're not going to
do something, and then they end up doing it. And
it's been obvious over the course of the last two months,
really since Greg's appearance at screen time, my confidence this
would happen has increased bit by bit, including as people
from Netflix told me that they were getting more and
more serious about it.
Speaker 2 (02:56):
Lucas, I think there's a lot of reporting to do
here on Bloomberg Tech, especially for the audience members that
are hearing about this deal for the first time. What
is Netflix proposing to do with Warner Brothers Discovery? What
is Warner Brothers Discovery plan to spin out? Because there's
an element that they'll have to divest or start new
companies of some things, And we're reporting that in this
(03:16):
bidding process, Paramount came in with a thirty dollars per
share offer, so it sounds as if Netflix had a
lower offer than Warner Brothers Discovery went.
Speaker 6 (03:26):
With I'll take them in three although I will say
lease that the Warner offer or they epicted me the
paramount offer was not technically higher, but I'll get into it.
So the process is assuming that this all continues as planned,
Warner Brothers Discovery will spin off at Cable Networks the
CNNTNT TBS's of the world sometime third quarter next year.
(03:50):
They will then proceed with closing the sale of the
rest of the business, which is the Warner Brothers Studio
and HBO slash HBO Max Streaming two Netflix. They fact
that transaction will close in the next twelve to eighteen months,
so let's say sometime in twenty seven, and then there
will obviously be you know, regulatory approval and all that,
(04:10):
which could also drag on for some time, depends on
when that enters the equation in terms of the value
and all that. Yes, Paramount offered thirty dollars to share.
Netflix was just shy of twenty eight. But you have
to remember that because Netflix is only buying two thirds
of the company, there is a value that is being
(04:32):
applied to the business that will be spun off that
you add on top of the Netflix bid. So a
lot of whether the Netflix bid was more or less
than paramount depends on the value you assigned to those
cable networks. You know, people who are really skeptical, and
certainly for folks I spoke within the paramount or better,
like those cable networks are worth nothing, maybe a dollar
or share maybe two. You know, Warner Brothers may argue
(04:53):
it's worth four or five dollars a share, in which
case the Netflix offer is actually higher.
Speaker 2 (04:58):
Blue Best Lucas Shaw, who lead all of our coverage
of this industry at Bloomberg, with the key details you
need to know.
Speaker 4 (05:04):
Thank you very much.
Speaker 2 (05:04):
Let's get more on the deal and the potential resulting
media landscape shake up with John Klein Hang Media co
founder John with respect a veteran of the media industry
in this country, former president of CNN, a serial founder
of media companies, modern day media companies. Lucas talked about
(05:25):
what happens next and the expectation I believe you share
this view is that this will go on for many months.
There will be challenges along the way in the antitrust context.
Speaker 7 (05:36):
This is going to be a Sada look that plays
out longer than Game of Thrones did, because you know,
not only do you have shareholder issues, your questions potentially,
but you've already got the creative community in Hollywood rising up.
The Director's Guild wants to sit out in Netflix. The
theater owners are worried that Netflix is going to severely reduce,
(05:59):
you know, move he's released in theaters overall. You know,
it reduces competition for producers and writers radically. And then,
of course, the biggest factor is going to be the
political aspect. Not only does David Ellison's dad, Larry Ellison,
who has funded the Paramount takeover, have a close relationship
(06:23):
with Donald Trump, who I think had been licking his
chops at the idea of combining CNN with CBS News,
which is already trying to veer a little more to
the to the right. But uh, you you have, you
have that in play. But then you've got Gavin Newsom,
who's you know, the the entertainment economy drives so much
(06:48):
job growth, revenue in California alone, and I'm sure he's
going to get involved in this as well. So it's
so so buckle up and stay tune and maybe at
the end of the day. You know what WBD ends
up with is the five billion kill value of this deal.
Speaker 4 (07:07):
We'll have to see.
Speaker 3 (07:07):
I mean, that's an extraordinary, of course, unwine value that
they're offering, saying, if this doesn't get through the regulators,
we will hand you five billion Warner Brothers Discovery more
than But John, I want to go back to how
Netflix is already trying to front run this. They're already
saying these are complementary strengths and assets. They're already saying
there's going to be more choice, greater value for the
consumer because you're going to get bundling and maybe a
cheaper offering. They're saying this is a stronger entertainment industry
(07:31):
because they're actually going to be leaning into theatrical releases.
Speaker 8 (07:34):
Do you buy any of that?
Speaker 4 (07:36):
Oh?
Speaker 7 (07:36):
I buy some of it. We just don't know how
much consumers, how much more consumers are going to have
to pay for this new and improved, bigger, better than ever,
one big, beautiful streaming company. And so we'll have to
see that. But bottom line, there are going to be
fewer buyers for creative product. Also left begging in this though,
(07:59):
and I think it's really worth talking about, especially on
a tech focus show. Netflix's biggest problem is not market
share versus Amazon or Disney Plus or what have you.
The bigger problem is YouTube. YouTube commands far more viewing time,
almost double the viewing time that Netflix does right now.
(08:21):
And Netflix has been busy trying to poach YouTube creators.
But what's really happening in the entertainment industry as a
whole is this flood of creator content. And this deal
does nothing to address that. They could have spent far
less money and bought a creator studio that could very
(08:46):
well have a much larger impact moving forward than gaining
some really great titles. I mean, the IP of Harry
Potter and Friends. That alone is worth a lot of
money too.
Speaker 4 (08:58):
So you'll into batic.
Speaker 2 (09:00):
Here is value, right, This is where Warner Brothers Discovery
is trading. I'm just making a sort of mechanical observation.
The share price is around twenty five dollars a share. Guys,
give me a Warner Brothers Discovery for.
Speaker 4 (09:10):
A sec please.
Speaker 2 (09:11):
The Netflix offer is twenty seven dollars seventy five cents
a share, which Lucas explained, gets you basically two.
Speaker 4 (09:19):
Thirds of the business.
Speaker 2 (09:20):
You seem to be questioning like the value the shares
aren't even trading at a kind of level that reflects
two thirds of the business. I'm trying to do the
math here on whether this is a deal that the
market is saying, yeah, we think this is this is
a fair value of good value.
Speaker 7 (09:38):
I don't think the market has grasped the title wave
that is being unleashed even as we speak, and is
only going to grow thanks to AI, which puts more
tools into the hands of more creators. And so I
think there's going to be a reckoning at some point,
not this week, not maybe this year, over the next
(09:59):
twelve months. But that's what's happening in the entertainment industry.
So this could end up being looked upon as one
of the last great old media deals. And it's ironic
to call Netflix old media, but this and I'm not
saying they're blind to the challenge of YouTube or the
creator opportunity, but it's placing a value on something that
(10:21):
used to have a lot more value than it is
going to.
Speaker 9 (10:23):
Have moving forward.
Speaker 3 (10:24):
John, what's so great about you is because you're building
hang which is all about gen Z interacting with brands.
Because you built an AI business that you sold to Apple,
you are in the new media, but you also did
help rem CBS and CNN. What does it mean for
TNT for CNN, what does even that part of the
business have value? Do you think it has two dollars
value or in excess of Was it a miss? Therefore?
For Paramount Skuydears.
Speaker 7 (10:46):
I would be shocked if David's Aslav is not working
the phones this morning, drumming up buyers for that entity
that he's going to spin off. He's been masterful at
discerning what parts of his his empire are valuable to whom.
And there is still value in those linear networks. Let's
say to a versant which just spun off. It's linear.
(11:08):
It is about to be officially spun off from NBC,
Sinclair and next Star. The massive and growing local broadcasters
might be interested in becoming both. Right, So there are
potential buyers out there, and David Zasav may have just figured, look,
I actually the sum of the parts is actually greater
(11:32):
than the whole if I do this.
Speaker 3 (11:33):
Right, John Klein, Hang Media, it's great to catch up
with you again. Really, appreciate it. Now coming up as
the EU, it finds Elon Musk's social media platform X,
and President Trump warns that European civilization could be wiped away.
We sit down with the EU ambassador to the United States.
You don't want to miss it. This will be my tech.
(12:05):
Elon Musk's X social network has been finned one hundred
and twenty million euros. That's one hundred and forty million
dollars equivalent for violating an EU content moderation law. That
rule is already on a point of contention between the
Bloc and the White House when it comes to tech regulation,
joining us to discuss a Blueberg tech editor in London
and of your solon what exactly was their issue in
(12:27):
the EU which law did it go against?
Speaker 10 (12:31):
So the law is something called the Digital Services Act,
which is a kind of new rule book for digital
platforms across Europe. And the main thing that the Commission
took issue with that they find Elon Musk's X for
today was three things. There was the blue tick and
the fact that it was changed to a paid feature
(12:51):
where it used to be a sort of sign that
someone was a kind of authority on something. Then they'd
also like stonewalled giving researchers acts to data, and they
didn't set up an advertising repository that provided transparency to
researchers either. So the find today was kind of generally
smaller than people had expected. But there are still some
(13:14):
other issues that the Commission's investigating, some more kind of
serious issues around how it polices illegal content, election disinformation
and its community notes system for content moderation.
