Delta Sees Robust Demand Going Into 2026 Amid Premium Focus

Summary

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Bloomberg Intelligence Podcast Summary

Episode: Delta Sees Robust Demand Going Into 2026 Amid Premium Focus
Date: October 9, 2025
Hosts: Scarlet Fu, Paul Sweeney, Nathan Hager
Guests: Sid Phillip (Bloomberg Intelligence, Aviation), Ken Shea (Bloomberg Intelligence, Consumer Products), Craig Trudelle (Bloomberg, Autos), Geetha Ranganathan (Bloomberg Intelligence, Media)

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Episode Overview

This episode delivers in-depth analysis on four major threads shaping global business:

• A robust premium and corporate travel resurgence benefiting Delta Airlines (and legacy peers)
• PepsiCo’s earnings, the challenge of activist pressure, and the search for global growth
• Ferrari’s tepid long-term outlook and the fraught supercar transition to EVs
• Continued consolidation in the US media landscape, focusing on Paramount, Warner Bros. Discovery, and Comcast

The panel leverages data and fresh reporting to zero in on winners and struggling players, market dynamics, and where companies see future opportunity.

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Segment 1: Airlines—Delta’s Premium Play (01:39–07:13)

Key Discussion Points:

• Post-Pandemic Airline Landscape:

  • Airlines serving higher-income and corporate travelers (e.g., Delta, United) report strong demand and profitability versus struggling low-cost carriers (Spirit Airlines, others) grappling with consumer pressure.
  • Sid Phillip explains, “There is a dichotomy … airlines’ profitability, especially at the top end of the market in the premium and corporate sector … are doing really well.” [01:58]

• Delta’s Customer Base:

  • Higher average income, frequent business and revenge/leisure travelers—less price sensitive and more “experience”-oriented.
  • “They’re looking to sort of travel premium. They’re not looking to go coach and nickel and dime their way through the aviation experience.” (Sid Phillip, 02:58)
  • Post-pandemic, spending on “experiences” continues, with strong booking visibility through holiday and projected into 2026.

• Capacity and Fleet Moves:

  • Major airlines are adding capacity, retiring old planes for new (e.g., 787s, MAXs), and “upgaging” fleets to larger aircraft with more seats.
  • Focus on enhanced premium offerings: more business class and premium economy seats than ever.
  • “They’re also premiumizing the cabins … adding more business class cabins and more premium economy than they ever did before.” (Sid Phillip, 05:28)

• On the Ground (Loyalty & Ancillaries):

  • Delta partners with Uber, expands Delta One lounges, and deepens credit card partnerships to “keep customers sticky and keep them engaged.” [06:45]

Notable Quotes:

• Sid Phillip:
  • “It’s the manifestation of the K-shaped economy right, where the higher income consumer is doing much better than the lower end consumer.” [02:35]
• Paul Sweeney:
  • “Premiumizing, that is a new word. I had not heard of it, but it makes a lot of sense.” [06:11]
• Nathan Hager:
  • “Economy coming back from Italy was actually like the old first class … was shocked at how much room there was.” [06:15]
• Sid Phillip:
  • “The moment you’re sort of signed into the [Delta] ecosystem, you’re more likely to book with them and not really use price comparison websites.” [06:45]

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Segment 2: PepsiCo Earnings and Strategy amid Activist Pressure (10:11–15:38)

Key Discussion Points:

• Earnings Recap:

  • PepsiCo met or slightly beat expectations, but growth lags and “persistent weak market conditions” in the US cloud the mood (Ken Shea, 10:28).

• Activist Investor Pressure:

  • Elliott Management’s $4B stake sparks renewed calls for a strategic review, streamlining the product portfolio, and especially “refranchising” the beverage business (as Coca-Cola does), but management hasn’t committed.

