Power in Numbers | Summers on The Fed, Aramco Evolution, Future of AI, Themed Entertainment Industry
June 20, 2025 • 48 mins
This week, Former Treasury Secretary Lawrence H. Summers on the recent Fed decision and the economic implications of uncertainty in the Middle East. And, how is Saudi giant Aramco diversifying in a tech-driven world? Plus, an interview with Robinhood’s Vlad Tenev on artificial intelligence solutions for nuanced needs. Later, Netflix is entering the themed entertainment business with Netflix House, further intensifying its competition with traditional media players.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:21):
This is Wall Street Week. I'm David Weston, bringing you
stories of capitalism. For many years, Saudi Arabia has been
at the center of the world of oil. We travel
to the kingdom to learn how and why it wants
to change that. Plus, you saw you knew the world
of artificial intelligence, but it turns out it comes in
different flavors with different time horizons. We explore the brave
(00:44):
new world of mathematical superintelligence and large quantitative models. And
as we head into the heart of summer, we take
you to some of the nation's theme parks as traditional
leaders Disney and Universal are getting some new competition from
Surprising play. But we start with the Federal Reserve Board
decision this week and how the Central Bank is grappling
(01:06):
with all that policy uncertainty.
Speaker 3 (01:08):
The amount of the tariff effects, the size of the
tariff effects, their duration, and the time it will take
are all highly uncertain. So that is why we think
the appropriate thing to do is to hold where we
are as we learn more, and we think our policy
stances is in a good place where we're well positioned
to react to incoming developments. We have to be forward looking,
and the thing that every forecaster, every outside forecaster, and
(01:31):
the Fed is saying is that we expect a meaningful
amount of inflation to arrive in coming months.
Speaker 2 (01:37):
Turning first to our special contributor, Larry Summers of Harvard. So, Larry,
we heard from the Federal Reserve, the FOMC as well
as Chair Pale this week. What did you make out
of what they had to say and particularly their projections.
Speaker 1 (01:52):
I thought what they said was both predictable and reasonable.
They you can't be changedinging monetary policy with the uncertainty
that we've.
Speaker 4 (02:04):
Got right now. They were right to.
Speaker 1 (02:06):
Signal that they were being cautious about future changes. What
struck me most, David, was a quite remarkable combination. The
dot plot showed unemployment revised upwards, showed inflation revised upwards,
even a period when we're getting good news about artificial
(02:28):
intelligence and productivity, and good news about a whale.
Speaker 4 (02:33):
So you see a supply shock coming even though the.
Speaker 1 (02:39):
Natural sources of supply shocks aren't there.
Speaker 4 (02:43):
What is it? It's the tariffs.
Speaker 1 (02:46):
We're imposing a supply shock on ourselves, and that's leading
to expectations of both higher inflation and higher unemployment making
the Fed's job that much much more difficult. And the
Fed's obviously not going to get in a political war
with the administration.
Speaker 4 (03:08):
But the stark analytic fact is clear.
Speaker 1 (03:12):
It doesn't happen that often that the FED revises up
on inflation and unemployment at the same time, and I
don't think there's ever been a time when they revised
that way in both directions based on administration policy.
Speaker 2 (03:30):
Larry, you mentioned the geopolitical conflict that we're seeing. Certainly
we have an enormous one between Israel and Iran as
we speak, with questions about whether the United States might
get involved. As a macroeconomist, how do you approach that question.
Speaker 4 (03:43):
Look, no one knows.
Speaker 1 (03:47):
I suspect that the President doesn't know completely what he's
going to do because he is watching.
Speaker 4 (03:55):
Events.
Speaker 1 (03:57):
I'd just say a couple of things, David. One is
that we got a lot of divisions within our country,
but I would hope that at a moment like this,
with respect to the kind of threat that Iran represents,
that there'd be a lot of desire to come together
(04:19):
and support policies that will put the greatest stability possible.
In second thing, I would advise your listeners. What I
do to track very complex events and spheres where I
(04:40):
don't have deep expertise is I look for prediction markets.
Prediction markets aren't perfect. They're sometimes wrong, just like the
stock market is sometimes wrong about the earnings of companies,
but they do represent an aggregation of opinion behind based
on people who are prepared to put some money where
(05:02):
their mouths are. And the experience now in many spheres,
from elections to geopolitical events to movie releases, is that
prediction markets have very good track records relative to experts.
And what prediction markets are saying is quite interesting.
Speaker 4 (05:26):
They're saying that.
Speaker 1 (05:27):
The odds of a US attack on Iran are close
to two thirds by the end of this month, close
to three quarters by the end of next month, and
that it's a substantial chance, well above fifty percent, that
the Supreme Leader in Iran will be out of office
(05:50):
by the end of this year. So what prediction markets
are judging is likely to happen is potentially quite tumultuous,
and I think that anyone trying to judge the situation
as they formed their portfolio would be well advised not
(06:12):
to rely only on that, but to give those prediction
market judgments weight as they make their own.
Speaker 2 (06:19):
Judgments if those predictions came true, and as you say,
we don't know, but let's assume that happened in fact,
the United States did get involved, and that the Supreme
Leader left and there was a regime change in Iran.
What would that mean economically? What sectors of the economy
would you look at when we all think about oil,
for example, I've also seen food prices raised in terms
(06:41):
of fertilizer of Iran. What sectors do you think might
be affected the moment?
Speaker 1 (06:45):
I think, David, I would quibble with you in one respect.
I think when you say something's got a sixty percent
chance of happening, you're saying that it's a sixty percent
chance of happening, and there's no such thing as the
prediction coming or the prediction coming faults. Either the sixty
percent thing will happen or the forty percent thing will happen.
(07:06):
So I would choose a somewhat different locution.
Speaker 4 (07:12):
Than you did. But to your question, I'd be looking
primarily at oil and petrochemicals more generally, fossil fuels more generally,
and that of course includes fertilizers includes plastics.
Speaker 2 (07:35):
Larry to be a bit more parochial, at least for us.
In New York City. We have a mayor election coming
up and including a primary in the Democratic Party, and
we have a fairly stark contrast in economic approaches of
the two leading candidates, who or Andrew Cuomo, you know,
well more of a traditional it seems to be Democrat,
and a man named Zoran Memdani, who seems to have
(07:57):
a much more extreme people think economic platform. What do
you make of that?
Speaker 1 (08:04):
In a sense, every American is a citizen of New York.
It's so much a cultural and financial hub of our
country that what happens in New York is consequential for
all of us.
Speaker 4 (08:22):
And I'm not an.
Speaker 1 (08:23):
Expert on the exigencies of the details of New York
City economic policy, but i do think the Democratic Socialist
program would be profoundly dangerous for New York, for the
Democratic Party, and for the United States. Set of measures,
(08:46):
free college, free childcare, free mass transit, rent control, huge
increases in the minimum wage, financed only with tax increases
on the wealthy. Mobile mobile wealthy who will prove to
be mobile if this program is enacted will, I think
(09:08):
be extremely dangerous. I have warned again and again on
your show about the dangers of economic populism of the
kind President Trump has followed talking about Juan Parone talking
about the dangers of tariffs many times. Frankly, the Democratic
(09:30):
Socialist candidate is more populist and more dangerous.
Speaker 4 (09:36):
In his approach on the narrow set of economic issues.
Speaker 1 (09:42):
Even then, President Trump and I think if he were
to be selected, it would brand the Democratic Party in
a highly problematic way. It would suggest that the debate
within the Democratic Party was between the Larren Sanders wing
(10:03):
and measures that are even more extreme than theirs in
terms of the politics of envy in terms of government
control of the economy.
Speaker 2 (10:17):
Next down Wall Street Week, imagining a Saudi Arabia that
doesn't depend on oil, We go to the Kingdom, where
the CEO of Aramco lays out a bold vision. This
(10:38):
is a story about something we haven't seen before, a
country weaning itself off oil as its primary source of revenue.
Even as renewed conflict between Israel and Iran has driven
the price of oil up once again. The Kingdom of
Saudi Arabia pursues a bold plan to move quickly to
a diversified economy and the world's biggest oil producer. Aramco
(10:59):
is in the middle of the transition. Here's our Bloomberg
TV colleague, Jumanar Bressecchi from Dahran.
Speaker 5 (11:08):
Aramco has long been the beating heart of Saudi Arabia's economy,
but in less than five years time, the kingdom hopes
to reach its goal of building an economy that moves
away from its traditional reliance on oil.
Speaker 6 (11:20):
We think of ourself as a technology company, delivering energy.
Speaker 7 (11:23):
To be honest with you, technology has always been our
competitive advantage.
Speaker 8 (11:27):
The company has been evolving ever since its inception.
Speaker 9 (11:29):
Aramko plays a significant role in Saudi's diversification agenda.
Speaker 5 (11:37):
Aramco's journey started in nineteen thirty three when the Saudi
government granted exploration rights to the Standard Oil Company of California.
That created the Californian Arabian Standard Oil Company and eventually
led to the discovery of oil in commercial quantities at
Dammam Well number seven. This marked a turning point in
Aramco and Saudi Arabian history. Nineteen forty four, the company
(12:01):
was renamed to ARAMCO, the Arabian American Oil Company, and
later that became Saudi Aramco, reflecting its transition to a
fully state owned company by the late eighties.
Speaker 6 (12:12):
Look at that. You can feel the crude here, eh,
looking at crude.
Speaker 5 (12:18):
Naser joined Aramco in nineteen eighty two as an oil
engineer before working up the ranks to become CEO in
twenty fifteen. So this is the geology. Where does the
technology come into it?
Speaker 6 (12:31):
Well, technology comes in the modeling and some of the
technology you can see it here. So we digitize all
of that and we kept the tea so they can
look at it and then while you know, having more
data to see rather than only the what you see
in front.