Speaker 2 (13:27):
Bloomberg's Olivia Solo and our tech editor in Europe, thank
you very much. Earlier today, the US Ambassador to the EU,
Andrew Puzzler, accused the block of unfairly targeting the biggest
American technology companies. His comments on Bloomberg Television came just
moments before the penalty on X was announced.
Speaker 8 (13:45):
The only substantial, meaningful fines that have been imposed so
far have been against American companies. So at some point,
if you're an American company, you've got to sit back
and say, look, am I being targeted here? Or is
this an effort to try and advantage europe competitors over
US companies? And if that's the case, it's something that
the United States needs to respond to. And I believe
(14:06):
the Vice President has been very active in that respect.
Speaker 2 (14:10):
We joined now by Yo Vita now Yoshenna, the EU
Ambassador to the US here with US in San Francisco,
and Ambassador to start, i'd welcome your response to your counterpart,
the US Ambassador to the EU.
Speaker 11 (14:22):
Good morning. I think that what we have discussing right
now it's non compliance case and it was very well summarized.
There is the question about the they're advertising, the accessor
to the data of that, the access to the to
the data for the researchers, and the deceptive mark of
verified content. So I think that this is really very clear.
Speaker 12 (14:48):
Now.
Speaker 11 (14:48):
The X has a certain amount of dates dates to
prepare the plan of implementation, and we will take it from.
Speaker 2 (14:56):
There broadly, Ambassador, US officials include the President just believe
that EU rules are too onerous on American technology companies.
One of the reasons you're here is to attend an
event about the USU investment Bridge. Secretary Lutnik has said,
if we're going to do some deals on certain tariffs
and sectors, then something needs to happen and change with
(15:19):
the digital rules that the EU has.
Speaker 11 (15:22):
Look I think that EU has a right every time
you have a business in Europe or the business in
any other jurisdiction.
Speaker 7 (15:29):
You apply the.
Speaker 11 (15:29):
Rules which you were supposed to act. I think that
this is our sovereign, sovereign writer to regulate. This is
one element. Another element, some of the search engines, in
digital search engines which are functioning in Europe, some of
the platforms have more users than US has citizens in Europe.
(15:54):
Some of the digital companies, American digital companies have thirty
to fifty percent of their turnover actually generated in Europe.
So probably we're doing something good in Europe to make
sure that American companies would feel welcome and actually see
the benefit of being there. And I think that in
(16:16):
general beat trade, the technological corporation beat corporation on economic
security or both sides investments. I think that on the
both sides of Atlantic this is the thing that should
be actually mutual beneficial. It should be beneficial for both
US and EU.
Speaker 3 (16:36):
Thus far, certaining an administration doesn't feel that, Ambassador, we're having
a post from Marco Rubio talking about how this isn't
just an attack on X it's an attack on American
tech platforms and on American people. As you sit down
and meet across the board. You're going into an AI
impact pre summit, for example, what are the sorts of
narratives you can come back with to say this isn't
this is the right due diligence. And indeed, we embrace
(16:59):
American tech companies.
Speaker 11 (17:00):
In Europe wells. As I mentioned, we have multiple American companies,
We have multiple companies from other parts of Europe. We
have a European companies active in our four hundred and
fifty million of market. Everybody has a full access to that,
(17:21):
to that and our regulation is never Our regulations are
never targeting one country or one specific company. It's really
geographically neutral.
Speaker 3 (17:34):
What's interesting is you're here, not just in San Francisco
and visiting. You're then flying to LA to an event
in Simi Valley that we're going to both be at
the Reagan Defense Forum. And what's interesting at the moment
is there's a view in particular white paper you the
EU have put forward really unveiling the commitment of the
European Commission to spending on defense. What has the reaction
(17:54):
been from the United States thus far? Have we seen
the US think that enough is being done? And can
you get access to the right US defense tack well.
Speaker 11 (18:02):
I think this is what actually was asked from US,
and we were encouraged as the European countries to invest
as much as possible to our security and defense. And
this is what we're doing. NATO member states will, NATO
allies will spend five percent of their GDP. European Union
is actually spending extra on top of that to make
(18:25):
sure that we incentivize our defense industry back back home.
All in all, it will be more than nine hundred
billions in three to five years. I think that's a
huge amount, and we are not really spending that to spend.
We want to build our capabilities, which we have to
(18:45):
step up. We don't have them them now or not enough,
and we are not planning to do that alone. The
corporation is extremely important. That's why we're here. We have
an investment bridge event today with our European Investment Bank
and you know, looking for the core investment projects, not
only you know, uh, some of the projects which would
(19:08):
be beneficial only for US. I think that this is
the this is the idea.
Speaker 2 (19:12):
Ambassador back in Brussels, the German Chancellor is trying to
secure a deal for immobilized Russian assets to help Ukraine.
What is your sense of where a deal is, if
it can be done, and what America's attitude is towards
it when you speak to your counterparts.
Speaker 11 (19:31):
So Commission European Commission presented legal pathways how the immobilized
assets can be turned into the reparation loan and the
loan for Ukraine with the long term commitment to support Ukraine.
Because we need to make sure to ensure our own security,
which includes as well a Ukrainian security. This is one
(19:54):
element and we believe that the country which actually wages
the war have to face the consequence.
Speaker 4 (20:01):
But America's supportive of this effort.
Speaker 11 (20:03):
What is your sense, Well, this money actually is in
a European account, it's in Euroclear, So I think that's
the decision for the European countries.
Speaker 3 (20:12):
It's been wonderful having time with you. A decisive answer.
Their EU ambassador to the US, Yovita. You know, Chiena,
We thank you time now for talking tech First up,
one of China's leading AI chip makers, More Threads, jumped
four and twenty five percent in its Shanghai trading debut.
(20:34):
The startup drew strong investor interest in its IPO with
a retail portion over subscribed by two seven and fifty times.
Now more Threads joins camera con Huawei racing to fill
a market void after in video was a cause forced
to exit China. Plus soft Bank Well, it's said to
be in talks to you acquired Digital Bridge AP firm with
heavy investments in assets like data centers. According to sources now,
(20:56):
the potential deal builds on soft Bank's efforts to take
advantage of AI driven boom in digital infrastructure. Transaction could
come together in a matter of weeks and Black rocks
I shares. Bitcoin Trust recorded it's longest streaker weekly withdrawals
since it's debut back in January twenty twenty four. Look
Invests yanked more than two point seven billion dollars in
the ETF over the five weeks to November the twenty eighth.
(21:17):
The ETF is now on pace for six straight week
of net outflows.
Speaker 2 (21:21):
Ed our top story Netflix buying a big chunk a
Warner Brothers Discovery. This is what shares look like right now.
This is a seventy two billion dollar cash and stock
deal where Warner Brothers Discovery shareholders get twenty seven dollars
and seventy five cents per share. I say a chunk
because Warner Brothers Discovery will spin off cable networks think CNN,
(21:42):
think TNT into a separate company before the transaction closes
and goes through. But it means that Netflix, this kind
of modern day streaming giant, is getting one of the
oldest studios and developers of content in Hollywood. There is
a lot of consideration around this deal. All I'll say,
carrow is that the parties have done some interesting things
(22:06):
here as part of the bidding world. Meanwhile, in Washington,
the proposed deal already facing some backlash. Democratic Senator Elizabeth
Warren issuing a statement calling for the DOJ to enforce
anti monopoly laws, saying the Netflix Warner proposal is quote
a nightmare. Let's bring in Blueberg's Michael Shepherd from Washington DC.
(22:27):
There's the congressional review, and the Democrats will have some
view on this, of course, but then it's probably more
important to say, what is the White House view of this?
Speaker 4 (22:36):
What a policymaker's view on this?
Speaker 13 (22:39):
Well, the policymakers are really being egged on by Congress,
and not just by Elizabeth Warren. We're seeing Republicans including
California's Darryl I also get into the act and he
is flagging his concerns on the consumer side. And really
it would fall to the Justice Department to conduct this review.
Our expectation is that the Agencies Antitrust Division will give
(23:02):
this transaction the wirebrush treatment. It will not go through
the review process very easily. The biggest concern ed really
is around the streaming question. Of course, Warner Brothers has
its storied movie studios and deep library of film and
other productions, but it also owns HBO Max, which is
(23:23):
the fourth largest streaming service in the world to Netflix's
number one. So when you combine those that would give Netflix,
following this deal, thirty percent control over the global streaming
market four hundred and fifty million users worldwide, and that
would attract a lot of attention from regulatory authorities, not
only here in Washington, but in the European Union as well.
(23:47):
One of the things that our analyst here at Bloomberg,
Jennifer Ray, said is that perhaps Netflix, to make this
deal more palatable, could let go of HBO Max. But
Netflix has already tried to inoculate against that, saying that
lookenty five percent of our users also subscribe to HBO Max,
so there may not be that sort of conflict When
(24:08):
it comes to competition, as some are raising, they say.