• Focus on Innovation & Global Growth:

  • Pepsi pledges to ramp up product innovation—especially on “advanced hydration, wellness, and value”—to align with shifting consumer trends (e.g., less sugar, more functionality, portion control, global tailoring).
  • US market growth seen as slow; the real opportunity is international: “These are really big growing markets … China, India, Latin America.” (Ken Shea, 13:15)

• Dividend Policy:

  • Commitment to dividend and buybacks continues, targeting income investors.
  • “They are very committed … their balance sheet would support them doing that.” [14:59]

Notable Quotes:

• Ken Shea:
  • “Flat performance is just not good enough for a company that’s perceived as a growth company.” [10:28]
  • “They’re going to ramp up innovation, they’re going to be more aggressive with cost cutting … [and] they agree with many of [the activist’s] points.” [10:28]
  • “The company is getting it … the jury is out [on] actually following through.” [10:28]
• Nathan Hager:
  • “Is a company like Pepsi nothing more than really a GDP kind of growth story?” [13:02]

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Segment 3: Ferrari & Supercars—Navigating the EV Transition (19:10–24:23)

Key Discussion Points:

• Ferrari’s Cautious Outlook:

  • Ferrari’s long-term guidance (to 2030) underwhelms; stock drops despite ongoing profitability, reflecting tempered expectations for volume and profit growth.

• Supercars & Electric Vehicles:

  • EV transition is challenging for luxury marques (Ferrari, Porsche, Mercedes).
  • Wealthy buyers resist EVs partly due to high price differentials for comparable combustion vs. electric models—even with strong charging infrastructure.

• Brand & Experience Concerns:

  • Preserving the sensory and emotional experience (engine noise, acceleration feel) is a significant challenge.
  • Ferrari is experimenting with artificial noise to retain part of the driving thrill for customers:
    • “They patented … systems to create artificial noise or at least to play up the noise … of electric motors.” (Craig Trudelle, 23:25)

Notable Quotes:

• Craig Trudelle:
  • “If you’re a luxury car buyer … looking at models that are the same … the electric one’s a lot more. It is still a decision and a rational decision to second guess whether you want to go electric.” [21:53]
  • “Will we see Ferraris make nearly as much noise as a Ferrari supercar? … I suspect that the answer is probably no.” [23:25]

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Segment 4: Media Consolidation—Paramount, Warner Bros., Comcast (27:55–34:25)

Key Discussion Points:

• Background:

  • Ongoing wave of M&A and strategic review in U.S. media as companies contend with digital disruption (e.g., YouTube) and declining traditional TV revenue.

• Paramount + Warner Bros. Discovery?

  • Skydance and Larry Ellison’s family bought Paramount; rumors swirl about a mega-merger with Warner Bros. Discovery.
  • No concrete bid but share prices have jumped, highlighting the industry’s hunger for scale.

• Strategic Motives & Hurdles:

  • Paramount needs HBO Max, studio assets for global media relevance; deal funding and Warner Bros. debt load ($32B) are central obstacles.
  • Possible private equity involvement (Apollo, Legendary) signals the deal’s size and complexity.

• Regulatory View:

  • Little FCC interference expected; Paramount recently navigated a regulatory process with Skydance transaction, further smoothing the path.

• Comcast’s Network Spin-Off:

  • Contrasts Warner’s leverage: Comcast’s planned spinoff (Versant) is well capitalized, but faces bleak cable outlook (“affiliate revenue decline with cord cutting,” Geetha Ranganathan, 33:33).

Notable Quotes:

• Geetha Ranganathan:
  • “They definitely need [the Warner Bros. deal] to make a splash in the media ecosystem.” [28:41]
  • “This is a huge deal … about a $60 billion deal. So funding is defin[itely] an issue.” [32:15]
  • “Paramount … making a bid for the entire company even before that split signaled they were willing to take all of the debt.” [32:32]
• Paul Sweeney:
  • “For the cable network business … the options are not looking that great.” [33:33]

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Memorable Moments & Soundbites

• The K-Shaped Economy in Travel:

  • “The manifestation of the K-shaped economy … the higher income consumer is doing much better than the lower end consumer.” (Sid Phillip, 02:35)

• ‘Premiumizing’ Aircraft Cabins:

  • “Premiumizing, that is a new word. I had not heard of it, but it makes a lot of sense.” (Paul Sweeney, 06:11)