Speaker 3 (12:47):
Of you here.
Speaker 5 (12:48):
In twenty nineteen, the Saudi government sold down one point
five percent of the company, raising twenty five point six
billion dollars, which today remains the largest IPO in history.
The Saudi government and SOERMN Wealth Funds PIF join the
own around ninety eight percent of aram coast shares. The
oil giant accounts for approximately sixty percent of total Saudi
(13:11):
government revenue, and the broader oil sector, with Aramco is
the main player, makes up roughly thirty to forty percent
of the kingdom's GDP.
Speaker 6 (13:20):
Relying on one sector only to drive the Saudi economy
is not right. And this is where the figion is.
They are helping other sectors, growing other sectors across the kingdom.
To grow oil and gas is still important. That's why
you see the growth see here. We are very pragmatic
here in the Kingdom. You're talking about one hundred to
(13:42):
one hundred and ten thirty ge go out of solar
and wind. We believe in hydrogen where we will be
happy to produce hydrogen. Actually, we have one of the
biggest projects in green hydrogen at Leon, and we will
be more than happy to build more green hydrogen and
blue hydrogens in the Kingdom. And the same time we're
in carbon caption and storage, but we are normally not
(14:03):
neglecting hydrocarbon. We have healthy oil production, we have a
maximum sustake ABAS with twelve million. We are growing our
gas by more than sixty percent by twenty thirty. So
we are focusing in our conventional and growing it while
decarbonizing at the same time, and we are building the
new which is solar, wind, hydrogen and others.
Speaker 5 (14:26):
The Kingdom's crown jewel is central to the ambitions of
vision twenty thirty, the government program aiming to diversify the
economy away from hydrocarbon dependence, attract foreign investments, and modernize
the Saudi Arabian society. Carla slam Is chief economists that
standard chartered covering regions including the Middle East.
Speaker 9 (14:46):
In the past, the diversification strategy was investing petro dollars
oil revenues abroad so that they would be uncorrelated to
the price of oil, and for the last decade around
cost dividends to the budget have contributed indirectly to funding
a lot of the diversification strategy in the domestic economy,
so they remain a very important piece of the Saudi
(15:09):
economy of the revenues in order to fund that government
spending and that investment.
Speaker 5 (15:15):
From creating Niom, a five hundred billion dollar futuristic city
in the desert, to hosting the twenty thirty four World
Cup and building out a new major airport in Riyad
Vision twenty thirty is well underway. The Kingdom's transition is
not without its challenges. Opek plus production cuts undermine a
key source of revenue for the country. Despite diversification efforts.
(15:39):
In the first quarter of twenty twenty five, Saudi Arabia
reported its largest budget deficits since twenty twenty one. That's
impacted spending for some of the kingdom's largest investment projects,
and ARAMCO has increasingly tapped into debt markets, which the
company has put down to looking to lower its weighted
cost of capital and optimizing the capital structure.
Speaker 6 (16:00):
Our gearing today is around five percent, still one of
the lowest gearing you know, almost half of the average
compared to other energy industry players in the market. And
we will continue to tab into that addition and bond
markets on the future. But we have a low gearing ratio.
(16:25):
It's still as you considered, terry low considered combat to
any others, any players in the markets.
Speaker 5 (16:32):
The size of the dividends, especially to its largest shareholder,
the Saudi government, remains under scrutiny relative to free cash
flow generated. Geopolitical tensions have also remained an undercurrent of
concerns since the twenty nineteen attacks on around COO's Upcake facility.
Although the company resumed partial operations within twenty four hours,
(16:52):
the incidet triggered a heightened focus on security. In response,
Saudi Arabia has worked to ease regional tensions, including wearing
diplomatic ties with Iran in twenty twenty three. Even as
the company manages near term pressures, Aramco is investing in
areas that could define its long term future.
Speaker 8 (17:09):
I think gas is going to be a major growth
area for the company today and this is not known
to many people. We are a large gas producer.
Speaker 5 (17:17):
Ashchef Rasawi is Aramco's EVP for Strategy and corporate Development.
He lays out the non oil key strategic pillars of
the business.
Speaker 8 (17:26):
Our gas business is going to grow by sixty percent
by twenty thirty compared to the twenty twenty one levels,
and you will see the company grow and continue to
invest in a lot of low carbon or new energies.
In particular, you will see Aramco investing now and renewables,
energy and hydrogen and ammonia, as well as carbon capture
and stores technology. Not to mention digital and digitization as
(17:51):
a big area for US. Further integration down the value
chain is an important area for you to basically have
an outlet for these vast hydrocarbon resources. Chemicals to US
is a main building block for all modern economies and
modern societies. You'll always need commodities and materials like plastics
and polymers for any type of economic development going forward.
Speaker 5 (18:15):
Like in most industries, one of its most ambitious bets
to move the company forward is artificial intelligence AI.
Speaker 7 (18:23):
We see as one of the most important developments in
this century in terms of technology, and so we have
been quick to deploy AI in our operations and to
apply it to our business.
Speaker 5 (18:35):
Ah medel Kite leads tech and innovation at Aramco. Data
from the company's facilities and operations end up here at
its fourth Industrial Revolution Center. Last year, a Ramco announced
it was developing a large scale industrial AI model called
Ramco Metabrain.
Speaker 7 (18:52):
The Metabrane is a seventy billion parameter model and the
reason we chose to build a proprietary large language model
is because we have to use our own data and
it gives us that competitive advantage. So we have trained
that model with all of our historical data, engineering reports, standards,
and that model is now used to advise our engineers
(19:14):
and operations every single employee in the company. So we
have deployed that model on seventy thousand workstations across our
facilities and our offices. But not only is it providing advice,
but it is also informing for better decisions. It is
the base foundation for many of the applications we are
doing in optimization for example and operating our facilities. So
(19:37):
that's the way we are able to bring AI right
to the field.
Speaker 6 (19:40):
This is where do you see a lot of the
use cases delivering results for us. Technology realization in twenty
twenty three used to be two billion dollars. Is so
much we realize from technology in twenty four four billion dollars,
we're looking at two to four billion dollars. Berrie technologized
AI is in everything embedded, not only in terms of
(20:05):
allowing us to reduce our cost structure more efficiency, it
also helps us in reducing our carbon footprint. So it's
very important and able to see it introducing emissions, increasing
productivity and with that the number of wolds water production
and with that emissions and this bumping in everything. It's embedded,
and we are looking at the benefits of AI integrating
(20:29):
it and everything that we are doing.
Speaker 5 (20:31):
Even with big strides and digital innovation. Aramco at its
core remains an energy giant as CEO of one of
the largest hydrocarbon companies in the world. Nasser has been
advocating for what he considers a more pragmatic approach to
the energy transition.
Speaker 6 (20:47):
Well, we have always said that we need transition research
or a reality check in the transition to deliver on
our ambition for an zero. What we need is pragmatic
solutions to deliver on what we are all aiming for.
Almost seventy to eighty percent of the energy global energy
(21:09):
and twenty fifty will be in the global salt not
and the global north. So one size fits all will
not work. And anything that is driven heavily by incentive
that's not sustainable. The minute these incentives disappear and they
will disappear one day, that additional cost will be best
to consumer, and that's where we are seeing the increase
(21:33):
in cost. What we need is something that while sustainable,
is affordable and secure. We have always talked about different
mix of energy that it will be required.
Speaker 5 (21:45):
Aramco has a net zero twenty to fifty target for
its Scope one and Scope two emissions and prides itself
on having the lowest carbon intensity for upstream extraction compared
to other energy companies, But this does not include Scope
three emissions, which from end user combustion of oil and
fossil fuels and constitute the line share of emissions.
Speaker 8 (22:05):
I have to say that not all crude oil is equal.
You know, we take a lot of pride in the
fact that we are the lowest upstream carbon intensity producer
and husband for a while, and that's a result of
decades of responsible and sustainable operations. You know, it's important
for us also to adhere to our commitments toward the
Nazero ambition and keeping an eye on what levers of
(22:29):
decarbonization are available to us. We have been running flair
minimization programs for for decades. We have methane intensity that
is the lowest in the market. All of these combines
actually is where we position ourselves as the undisputed leader
when it comes to carbon intensity and environmental metrics out there.
Speaker 5 (22:52):
Aramco looks to redefine its role as Saudi Arabia reimagines
its future.
Speaker 9 (22:58):
We believe Saudi will remain a major oil producer in
the global economy. We don't expect this to change, but
we believe that the non oil GDP expansion will happen
in parallel to Saudi remaining a major commodity player on
the global front. On the regional front and its G
twenty capacity. We just expect that the non oil development
(23:19):
will happen in tandem in parallel, and this will continue
to have shifts to how Saudi spends domestically globally in
the region as well with its regional allies.
Speaker 6 (23:29):
There is a lot of challenges ahead of us, especially
with sustainability, with the transitions with disruptive technologies. We need
to be ready. How do we maintain and continue to
maintain that leadership while also delivering the new energies that
the world wants.
Speaker 2 (23:46):
Us coming up. Just when you thought you were getting
your arms around artificial intelligence, large language models along coming
array of alternatives, we delve into large quantitative models and
even so for intelligence that's next on Wall Street Week.
(24:12):
This is a story about thinking ahead, even way ahead.
We've all heard about the race between companies and countries
to develop artificial intelligence, but it turns out that there's
another race going on, one among entirely different approaches to
AI and what they're racing to achieve.
Speaker 10 (24:31):
Generally, we think the cost of innovation is collapsing here.
Speaker 8 (24:35):
It is going to transform our lives.
Speaker 2 (24:37):
We're going to look back and see this is a
hugely important era.
Speaker 1 (24:40):
This is obviously the most disruptive technology in the history
of man can.
