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- [00:00]
Paul Sweeney
At Charmin we heard you shouldn't talk about going to the bathroom in public.
- [00:03]
Lindsey Dutch
So we decided to sing about it.
- [00:05]
Scarlett Fu
Charmin Ultra Strong you can use less better than the rest Charmin Ultra Strong Booty pass the clean text Shaman weave texture it's the best Study up teach.
- [00:17]
Keith Weiss
A lesson on fresh your booty pass.
- [00:19]
Scarlett Fu
The clean test Charmin Ultra Strong Charmin.
- [00:24]
Geetha Ranganathan
Ultra Strong with Diamond Weed texture cleans.
- [00:26]
Paul Sweeney
Better than the leading one plaid brand so you can use less Enjoy the.
- [00:29]
Geetha Ranganathan
Go with charming.
- [00:33]
Podcast Host
Bloomberg Audio Studios Podcasts Radio news. 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.
- [00:54]
Scarlett Fu
Let's turn our attention to the media space. Lots going on out there. Spotify reported some earnings, but we want to lead with Warner Brothers Discovery. That M and A saga continues to play out. Today. Paramount kind of amended its bid, add some more cash funding for a termination fee, instituting a ticking option here for this thing. Geetha Ranganathan, she follows this as the media analyst for Bloomberg Intelligence. Geetha, let's start with Warner Brothers Discovery here. I'm still surprised that Paramount has not raised its bid from $30 that are making changes and maybe some enhancements to their offer, but not raising the bid in general. What do you make of it?
- [01:34]
Geetha Ranganathan
Yeah, still playing the cat and mouse game here, Paul. They did stop short of actually raising the offer. But yes, you're right, they are offering now this almost $1.80 per share to cover the termination fee with the Netflix deal as well as some of the financing costs. And then of course, as you just mentioned, the ticking fee. I don't know though if this will necessarily fly with the Warner Brothers Discovery board. I think this is just Paramount exhaust all of its options before, you know, they actually raise the bid. But in my mind what this signals is yes, they did stop short of actually raising that $30 bid. But I do think that this signals that they are willing to kind of go back to the table and probably raise that bid as, you know, kind of this thing keeps dragging on.
- [02:18]
Keith Weiss
Yeah, it does feel a little bit silly given that David Ellison had said that $30 a share was not their best and final offer. So let's, so let's kind of get to it. That begs the question, Keith, and this is a dumb question, do they have the money to raise their bid?
- [02:32]
Geetha Ranganathan
They do, but the question is really going to be what happens after Scarlet? So you know Right now we're looking at a company with the $30 per share bid. We're looking at a company that's going to be levered about six and a half times. They raise that bid to, let's say 30 to 33, 34, whatever the number is. You're going to look at a company that's value, that's going to be levered at about 7 to maybe 7.3 times. What happens with those dangerous levels of debt is it just becomes a distraction. You're not going to be able to invest in growth. You're just going to be focused on deleveraging. This is exactly what we've seen happen many a time in the media world. It's happened actually to Warner Brothers Discovery itself. They had over $50 billion in debt and the only thing that they were hyper focused on is okay, how do we keep reducing that debt pile? And so the biggest worry is that's what's going to happen to Paramount. So yes, they could get their hands on this absolutely world class asset. But yes, leverage becomes this huge, huge headache for them.
- [03:33]
Scarlett Fu
Keith, any sense of timing? It doesn't seem like either side feels the need to, I don't know, be aggressive here.
- [03:40]
Geetha Ranganathan
So February 20th, that's what, that's the date that Paramount proxy bid actually expires. It was initially January 20th. They extended it to February 20th. So that's, that's the $30 hostile bid. That's, that's the date of expir. Remember Paul and scarlet? Only about 7% of Warner Brothers shares to date have been tendered at that $30. But so everybody's still kind of holding out for that higher per share offer.
- [04:06]
Keith Weiss
I think that tells you everything you need to know right now. Then February 20th is the day we'll watch for Geeta, let's also talk about Spotify here. It added a record number of users, 38 million users to 751 million, topping analysts estimates. How much more room is there to raise prices? Because increased price prices in the US was certainly part of that. It looks like consumers continue to sign up.