• Supercar EV Challenge:

  • “Will we see Ferraris make nearly as much noise as a Ferrari supercar? … I suspect that the answer is probably no.” (Craig Trudelle, 23:25)

• Merger Math in the Media Sector:

  • “This is a huge deal… $60 billion deal. So funding is defin[itely] an issue.” (Geetha Ranganathan, 32:15)

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Timestamps for Key Segments

• Delta & Airlines Segment: 01:39–07:13
• PepsiCo/Earnings & Strategy: 10:11–15:38
• Ferrari, Supercars & EVs: 19:10–24:23
• Media M&A (Paramount, Warner, Comcast): 27:55–34:25

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Overall Tone:
Engaged, data-driven, and conversational with a focus on dissecting corporate strategy and market trends across sectors. The hosts and guests offer candid opinions, memorable analogies, and breakdowns that make complex business news accessible and insightful.

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Transcript

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[Nathan Hager]

Delta Airlines came out some better than expected results for the quarter, saying that helped by leisure travelers and a rebound in corporate travel. How about that? Sid Phillip joins us, he's Deputy Team Leader for Global Aviation. Join us live in our Bloomberg Interactive Broker studio. Are we kind of back to pre pandemic levels in terms of air travel?

[Sid Phillip]

Also there is a dichotomy in the aviation industry at the moment where we're seeing airlines profitability especially at the top end of the market in the premium and corporate sector are sort of they're doing really well. So Delta Airlines, United Airlines doing really well. At the other end of the market there's the likes of Spirit Airlines that's in its second bankruptcy. You've got the other sort of low cost carriers that are struggling to fill up seats and that's partly on account of the fact that low cost carriers, their customer base is still hurting from the sort of tariffs and the economic uncertainty, whereas for the top end of the market they seem to be traveling as normal.

[Paul Sweeney]

Actually yeah, it's the manifestation of the K shaped economy Right. Where the higher income consumer is doing much better than the lower end consumer. The CEO of Delta at Bastion said in the earnings report that our customer is financially in a good spot. Said who exactly is Delta's customer? Because it's not the same as you said, as for instance, Spirit or Southwest or even you can argue United.

[Sid Phillip]

Sure. I mean Delta airlines, I mean they frequently talk about how their customer is in the sort of average of over 100,000 earnings in $100,000 a year in terms of earnings. And they sort of are looking for experiences. They're looking to sort of travel premium. They're not looking to sort of go coach and sort of nickel and dime their way through the aviation experience. And they're sort of more willing to splurge on experiences. And that's sort of the post pandemic revenge traveler who is now continuing to sort of spend money on travel. And they seem to be suggesting that airlines are willing people are willing to keep going and keep traveling and keep spending money on experiences and holidays.

[Nathan Hager]

Of if United States beats their numbers this quarter, it's because what I spent to get over Italy spared no expense to get over there. I needed the rest. Talk to us about just visibility. These airlines, they probably do. They have some pretty decent visibility on their bookings.

[Sid Phillip]

So they do. They've been talking about how their visibility into the, into the holiday quarter, into the fourth quarter of the year is looking good at the moment. They see, they're seeing demand being strong as they get into the close of the year and that's at least. Delta airlines is talking about how they expect corporate travel to continue to be so solid and robust in 2026. They're saying that companies that they surveyed are seeing continued appetite for corporate travel. So it remains to be seen what actually materializes. I mean, airlines had massive forecasts for record growth this year and then sort of liberation, they came around and that sort of torpedoed that and they've now sort of come back to those levels. But we will be remains as we've seen what surprises come out next year.

[Paul Sweeney]

I'm so glad you bring that up because earlier this year Delta warned of an abrupt slowdown or I don't know that it actually saw when it just said it kind of it was seeing it on the horizon. Has that been completely erased and turned around now?

[Sid Phillip]

For the moment it does look like it is smooth, smoother skies for them. But at the same time we don't really know what's going to happen in the current economic environment or what demand looks like as we go into 2026. And that's something that we, we need to watch as the airlines report their fourth quarter results and sort of talk about their future forecasts.