Speaker 2 (24:47):
At the center of many of the latest AI breakthroughs
are large language models or lms, the chat, GPTs and
geminis of this world. But as powerful as they are becoming,
we learn more every day about their limitations, how they
can be prone to errors, hallucinations, and uncertainty. One of
those trying to address these limitations is none other than
(25:09):
Vlad Tenef, known to most of us as the CEO
and co founder of robin Hood Markets. Tenef has become
a successful entrepreneur, but his background is in mathematics.
Speaker 11 (25:22):
What a lot of people don't know about me is actually,
before I became an entrepreneur, I was a mathematician, or
at least an aspiring mathematician. I always had this passion
for mathematics and for advancing our understanding of reality. And
so when we saw GPT four come out along with
(25:43):
a bunch of improvements in the mathematics community around formal verification, Tutor,
who's my co founder and CEO of Harmonic, and I
got very very excited about building something. We thought that
the time was right to actually build something mathematics that
combine the state of the art in that field with
(26:03):
the state of the art in AI.
Speaker 2 (26:06):
Tenem's new firm, Harmonic helps to achieve something that still
belongs to the realm of science fiction. Beyond artificial narrow
intelligence like chat GPT, which can perform specific and limited tasks,
beyond even an artificial general intelligence which could learn and
adapt like humans. Tenef says his goal is to help
create what he calls a mathematical superintelligence.
Speaker 11 (26:30):
So mathematical superintelligence is artificial intelligence that can reason and
solve math problems at a level exceeding the most advanced
mathematics researchers, so professional mathematicians that are out there today.
And we think that developing such a system will not
(26:50):
only greatly accelerate the progress of mathematics, but it will
also accelerate progress in all fields of science and technology
that depend on mathematics.
Speaker 2 (27:03):
We have heard at this point so much about large
language models in the AI space. What you describe sounds
like almost the obverse of large language models, which is,
I understand operate on language rather than numbers or on mathematics.
Speaker 11 (27:16):
I think the main problem with large language models and
AI systems as they're currently designed, is that they very
very confidently can tell you the wrong thing. So there's
very few controls over what we call hallucinations. You'll ask
a large language model a question, it'll give you an answer.
(27:36):
You can ask it to solve a major mathematical conjecture
and it'll spit out output, and it can be very
convincing in its incorrectness. And so I think that's a
huge problem, and that's by and large what's hindered the
adoption of these AI tools in mission critical industries, and
(28:00):
the way that Harmonic has designed our AI from the
beginning is with correctness and verifiability being a first class citizen.
Speaker 2 (28:12):
Last year, Harmonic closed a seventy five million dollars Series
A funding round led by Sequoia Capital and announced that
it's AI had performed well in a test of mathematical reasoning.
But Tennis says there's still work to do before true
mathematical superintelligence is achieved and before Harmonic can roll out
a product to consumers.
Speaker 11 (28:33):
We're still in fairly early stages, but we're actually getting
close to unveiling our technology to the public. So the
team actually released a big result about nine to twelve
months ago where we showed really tremendous advancements across a
(28:57):
few key mathematics benchmarks that were focused on formal mathematics.
Speaker 2 (29:02):
Give us a sense of that development process. I mean,
are you working toward a prototype or do you have
a prototype already?
Speaker 11 (29:08):
We have some things internally that we're refining, and basically
the company is largely focused on research because without a
strong model that keeps getting better and better, it's not
as useful. But over the past few months we've started
to turn more and more of our resources towards commercialization
(29:30):
and actually figuring out how we're going to put it
into people's hands. Who the customers are, what the biggest
pain points we can help solve for customers are.
Speaker 2 (29:41):
While ten If and his colleagues walk the long and
uncertain road towards superintelligence, Jack Hitory has built a business
around what he calls large quantitative models, which are trained
on numbers and data rather than on pros. His company,
Sandbox AQ, spun off from Alphabet in twenty twenty two.
Speaker 12 (30:00):
What we can do is we can take the equations
of biology, of chemistry, of physics, of engineering, and we
can train an AI on those, and that's the world
now of large quantitative models l qms, and this world
of lqms impacts eighty percent of our economy and drives
massive innovation in the companies that use them. And so
(30:23):
you have large language models on the one hand, and
from a business point of view, they're mainly there to
cut some costs. If you have say thirty million dollars
of costs every year in your company, you could probably
start lopping off ten, fifteen to twenty million of customer
service costs per year, and that's going to be a
great savings for your company. But when it comes to
(30:45):
creating new product billions of dollars of new revenue, that's
not really going to be a large language model. That's
going to be an LQM, a large quantitative model.
Speaker 2 (30:56):
Where are we in developing lqms.
Speaker 12 (30:58):
Lqms are now plating in the B to B land,
So it's less about consumers using lqms, but it's really
about businesses using lqms. And right now we announce at
Sandbox AQ that we're working with Santa Fee, for example,
a top ten pharma company, using lqms to advance their
work in life saving medicines. We announce work with chemical
(31:21):
companies such as a Ramco using lqms to up value
the hydrocarbons coming out, so we can create new products,
products that will not be burned in the atmosphere, but
rather be put into various kinds of vehicles and others
to lightweight and to add value to those industries as well.
Speaker 2 (31:40):
There's a lot of money being invested in AI right now,
a lot.
Speaker 13 (31:45):
Hundreds of billions of dollars literally being invested. From what
you understand, where are the places to look for good
investments or even better, what would you advise an investor
to look out for both on the upside in the
downs side. In considering investing in AI, there's.
Speaker 12 (32:03):
Two real ways to play the AI future. One is
to focus on a number of mainly private AI companies
that are that are out there now, and you know,
various people and various banks are able to put together
vehicles to invest in these uh and so that's one
way up to really focus on that. The second is
(32:26):
to look at the public markets. And we look at
the public markets again, you can look at the hyperscalers
such as Amazon, Microsoft, Google and others, and you could,
you know, place your bets there because essentially those are
AI driven companies at this point. But another way to
make your AI play that actually may be more fruitful
(32:49):
is to look at industry by industry David and understand
who are going to be the AI winners and AI losers.
In the pharmaceutical industry, in the energy industry, in the
telco industry, in the financial services sector. Each of these
are eight, ten, fifteen trillion dollar sectors, and the winners
(33:10):
and losers there are going to really determine billions and
billions of dollars of value of market cap difference as
those two groups diverge, the winners who are embracing AI
and the laggards who are not embracing AI fast enough.
Speaker 2 (33:27):
Whoever the winners and losers might be tomorrow, picking them
today is anything but certain. MIT professor Alex Pentland says
there will be no one size fits all solution.
Speaker 14 (33:38):
I think it's pretty clear that different AI will be
used for different purposes. It's just like humans are expert
in one thing or another. You want to have as
much sort of information and depth in something like designing drugs,
so medicines or doing climate change as you possibly can.
Your climate change model doesn't need to speak twenty different languages,
(34:03):
so don't waste the power of the language by training
on that sort of thing.
Speaker 2 (34:08):
You have a deep understanding of artificial intelligence, and you
are an academic, I'm not going to ask you for
investment advice, except I am here at Bloomberg. There's an
awful lot of money, tens of billions, even hundreds of
billions of dollars going into artificial intelligence. Where should investors
be looking to really put money into artificial intelligence or
(34:28):
should they just be trying a lot of different things
hoping something pays off.
Speaker 14 (34:33):
Well, if you're actually a qualified investor so that you
have enough money to sort of spread it around. I
would stick with things that have a very clear, defined
business case. So I mentioned the accounting right, or say,
taxes into it is worth a lot of money because
it uses AI to help you with your taxes. Clear
(34:56):
business case there, So look for other things like that
for discovery, for risk evaluation, things like that. One thing
not to do is assume that whatever it is that
they're building, this AI that they're building, will never make mistakes,
because it will. Everything makes mistakes sometimes, and you have
(35:17):
to make sure that the thing that you're doing when
it makes that mistake doesn't bankrupt the company.
Speaker 2 (35:24):
Disney World has some new company has a wide array
of companies and brands try to follow the lead of
the dominant theme park company. That's next on Wall Street Week.
This is a story about making dreams come true. For years,
(35:45):
media and entertainment companies have used their intellectual property to
create unforgettable live experiences through theme parks, but their success
is attracting new competition from New Quarters College Scarlett Food.
As the story.
Speaker 10 (36:02):
Summertime conjures up hot days, late nights, and roller coaster
rides and answering the call the themed entertainment industry, which
is currently worth an estimated seventy six billion dollars and
projected to reach more than one hundred and twenty billion
by twenty thirty three. The leaders Disney Universal, Merlin Entertainment,
and chime Long Group of China all generated experience revenues
(36:24):
in the billions last year, but Disney is a clear standout,
booking thirty four billion dollars in revenue alone, which is
almost three times the combined revenue of its smaller competitors,
and holding it all together fictional characters and immersive storytelling.
Speaker 15 (36:41):
In intellectual property really has become the cornerstone of the
modern theme park industry, and we've seen them grow exponentially
through the years.
Speaker 10 (36:53):
Dennis Spiegel is a theme park expert who's been working
in the industry for more than fifty years.
Speaker 15 (36:57):
There have been some very interesting situations developed through the years.
Disney bought Marvel, Spider Man, Ironman, all of those wonderful characters.
Those characters were already being used at Universal Studios, Florida,
(37:17):
a couple of miles away from Disney World. So in
that agreement, Disney cannot use the Marvel characters in Orlando.
In England, there's a Harry Potter Studios tour which is
very close to where the Universal Studio park will be,
(37:39):
but at this point in time, they haven't announced if
Harry Potter is going to be allowed to be used
in that.
Speaker 10 (37:47):
Now other entertainment companies want in on the action, leveraging
their most popular ip.