Speaker 3 (24:10):
Yeah, and maybe they can bundle it and make it
cheaper as part of the argument for the consumer.
Speaker 10 (24:14):
We could go so many.
Speaker 3 (24:15):
Directions, Mike, and we can look to California and the
impact on the industry and on jobs, and I'm sure
that's something Gavin Newson's looking at. But where you sit,
many are wondering about the counter argument likely to come
from Paramount's guidance, and of course the close ties with
David Ellison, his wather Larry Ellison, and the administration. What
are you reading there?
Speaker 13 (24:34):
Well, Karen, I'm glad you asked about this, because the
politics these days are inescapable, and especially when it comes
to this transaction, because in choosing Netflix as its partner
here in this deal, Warner Brothers is jilting David Ellison,
and that really does prompt perhaps a whole new level
of scrutiny and a perhaps full court press with the
(24:57):
Trump administration, with whom he is close, and also with
perhaps the President himself. So there will be a lot
of jockeying behind the scenes, perhaps even more so than
usual when it comes to a deal of this nature.
And one of the things we'll have to be watching
is to what degree the Netflix side is also trying
to curry favor in effect with the Trump side. Over
(25:21):
the years, Netflix founder Reid Hastings has donated heavily to
democratic causes. He contributed seven million dollars to Kamala Harris
twenty million dollars to Democrats over the years. But we
also want to see how Ted Surrenders, the CEO of Netflix,
is trying to do his part. And we know that
in December he did have dinner with Donald Trump at
(25:43):
mar A Lago. The men sat for several hours and talked.
In March, Surrenders described the conversation as a good conversation.
But we will need to see where that leads. We've
seen how Jensen Wongam Nvidia has parlayed that kind of
a close relationship with Donald Trump into actions by the
government that work a little bit more in his company's favors.
(26:04):
So that sort of interpersonal of diplomacy with the administration
will be key here.
Speaker 3 (26:10):
Yeah, co CEOs, I'm sure trying to work the phones,
and I'm sure many will be trying to remind everyone
that YouTube's a pretty key player and all of this
as well when it comes to the regulatory impact and competition.
Bluembags Mike Shephard, thanks so much for joining us. Let's
pivot a little bit a secular. What's happening in crypto?
Suddenly seen about selling We're off by three point seven
percent on bitcoin eighty eighty seven hundred and sixty as
(26:30):
we moved towards the end of the weekend. Maybe some
institutional money just putting things on pause. The digital asset, though,
look how it's performed this year for the first time,
it's actually sort diverged from the S and P five
hundred since twenty fourteen. He's aren't moving in lockstep. Let's
get more on this with Ayakontarovitch's August co CEO co
founder joining us. Now you have so much experience when
(26:51):
it comes to fulcon x, where you're previously a were
your secure software company, August and look bitcoins decoupling from stocks.
What's it telling you?
Speaker 14 (26:59):
Look, I think without a doubt, the last three weeks
have been painful. You know, we've seen one and a
half x times higher volatility in the last three weeks
than we've seen in twenty twenty five total, and a
lot of that has to do with the number of things. One,
there's implications you know, outside of just macro, which is
you know, more global and geopolitical, and we're seeing a
(27:20):
lot of bit of that. We're also seeing, you know,
some decoupling into the weekend, where we are seeing sell
offs into the weekend and then buybacks back into Monday,
as you referenced earlier, and then last we're seeing rotations
back into you know, macro and so for example, sometimes
people have to sell off their risk assets in order
to reposition into those macro assets, and I think that's
(27:41):
what we're seeing a little bit here as well.
Speaker 2 (27:44):
The data set that keeps flashing up on the Bloomberg
terminal Caroline did it in the news story about earlier,
is the ETF flows outflows. At the moment, I'm just
trying to use that data set to understand the psychology
of everyone that participates in this industry. What is the
interpretation we should make.
Speaker 14 (28:05):
Yeah, So, look, I think more broadly, bitcoin operates in
four year cycles, and we're seeing that twenty twenty five.
It's actually more similar to a twenty twenty one or
twenty two in comparison to A twenty twenty, twenty three
and twenty four. And what's tough is you know, in
those years we really saw strong December especially, and you know,
you have the post having liquidity surge, you had recovery
(28:28):
from FTX and ETF optimism, and then in twenty four
you saw the ETF you know, inflows coming in in size,
and so you know, we're actually we've seen this cycle before.
We've also seen historically this year a lot of very
long term holders take some profits off the table, and
we have seen some patients and so I think you're
(28:48):
seeing some of that profit taking into year end. We're
going to continue to see that. But it really does
make Q one look very attractive as we do close
out on that four year cycle, and we have a
lot of the headway that will take us there. Whether
it's the Vanguard News, whether it's the Bank of American News.
We are looking to see new entrants come into the
market via the ETS.
Speaker 3 (29:08):
Talking of long term holders selling, there was suddenly a
shock to the system when it was thought that maybe
Michael Saylor's strategy just formerly known as MicroStrategy, might actually
offload bitcoin, the hoddler of all hoddlers sort of saying
the most extraordinary thing to many who've been in this
market for a long time, what did you make of that?
And their desire to try and stabilize after that moment.
Speaker 14 (29:32):
Look, I think at the end of the day, he
is probably feeling some of the pressure that some of
these other institutional players are feeling, which is diversification and
having to manage some of that downside risk and if
you do have leverage, having to manage your Martin calls,
and so at the end of the day, you know,
was that a great headline for the space? No, of
course not. But these do These things operate in cycles,
(29:55):
and we are at the end of that cycle. That
also was announced before the Vanguard news and before the
Bank of American news, and so you know, I think
there are again headwinds into Q one, But I agree
with you. I think, you know, looking at where we
are and then the next three weeks into year end,
it's probably not going to be as optimistic, but means
that twenty twenty six can start that news cycle over again.
Speaker 2 (30:19):
I I'm probably going to take most of the rest
of the year off just share that with the audience,
and so it might be my last chance to ask
you for your twenty twenty six predictions. This year has
kind of been about stable coin legislation, David.
Speaker 4 (30:31):
Sachs, dolarization.
Speaker 2 (30:33):
If you were to listen to Jamie Diamond, he will
always bring it back to the underlying technology and the
utility of blockchain in global financial markets. What do you
think will happen next in twenty twenty six?
Speaker 14 (30:45):
Look, I think what people haven't realized yet is tokenization
of everything is happening, and it started with stable coins,
as you mentioned, but it's going much broader than that.
So if you look at even equities trading on chain,
you saw the Max seven come to Hyperliquid. That was
you know, fallow in videos earnings, one of the largest
stays of volume for hyper Liquid in November, and so
(31:05):
you're seeing a lot of that come on chain, and
you're also seeing a lot of traditional assets get tokenized.
And so you know, we're seeing on our side a
lot of tokenization of assets, strategies, vehicles, and then the
liquid markets to make them composable and more capital fision.
Speaker 3 (31:21):
It's always great to catch up with you. I'll still
be here for the rest of the year, so hopefully
I'll see you then I can tell of it. August co, CEO,
co founder, thank you.
Speaker 12 (31:29):
Coming up.
Speaker 3 (31:30):
HPE CEO Antonio Naire joins us to discuss the company's
earnings and well delay perhaps in some of those AI
servi deals with governments that's next. This is a blumbed tech.
Speaker 2 (31:54):
Shares of HPE, now basically flat, had been lower after
the company announced third quarter earning, noting that some deals
for AI servers have been pushed into twenty twenty six.
Delighted to discuss hbe's earnings with the companies and president
and CEO Antonio and Ery Antonio. We're actually getting a
really good insight through HPE into what's happening in real
(32:17):
terms in the real world of data center build out.
We had it with core Weave just a few weeks ago.
A part of this, right is a delay on a
specific data center project and you can't book revenue until
that project goes ahead.
Speaker 4 (32:31):
Is this a one off? And if you.
Speaker 2 (32:34):
Could just explain to the bloombo tech audience, what is
in your power to control and what is still happening
out there in the supply chain for data center build out.
Speaker 4 (32:43):
That's holding things up.
Speaker 12 (32:44):
Look than Q four, we posted a record profitableok quorder
where we saw revenue growing fourteen percent and profit growing
faster at twenty six percent, and that allows us to
exceed both EPs and free cash flow guidance. So CAP
in a very strong gear. But on THEI front, we
continue to see strong demand. We booked another two billion
(33:04):
dollars in orders. More than sixty percent of our orders
are in sovereign and enterprise. And as you state, you know,
there were a couple of deals that slip into twenty
twenty six. One of them was for data center readiness
you know was slightly delaid, and two where because of
the US government shut down, we couldn't deliver the system
(33:26):
and get it accepted. But in general sovereign no longer right,
longer cell cycle, longer acceptance cycles. But we are intentional
on that because you know, we focus on profitable growth
in AI. And now we have a backlog which is
over four point seven billion dollars, So ultimately it can
be data center, it can be also customers speaking different
(33:46):
technologies like Veri and Rubin and maybe waiting for AMD.