[Nathan Hager]

What are the big airlines, the big, the big ones you mentioned, United, Deltas, what are they doing with capacity? Are they adding capacity, trimming it back? I mean, I don't know what they're doing with routes. I don't know if they have enough planes, all that kind of stuff.

[Sid Phillip]

So they have been, so Delta's been adding capacity. They've been retiring older planes and taking on new planes. And so they seem to be adding a little bit of capacity. And we also seeing like so United talk about how they are upgrading their fleet. They're replacing their old aircraft with 787s and Maxs. And so we are seeing the US carriers upgrade their fleets and that's sort of adding more capacity, especially as they upgage aircraft. So they sort of replace smaller narrow bodies with the larger A321 or the Max 9. And that sort of adds more seats and more capacity. But then at the same time, they're also premiumizing the cabins. So they're adding more business class cabins and more premium economy than they ever did before.

[Paul Sweeney]

Premiumizing, that is a new word. I had not heard of it, but it makes a lot of sense.

[Nathan Hager]

Economy coming back from Italy was actually like the old first class in terms of really, I was shocked at how much room there was in this. How, how can you recline just the normal one.

[Ken Shea]

Okay.

[Nathan Hager]

But it was just way more legroom and it wasn't that much money was a couple hundred bucks to upgrade. So that was pretty interesting.

[Paul Sweeney]

No, and that's, that's a big part of Delta's push, right? Pushing these premium products in the cabin. What about on the ground? What is Delta doing on the ground to really harness its customers desire for a premium experience?

[Sid Phillip]

So they're partnering with, they have that partnership with Uber. They have the, that they've sort of added more of those Delta 1 lounges and they're sort of doing those credit card partnerships and those are all sort of ways to keep customers sticky and keep them engaged. Because I mean, the moment you're sort of signed into the ecosystem, you're more likely to book with them and sort of not really use price comparison websites. You're more likely to sort of keep.

[Paul Sweeney]

Going, customer for life kind of thing.

[Nathan Hager]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Nathan Hager]

You know, I'm a Coke guy, but Pepsi in front of me, fine, I'm just as happy I can do this. But Ken Shea, he follows this stuff for a living. Ken Shea is a senior consumer products analyst for Bloomberg Intelligence. Pepsi reported some numbers a little bit better than expected here. Ken, tell us what you heard from our good friends at Pepsi.

[Ken Shea]

Yeah, Hi, Paul. Well, PepsiCo reported a number today, numbers today that were pretty much in line, maybe a little bit above expectations, but I think they also masked persistent weak market conditions in the US across its broad food, snack and beverage businesses. The company pretty much, you know, hit their numbers, as I said, but it didn't do much to relieve the pressure it's getting from activists. An activist who's asking the company to do more, basically flat performance is just not good enough for something that's perceived or a company that's perceived as a growth company. I guess the good news is their language during the call though, did provide investors a bit of optimism. It sounds like the company is getting it. They said they're going to ramp up innovation, they're going to be more aggressive with cost cutting. They're listening to the activist points and they said by and large, they agree with many of them. So those are all good things to hear from an investor point of view. It's just a matter of executing and actually following through with them, I think is where the jury is out.

[Paul Sweeney]

So I guess, Ken, the question is, is this enough for Elliot, the activist investor, which took about a $4 billion stake in PepsiCo and called for a strategic review, a streamlining of the stock portfolio in particular.

[Ken Shea]

Well, I think the CEO of PepsiCo mentioned that they are on the same page on a lot of fronts. But what they didn't say is one of the big things that Elliot is calling for is basically, you know, the beverage business to refranchise, sort of what Coca Cola does, to let the bottlers be independent rather than own those very capital intensive businesses. They didn't go there. I'm sure that's going to be a big sticky point. What they are in agreement though, is that innovation is needed to be even more on trend. You know, I covered PepsiCo, I've covered PepsiCo for a long time. They are probably on the forefront of the most innovative companies across the beverage world that I cover. And yet they're even ramping it up even more aggressively across food, aggressively across beverage to be as on tre as possible. And on that note, you know, Bloomberg Intelligence came out with its annual consumer beverage survey just on Monday. And some of the big findings that we're seeing is that advanced hydration, wellness and value are more important than ever in the world of beverages. And it was interesting to hear PepsiCo pretty much address all three of those areas with their new product innovation. So that's encouraging.