Speaker 11 (37:52):
So my favorite shows are net Place and have been
real long time.
Speaker 4 (37:55):
But people hear you bring the energy.
Speaker 13 (37:56):
I love Netflix.
Speaker 16 (37:57):
I've obsessed with Stranger.
Speaker 11 (37:58):
Things, Swinging Winter, anything and everything they relate.
Speaker 17 (38:02):
We realized there's really a way here to bring fans
closer to the stories that they love through live experiences.
Speaker 10 (38:09):
As Netflix expands its library of original content, the streaming
company is looking beyond its platform. Since twenty twenty, Netflix
has incorporated characters from some of its biggest hits into
live experiences, culminating in permanent themed entertainment centers.
Speaker 17 (38:24):
I'd consider Netflix House like a totally new dimension of storytelling,
because we'll be able to really keep it fresh, you know,
and sort of maintain that same case of cultural impact
and conversation that people see from our movies and TV shows.
Speaker 10 (38:38):
Josh Simon is Netflix's Vice president of Consumer Products. He's
in charge of a new theme park style venture called
Netflix House.
Speaker 17 (38:46):
Later this year, we'll open our first two Netflix House locations,
one at the King of Prussia Mall outside of Philadelphia
and one at the Galleria in Dallas. We recently announced
that we're also going to be opening a location in
Las Vegas in twenty twenty seven as well.
Speaker 16 (39:01):
All of those experiences are about engaging with fans and
then taking all that information and saying, okay, we are
ready to launch permanent experiences.
Speaker 10 (39:12):
Marion Lee is Netflix's chief marketing officer.
Speaker 16 (39:15):
We'll have Replay, which is sort of that concept of
an old school arcade, but it will be all obviously
Netflix shows and movies and games related to that.
Speaker 17 (39:25):
A Netflix bites, restaurant and bar, a retail store, a theater,
and then.
Speaker 16 (39:31):
We'll have a mini golf squid game and Wednesday and
one and then one Piece and something else and the
other and stranger things.
Speaker 17 (39:38):
It's really a great way for fans to experience those
like hero moments from their favorite Netflix movies and TV shows.
Speaker 16 (39:45):
We are not trying to fit ourselves into like one box.
Speaker 10 (39:49):
Netflix does not break out sales of consumer products and
live experiences, but in twenty twenty four, the company surpassed
three hundred million paying memberships, grew revenue by sixteen percent,
while it's operating income exceeded ten billion dollars for the
first time ever. And in the past five years, Netflix
has created more than four hundred experiences in three hundred
plus cities across the globe. In a world of screens,
(40:11):
live experiences appear to be in demand, but will they
sustain viewers' interest over the longer term.
Speaker 17 (40:17):
Well, we're thinking about which live experiences to bring to life.
There's there's usually a couple of ways we think about it. First,
is we really follow fan passion. We see this incredible
love for stories all over the world. The other thing
is we really look for our experiences to tell a
new dimension of a story. So you know, we're interested
in movies and TV shows that we know fans want
(40:39):
to explore in new ways.
Speaker 16 (40:40):
One of the key critical things that allows us to
really set ourselves apart is that we have a rabid
fan base. We have one point two billion fans across
all of our social media accounts around the world, and
they are telling us what they want to do. We
(41:02):
can hear what they're talking about, what kinds of products
they're buying, what kinds of food that they're eating, whenever
they go, and then it allows us to take that
information and invest into future experiences that we can place
all around the world.
Speaker 10 (41:18):
Even before Netflix entered the picture, the theme park industry
was a kind of survival of the fittest scenario, smaller
companies struggling to keep up with changing consumer tastes, the
biggest players under pressure to roll out new attractions highlighting
the latest technology, and everyone, no matter their size, spending
continuously to give visitors a reason to keep coming back.
Speaker 15 (41:39):
Typically a part will fail because either the market isn't ready,
it's not a good concept. I tell a lot of
people in our industry just because you have an idea,
it doesn't mean it's a good one. And we've seen
the good, the bad, and the ugly of theme parks.
Speaker 10 (41:58):
What are the big guys not understand? What do they
get wrong?
Speaker 18 (42:02):
Historically the local amusement park went from being a two
to ninety two family park to a thrill park. I
think our industry got addicted to the growth that a
roller coaster growths. But what happened was it really changed
the demographic of the park. They reduced the amount of entertainment,
They reduced the amount of show. The culinary experience was
(42:23):
reduced because they were getting the growth by just focusing
on roller coasters and thrill rides. And so now they've
kind of maxed out where the thrill ride can take them.
And you've seen this with six Flags and some of
the changes they're trying to make to move back towards
broader family experiences. So I would say there were some
mistakes made that brought them to where they are today.
Speaker 10 (42:43):
COVID nineteen dealt a big blow to theme parks, forcing
them to shut down for weeks and sometimes months. And
that's exactly when Netflix made its move into live experiences.
Speaker 17 (42:53):
We were looking for a way to bring a stranger
things to life. People were spending a lot of time
on their own in their cars. We took over a
couple hundred thousand square foot parking garage downtown LA and
basically created like a pop up theme park attraction.
Speaker 15 (43:10):
Well, we haven't seen this really. I mean, this is
our entertainment industry. From that standpoint, the streaming is really changing.
It's bringing us that shorter story.
Speaker 18 (43:21):
For our industry. It really is about how do we
define ourselves as a live experience. There's a lot of
people who feel that virtual experiences are going to become
bigger than real life experiences, and so we've got to
make sure that we continue to make great experiences so
that doesn't really happen.
Speaker 10 (43:39):
Andrew Wexler is CEO of Hershant, the largest family owned
a theme attractions company in North America. Hershan's first attraction
was Silver Dollar City in Branson, Missouri, in nineteen sixty.
It has since built a portfolio of family friendly entertainment
brands from the Harlem Globetrotters exhibition basketball team to Dollywood
in the Great Smoky Mountains in Tennessee. Interest in Netflix.
(44:01):
Hershan's Silver Dollar City features IP that's tied to its
local history. Starting with a cave. How did a cave
spawn a theme park?
Speaker 18 (44:10):
Hugo Mary Hershon went on a road trip. They came
to southwest Missouri to the Ozarks to enjoy the beauty,
and they did a cave tour here and really fell
in love with location, with the cave, with the people,
and decided they wanted to make it a summer attraction.
So the cave tour was so popular that there were
long lines to get in the cave, and they needed
to give some people something to do. It's kind of
(44:30):
the first instance of line management, So they built this
eighteen eighties town on top of the cave so people
can be entertained.
Speaker 10 (44:39):
Since the nineteen seventies, Hershant has focused on bringing new
live shows and rides to Silver Dollar City while keeping
its IP rooted in the area's eighteen eighties lore. As
a result, the park feels timeless, which is reinforced by
its long serving staff.
Speaker 2 (44:53):
I've been the vice president of FEUDU service since nineteen
ninety two, and this is my fiftieth year.
Speaker 4 (44:57):
I've started from the ground up and I'm still here.
Speaker 10 (45:00):
It's also got a cult following, with local families making
regular pilgrimages generation after generation. All I know is for
my eighth birthday, that was we went that day.
Speaker 4 (45:10):
It was my one hundred and eighth time building.
Speaker 17 (45:12):
I think, and I remember a lot of my childhood
coming back.
Speaker 12 (45:15):
They have some rides of six Flags, but these rides
are like really fun.
Speaker 16 (45:18):
We've been coming since we were little ourselves, Like, I
don't even remember my first time coming.
Speaker 4 (45:24):
Yeah, how do I remember my first time?
Speaker 7 (45:25):
It's just been always part of our lives.
Speaker 18 (45:27):
If you look at most theme parks across America, they
were organic. They start off as a petting zoo or
a campground, and then they added rides and slowly grew
over time. Most successful theme parks are like that. It's
really hard to go from zero to one hundred at
a theme park today just because of the capital intensity
and the ability to actually draw enough people to make
(45:49):
it in cash flow positive.
Speaker 10 (45:50):
So you're continuously reinvesting in the business, how do you
think about return on investment?
Speaker 18 (45:55):
So we know what the return is that our shareholders
would like on the business. We incorporate that in our
capital plans, so we actually we do long range plans
to we try and identify what are our projects over
the next ten years. Now, you've got to be nimble
and flexible. It may change. But within that, what's the
impact of that investment and how's it going to grow
(46:15):
the park? From an attendance perspective.
Speaker 10 (46:17):
I think about bigger competitors or peers. Universal it engages
in an IP review every two to three years, and
it looks critically at its own properties. That also does
an overall assessment of the media landscape. What does that
look like on your end?
Speaker 18 (46:33):
It's about gaps and needs. The IP is just one
element of the experience. What are the frictions that make
it hard to enjoy the park? Waiting in line, having
to walk certain distance from one place to another. How
do you improve that sort of experience? So, while it's
great they do an IP review for us, it's about
experience review and how do we make the experience better.
Speaker 15 (46:53):
Theme parks live on repeat visitation, and repeat visitation is
generated by what we call capex, the dollars that we
invest every year. So the new rides and attractions that
we put in every year bring the people back.
Speaker 10 (47:13):
But this is a capital intensive business, so how do
you plan out how much you're going to spend it.
Speaker 18 (47:17):
Well, fortunately, our business does generate cash, and so we
have a set percentage of the cash that we generate
each year that we know is going to go back
into capital. So really the debt part is irrelevant when
it comes to our capex unless we wanted to make
an acquisition or do something that was above and beyond.
We really are about that live local experience, with the
(47:41):
idea that if our purpose is the companies that bring
families closer together, having somebody necessarily sit in front of
television is not the best way to do that.