But the reality is that there is more back end loaded.
That's why we got it a year the way we
did it, but ultimately a free minutes seventeen percent to
twenty two percent revenue growth guidance in addition to raise
the EPs and free cash flow guidance.
Speaker 3 (34:04):
That data center lumpiness and indeed the hold up that
you saw, what is it? Is it supply chain issues?
Is it cooling? Is there something that tends to be
the hold back?
Speaker 12 (34:16):
It's a combination of many things, Caroline. You know, I
think sometimes you know, just a real estate takes time.
Bringing the power and cooling takes time. In some cases,
you know, the equipment right slightly delay because you're talking
about turbines for you know, power generations. Some cases, you know,
it can be low level components. But look, these are
(34:39):
very large buildouts we're talking about, you know, tens of megawhites,
sometimes hundreds of megawats, and now we're going in through gigawads,
and so we just need to recognize that it takes
time to build these large build data centers and ultimately
we will be ready to deploy it as soon as
these data centers are ready to accept the systems. But
(35:00):
also the working capital takes also longer to get through so.
Speaker 2 (35:05):
You just reference Vera Rubin and I'm trying to understand
what you meant there. You know, in Nvidia has this.
We've discussed it, Antonio several times, this commitment to annual
update to the technology.
Speaker 4 (35:18):
And are you saying that.
Speaker 2 (35:19):
There are customers out there that just want to wait
for the latest gen before they commit at scale to
a big project.
Speaker 12 (35:29):
Well, or there are customers already in the current generations,
there are generations before that feel now I need to
get another bumping performance so that can lower my cost
per talking training as I go forward. So it can
be a combination of both. And depending on where they
are in the buildout of the data center, it makes
sense for them to go to the next generation. But
(35:50):
also we see an interest, you know, in getting the
choice and the flexibility to build these data centers the
right way. And that's why you know, we at HPN
now with the additional Juniper, we are becoming a networking
center company. And this past week just in Barcelona, I
came back yesterday we announced a number of amazing technologies
(36:10):
that allows customers to adopt, whether it's Nvidia or whether
it is A and D, and we announced the first
gal Up here you switch that allows them to adopt
the technology, So it can be a combination of things
depending on where they are in that build out cycle.
Speaker 3 (36:27):
A Bluemag intelligence analyst re Jenho always loving diversification of
the business and the leaning into the networking Antonio, But
just going back to with the data centers and the margins,
that's always been the question. Like AI servers, the cost
is memory. You seem pretty confident. Why are you confident
just having the handle on the shortage that we've got
in memory?
Speaker 12 (36:46):
Yeah, absolutely, cal Well, look, I'm very pleased that would
return the entire server segment, inclusive of AI to approximate
ten percent operating profit in Q four, which was our
commitment since Q one. And regarding costal commodities, it's first too,
we need to recognize that the cost of commodity will
(37:06):
be driven by the shortages we are going to experience
in the latter part of twenty six, start in the
second half, particularly in Deram and obviously as well Nand
and we already enacted price increases in the month of November,
and we already factor what we think is going to happen.
At least the best line sight we have in our guidance,
(37:29):
and that's why not only we we affirmed the revenue guidance,
but we also raise our non gap PPS guidance considering
what we see going forward.
Speaker 2 (37:40):
An Tony, I'm really interested in the differences in the
demand profile of say Vera Rubin and against Helios. You
know helos the pitches, its scalability, but are you're getting
more interest there at the edge in terms of use cases?
Just try and explain the real world differences of what
you're seeing among your customers.
Speaker 12 (38:00):
Yeah, I think you know. Enterprises are accelerated and adoption.
I give you my own example here at HP we
already have one hundred plus use cases in production using
AI across a number of functions and business units. And
obviously we use AI for our own products, which is
one poor differentiator for us in the market. But in
(38:23):
terms of where the work is being done, is done everywhere.
But we see now the growing and inferencing, which tells
you that AI is being deployed. And there are a
lot of use cases, whether it's manufacturing, transportation, healthcare where
the inferencing is cheaper, at the edge where things take
place where the data is generated and then obviously it's
(38:43):
the training aspect, which can be a combination of locations.
And in Europe, for example, these concept of sovereign AI
clouds is super important because they want to preserve the
sovereignty from a model perspective and the data so is
a hybrid design by design, and that's why I always
say AI is the through the Phoenician or warload.
Speaker 3 (39:06):
We love deep diving with you, Antonio and Narry. Thanks
for joining, President and CEO of HPE.
Speaker 2 (39:17):
Back to our top story, Netflix buying some Warner Brothers Discovery.
Netflix lining up fifty nine billion dollars of financing from
Wall Street Banks to help support its planned seventy two
billion dollar cash and stock acquisition of Warner Brothers Discovery.
Bloomberg Intelligence medi around this, Keith Orang and Nathan joins
us with the in house take, what is.
Speaker 4 (39:36):
The bi view?
Speaker 2 (39:37):
How good do you feel about the financing of it?
And I know you have some thoughts about what could
happen next?
Speaker 9 (39:44):
Yees, So from a financing standpoint, you're obviously Netflix right
now has about zero point four times of a net
leverage ratio, which is way below you know, media years
like Disney or a Comcast for instance, but again, this
is a company that has an absolutely robust batt than sheet,
And as my credit colleague Steve Flynn constantly says, I mean,
this is a company that throws out billions and billions
(40:07):
in free cash flow, So absolutely no problem. Yes, their
leverage will go up to about three times, but that
shouldn't be a problem. We do kind of anticipate them
deleveraging pretty quickly, just given that they're going to be
generating something like about nine billion of free cash flow
this year and something like maybe you are thirteen to
sixteen dollars thirteen to sixteen billion dollars in you know,
(40:29):
twenty twenty six, twenty twenty seven, So financing really doesn't
look like much of a problem at all.
Speaker 3 (40:35):
Ed, what therefore is the problem either, if there is one,
is it regulators? Is it paramounts, guide ounce fighting back?
Speaker 9 (40:44):
What do you think all of the above?
Speaker 11 (40:46):
Regulators?
Speaker 9 (40:47):
Definitely So just you know, from first lance, you have
the number one streaming service in the world combining with
the number three streaming service, which is HBO Max, and
that just gives them an unmatched scale. You know, we're
looking at four hundred and fifteen million global streamers Obviously
that is going to raise a lot of regulatory concern,
but I think Netflix can fight back by saying, you know,
(41:07):
it really depends on how you define the market. Is
it just are we just looking at Netflix Disney plus
Amazon Prime, or should we be looking at Netflix versus YouTube,
versus reels, versus TikTok, you know, versus Facebook? So how
do you define the market? And if you look at
it from a much broader perspective, then the Netflix and
HBO Max combination, I mean, it's less than ten percent
(41:27):
of total US viewing time, so maybe it shouldn't really,
you know, generate too much of regulatory backlash. So again,
it all comes down to how the anti trust authorities
are going to view this transaction.
Speaker 14 (41:39):
I have a.
Speaker 3 (41:39):
Feelings go play out over many months, even years. Keitha Rangnathan,
we thank you so much for boommeg Intelligence with the
immediate reaction to a pretty blockbuster deal ed. That does
it for this edition in Bloomberg Tech. What a way
to finish the week.
Speaker 2 (41:52):
Don't worry, We're going to be talking about this for
months and years, and that's something to look forward to.
But there was a lot of serious report in detail
to recap on that deal.
Speaker 4 (42:01):
Check out the podcast.
Speaker 2 (42:02):
Best place to find it You know where to find
it on the Bloomberg terminal and online on Apple, Spotify,
and I Heart from New York and San Francisco.
Speaker 4 (42:10):
Have a great weekend. This is bloombog Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Va Loow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up a historic media shakeup
as Netflix agrees to buy Warner Brothers Discovery. Details on
the seventy two billion dollar cash and stock deal throughout
the hour.
Speaker 3 (00:33):
Plus continued clash between the US and EU on free
speech as the European Union finds Elon Musk's X platform
one hundred and forty million dollars.
Speaker 2 (00:42):
An HPES outlook disappoints on slower AI server deals.
Speaker 4 (00:46):
We speak to the CEO. Let's get right to it.
Speaker 2 (00:50):
Netflix buying Warner Brothers Discovery.
Speaker 4 (00:53):
The value of the.
Speaker 2 (00:54):
Deal seventy two billion dollars. Warner Brothers Discovery shareholders set
to receive twenty seven dollars seventy five per cents per
share in cash and stock. The value of the deal
or value of Warner Brothers almost eighty three billion dollars
when you take into account debt.
Speaker 4 (01:09):
This is going to go on for a while.
Speaker 2 (01:11):
The expectations it could close within eighteen months. A lot
of questions. Carro on the why and also about the
price when you consider the bidding war that was going
on for this name.
Speaker 3 (01:21):
And this is for streaming, this is for studios only.
Earlier today, Ted Sarandas spoke on a conference call and
about this deal. What he had to.