[Nathan Hager]

At the end of the day, Ken, is a company like Pepsi, is that nothing more than really a GDP kind of growth story? There's not much more you can do to goose it above that. Or is that or can they do better?

[Ken Shea]

Maybe that may be true in the U.S. paul. I mean it's such a large business, it's in most channels, it's, you know, it's been around a long time obviously. But I think most people looking at this company would say look, you have great opportunities outside the U.S. there's much less price competition outside the U.S. people are embracing these consumer goods and these brands outside the US So that's one of the things Ellie is actually saying provide feed the capital needed outside the US to grow these business in these big growing markets like China and India and so on Latin America. These are really big growing markets. And to the extent that they could play more in those markets I think would be good for the enterprise in the whole.

[Paul Sweeney]

But for those markets, would they need to take a similar approach as what they do in the US Be more innovative, keep up with this shifting consumer taste towards healthier offerings, higher protein portion controlled, less sugary drinks or can they go with their old playbook?

[Ken Shea]

I think it's a combination of doing what they're doing. You know, in some of these markets, you know, they have to adhere to local tastes. My guess is that a lot of these consumers are seeking the same kind of things. The US though is, or I should say, you know, wellness value, but the portfolios are not quite as broad outside the US So I think it's, it's tailoring towards the local areas and bringing some of their learnings from the U.S. to these markets over time.

[Nathan Hager]

Can talk to us about the got about a 4% dividend yield on Pepsi. That seems pretty solid. What's their policy on dividends these days?

[Ken Shea]

Oh, they're committed. I mean they know that a big shareholder base, you know, is income investors. So they are very committed. And every quarter like this one they said look, we're committed to have a multi prong capital allocation policy. We're going to, you know, invest in the business you know, innovation, like I said. But they're also going to buy stock back on a, you know, selective basis. They're going to commit to their growing dividend and their balance sheet would support them doing that. I mean, the balance sheet is in good shape and good investment grade and so I see this company continuing to have a balanced allocation going forward.

[Nathan Hager]

Stay with us. More from Bloomberg Intelligence coming up after this.

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You'Re listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Nathan Hager]

We were talking about the auto business in Ferrari Boy, Ferrari sinking. This brings to mind I don't know how these companies are going to go for the next five years, 10 years in terms of that evolution because it's kind of fits and starts.

[Paul Sweeney]

They can't figure out next year.

[Nathan Hager]

At some point the market rewards them for it. At some point the market penalizes them. For Craig Trudelle, it's his job to make sense out of all this. He's a global autos editor for Bloomberg News. So Craig, when you see news from Ferrari about its cautious forecast, maybe just kind of cautious counter territory on EVs, what does it tell you here from Ferrari?

[Craig Trudelle]

Yeah, I mean I think the market was, was taking in stride, you know, the caution on EVs. I think even, you know, sort of among the investor base and certainly the analysts too, there's some real concerns about, you know, just how sort of incongruous EVs are with, with Ferrari and some questions about whether, you know, whether they bother going in that direction. You know, I think, I think the shares were down a little bit, you know, earlier this morning when they were talking about that, I think where we saw the stock really just take it on the chin was when they came out with their, their outlook, you know, for through 2030. And you know, I think that the profit, you know, growth was, was underwhelming I should sort of say it. It also is the case that they are still, you know, calling for growth. I think some analysts were maybe hoping for or, you know, also some, some increase in volumes. But it's not really, you know, what Ferrari is about. They, you know, are sort of like clockwork, you know, making a pretty set number of vehicles every year and charging an awful lot of money for them. And that's, that's really been, you know, something that's, that's paid off. And I think, you know, just the other thing to sort of keep in mind here, when you look at what these shares have done, you know, since they listed, you know, the shares in Milan have been trading since early 2016, the New York ones a little bit earlier than that. But this is a stock that was, has absolutely been on a tear all those years since. And so, you know, yes, a 16% decline in one day, you know, sort of makes your eyes pop. But this is a company that is still valued very richly and that makes a little bit more sense in hindsight.