Speaker 2 (47:50):
That does it for us Here at Wall Street Week,
I'm David Weston. See you next week for more stories
of capitalism.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:21):
This is Wall Street Week. I'm David Weston, bringing you
stories of capitalism. For many years, Saudi Arabia has been
at the center of the world of oil. We travel
to the kingdom to learn how and why it wants
to change that. Plus, you saw you knew the world
of artificial intelligence, but it turns out it comes in
different flavors with different time horizons. We explore the brave
(00:44):
new world of mathematical superintelligence and large quantitative models. And
as we head into the heart of summer, we take
you to some of the nation's theme parks as traditional
leaders Disney and Universal are getting some new competition from
Surprising play. But we start with the Federal Reserve Board
decision this week and how the Central Bank is grappling
(01:06):
with all that policy uncertainty.
Speaker 3 (01:08):
The amount of the tariff effects, the size of the
tariff effects, their duration, and the time it will take
are all highly uncertain. So that is why we think
the appropriate thing to do is to hold where we
are as we learn more, and we think our policy
stances is in a good place where we're well positioned
to react to incoming developments. We have to be forward looking,
and the thing that every forecaster, every outside forecaster, and
(01:31):
the Fed is saying is that we expect a meaningful
amount of inflation to arrive in coming months.
Speaker 2 (01:37):
Turning first to our special contributor, Larry Summers of Harvard. So, Larry,
we heard from the Federal Reserve, the FOMC as well
as Chair Pale this week. What did you make out
of what they had to say and particularly their projections.
Speaker 1 (01:52):
I thought what they said was both predictable and reasonable.
They you can't be changedinging monetary policy with the uncertainty
that we've.
Speaker 4 (02:04):
Got right now. They were right to.
Speaker 1 (02:06):
Signal that they were being cautious about future changes. What
struck me most, David, was a quite remarkable combination. The
dot plot showed unemployment revised upwards, showed inflation revised upwards,
even a period when we're getting good news about artificial
(02:28):
intelligence and productivity, and good news about a whale.
Speaker 4 (02:33):
So you see a supply shock coming even though the.
Speaker 1 (02:39):
Natural sources of supply shocks aren't there.
Speaker 4 (02:43):
What is it? It's the tariffs.
Speaker 1 (02:46):
We're imposing a supply shock on ourselves, and that's leading
to expectations of both higher inflation and higher unemployment making
the Fed's job that much much more difficult. And the
Fed's obviously not going to get in a political war
with the administration.
Speaker 4 (03:08):
But the stark analytic fact is clear.
Speaker 1 (03:12):
It doesn't happen that often that the FED revises up
on inflation and unemployment at the same time, and I
don't think there's ever been a time when they revised
that way in both directions based on administration policy.
Speaker 2 (03:30):
Larry, you mentioned the geopolitical conflict that we're seeing. Certainly
we have an enormous one between Israel and Iran as
we speak, with questions about whether the United States might
get involved. As a macroeconomist, how do you approach that question.
Speaker 4 (03:43):
Look, no one knows.
Speaker 1 (03:47):
I suspect that the President doesn't know completely what he's
going to do because he is watching.
Speaker 4 (03:55):
Events.
Speaker 1 (03:57):
I'd just say a couple of things, David. One is
that we got a lot of divisions within our country,
but I would hope that at a moment like this,
with respect to the kind of threat that Iran represents,
that there'd be a lot of desire to come together
(04:19):
and support policies that will put the greatest stability possible.
In second thing, I would advise your listeners. What I
do to track very complex events and spheres where I
(04:40):
don't have deep expertise is I look for prediction markets.
Prediction markets aren't perfect. They're sometimes wrong, just like the
stock market is sometimes wrong about the earnings of companies,
but they do represent an aggregation of opinion behind based
on people who are prepared to put some money where
(05:02):
their mouths are. And the experience now in many spheres,
from elections to geopolitical events to movie releases, is that
prediction markets have very good track records relative to experts.
And what prediction markets are saying is quite interesting.
Speaker 4 (05:26):
They're saying that.
Speaker 1 (05:27):
The odds of a US attack on Iran are close
to two thirds by the end of this month, close
to three quarters by the end of next month, and
that it's a substantial chance, well above fifty percent, that
the Supreme Leader in Iran will be out of office
(05:50):
by the end of this year. So what prediction markets
are judging is likely to happen is potentially quite tumultuous,
and I think that anyone trying to judge the situation
as they formed their portfolio would be well advised not
(06:12):
to rely only on that, but to give those prediction
market judgments weight as they make their own.
Speaker 2 (06:19):
Judgments if those predictions came true, and as you say,
we don't know, but let's assume that happened in fact,
the United States did get involved, and that the Supreme
Leader left and there was a regime change in Iran.
What would that mean economically? What sectors of the economy
would you look at when we all think about oil,
for example, I've also seen food prices raised in terms
(06:41):
of fertilizer of Iran. What sectors do you think might
be affected the moment?
Speaker 1 (06:45):
I think, David, I would quibble with you in one respect.
I think when you say something's got a sixty percent
chance of happening, you're saying that it's a sixty percent
chance of happening, and there's no such thing as the
prediction coming or the prediction coming faults. Either the sixty
percent thing will happen or the forty percent thing will happen.
(07:06):
So I would choose a somewhat different locution.
Speaker 4 (07:12):
Than you did. But to your question, I'd be looking
primarily at oil and petrochemicals more generally, fossil fuels more generally,
and that of course includes fertilizers includes plastics.
Speaker 2 (07:35):
Larry to be a bit more parochial, at least for us.
In New York City. We have a mayor election coming
up and including a primary in the Democratic Party, and
we have a fairly stark contrast in economic approaches of
the two leading candidates, who or Andrew Cuomo, you know,
well more of a traditional it seems to be Democrat,
and a man named Zoran Memdani, who seems to have
(07:57):
a much more extreme people think economic platform. What do
you make of that?
Speaker 1 (08:04):
In a sense, every American is a citizen of New York.
It's so much a cultural and financial hub of our
country that what happens in New York is consequential for
all of us.
Speaker 4 (08:22):
And I'm not an.
Speaker 1 (08:23):
Expert on the exigencies of the details of New York
City economic policy, but i do think the Democratic Socialist
program would be profoundly dangerous for New York, for the
Democratic Party, and for the United States. Set of measures,
(08:46):
free college, free childcare, free mass transit, rent control, huge
increases in the minimum wage, financed only with tax increases
on the wealthy. Mobile mobile wealthy who will prove to
be mobile if this program is enacted will, I think
(09:08):
be extremely dangerous. I have warned again and again on
your show about the dangers of economic populism of the
kind President Trump has followed talking about Juan Parone talking
about the dangers of tariffs many times. Frankly, the Democratic
(09:30):
Socialist candidate is more populist and more dangerous.
Speaker 4 (09:36):
In his approach on the narrow set of economic issues.
Speaker 1 (09:42):
Even then, President Trump and I think if he were
to be selected, it would brand the Democratic Party in
a highly problematic way. It would suggest that the debate
within the Democratic Party was between the Larren Sanders wing
(10:03):
and measures that are even more extreme than theirs in
terms of the politics of envy in terms of government
control of the economy.
Speaker 2 (10:17):
Next down Wall Street Week, imagining a Saudi Arabia that
doesn't depend on oil, We go to the Kingdom, where
the CEO of Aramco lays out a bold vision. This
(10:38):
is a story about something we haven't seen before, a
country weaning itself off oil as its primary source of revenue.
Even as renewed conflict between Israel and Iran has driven
the price of oil up once again. The Kingdom of
Saudi Arabia pursues a bold plan to move quickly to
a diversified economy and the world's biggest oil producer. Aramco
(10:59):
is in the middle of the transition. Here's our Bloomberg
TV colleague, Jumanar Bressecchi from Dahran.
Speaker 5 (11:08):
Aramco has long been the beating heart of Saudi Arabia's economy,
but in less than five years time, the kingdom hopes
to reach its goal of building an economy that moves
away from its traditional reliance on oil.
Speaker 6 (11:20):
We think of ourself as a technology company, delivering energy.
Speaker 7 (11:23):
To be honest with you, technology has always been our
competitive advantage.
Speaker 8 (11:27):
The company has been evolving ever since its inception.
Speaker 9 (11:29):
Aramko plays a significant role in Saudi's diversification agenda.
Speaker 5 (11:37):
Aramco's journey started in nineteen thirty three when the Saudi
government granted exploration rights to the Standard Oil Company of California.
That created the Californian Arabian Standard Oil Company and eventually
led to the discovery of oil in commercial quantities at
Dammam Well number seven. This marked a turning point in
Aramco and Saudi Arabian history. Nineteen forty four, the company
(12:01):
was renamed to ARAMCO, the Arabian American Oil Company, and
later that became Saudi Aramco, reflecting its transition to a
fully state owned company by the late eighties.
Speaker 6 (12:12):
Look at that. You can feel the crude here, eh,
looking at crude.
Speaker 5 (12:18):
Naser joined Aramco in nineteen eighty two as an oil
engineer before working up the ranks to become CEO in
twenty fifteen. So this is the geology. Where does the
technology come into it?
Speaker 6 (12:31):
Well, technology comes in the modeling and some of the
technology you can see it here. So we digitize all
of that and we kept the tea so they can
look at it and then while you know, having more
data to see rather than only the what you see
in front.
Speaker 3 (12:47):
Of you here.
Speaker 5 (12:48):
In twenty nineteen, the Saudi government sold down one point
five percent of the company, raising twenty five point six
billion dollars, which today remains the largest IPO in history.
The Saudi government and SOERMN Wealth Funds PIF join the
own around ninety eight percent of aram coast shares. The
oil giant accounts for approximately sixty percent of total Saudi
(13:11):
government revenue, and the broader oil sector, with Aramco is
the main player, makes up roughly thirty to forty percent
of the kingdom's GDP.