Speaker 5 (01:29):
Say, I know some of your surprise that we're making
this acquisition, and I certainly understand why. Over the years
we have been known to be builders not buyers. We
already have. We already have incredible shows and movies and
a great business model, and it's working for talent, it's
working for consumers, and it's working for shareholders. But this
(01:51):
is a rare opportunity. It's going to help us achieve
our mission to entertain the world and to bring people
together through great stories.
Speaker 3 (01:59):
Puy Magsalue, for sure to lead Bloomberg's coverage and media
and entertainment, joins us Now and Lucas. Those exact words,
builders not buyers, was exactly what Greg Peter's, the other
co CEO, said to you on a stage but a
few months ago, did it take you by surprise.
Speaker 6 (02:15):
By this point, No, it's funny that you asked that.
I've spoken with a few different people at Netflix this morning,
and they all asked me if I was surprised or shocked,
and it's true that they've never done anything like this before.
It represents a huge change for the business. It'll, you know,
if this deal gets true, and I know we may
get there, it'll double in size pretty much as soon
as they add.
Speaker 4 (02:35):
All these folks.
Speaker 6 (02:36):
But Netflix has always been a company where they kind
of never say never. They say they're not going to
do something, and then they end up doing it. And
it's been obvious over the course of the last two months,
really since Greg's appearance at screen time, my confidence this
would happen has increased bit by bit, including as people
from Netflix told me that they were getting more and
more serious about it.
Speaker 2 (02:56):
Lucas, I think there's a lot of reporting to do
here on Bloomberg Tech, especially for the audience members that
are hearing about this deal for the first time. What
is Netflix proposing to do with Warner Brothers Discovery? What
is Warner Brothers Discovery plan to spin out? Because there's
an element that they'll have to divest or start new
companies of some things, And we're reporting that in this
(03:16):
bidding process, Paramount came in with a thirty dollars per
share offer, so it sounds as if Netflix had a
lower offer than Warner Brothers Discovery went.
Speaker 6 (03:26):
With I'll take them in three although I will say
lease that the Warner offer or they epicted me the
paramount offer was not technically higher, but I'll get into it.
So the process is assuming that this all continues as planned,
Warner Brothers Discovery will spin off at Cable Networks the
CNNTNT TBS's of the world sometime third quarter next year.
(03:50):
They will then proceed with closing the sale of the
rest of the business, which is the Warner Brothers Studio
and HBO slash HBO Max Streaming two Netflix. They fact
that transaction will close in the next twelve to eighteen months,
so let's say sometime in twenty seven, and then there
will obviously be you know, regulatory approval and all that,
(04:10):
which could also drag on for some time, depends on
when that enters the equation in terms of the value
and all that. Yes, Paramount offered thirty dollars to share.
Netflix was just shy of twenty eight. But you have
to remember that because Netflix is only buying two thirds
of the company, there is a value that is being
(04:32):
applied to the business that will be spun off that
you add on top of the Netflix bid. So a
lot of whether the Netflix bid was more or less
than paramount depends on the value you assigned to those
cable networks. You know, people who are really skeptical, and
certainly for folks I spoke within the paramount or better,
like those cable networks are worth nothing, maybe a dollar
or share maybe two. You know, Warner Brothers may argue
(04:53):
it's worth four or five dollars a share, in which
case the Netflix offer is actually higher.
Speaker 2 (04:58):
Blue Best Lucas Shaw, who lead all of our coverage
of this industry at Bloomberg, with the key details you
need to know.
Speaker 4 (05:04):
Thank you very much.
Speaker 2 (05:04):
Let's get more on the deal and the potential resulting
media landscape shake up with John Klein Hang Media co
founder John with respect a veteran of the media industry
in this country, former president of CNN, a serial founder
of media companies, modern day media companies. Lucas talked about
(05:25):
what happens next and the expectation I believe you share
this view is that this will go on for many months.
There will be challenges along the way in the antitrust context.
Speaker 7 (05:36):
This is going to be a Sada look that plays
out longer than Game of Thrones did, because you know,
not only do you have shareholder issues, your questions potentially,
but you've already got the creative community in Hollywood rising up.
The Director's Guild wants to sit out in Netflix. The
theater owners are worried that Netflix is going to severely reduce,
(05:59):
you know, move he's released in theaters overall. You know,
it reduces competition for producers and writers radically. And then,
of course, the biggest factor is going to be the
political aspect. Not only does David Ellison's dad, Larry Ellison,
who has funded the Paramount takeover, have a close relationship
(06:23):
with Donald Trump, who I think had been licking his
chops at the idea of combining CNN with CBS News,
which is already trying to veer a little more to
the to the right. But uh, you you have, you
have that in play. But then you've got Gavin Newsom,
who's you know, the the entertainment economy drives so much
(06:48):
job growth, revenue in California alone, and I'm sure he's
going to get involved in this as well. So it's
so so buckle up and stay tune and maybe at
the end of the day. You know what WBD ends
up with is the five billion kill value of this deal.
Speaker 4 (07:07):
We'll have to see.
Speaker 3 (07:07):
I mean, that's an extraordinary, of course, unwine value that
they're offering, saying, if this doesn't get through the regulators,
we will hand you five billion Warner Brothers Discovery more
than But John, I want to go back to how
Netflix is already trying to front run this. They're already
saying these are complementary strengths and assets. They're already saying
there's going to be more choice, greater value for the
consumer because you're going to get bundling and maybe a
cheaper offering. They're saying this is a stronger entertainment industry
(07:31):
because they're actually going to be leaning into theatrical releases.
Speaker 8 (07:34):
Do you buy any of that?
Speaker 4 (07:36):
Oh?
Speaker 7 (07:36):
I buy some of it. We just don't know how
much consumers, how much more consumers are going to have
to pay for this new and improved, bigger, better than ever,
one big, beautiful streaming company. And so we'll have to
see that. But bottom line, there are going to be
fewer buyers for creative product. Also left begging in this though,
(07:59):
and I think it's really worth talking about, especially on
a tech focus show. Netflix's biggest problem is not market
share versus Amazon or Disney Plus or what have you.
The bigger problem is YouTube. YouTube commands far more viewing time,
almost double the viewing time that Netflix does right now.
(08:21):
And Netflix has been busy trying to poach YouTube creators.
But what's really happening in the entertainment industry as a
whole is this flood of creator content. And this deal
does nothing to address that. They could have spent far
less money and bought a creator studio that could very
(08:46):
well have a much larger impact moving forward than gaining
some really great titles. I mean, the IP of Harry
Potter and Friends. That alone is worth a lot of
money too.
Speaker 4 (08:58):
So you'll into batic.
Speaker 2 (09:00):
Here is value, right, This is where Warner Brothers Discovery
is trading. I'm just making a sort of mechanical observation.
The share price is around twenty five dollars a share. Guys,
give me a Warner Brothers Discovery for.
Speaker 4 (09:10):
A sec please.
Speaker 2 (09:11):
The Netflix offer is twenty seven dollars seventy five cents
a share, which Lucas explained, gets you basically two.
Speaker 4 (09:19):
Thirds of the business.
Speaker 2 (09:20):
You seem to be questioning like the value the shares
aren't even trading at a kind of level that reflects
two thirds of the business. I'm trying to do the
math here on whether this is a deal that the
market is saying, yeah, we think this is this is
a fair value of good value.
Speaker 7 (09:38):
I don't think the market has grasped the title wave
that is being unleashed even as we speak, and is
only going to grow thanks to AI, which puts more
tools into the hands of more creators. And so I
think there's going to be a reckoning at some point,
not this week, not maybe this year, over the next
(09:59):
twelve months. But that's what's happening in the entertainment industry.
So this could end up being looked upon as one
of the last great old media deals. And it's ironic
to call Netflix old media, but this and I'm not
saying they're blind to the challenge of YouTube or the
creator opportunity, but it's placing a value on something that
(10:21):
used to have a lot more value than it is
going to.
Speaker 9 (10:23):
Have moving forward.
Speaker 3 (10:24):
John, what's so great about you is because you're building
hang which is all about gen Z interacting with brands.
Because you built an AI business that you sold to Apple,
you are in the new media, but you also did
help rem CBS and CNN. What does it mean for
TNT for CNN, what does even that part of the
business have value? Do you think it has two dollars
value or in excess of Was it a miss? Therefore?
For Paramount Skuydears.
Speaker 7 (10:46):
I would be shocked if David's Aslav is not working
the phones this morning, drumming up buyers for that entity
that he's going to spin off. He's been masterful at
discerning what parts of his his empire are valuable to whom.
And there is still value in those linear networks. Let's
say to a versant which just spun off. It's linear.
(11:08):
It is about to be officially spun off from NBC,
Sinclair and next Star. The massive and growing local broadcasters
might be interested in becoming both. Right, So there are
potential buyers out there, and David Zasav may have just figured, look,
I actually the sum of the parts is actually greater
(11:32):
than the whole if I do this.