- [04:29]
Geetha Ranganathan
Consumers continue to sign up. Yes, we're seeing Spotify. I mean, if you just look at that subscriber trajectory, Scarlet, over the past few years They've added about 28 to 30 million subscribers every year. And there's just no signs of slowing down. They keep adding record number of subscribers, record number of active users, quarter after quarter. So there's just so much of appetite for this platform, for music in general, for audio in general. So that is Definitely good news. You talked about pricing power. I think, you know, just with kind of the user interface that Spotify offers, with all of the content that it offers in terms of breadth and depth of content. And as they keep adding more enhancements, they do have a lot more leverage to keep raising those prices. So you know they've made a pretty bold move by raising their prices a little bit earlier this year. So now, now it's $13 for an individual plan in the U.S. that was a little bit above the rest of their competitors. But then we just saw a few days ago Amazon Music also kind of raising prices which then I think just speaks to the audio industry in general. I mean everybo there has a lot of pricing power but I think Spotify definitely has the most just kind of again given the fact that they are a best in class product.
- [05:35]
Scarlett Fu
Stay with us. More from Bloomberg Intelligence coming up after this.
- [05:42]
Podcast Host
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.
- [05:56]
Keith Weiss
We have markets in the green right now. Nasdaq is among them. We had seen this decoupling between big tech and the rest of the stock market but big tech is back in the green once again and the big news really is Alphabet and all the hyperscalers. It's going to need about $185 billion in terms of Capex over this year and so it has to raise a lot of money in the debt market. Caroline Hyde is the co anchor of Btech and Caroline Alfred has had a banner 24 hours looking to raise almost $32 billion or a pretty much set to raise $32 billion in less than 24 hours.
- [06:33]
Paul Sweeney
I know we've got dollar denominated debt, you've got sterling, you've got Swiss franc. And what's extraordinary is the extent of demand. They could have sold way more than $32 billion. They had extraordinary more than $100 billion worth of orders for the upsized $20 billion US sale. We're ranging from you know, 3 year to 10 is out to as much as 30 year, 32 year. But then you're looking to the UK they're selling 1 billion pounds of my great British sterling in 100 year bonds, a century bond. Now you haven't seen a tech company do that since Motorola since the 90s. And this is such a vote of confidence. Yes, you can say is Google going to be here in 100 years time. A lot of these companies pay off the debt well ahead of 100 years. Disney they issued back in the 90s. They paid it off in the, in, in 20 twenties. But really what this is a resolute clear signal of is that people believe in Alphabet, they believe in their ability to pay for their infrastructure. They believe in the 185 billion of spending in Capex is a wise decision and that they are going to be an AI winner. More across the board we're seeing a record Swiss franc issuance. You haven't seen a market being tapped to this extent and again a record amount of demand for it.
- [07:46]
Scarlett Fu
Rob Schiffman covers the tech from the credit size for Bloomberg Intelligence. He says the windows wide open for these companies they can keep coming to the market which is amazing for them and they are. We also got a piece of news. Taiwan Semiconductor manufacturing said their January sales were their fastest clip in months. So if you needed I guess another data point supporting this continuing air spending. There you go.
- [08:07]
Ken Shea
Yeah.
- [08:08]
Paul Sweeney
37% increase year on year in terms of. Yes, it was probably a bit of a slower year, a slower January previous year because the way that the vacations and holidays fell in China. But TSMC is the chip manufacturer to the world. Nvidia, Apple. If you think about consumer electronics, if you're thinking about the data center story, this is the company that has been dining out on it. The shares are at a record whether you're looking them in Taiwan or indeed on the ideas trading abroad. And it just signals that the bubble that we're so concerned about the idea that it was just passing money amongst themselves, there is real orders going in from a fundamental basis for this particular chip maker.
- [08:44]
Keith Weiss
Yeah and it's the hardware maker tsmc. Let's talk about other hardware companies because they are paying up for memory chips and those memory chip makers, some are winning, some maybe are under more pressure and investors are trying to discern who's best placed. How are you thinking about this?
- [08:59]
Paul Sweeney
I think a lot of people are trying to understand where is the cost pressure. The cost pressure is for those electronics companies. Apple has more control over its supply chain, its own chips. But still more broadly if you're looking at an index of electronics makers like thinking of the Nintendo's of this world, they've sold off about 10% in the beginning of this year. Meanwhile the memory makers are up about 160% or so. We're seeing Samsung being the winner here. You're seeing the likes of Micron, you're seeing yes There is turbulence day in, day out. But more broadly, it has been up and to the right for these memory makers because not only is that necessary to put them in your hardware and your electronics, but really the ferocious demand to put them in AI data centers. Remember, this is high bandwidth memory that everyone's been going on about. The HK Hynix has been winning in for SK Hynix for example, over in career. Well, because there's so much demand there and it's so much more profitable for them. They're having to sort of put their boring bodies, bog standard memory chips that you want in your devices to the back burner and it's really hurting these companies.