Speaker 6 (13:20):
Relying on one sector only to drive the Saudi economy
is not right. And this is where the figion is.
They are helping other sectors, growing other sectors across the kingdom.
To grow oil and gas is still important. That's why
you see the growth see here. We are very pragmatic
here in the Kingdom. You're talking about one hundred to
(13:42):
one hundred and ten thirty ge go out of solar
and wind. We believe in hydrogen where we will be
happy to produce hydrogen. Actually, we have one of the
biggest projects in green hydrogen at Leon, and we will
be more than happy to build more green hydrogen and
blue hydrogens in the Kingdom. And the same time we're
in carbon caption and storage, but we are normally not
(14:03):
neglecting hydrocarbon. We have healthy oil production, we have a
maximum sustake ABAS with twelve million. We are growing our
gas by more than sixty percent by twenty thirty. So
we are focusing in our conventional and growing it while
decarbonizing at the same time, and we are building the
new which is solar, wind, hydrogen and others.
Speaker 5 (14:26):
The Kingdom's crown jewel is central to the ambitions of
vision twenty thirty, the government program aiming to diversify the
economy away from hydrocarbon dependence, attract foreign investments, and modernize
the Saudi Arabian society. Carla slam Is chief economists that
standard chartered covering regions including the Middle East.
Speaker 9 (14:46):
In the past, the diversification strategy was investing petro dollars
oil revenues abroad so that they would be uncorrelated to
the price of oil, and for the last decade around
cost dividends to the budget have contributed indirectly to funding
a lot of the diversification strategy in the domestic economy,
so they remain a very important piece of the Saudi
(15:09):
economy of the revenues in order to fund that government
spending and that investment.
Speaker 5 (15:15):
From creating Niom, a five hundred billion dollar futuristic city
in the desert, to hosting the twenty thirty four World
Cup and building out a new major airport in Riyad
Vision twenty thirty is well underway. The Kingdom's transition is
not without its challenges. Opek plus production cuts undermine a
key source of revenue for the country. Despite diversification efforts.
(15:39):
In the first quarter of twenty twenty five, Saudi Arabia
reported its largest budget deficits since twenty twenty one. That's
impacted spending for some of the kingdom's largest investment projects,
and ARAMCO has increasingly tapped into debt markets, which the
company has put down to looking to lower its weighted
cost of capital and optimizing the capital structure.
Speaker 6 (16:00):
Our gearing today is around five percent, still one of
the lowest gearing you know, almost half of the average
compared to other energy industry players in the market. And
we will continue to tab into that addition and bond
markets on the future. But we have a low gearing ratio.
(16:25):
It's still as you considered, terry low considered combat to
any others, any players in the markets.
Speaker 5 (16:32):
The size of the dividends, especially to its largest shareholder,
the Saudi government, remains under scrutiny relative to free cash
flow generated. Geopolitical tensions have also remained an undercurrent of
concerns since the twenty nineteen attacks on around COO's Upcake facility.
Although the company resumed partial operations within twenty four hours,
(16:52):
the incidet triggered a heightened focus on security. In response,
Saudi Arabia has worked to ease regional tensions, including wearing
diplomatic ties with Iran in twenty twenty three. Even as
the company manages near term pressures, Aramco is investing in
areas that could define its long term future.
Speaker 8 (17:09):
I think gas is going to be a major growth
area for the company today and this is not known
to many people. We are a large gas producer.
Speaker 5 (17:17):
Ashchef Rasawi is Aramco's EVP for Strategy and corporate Development.
He lays out the non oil key strategic pillars of
the business.
Speaker 8 (17:26):
Our gas business is going to grow by sixty percent
by twenty thirty compared to the twenty twenty one levels,
and you will see the company grow and continue to
invest in a lot of low carbon or new energies.
In particular, you will see Aramco investing now and renewables,
energy and hydrogen and ammonia, as well as carbon capture
and stores technology. Not to mention digital and digitization as
(17:51):
a big area for US. Further integration down the value
chain is an important area for you to basically have
an outlet for these vast hydrocarbon resources. Chemicals to US
is a main building block for all modern economies and
modern societies. You'll always need commodities and materials like plastics
and polymers for any type of economic development going forward.
Speaker 5 (18:15):
Like in most industries, one of its most ambitious bets
to move the company forward is artificial intelligence AI.
Speaker 7 (18:23):
We see as one of the most important developments in
this century in terms of technology, and so we have
been quick to deploy AI in our operations and to
apply it to our business.
Speaker 5 (18:35):
Ah medel Kite leads tech and innovation at Aramco. Data
from the company's facilities and operations end up here at
its fourth Industrial Revolution Center. Last year, a Ramco announced
it was developing a large scale industrial AI model called
Ramco Metabrain.
Speaker 7 (18:52):
The Metabrane is a seventy billion parameter model and the
reason we chose to build a proprietary large language model
is because we have to use our own data and
it gives us that competitive advantage. So we have trained
that model with all of our historical data, engineering reports, standards,
and that model is now used to advise our engineers
(19:14):
and operations every single employee in the company. So we
have deployed that model on seventy thousand workstations across our
facilities and our offices. But not only is it providing advice,
but it is also informing for better decisions. It is
the base foundation for many of the applications we are
doing in optimization for example and operating our facilities. So
(19:37):
that's the way we are able to bring AI right
to the field.
Speaker 6 (19:40):
This is where do you see a lot of the
use cases delivering results for us. Technology realization in twenty
twenty three used to be two billion dollars. Is so
much we realize from technology in twenty four four billion dollars,
we're looking at two to four billion dollars. Berrie technologized
AI is in everything embedded, not only in terms of
(20:05):
allowing us to reduce our cost structure more efficiency, it
also helps us in reducing our carbon footprint. So it's
very important and able to see it introducing emissions, increasing
productivity and with that the number of wolds water production
and with that emissions and this bumping in everything. It's embedded,
and we are looking at the benefits of AI integrating
(20:29):
it and everything that we are doing.
Speaker 5 (20:31):
Even with big strides and digital innovation. Aramco at its
core remains an energy giant as CEO of one of
the largest hydrocarbon companies in the world. Nasser has been
advocating for what he considers a more pragmatic approach to
the energy transition.
Speaker 6 (20:47):
Well, we have always said that we need transition research
or a reality check in the transition to deliver on
our ambition for an zero. What we need is pragmatic
solutions to deliver on what we are all aiming for.
Almost seventy to eighty percent of the energy global energy
(21:09):
and twenty fifty will be in the global salt not
and the global north. So one size fits all will
not work. And anything that is driven heavily by incentive
that's not sustainable. The minute these incentives disappear and they
will disappear one day, that additional cost will be best
to consumer, and that's where we are seeing the increase
(21:33):
in cost. What we need is something that while sustainable,
is affordable and secure. We have always talked about different
mix of energy that it will be required.
Speaker 5 (21:45):
Aramco has a net zero twenty to fifty target for
its Scope one and Scope two emissions and prides itself
on having the lowest carbon intensity for upstream extraction compared
to other energy companies, But this does not include Scope
three emissions, which from end user combustion of oil and
fossil fuels and constitute the line share of emissions.
Speaker 8 (22:05):
I have to say that not all crude oil is equal.
You know, we take a lot of pride in the
fact that we are the lowest upstream carbon intensity producer
and husband for a while, and that's a result of
decades of responsible and sustainable operations. You know, it's important
for us also to adhere to our commitments toward the
Nazero ambition and keeping an eye on what levers of
(22:29):
decarbonization are available to us. We have been running flair
minimization programs for for decades. We have methane intensity that
is the lowest in the market. All of these combines
actually is where we position ourselves as the undisputed leader
when it comes to carbon intensity and environmental metrics out there.
Speaker 5 (22:52):
Aramco looks to redefine its role as Saudi Arabia reimagines
its future.
Speaker 9 (22:58):
We believe Saudi will remain a major oil producer in
the global economy. We don't expect this to change, but
we believe that the non oil GDP expansion will happen
in parallel to Saudi remaining a major commodity player on
the global front. On the regional front and its G
twenty capacity. We just expect that the non oil development
(23:19):
will happen in tandem in parallel, and this will continue
to have shifts to how Saudi spends domestically globally in
the region as well with its regional allies.
Speaker 6 (23:29):
There is a lot of challenges ahead of us, especially
with sustainability, with the transitions with disruptive technologies. We need
to be ready. How do we maintain and continue to
maintain that leadership while also delivering the new energies that
the world wants.
Speaker 2 (23:46):
Us coming up. Just when you thought you were getting
your arms around artificial intelligence, large language models along coming
array of alternatives, we delve into large quantitative models and
even so for intelligence that's next on Wall Street Week.
(24:12):
This is a story about thinking ahead, even way ahead.
We've all heard about the race between companies and countries
to develop artificial intelligence, but it turns out that there's
another race going on, one among entirely different approaches to
AI and what they're racing to achieve.
Speaker 10 (24:31):
Generally, we think the cost of innovation is collapsing here.
Speaker 8 (24:35):
It is going to transform our lives.
Speaker 2 (24:37):
We're going to look back and see this is a
hugely important era.
Speaker 1 (24:40):
This is obviously the most disruptive technology in the history
of man can.
Speaker 2 (24:47):
At the center of many of the latest AI breakthroughs
are large language models or lms, the chat, GPTs and
geminis of this world. But as powerful as they are becoming,
we learn more every day about their limitations, how they
can be prone to errors, hallucinations, and uncertainty. One of
those trying to address these limitations is none other than
(25:09):
Vlad Tenef, known to most of us as the CEO
and co founder of robin Hood Markets. Tenef has become
a successful entrepreneur, but his background is in mathematics.