Speaker 3 (11:33):
Right, John Klein, Hang Media, it's great to catch up
with you again. Really, appreciate it. Now coming up as
the EU, it finds Elon Musk's social media platform X,
and President Trump warns that European civilization could be wiped away.
We sit down with the EU ambassador to the United States.
You don't want to miss it. This will be my tech.
(12:05):
Elon Musk's X social network has been finned one hundred
and twenty million euros. That's one hundred and forty million
dollars equivalent for violating an EU content moderation law. That
rule is already on a point of contention between the
Bloc and the White House when it comes to tech regulation,
joining us to discuss a Blueberg tech editor in London
and of your solon what exactly was their issue in
(12:27):
the EU which law did it go against?
Speaker 10 (12:31):
So the law is something called the Digital Services Act,
which is a kind of new rule book for digital
platforms across Europe. And the main thing that the Commission
took issue with that they find Elon Musk's X for
today was three things. There was the blue tick and
the fact that it was changed to a paid feature
(12:51):
where it used to be a sort of sign that
someone was a kind of authority on something. Then they'd
also like stonewalled giving researchers acts to data, and they
didn't set up an advertising repository that provided transparency to
researchers either. So the find today was kind of generally
smaller than people had expected. But there are still some
(13:14):
other issues that the Commission's investigating, some more kind of
serious issues around how it polices illegal content, election disinformation
and its community notes system for content moderation.
Speaker 2 (13:27):
Bloomberg's Olivia Solo and our tech editor in Europe, thank
you very much. Earlier today, the US Ambassador to the EU,
Andrew Puzzler, accused the block of unfairly targeting the biggest
American technology companies. His comments on Bloomberg Television came just
moments before the penalty on X was announced.
Speaker 8 (13:45):
The only substantial, meaningful fines that have been imposed so
far have been against American companies. So at some point,
if you're an American company, you've got to sit back
and say, look, am I being targeted here? Or is
this an effort to try and advantage europe competitors over
US companies? And if that's the case, it's something that
the United States needs to respond to. And I believe
(14:06):
the Vice President has been very active in that respect.
Speaker 2 (14:10):
We joined now by Yo Vita now Yoshenna, the EU
Ambassador to the US here with US in San Francisco,
and Ambassador to start, i'd welcome your response to your counterpart,
the US Ambassador to the EU.
Speaker 11 (14:22):
Good morning. I think that what we have discussing right
now it's non compliance case and it was very well summarized.
There is the question about the they're advertising, the accessor
to the data of that, the access to the to
the data for the researchers, and the deceptive mark of
verified content. So I think that this is really very clear.
Speaker 12 (14:48):
Now.
Speaker 11 (14:48):
The X has a certain amount of dates dates to
prepare the plan of implementation, and we will take it from.
Speaker 2 (14:56):
There broadly, Ambassador, US officials include the President just believe
that EU rules are too onerous on American technology companies.
One of the reasons you're here is to attend an
event about the USU investment Bridge. Secretary Lutnik has said,
if we're going to do some deals on certain tariffs
and sectors, then something needs to happen and change with
(15:19):
the digital rules that the EU has.
Speaker 11 (15:22):
Look I think that EU has a right every time
you have a business in Europe or the business in
any other jurisdiction.
Speaker 7 (15:29):
You apply the.
Speaker 11 (15:29):
Rules which you were supposed to act. I think that
this is our sovereign, sovereign writer to regulate. This is
one element. Another element, some of the search engines, in
digital search engines which are functioning in Europe, some of
the platforms have more users than US has citizens in Europe.
(15:54):
Some of the digital companies, American digital companies have thirty
to fifty percent of their turnover actually generated in Europe.
So probably we're doing something good in Europe to make
sure that American companies would feel welcome and actually see
the benefit of being there. And I think that in
(16:16):
general beat trade, the technological corporation beat corporation on economic
security or both sides investments. I think that on the
both sides of Atlantic this is the thing that should
be actually mutual beneficial. It should be beneficial for both
US and EU.
Speaker 3 (16:36):
Thus far, certaining an administration doesn't feel that, Ambassador, we're having
a post from Marco Rubio talking about how this isn't
just an attack on X it's an attack on American
tech platforms and on American people. As you sit down
and meet across the board. You're going into an AI
impact pre summit, for example, what are the sorts of
narratives you can come back with to say this isn't
this is the right due diligence. And indeed, we embrace
(16:59):
American tech companies.
Speaker 11 (17:00):
In Europe wells. As I mentioned, we have multiple American companies,
We have multiple companies from other parts of Europe. We
have a European companies active in our four hundred and
fifty million of market. Everybody has a full access to that,
(17:21):
to that and our regulation is never Our regulations are
never targeting one country or one specific company. It's really
geographically neutral.
Speaker 3 (17:34):
What's interesting is you're here, not just in San Francisco
and visiting. You're then flying to LA to an event
in Simi Valley that we're going to both be at
the Reagan Defense Forum. And what's interesting at the moment
is there's a view in particular white paper you the
EU have put forward really unveiling the commitment of the
European Commission to spending on defense. What has the reaction
(17:54):
been from the United States thus far? Have we seen
the US think that enough is being done? And can
you get access to the right US defense tack well.
Speaker 11 (18:02):
I think this is what actually was asked from US,
and we were encouraged as the European countries to invest
as much as possible to our security and defense. And
this is what we're doing. NATO member states will, NATO
allies will spend five percent of their GDP. European Union
is actually spending extra on top of that to make
(18:25):
sure that we incentivize our defense industry back back home.
All in all, it will be more than nine hundred
billions in three to five years. I think that's a
huge amount, and we are not really spending that to spend.
We want to build our capabilities, which we have to
(18:45):
step up. We don't have them them now or not enough,
and we are not planning to do that alone. The
corporation is extremely important. That's why we're here. We have
an investment bridge event today with our European Investment Bank
and you know, looking for the core investment projects, not
only you know, uh, some of the projects which would
(19:08):
be beneficial only for US. I think that this is
the this is the idea.
Speaker 2 (19:12):
Ambassador back in Brussels, the German Chancellor is trying to
secure a deal for immobilized Russian assets to help Ukraine.
What is your sense of where a deal is, if
it can be done, and what America's attitude is towards
it when you speak to your counterparts.
Speaker 11 (19:31):
So Commission European Commission presented legal pathways how the immobilized
assets can be turned into the reparation loan and the
loan for Ukraine with the long term commitment to support Ukraine.
Because we need to make sure to ensure our own security,
which includes as well a Ukrainian security. This is one
(19:54):
element and we believe that the country which actually wages
the war have to face the consequence.
Speaker 4 (20:01):
But America's supportive of this effort.
Speaker 11 (20:03):
What is your sense, Well, this money actually is in
a European account, it's in Euroclear, So I think that's
the decision for the European countries.
Speaker 3 (20:12):
It's been wonderful having time with you. A decisive answer.
Their EU ambassador to the US, Yovita. You know, Chiena,
We thank you time now for talking tech First up,
one of China's leading AI chip makers, More Threads, jumped
four and twenty five percent in its Shanghai trading debut.
(20:34):
The startup drew strong investor interest in its IPO with
a retail portion over subscribed by two seven and fifty times.
Now more Threads joins camera con Huawei racing to fill
a market void after in video was a cause forced
to exit China. Plus soft Bank Well, it's said to
be in talks to you acquired Digital Bridge AP firm with
heavy investments in assets like data centers. According to sources now,
(20:56):
the potential deal builds on soft Bank's efforts to take
advantage of AI driven boom in digital infrastructure. Transaction could
come together in a matter of weeks and Black rocks
I shares. Bitcoin Trust recorded it's longest streaker weekly withdrawals
since it's debut back in January twenty twenty four. Look
Invests yanked more than two point seven billion dollars in
the ETF over the five weeks to November the twenty eighth.
(21:17):
The ETF is now on pace for six straight week
of net outflows.
Speaker 2 (21:21):
Ed our top story Netflix buying a big chunk a
Warner Brothers Discovery. This is what shares look like right now.
This is a seventy two billion dollar cash and stock
deal where Warner Brothers Discovery shareholders get twenty seven dollars
and seventy five cents per share. I say a chunk
because Warner Brothers Discovery will spin off cable networks think CNN,
(21:42):
think TNT into a separate company before the transaction closes
and goes through. But it means that Netflix, this kind
of modern day streaming giant, is getting one of the
oldest studios and developers of content in Hollywood. There is
a lot of consideration around this deal. All I'll say,
carrow is that the parties have done some interesting things
(22:06):
here as part of the bidding world. Meanwhile, in Washington,
the proposed deal already facing some backlash. Democratic Senator Elizabeth
Warren issuing a statement calling for the DOJ to enforce
anti monopoly laws, saying the Netflix Warner proposal is quote
a nightmare. Let's bring in Blueberg's Michael Shepherd from Washington DC.
(22:27):
There's the congressional review, and the Democrats will have some
view on this, of course, but then it's probably more
important to say, what is the White House view of this?