[Paul Sweeney]

And Ferrari also, of course, coming out with its first EV2. And that might be accounting for some of the caution in terms of what it sees going forward in the story. You and your colleagues, Craig, talk about how not just Ferrari but Porsche and Mercedes Benz have also struggled with the electric transition. Why are wealthy buyers somewhat resistant to switching over to plug in EVs? What's, what's behind that?

[Craig Trudelle]

Yeah, it's a really good question. I think, you know, there was just this sort of working assumption that, you know, the only thing that you're going to, going to have to overcome was, was cost. And so, you know, there was this, I think, sort of conventional wisdom. Well, oh, we'll just have, you know, the folks who are sort of most able to afford this incremental additional cost, they'll bill, foot the bill and will be sort of off and running as an industry and gradually sort of work our way down price wise. I think if you're a luxury car buyer and you're having to pay a significant premium over, you know, looking at models that are, that are the same one combustion in one electric, the electric ones a lot more, you know, it is still a decision and sort of a rational decision to sort of second guess whether or not you want to go electric. And I think that's what, what you're seeing is that, you know, BMW and Mercedes until and unless they sort of, you know, price their models closer to one another, you're going to have, you know, some pushback on the part of the consumer to make that transition even as we make progress and things like charging infrastructure and some of these hurdles that you have to overcome that are unique to EVs.

[Nathan Hager]

My biggest question for, you know, the supercars going electric is I think a big part of the reason people buy the Ferraris, the Lamborghinis is for the cool sound when they're coming down the street. What's Ferrari doing with that part of it?

[Craig Trudelle]

Yeah, it's interesting and we saw it sort of, you know, we had indications that Ferrari was working on something in this regard to try and sort of preserve the noise that you can make driving a Ferrari, that they patented, you know, systems to kind of create essentially artificial noise or at least to play up the noise that that is made by, you know, electric motors in electric vehicles. You know, I think that being said, will we see Ferraris externally make, you know, nearly as much noise as a Ferrari supercar? I suspect that the answer to that is probably no. But I've been, I've been very entertained that, you know, Dodge came out with an electric vehicle last year. And I saw a report recently that, you know, an owner in Canada was ticketed for a noise violation with his electric Dodge vehicle. So, you know, maybe it's for the best actually that this, this will become a thing of the past.

[Nathan Hager]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Nathan Hager]

Let's talk a little bit about the media business there. It's undergoing a certain degree of consolidation here as it tries to deal with the rising tide of YouTube among other streaming type services and digital services that have really displaced many of the traditional media businesses. And one of those is Paramount Global. That was, we saw, bought by Skydance and Larry Ellison's family. Now looking to take a look at Warner Brothers Discovery, another publicly traded company. Maybe those two might get together. Let's check in with Geetha Ranganathan. She's the media analyst over at Bloomberg Intelligence. Geetha, talk to us about the likelihood of Paramount merging with or acquiring Warner Brothers Discovery and how that might look.

[Geetha Ranganathan]

Yeah, thank you so much, Paul. So it's been a while actually. So there's been these on again, off again reports. The first time the news broke was almost a month ago. It was on September 11 that there was this Wall Street Journal article which suggested that Paramount was kind of exploring this bid. There hasn't actually been been any formal bid from Paramount. However, you know, the shares of both those companies have kind of really gone up very nicely on the news. Kind of just telling us how important it is for both of them to, to have this consolidation. If you look at Paramount, obviously they just went through that merger. There is really very little details when it comes to what is, you know, kind of the strategy for this business. They definitely need something big. Having a studio like Warner, having a service like HBO Max, it really kind of puts them on global media map. So they, I think they definitely need it in order to kind of make this big splash in the media ecosystem. But you know, as days pass along and we don't get a bit, it just seems like the probability of this happening gets smaller and smaller.