Speaker 11 (25:22):
What a lot of people don't know about me is actually,
before I became an entrepreneur, I was a mathematician, or
at least an aspiring mathematician. I always had this passion
for mathematics and for advancing our understanding of reality. And
so when we saw GPT four come out along with
(25:43):
a bunch of improvements in the mathematics community around formal verification, Tutor,
who's my co founder and CEO of Harmonic, and I
got very very excited about building something. We thought that
the time was right to actually build something mathematics that
combine the state of the art in that field with
(26:03):
the state of the art in AI.
Speaker 2 (26:06):
Tenem's new firm, Harmonic helps to achieve something that still
belongs to the realm of science fiction. Beyond artificial narrow
intelligence like chat GPT, which can perform specific and limited tasks,
beyond even an artificial general intelligence which could learn and
adapt like humans. Tenef says his goal is to help
create what he calls a mathematical superintelligence.
Speaker 11 (26:30):
So mathematical superintelligence is artificial intelligence that can reason and
solve math problems at a level exceeding the most advanced
mathematics researchers, so professional mathematicians that are out there today.
And we think that developing such a system will not
(26:50):
only greatly accelerate the progress of mathematics, but it will
also accelerate progress in all fields of science and technology
that depend on mathematics.
Speaker 2 (27:03):
We have heard at this point so much about large
language models in the AI space. What you describe sounds
like almost the obverse of large language models, which is,
I understand operate on language rather than numbers or on mathematics.
Speaker 11 (27:16):
I think the main problem with large language models and
AI systems as they're currently designed, is that they very
very confidently can tell you the wrong thing. So there's
very few controls over what we call hallucinations. You'll ask
a large language model a question, it'll give you an answer.
(27:36):
You can ask it to solve a major mathematical conjecture
and it'll spit out output, and it can be very
convincing in its incorrectness. And so I think that's a
huge problem, and that's by and large what's hindered the
adoption of these AI tools in mission critical industries, and
(28:00):
the way that Harmonic has designed our AI from the
beginning is with correctness and verifiability being a first class citizen.
Speaker 2 (28:12):
Last year, Harmonic closed a seventy five million dollars Series
A funding round led by Sequoia Capital and announced that
it's AI had performed well in a test of mathematical reasoning.
But Tennis says there's still work to do before true
mathematical superintelligence is achieved and before Harmonic can roll out
a product to consumers.
Speaker 11 (28:33):
We're still in fairly early stages, but we're actually getting
close to unveiling our technology to the public. So the
team actually released a big result about nine to twelve
months ago where we showed really tremendous advancements across a
(28:57):
few key mathematics benchmarks that were focused on formal mathematics.
Speaker 2 (29:02):
Give us a sense of that development process. I mean,
are you working toward a prototype or do you have
a prototype already?
Speaker 11 (29:08):
We have some things internally that we're refining, and basically
the company is largely focused on research because without a
strong model that keeps getting better and better, it's not
as useful. But over the past few months we've started
to turn more and more of our resources towards commercialization
(29:30):
and actually figuring out how we're going to put it
into people's hands. Who the customers are, what the biggest
pain points we can help solve for customers are.
Speaker 2 (29:41):
While ten If and his colleagues walk the long and
uncertain road towards superintelligence, Jack Hitory has built a business
around what he calls large quantitative models, which are trained
on numbers and data rather than on pros. His company,
Sandbox AQ, spun off from Alphabet in twenty twenty two.
Speaker 12 (30:00):
What we can do is we can take the equations
of biology, of chemistry, of physics, of engineering, and we
can train an AI on those, and that's the world
now of large quantitative models l qms, and this world
of lqms impacts eighty percent of our economy and drives
massive innovation in the companies that use them. And so
(30:23):
you have large language models on the one hand, and
from a business point of view, they're mainly there to
cut some costs. If you have say thirty million dollars
of costs every year in your company, you could probably
start lopping off ten, fifteen to twenty million of customer
service costs per year, and that's going to be a
great savings for your company. But when it comes to
(30:45):
creating new product billions of dollars of new revenue, that's
not really going to be a large language model. That's
going to be an LQM, a large quantitative model.
Speaker 2 (30:56):
Where are we in developing lqms.
Speaker 12 (30:58):
Lqms are now plating in the B to B land,
So it's less about consumers using lqms, but it's really
about businesses using lqms. And right now we announce at
Sandbox AQ that we're working with Santa Fee, for example,
a top ten pharma company, using lqms to advance their
work in life saving medicines. We announce work with chemical
(31:21):
companies such as a Ramco using lqms to up value
the hydrocarbons coming out, so we can create new products,
products that will not be burned in the atmosphere, but
rather be put into various kinds of vehicles and others
to lightweight and to add value to those industries as well.
Speaker 2 (31:40):
There's a lot of money being invested in AI right now,
a lot.
Speaker 13 (31:45):
Hundreds of billions of dollars literally being invested. From what
you understand, where are the places to look for good
investments or even better, what would you advise an investor
to look out for both on the upside in the
downs side. In considering investing in AI, there's.
Speaker 12 (32:03):
Two real ways to play the AI future. One is
to focus on a number of mainly private AI companies
that are that are out there now, and you know,
various people and various banks are able to put together
vehicles to invest in these uh and so that's one
way up to really focus on that. The second is
(32:26):
to look at the public markets. And we look at
the public markets again, you can look at the hyperscalers
such as Amazon, Microsoft, Google and others, and you could,
you know, place your bets there because essentially those are
AI driven companies at this point. But another way to
make your AI play that actually may be more fruitful
(32:49):
is to look at industry by industry David and understand
who are going to be the AI winners and AI losers.
In the pharmaceutical industry, in the energy industry, in the
telco industry, in the financial services sector. Each of these
are eight, ten, fifteen trillion dollar sectors, and the winners
(33:10):
and losers there are going to really determine billions and
billions of dollars of value of market cap difference as
those two groups diverge, the winners who are embracing AI
and the laggards who are not embracing AI fast enough.
Speaker 2 (33:27):
Whoever the winners and losers might be tomorrow, picking them
today is anything but certain. MIT professor Alex Pentland says
there will be no one size fits all solution.
Speaker 14 (33:38):
I think it's pretty clear that different AI will be
used for different purposes. It's just like humans are expert
in one thing or another. You want to have as
much sort of information and depth in something like designing drugs,
so medicines or doing climate change as you possibly can.
Your climate change model doesn't need to speak twenty different languages,
(34:03):
so don't waste the power of the language by training
on that sort of thing.
Speaker 2 (34:08):
You have a deep understanding of artificial intelligence, and you
are an academic, I'm not going to ask you for
investment advice, except I am here at Bloomberg. There's an
awful lot of money, tens of billions, even hundreds of
billions of dollars going into artificial intelligence. Where should investors
be looking to really put money into artificial intelligence or
(34:28):
should they just be trying a lot of different things
hoping something pays off.
Speaker 14 (34:33):
Well, if you're actually a qualified investor so that you
have enough money to sort of spread it around. I
would stick with things that have a very clear, defined
business case. So I mentioned the accounting right, or say,
taxes into it is worth a lot of money because
it uses AI to help you with your taxes. Clear
(34:56):
business case there, So look for other things like that
for discovery, for risk evaluation, things like that. One thing
not to do is assume that whatever it is that
they're building, this AI that they're building, will never make mistakes,
because it will. Everything makes mistakes sometimes, and you have
(35:17):
to make sure that the thing that you're doing when
it makes that mistake doesn't bankrupt the company.
Speaker 2 (35:24):
Disney World has some new company has a wide array
of companies and brands try to follow the lead of
the dominant theme park company. That's next on Wall Street Week.
This is a story about making dreams come true. For years,
(35:45):
media and entertainment companies have used their intellectual property to
create unforgettable live experiences through theme parks, but their success
is attracting new competition from New Quarters College Scarlett Food.
As the story.
Speaker 10 (36:02):
Summertime conjures up hot days, late nights, and roller coaster
rides and answering the call the themed entertainment industry, which
is currently worth an estimated seventy six billion dollars and
projected to reach more than one hundred and twenty billion
by twenty thirty three. The leaders Disney Universal, Merlin Entertainment,
and chime Long Group of China all generated experience revenues
(36:24):
in the billions last year, but Disney is a clear standout,
booking thirty four billion dollars in revenue alone, which is
almost three times the combined revenue of its smaller competitors,
and holding it all together fictional characters and immersive storytelling.
Speaker 15 (36:41):
In intellectual property really has become the cornerstone of the
modern theme park industry, and we've seen them grow exponentially
through the years.
Speaker 10 (36:53):
Dennis Spiegel is a theme park expert who's been working
in the industry for more than fifty years.
Speaker 15 (36:57):
There have been some very interesting situations developed through the years.
Disney bought Marvel, Spider Man, Ironman, all of those wonderful characters.
Those characters were already being used at Universal Studios, Florida,
(37:17):
a couple of miles away from Disney World. So in
that agreement, Disney cannot use the Marvel characters in Orlando.
In England, there's a Harry Potter Studios tour which is
very close to where the Universal Studio park will be,
(37:39):
but at this point in time, they haven't announced if
Harry Potter is going to be allowed to be used
in that.
Speaker 10 (37:47):
Now other entertainment companies want in on the action, leveraging
their most popular ip.
Speaker 11 (37:52):
So my favorite shows are net Place and have been
real long time.
Speaker 4 (37:55):
But people hear you bring the energy.
Speaker 13 (37:56):
I love Netflix.
Speaker 16 (37:57):
I've obsessed with Stranger.
Speaker 11 (37:58):
Things, Swinging Winter, anything and everything they relate.
Speaker 17 (38:02):
We realized there's really a way here to bring fans
closer to the stories that they love through live experiences.