Speaker 4 (22:36):
What a policymaker's view on this?
Speaker 13 (22:39):
Well, the policymakers are really being egged on by Congress,
and not just by Elizabeth Warren. We're seeing Republicans including
California's Darryl I also get into the act and he
is flagging his concerns on the consumer side. And really
it would fall to the Justice Department to conduct this review.
Our expectation is that the Agencies Antitrust Division will give
(23:02):
this transaction the wirebrush treatment. It will not go through
the review process very easily. The biggest concern ed really
is around the streaming question. Of course, Warner Brothers has
its storied movie studios and deep library of film and
other productions, but it also owns HBO Max, which is
(23:23):
the fourth largest streaming service in the world to Netflix's
number one. So when you combine those that would give Netflix,
following this deal, thirty percent control over the global streaming
market four hundred and fifty million users worldwide, and that
would attract a lot of attention from regulatory authorities, not
only here in Washington, but in the European Union as well.
(23:47):
One of the things that our analyst here at Bloomberg,
Jennifer Ray, said is that perhaps Netflix, to make this
deal more palatable, could let go of HBO Max. But
Netflix has already tried to inoculate against that, saying that
lookenty five percent of our users also subscribe to HBO Max,
so there may not be that sort of conflict When
(24:08):
it comes to competition, as some are raising, they say.
Speaker 3 (24:10):
Yeah, and maybe they can bundle it and make it
cheaper as part of the argument for the consumer.
Speaker 10 (24:14):
We could go so many.
Speaker 3 (24:15):
Directions, Mike, and we can look to California and the
impact on the industry and on jobs, and I'm sure
that's something Gavin Newson's looking at. But where you sit,
many are wondering about the counter argument likely to come
from Paramount's guidance, and of course the close ties with
David Ellison, his wather Larry Ellison, and the administration. What
are you reading there?
Speaker 13 (24:34):
Well, Karen, I'm glad you asked about this, because the
politics these days are inescapable, and especially when it comes
to this transaction, because in choosing Netflix as its partner
here in this deal, Warner Brothers is jilting David Ellison,
and that really does prompt perhaps a whole new level
of scrutiny and a perhaps full court press with the
(24:57):
Trump administration, with whom he is close, and also with
perhaps the President himself. So there will be a lot
of jockeying behind the scenes, perhaps even more so than
usual when it comes to a deal of this nature.
And one of the things we'll have to be watching
is to what degree the Netflix side is also trying
to curry favor in effect with the Trump side. Over
(25:21):
the years, Netflix founder Reid Hastings has donated heavily to
democratic causes. He contributed seven million dollars to Kamala Harris
twenty million dollars to Democrats over the years. But we
also want to see how Ted Surrenders, the CEO of Netflix,
is trying to do his part. And we know that
in December he did have dinner with Donald Trump at
(25:43):
mar A Lago. The men sat for several hours and talked.
In March, Surrenders described the conversation as a good conversation.
But we will need to see where that leads. We've
seen how Jensen Wongam Nvidia has parlayed that kind of
a close relationship with Donald Trump into actions by the
government that work a little bit more in his company's favors.
(26:04):
So that sort of interpersonal of diplomacy with the administration
will be key here.
Speaker 3 (26:10):
Yeah, co CEOs, I'm sure trying to work the phones,
and I'm sure many will be trying to remind everyone
that YouTube's a pretty key player and all of this
as well when it comes to the regulatory impact and competition.
Bluembags Mike Shephard, thanks so much for joining us. Let's
pivot a little bit a secular. What's happening in crypto?
Suddenly seen about selling We're off by three point seven
percent on bitcoin eighty eighty seven hundred and sixty as
(26:30):
we moved towards the end of the weekend. Maybe some
institutional money just putting things on pause. The digital asset, though,
look how it's performed this year for the first time,
it's actually sort diverged from the S and P five
hundred since twenty fourteen. He's aren't moving in lockstep. Let's
get more on this with Ayakontarovitch's August co CEO co
founder joining us. Now you have so much experience when
(26:51):
it comes to fulcon x, where you're previously a were
your secure software company, August and look bitcoins decoupling from stocks.
What's it telling you?
Speaker 14 (26:59):
Look, I think without a doubt, the last three weeks
have been painful. You know, we've seen one and a
half x times higher volatility in the last three weeks
than we've seen in twenty twenty five total, and a
lot of that has to do with the number of things. One,
there's implications you know, outside of just macro, which is
you know, more global and geopolitical, and we're seeing a
(27:20):
lot of bit of that. We're also seeing, you know,
some decoupling into the weekend, where we are seeing sell
offs into the weekend and then buybacks back into Monday,
as you referenced earlier, and then last we're seeing rotations
back into you know, macro and so for example, sometimes
people have to sell off their risk assets in order
to reposition into those macro assets, and I think that's
(27:41):
what we're seeing a little bit here as well.
Speaker 2 (27:44):
The data set that keeps flashing up on the Bloomberg
terminal Caroline did it in the news story about earlier,
is the ETF flows outflows. At the moment, I'm just
trying to use that data set to understand the psychology
of everyone that participates in this industry. What is the
interpretation we should make.
Speaker 14 (28:05):
Yeah, So, look, I think more broadly, bitcoin operates in
four year cycles, and we're seeing that twenty twenty five.
It's actually more similar to a twenty twenty one or
twenty two in comparison to A twenty twenty, twenty three
and twenty four. And what's tough is you know, in
those years we really saw strong December especially, and you know,
you have the post having liquidity surge, you had recovery
(28:28):
from FTX and ETF optimism, and then in twenty four
you saw the ETF you know, inflows coming in in size,
and so you know, we're actually we've seen this cycle before.
We've also seen historically this year a lot of very
long term holders take some profits off the table, and
we have seen some patients and so I think you're
(28:48):
seeing some of that profit taking into year end. We're
going to continue to see that. But it really does
make Q one look very attractive as we do close
out on that four year cycle, and we have a
lot of the headway that will take us there. Whether
it's the Vanguard News, whether it's the Bank of American News.
We are looking to see new entrants come into the
market via the ETS.
Speaker 3 (29:08):
Talking of long term holders selling, there was suddenly a
shock to the system when it was thought that maybe
Michael Saylor's strategy just formerly known as MicroStrategy, might actually
offload bitcoin, the hoddler of all hoddlers sort of saying
the most extraordinary thing to many who've been in this
market for a long time, what did you make of that?
And their desire to try and stabilize after that moment.
Speaker 14 (29:32):
Look, I think at the end of the day, he
is probably feeling some of the pressure that some of
these other institutional players are feeling, which is diversification and
having to manage some of that downside risk and if
you do have leverage, having to manage your Martin calls,
and so at the end of the day, you know,
was that a great headline for the space? No, of
course not. But these do These things operate in cycles,
(29:55):
and we are at the end of that cycle. That
also was announced before the Vanguard news and before the
Bank of American news, and so you know, I think
there are again headwinds into Q one, But I agree
with you. I think, you know, looking at where we
are and then the next three weeks into year end,
it's probably not going to be as optimistic, but means
that twenty twenty six can start that news cycle over again.
Speaker 2 (30:19):
I I'm probably going to take most of the rest
of the year off just share that with the audience,
and so it might be my last chance to ask
you for your twenty twenty six predictions. This year has
kind of been about stable coin legislation, David.
Speaker 4 (30:31):
Sachs, dolarization.
Speaker 2 (30:33):
If you were to listen to Jamie Diamond, he will
always bring it back to the underlying technology and the
utility of blockchain in global financial markets. What do you
think will happen next in twenty twenty six?
Speaker 14 (30:45):
Look, I think what people haven't realized yet is tokenization
of everything is happening, and it started with stable coins,
as you mentioned, but it's going much broader than that.
So if you look at even equities trading on chain,
you saw the Max seven come to Hyperliquid. That was
you know, fallow in videos earnings, one of the largest
stays of volume for hyper Liquid in November, and so
(31:05):
you're seeing a lot of that come on chain, and
you're also seeing a lot of traditional assets get tokenized.
And so you know, we're seeing on our side a
lot of tokenization of assets, strategies, vehicles, and then the
liquid markets to make them composable and more capital fision.
Speaker 3 (31:21):
It's always great to catch up with you. I'll still
be here for the rest of the year, so hopefully
I'll see you then I can tell of it. August co, CEO,
co founder, thank you.
Speaker 12 (31:29):
Coming up.
Speaker 3 (31:30):
HPE CEO Antonio Naire joins us to discuss the company's
earnings and well delay perhaps in some of those AI
servi deals with governments that's next. This is a blumbed tech.
Speaker 2 (31:54):
Shares of HPE, now basically flat, had been lower after
the company announced third quarter earning, noting that some deals
for AI servers have been pushed into twenty twenty six.
Delighted to discuss hbe's earnings with the companies and president
and CEO Antonio and Ery Antonio. We're actually getting a
really good insight through HPE into what's happening in real
(32:17):
terms in the real world of data center build out.
We had it with core Weave just a few weeks ago.