- [09:58]
Scarlett Fu
Stay with us. More from Bloomberg Intelligence coming up after this.
- [10:05]
Podcast Host
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, get your podcasts or watch us live on YouTube.
- [10:20]
Keith Weiss
Let's get to some more corporate earnings because we are knee deep in earnings season. We're past the big tech companies and now we're really focused on the companies that make up this US Economy, companies like Hasbro, the toymaker. The shares are up more than 7% right now. Lindsey Dutch is joining us. She is a consumer hardline senior analyst at Bloomberg Intelligence. And Lindsey, this earnings report shows it had a decent fourth quarter revenue and earnings per share beat. But the guidance, the outlook was seen as fairly conservative, yet investors seem to be rewarding the stock. What's the, what's the story here for Hasbro?
- [10:56]
Lindsey Dutch
Hi Scarlett. Thanks for having me. So the story for Hasbro is, you know, the results in 25, including the fourth quarter is really being driven by their wizard of the coast digital gaming segment. That that segment has been growing rapidly, 45% on the year, 60% I think for magic of the gathering in the quarter. So just tremendous growth coming out of that brand, better than expected and that that unit is really going to carry the growth in 2026. That the outlook for the consumer products with their toy segment is still kind of weak. So it's really coming out of that digital gaming segment. But I think investors are pleased with the outlook there just because they're lapping very difficult comps. So to see solid growth in 2016 coming out of that, it was a good surprise.
- [11:45]
Scarlett Fu
What's the competitive landscape out there? Hasbro, Mattel, others, how's that playing out?
- [11:51]
Lindsey Dutch
Yeah, so we get Mattel results later today and we'll have to see how that goes. It was a very challenging 2025, you know, with the tariffs, we had retailers delaying the holiday orders and that really threw a wrench into the entire year for these toy makers. Hasbro did report, you know, a plus 7% sales growth in the fourth quarter quarter for consumer products. That was the first quarter of growth in quite some time. They do expect toy growth in 2026, but it could be low single digits. You know, there's a lot of headwinds. You know, we just saw, you know, disappointing retailer sales for, for December. So there's a lot of uncertainty about consumers out there and a rebound in that category. And we should hear more from Mattel. You know, they are the dominant player in dolls. So we'll hear more later today.
- [12:39]
Keith Weiss
Lindsey, what about tariffs? Is this something that Hasbro has figured out and it's no longer something that leaves its earnings to be kind of unreliable and they've kind of smoothed things out.
- [12:52]
Lindsey Dutch
So it definitely affected the year. So about $40 million in the fourth quarter, a headwind for margin there, especially on that consumer products segment. So that margin did decline year over year, which was a disappointment. That's certainly going to be a headwind for profitability, at least in the first half, and comps will get easier in the second half. But Hasbro did note that, you know, much of the cost savings program that they're working on and other supply chain efficiencies, they were able to offset a significant portion of that cost. So that is a good sign. But there's still a little bit of a headwind for the next two quarters.
- [13:32]
Scarlett Fu
I'm just looking at the FAA function on the Bloomberg terminal, gives me all the financial analysis and boy, the operating income profit for the Wizards of the coast in the digital segment is huge, whereas the profitability of their regular toy business, not so much. Is a company just throwing all the resources into their digital stuff? Is that the strategy?
- [13:52]
Lindsey Dutch
So they have definitely been pushing for several years now to become a bigger player in that digital world, but also really to become known for that. So I would say, you know, one of Hasbro's big brands, Monopoly, that, that, that's what many people know that the company for is that traditional Monopoly board game. But they are, they are pushing into this world of digital games. You know, they want to be valued as such. And I will say, you know, they do have a digital version of Monopoly, Monopoly Go. And that has done very, very well over the past couple of years. It continues to surprise, including in the fourth quarter. So they're definitely moving in that direction. But that's toy segment, consumer products, you know, still is pretty large. It was still around 50% of revenue for 25. I do think that will that mix will come down over time, but it's still a big piece of their business that they can't ignore.