[Paul Sweeney]

Yeah, it's curious because we've been waiting for so long and the industry has been ripe for consolidation. And David Zaslav, who of course runs Warner Brothers Discovery, has been talking about how consolidation is something that he anticipates and he wants to see happen. Is there a role here for regulators? Is this something that they would weigh in on? Is Brendan Carr going to play any kind of role here?

[Geetha Ranganathan]

So Paramount? Yes, there is potentially a role for any and all types of regulatory scrutiny in the Paramount Warner Brothers deal or a potential deal. The FCC's involvement likely wouldn't be as heavy just because there is no merger of two broadcast assets. So Warner Brothers only has streaming studio and cable networks, no broadcast networks like Paramount, which owns the CBS broadcast network. So they should get like a fairly quick green signal from the fcc. Well, all mergers are ultimately kind of a subject regulatory scrutiny. But let's remember Paramount has just gone through this whole process with the regulators kind of getting that Skydance. So they kind of know how to navigate their whole way around the regulatory ecosystem, if you will. So I don't think it should be much of a problem at all.

[Nathan Hager]

Scarlett, now the New York Post. I saw some Reporting. And by the way, the New York Post, they do a great job covering the media sector, particularly on the M and A front. Always have, always have. They're suggesting maybe Paramount, Skydance might be talking with some private equity players about participating in any potential deal. And I think they mentioned Apollo as one that they were talking with. What does that mean to you?

[Geetha Ranganathan]

What that means to us is that, you know, obviously funding is a problem here. I mean, this is a big deal, Paul. You know, there was an initial price range that was suggested by cnbc of about 22 to $24 a share. I think David Zaslav is looking for something much, much higher than that. You know, the New York Post themselves had reported that he was probably looking for something in the range of $40 a share. Not sure whether he's going to. Yeah, not sure whether he's going to get that. But regardless, I mean, this is a huge deal. I mean, even at that 22, $24, we're looking at about a $60 billion deal. So funding is defin, you know, an issue. And that's kind of what it suggests that the news article from yesterday suggests to us. Because if Paramount is kind of scouting for all of these different partners, they've talked to Apollo, as you just suggested, they're talking to Legendary. You know, funding doesn't seem to be as easy as, you know, maybe we initially thought.

[Paul Sweeney]

And also, Warner Brothers is carrying a lot of debt. I know Zaslav has made a priority of reducing leverage and he, you know, has executed on a lot of that. But there is still quite a bit of debt involved here. How willing is Skydance to take that on?

[Geetha Ranganathan]

They are willing to take that on because, Scarlett, you know, Warner Brothers is actually in the midst of their own restructuring. So what they had planned, even before all of this Paramount news broke, they had planned to actually split, split their company. So they have a TV networks business and they have their streaming and studio business. So kind of the, the no growth assets and the, and the high growth assets that kind of, of splitting those two out and majority of the debt. They started with about $55 billion in debt. They've kind of whittled that down to about 30, 32 billion. But majority of that $32 billion debt was actually supposed to travel with the TV networks business. With Paramount kind of coming in and making a bid for the entire company even before that split actually took place, just kind of signaled that they wanted to get the entire business and they were willing to take all of the debt, not wait for the split and wait for kind of the debt to go away and then just go scoop in on the stream. They definitely know about the situation and seem like they were willing to take it.

[Nathan Hager]

Another company that's talked or announced they're splitting their networks away was Comcast. Where are we on that?

[Geetha Ranganathan]

So that seems to be coming pretty close. Now in contrast to the whole Warner Brothers discovery split, the nice thing about the Comcast cable network split, which is by the way going to be called Versant, is that it doesn't have a lot of debt. So it's really a well capitalized company throwing off about $3 billion in EBITDA, but debt is only going to be close to about two and a half to $3 billion. So really well capitalized. The problem is with the cable network business, as you well know, Paul, that just the options are not looking that great. You know, affiliate revenue as we know is a decline with cord cutting. Again, advertising is going to be, you know that most of these ad dollars are going away from linear TV to digital outlets. So again, the outlook is just very bleak. But you know that that company should, should come on the market sometime pretty soon.

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