A part of this, right is a delay on a
specific data center project and you can't book revenue until
that project goes ahead.
Speaker 4 (32:31):
Is this a one off? And if you.
Speaker 2 (32:34):
Could just explain to the bloombo tech audience, what is
in your power to control and what is still happening
out there in the supply chain for data center build out.
Speaker 4 (32:43):
That's holding things up.
Speaker 12 (32:44):
Look than Q four, we posted a record profitableok quorder
where we saw revenue growing fourteen percent and profit growing
faster at twenty six percent, and that allows us to
exceed both EPs and free cash flow guidance. So CAP
in a very strong gear. But on THEI front, we
continue to see strong demand. We booked another two billion
(33:04):
dollars in orders. More than sixty percent of our orders
are in sovereign and enterprise. And as you state, you know,
there were a couple of deals that slip into twenty
twenty six. One of them was for data center readiness
you know was slightly delaid, and two where because of
the US government shut down, we couldn't deliver the system
(33:26):
and get it accepted. But in general sovereign no longer right,
longer cell cycle, longer acceptance cycles. But we are intentional
on that because you know, we focus on profitable growth
in AI. And now we have a backlog which is
over four point seven billion dollars, So ultimately it can
be data center, it can be also customers speaking different
(33:46):
technologies like Veri and Rubin and maybe waiting for AMD.
But the reality is that there is more back end loaded.
That's why we got it a year the way we
did it, but ultimately a free minutes seventeen percent to
twenty two percent revenue growth guidance in addition to raise
the EPs and free cash flow guidance.
Speaker 3 (34:04):
That data center lumpiness and indeed the hold up that
you saw, what is it? Is it supply chain issues?
Is it cooling? Is there something that tends to be
the hold back?
Speaker 12 (34:16):
It's a combination of many things, Caroline. You know, I
think sometimes you know, just a real estate takes time.
Bringing the power and cooling takes time. In some cases,
you know, the equipment right slightly delay because you're talking
about turbines for you know, power generations. Some cases, you know,
it can be low level components. But look, these are
(34:39):
very large buildouts we're talking about, you know, tens of megawhites,
sometimes hundreds of megawats, and now we're going in through gigawads,
and so we just need to recognize that it takes
time to build these large build data centers and ultimately
we will be ready to deploy it as soon as
these data centers are ready to accept the systems. But
(35:00):
also the working capital takes also longer to get through so.
Speaker 2 (35:05):
You just reference Vera Rubin and I'm trying to understand
what you meant there. You know, in Nvidia has this.
We've discussed it, Antonio several times, this commitment to annual
update to the technology.
Speaker 4 (35:18):
And are you saying that.
Speaker 2 (35:19):
There are customers out there that just want to wait
for the latest gen before they commit at scale to
a big project.
Speaker 12 (35:29):
Well, or there are customers already in the current generations,
there are generations before that feel now I need to
get another bumping performance so that can lower my cost
per talking training as I go forward. So it can
be a combination of both. And depending on where they
are in the buildout of the data center, it makes
sense for them to go to the next generation. But
(35:50):
also we see an interest, you know, in getting the
choice and the flexibility to build these data centers the
right way. And that's why you know, we at HPN
now with the additional Juniper, we are becoming a networking
center company. And this past week just in Barcelona, I
came back yesterday we announced a number of amazing technologies
(36:10):
that allows customers to adopt, whether it's Nvidia or whether
it is A and D, and we announced the first
gal Up here you switch that allows them to adopt
the technology, So it can be a combination of things
depending on where they are in that build out cycle.
Speaker 3 (36:27):
A Bluemag intelligence analyst re Jenho always loving diversification of
the business and the leaning into the networking Antonio, But
just going back to with the data centers and the margins,
that's always been the question. Like AI servers, the cost
is memory. You seem pretty confident. Why are you confident
just having the handle on the shortage that we've got
in memory?
Speaker 12 (36:46):
Yeah, absolutely, cal Well, look, I'm very pleased that would
return the entire server segment, inclusive of AI to approximate
ten percent operating profit in Q four, which was our
commitment since Q one. And regarding costal commodities, it's first too,
we need to recognize that the cost of commodity will
(37:06):
be driven by the shortages we are going to experience
in the latter part of twenty six, start in the
second half, particularly in Deram and obviously as well Nand
and we already enacted price increases in the month of November,
and we already factor what we think is going to happen.
At least the best line sight we have in our guidance,
(37:29):
and that's why not only we we affirmed the revenue guidance,
but we also raise our non gap PPS guidance considering
what we see going forward.
Speaker 2 (37:40):
An Tony, I'm really interested in the differences in the
demand profile of say Vera Rubin and against Helios. You
know helos the pitches, its scalability, but are you're getting
more interest there at the edge in terms of use cases?
Just try and explain the real world differences of what
you're seeing among your customers.
Speaker 12 (38:00):
Yeah, I think you know. Enterprises are accelerated and adoption.
I give you my own example here at HP we
already have one hundred plus use cases in production using
AI across a number of functions and business units. And
obviously we use AI for our own products, which is
one poor differentiator for us in the market. But in
(38:23):
terms of where the work is being done, is done everywhere.
But we see now the growing and inferencing, which tells
you that AI is being deployed. And there are a
lot of use cases, whether it's manufacturing, transportation, healthcare where
the inferencing is cheaper, at the edge where things take
place where the data is generated and then obviously it's
(38:43):
the training aspect, which can be a combination of locations.
And in Europe, for example, these concept of sovereign AI
clouds is super important because they want to preserve the
sovereignty from a model perspective and the data so is
a hybrid design by design, and that's why I always
say AI is the through the Phoenician or warload.
Speaker 3 (39:06):
We love deep diving with you, Antonio and Narry. Thanks
for joining, President and CEO of HPE.
Speaker 2 (39:17):
Back to our top story, Netflix buying some Warner Brothers Discovery.
Netflix lining up fifty nine billion dollars of financing from
Wall Street Banks to help support its planned seventy two
billion dollar cash and stock acquisition of Warner Brothers Discovery.
Bloomberg Intelligence medi around this, Keith Orang and Nathan joins
us with the in house take, what is.
Speaker 4 (39:36):
The bi view?
Speaker 2 (39:37):
How good do you feel about the financing of it?
And I know you have some thoughts about what could
happen next?
Speaker 9 (39:44):
Yees, So from a financing standpoint, you're obviously Netflix right
now has about zero point four times of a net
leverage ratio, which is way below you know, media years
like Disney or a Comcast for instance, but again, this
is a company that has an absolutely robust batt than sheet,
And as my credit colleague Steve Flynn constantly says, I mean,
this is a company that throws out billions and billions
(40:07):
in free cash flow, So absolutely no problem. Yes, their
leverage will go up to about three times, but that
shouldn't be a problem. We do kind of anticipate them
deleveraging pretty quickly, just given that they're going to be
generating something like about nine billion of free cash flow
this year and something like maybe you are thirteen to
sixteen dollars thirteen to sixteen billion dollars in you know,
(40:29):
twenty twenty six, twenty twenty seven, So financing really doesn't
look like much of a problem at all.
Speaker 3 (40:35):
Ed, what therefore is the problem either, if there is one,
is it regulators? Is it paramounts, guide ounce fighting back?
Speaker 9 (40:44):
What do you think all of the above?
Speaker 11 (40:46):
Regulators?
Speaker 9 (40:47):
Definitely So just you know, from first lance, you have
the number one streaming service in the world combining with
the number three streaming service, which is HBO Max, and
that just gives them an unmatched scale. You know, we're
looking at four hundred and fifteen million global streamers Obviously
that is going to raise a lot of regulatory concern,
but I think Netflix can fight back by saying, you know,
(41:07):
it really depends on how you define the market. Is
it just are we just looking at Netflix Disney plus
Amazon Prime, or should we be looking at Netflix versus YouTube,
versus reels, versus TikTok, you know, versus Facebook? So how
do you define the market? And if you look at
it from a much broader perspective, then the Netflix and
HBO Max combination, I mean, it's less than ten percent
(41:27):
of total US viewing time, so maybe it shouldn't really,
you know, generate too much of regulatory backlash. So again,
it all comes down to how the anti trust authorities
are going to view this transaction.
Speaker 14 (41:39):
I have a.
Speaker 3 (41:39):
Feelings go play out over many months, even years. Keitha Rangnathan,
we thank you so much for boommeg Intelligence with the
immediate reaction to a pretty blockbuster deal ed. That does
it for this edition in Bloomberg Tech. What a way
to finish the week.
Speaker 2 (41:52):
Don't worry, We're going to be talking about this for
months and years, and that's something to look forward to.
But there was a lot of serious report in detail
to recap on that deal.
Speaker 4 (42:01):
Check out the podcast.
Speaker 2 (42:02):
Best place to find it You know where to find
it on the Bloomberg terminal and online on Apple, Spotify,
and I Heart from New York and San Francisco.
Speaker 4 (42:10):
Have a great weekend. This is bloombog Tech
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