Speaker 10 (38:09):
As Netflix expands its library of original content, the streaming
company is looking beyond its platform. Since twenty twenty, Netflix
has incorporated characters from some of its biggest hits into
live experiences, culminating in permanent themed entertainment centers.
Speaker 17 (38:24):
I'd consider Netflix House like a totally new dimension of storytelling,
because we'll be able to really keep it fresh, you know,
and sort of maintain that same case of cultural impact
and conversation that people see from our movies and TV shows.
Speaker 10 (38:38):
Josh Simon is Netflix's Vice president of Consumer Products. He's
in charge of a new theme park style venture called
Netflix House.
Speaker 17 (38:46):
Later this year, we'll open our first two Netflix House locations,
one at the King of Prussia Mall outside of Philadelphia
and one at the Galleria in Dallas. We recently announced
that we're also going to be opening a location in
Las Vegas in twenty twenty seven as well.
Speaker 16 (39:01):
All of those experiences are about engaging with fans and
then taking all that information and saying, okay, we are
ready to launch permanent experiences.
Speaker 10 (39:12):
Marion Lee is Netflix's chief marketing officer.
Speaker 16 (39:15):
We'll have Replay, which is sort of that concept of
an old school arcade, but it will be all obviously
Netflix shows and movies and games related to that.
Speaker 17 (39:25):
A Netflix bites, restaurant and bar, a retail store, a theater,
and then.
Speaker 16 (39:31):
We'll have a mini golf squid game and Wednesday and
one and then one Piece and something else and the
other and stranger things.
Speaker 17 (39:38):
It's really a great way for fans to experience those
like hero moments from their favorite Netflix movies and TV shows.
Speaker 16 (39:45):
We are not trying to fit ourselves into like one box.
Speaker 10 (39:49):
Netflix does not break out sales of consumer products and
live experiences, but in twenty twenty four, the company surpassed
three hundred million paying memberships, grew revenue by sixteen percent,
while it's operating income exceeded ten billion dollars for the
first time ever. And in the past five years, Netflix
has created more than four hundred experiences in three hundred
plus cities across the globe. In a world of screens,
(40:11):
live experiences appear to be in demand, but will they
sustain viewers' interest over the longer term.
Speaker 17 (40:17):
Well, we're thinking about which live experiences to bring to life.
There's there's usually a couple of ways we think about it. First,
is we really follow fan passion. We see this incredible
love for stories all over the world. The other thing
is we really look for our experiences to tell a
new dimension of a story. So you know, we're interested
in movies and TV shows that we know fans want
(40:39):
to explore in new ways.
Speaker 16 (40:40):
One of the key critical things that allows us to
really set ourselves apart is that we have a rabid
fan base. We have one point two billion fans across
all of our social media accounts around the world, and
they are telling us what they want to do. We
(41:02):
can hear what they're talking about, what kinds of products
they're buying, what kinds of food that they're eating, whenever
they go, and then it allows us to take that
information and invest into future experiences that we can place
all around the world.
Speaker 10 (41:18):
Even before Netflix entered the picture, the theme park industry
was a kind of survival of the fittest scenario, smaller
companies struggling to keep up with changing consumer tastes, the
biggest players under pressure to roll out new attractions highlighting
the latest technology, and everyone, no matter their size, spending
continuously to give visitors a reason to keep coming back.
Speaker 15 (41:39):
Typically a part will fail because either the market isn't ready,
it's not a good concept. I tell a lot of
people in our industry just because you have an idea,
it doesn't mean it's a good one. And we've seen
the good, the bad, and the ugly of theme parks.
Speaker 10 (41:58):
What are the big guys not understand? What do they
get wrong?
Speaker 18 (42:02):
Historically the local amusement park went from being a two
to ninety two family park to a thrill park. I
think our industry got addicted to the growth that a
roller coaster growths. But what happened was it really changed
the demographic of the park. They reduced the amount of entertainment,
They reduced the amount of show. The culinary experience was
(42:23):
reduced because they were getting the growth by just focusing
on roller coasters and thrill rides. And so now they've
kind of maxed out where the thrill ride can take them.
And you've seen this with six Flags and some of
the changes they're trying to make to move back towards
broader family experiences. So I would say there were some
mistakes made that brought them to where they are today.
Speaker 10 (42:43):
COVID nineteen dealt a big blow to theme parks, forcing
them to shut down for weeks and sometimes months. And
that's exactly when Netflix made its move into live experiences.
Speaker 17 (42:53):
We were looking for a way to bring a stranger
things to life. People were spending a lot of time
on their own in their cars. We took over a
couple hundred thousand square foot parking garage downtown LA and
basically created like a pop up theme park attraction.
Speaker 15 (43:10):
Well, we haven't seen this really. I mean, this is
our entertainment industry. From that standpoint, the streaming is really changing.
It's bringing us that shorter story.
Speaker 18 (43:21):
For our industry. It really is about how do we
define ourselves as a live experience. There's a lot of
people who feel that virtual experiences are going to become
bigger than real life experiences, and so we've got to
make sure that we continue to make great experiences so
that doesn't really happen.
Speaker 10 (43:39):
Andrew Wexler is CEO of Hershant, the largest family owned
a theme attractions company in North America. Hershan's first attraction
was Silver Dollar City in Branson, Missouri, in nineteen sixty.
It has since built a portfolio of family friendly entertainment
brands from the Harlem Globetrotters exhibition basketball team to Dollywood
in the Great Smoky Mountains in Tennessee. Interest in Netflix.
(44:01):
Hershan's Silver Dollar City features IP that's tied to its
local history. Starting with a cave. How did a cave
spawn a theme park?
Speaker 18 (44:10):
Hugo Mary Hershon went on a road trip. They came
to southwest Missouri to the Ozarks to enjoy the beauty,
and they did a cave tour here and really fell
in love with location, with the cave, with the people,
and decided they wanted to make it a summer attraction.
So the cave tour was so popular that there were
long lines to get in the cave, and they needed
to give some people something to do. It's kind of
(44:30):
the first instance of line management, So they built this
eighteen eighties town on top of the cave so people
can be entertained.
Speaker 10 (44:39):
Since the nineteen seventies, Hershant has focused on bringing new
live shows and rides to Silver Dollar City while keeping
its IP rooted in the area's eighteen eighties lore. As
a result, the park feels timeless, which is reinforced by
its long serving staff.
Speaker 2 (44:53):
I've been the vice president of FEUDU service since nineteen
ninety two, and this is my fiftieth year.
Speaker 4 (44:57):
I've started from the ground up and I'm still here.
Speaker 10 (45:00):
It's also got a cult following, with local families making
regular pilgrimages generation after generation. All I know is for
my eighth birthday, that was we went that day.
Speaker 4 (45:10):
It was my one hundred and eighth time building.
Speaker 17 (45:12):
I think, and I remember a lot of my childhood
coming back.
Speaker 12 (45:15):
They have some rides of six Flags, but these rides
are like really fun.
Speaker 16 (45:18):
We've been coming since we were little ourselves, Like, I
don't even remember my first time coming.
Speaker 4 (45:24):
Yeah, how do I remember my first time?
Speaker 7 (45:25):
It's just been always part of our lives.
Speaker 18 (45:27):
If you look at most theme parks across America, they
were organic. They start off as a petting zoo or
a campground, and then they added rides and slowly grew
over time. Most successful theme parks are like that. It's
really hard to go from zero to one hundred at
a theme park today just because of the capital intensity
and the ability to actually draw enough people to make
(45:49):
it in cash flow positive.
Speaker 10 (45:50):
So you're continuously reinvesting in the business, how do you
think about return on investment?
Speaker 18 (45:55):
So we know what the return is that our shareholders
would like on the business. We incorporate that in our
capital plans, so we actually we do long range plans
to we try and identify what are our projects over
the next ten years. Now, you've got to be nimble
and flexible. It may change. But within that, what's the
impact of that investment and how's it going to grow
(46:15):
the park? From an attendance perspective.
Speaker 10 (46:17):
I think about bigger competitors or peers. Universal it engages
in an IP review every two to three years, and
it looks critically at its own properties. That also does
an overall assessment of the media landscape. What does that
look like on your end?
Speaker 18 (46:33):
It's about gaps and needs. The IP is just one
element of the experience. What are the frictions that make
it hard to enjoy the park? Waiting in line, having
to walk certain distance from one place to another. How
do you improve that sort of experience? So, while it's
great they do an IP review for us, it's about
experience review and how do we make the experience better.
Speaker 15 (46:53):
Theme parks live on repeat visitation, and repeat visitation is
generated by what we call capex, the dollars that we
invest every year. So the new rides and attractions that
we put in every year bring the people back.
Speaker 10 (47:13):
But this is a capital intensive business, so how do
you plan out how much you're going to spend it.
Speaker 18 (47:17):
Well, fortunately, our business does generate cash, and so we
have a set percentage of the cash that we generate
each year that we know is going to go back
into capital. So really the debt part is irrelevant when
it comes to our capex unless we wanted to make
an acquisition or do something that was above and beyond.
We really are about that live local experience, with the
(47:41):
idea that if our purpose is the companies that bring
families closer together, having somebody necessarily sit in front of
television is not the best way to do that.
Speaker 2 (47:50):
That does it for us Here at Wall Street Week,
I'm David Weston. See you next week for more stories
of capitalism.
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Welcome to Bookmarked by Reese’s Book Club — the podcast where great stories, bold women, and irresistible conversations collide! Hosted by award-winning journalist Danielle Robay, each week new episodes balance thoughtful literary insight with the fervor of buzzy book trends, pop culture and more. Bookmarked brings together celebrities, tastemakers, influencers and authors from Reese's Book Club and beyond to share stories that transcend the page. Pull up a chair. You’re not just listening — you’re part of the conversation.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com