- [14:46]
Keith Weiss
Lindsey, I also noticed that in this latest earnings report they announced a $1 billion stock buyback authorization. I believe this is the first buyback since 2018. What does that signal to you?
- [14:58]
Lindsey Dutch
You know, I think that there Hasbro is still working through their capital allocation priorities. They are still focused on reducing leverage. You know, their dividend has been flat for quite some time. So I think they're looking at different avenues now that they're in a much better financial position than they had been maybe a year or two ago. So I think it's just a signal that, that that position is solidly better and they're looking to redeploy cash in different ways that they maybe couldn't have done a year or so ago.
- [15:29]
Scarlett Fu
Again, using the PGEO function, you can see where the revenue comes from geographically for this company. And the international business, which was about 40% of the revenue, has been declining as a percentage of total revenue here. Is there a strategy there to focus on the US or are they pulling back from international. What's that strategy?
- [15:48]
Lindsey Dutch
Yes, so I don't think that they're necessarily pulling back from international toys is a global business. I think a lot of that is reflecting the growth in Wizards of the coast and the digital gaming. So the digital gaming, it's really picking up very quickly in the US they're seeing a lot of growth there and that's partly shifting that that geographical concentration. That digital gaming business is a global business. So some of that shift might, might move back the reverse over time. But I think the near term shift is just part of that growth on the digital gaming side.
- [16:22]
Scarlett Fu
Stay with us. More from Bloomberg Intelligence coming up after this.
- [16:28]
Podcast Host
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.
- [16:42]
Keith Weiss
All right, let's get back to earnings season because those are not the only companies that reported. Coca Cola also came out with its latest results and maybe perhaps a bit underwhelming given the stock price reaction, down 2% at the moment. Ken Shea is our consumer products analyst or senior consumer products analyst, and he joins us now from Princeton. So what's the story from Coca Cola, Ken? What did they tell us Hi Scarlett.
- [17:05]
Ken Shea
Well, Coke in the fourth quarter, you know, revenues were up 2, EPS was up 6%, pretty much in line with expectations. But I think what may be concerning the market a little bit about Coke is that the mix was not as favorable as it had been. Also the company over the past couple years had been relying heavily on price mix to boost the top line. It was a considerable slowing in the quarter. Having said that, there's always some noise in the fourth quarter. It's hard to draw too many conclusions from the fourth quarter. But I think the market is also being being spooked a little bit by the guidance for next year which came in a bit, a little bit light. The company's long term algorithm is to generate about 4 to 6% organic revenue and from that it can generate high comparable EPS growth. And it did that in 2025, in 2026. So they're saying 4 to 5% top line and 4 to 5% EPS growth. And so that's EPS growth again, that's excluding currency effects is not only below the long term algorithm but also below consensus expectations. Going in.
- [18:17]
Scarlett Fu
What's the, you know, we always talk a lot of your companies, the consumer products companies and staples companies that you think about them as kind of a gdp, maybe a little bit GDP plus kind of growth here. Is there any secret sauce to the Coca Cola story or is that the way we should think about it?
- [18:32]
Ken Shea
Well, there's a lot of truth to that Paul, because Coke is in like 200 markets around the world. You know, I guess the way for growth is lunar at this point. I mean they're everywhere. But I think there's going to be a new CEO on March 31st. Henrique Braun. He's a longtime veteran at Coca Cola. He was the coo, used to head up Latin American operations. I think there's a lot of confidence in his ability to take the reins here and I think what he's going to spell out in his vision next week at Cagney, that's when they usually do it.
- [19:04]
Scarlett Fu
That's where you'll be.
- [19:06]
Ken Shea
Yeah, well, I think he's going to say that they need to step up their marketing and innovation here to boost that top line growth. And I think they're going to talk a lot about functionality, something that we talked about with PepsiCo. What I mean by functionality? Well, well, consumers want more from their beverages than just taste good and hydrate them. They want to not only have zero calories, zero sugar, but if they want to have more electrolytes in their water, it wants to have more protein in their drinks, particularly the GLP1 crowd. They want to have fiber which Coke offers in its prebiotic sodas like simply pop. So these are the kind of things they're going to talk about in terms of product innovation, I believe next week. In addition to that, I think the company is going to spend more on marketing, digital marketing to get the message out to new young consumers.
- [19:57]
Keith Weiss
I guess the idea is to just have your drink replace your food. I guess fine protein, Zero sugar actually was a standout, right? With Coca Cola Zero sugar posting double digit volume growth in the quarter. When you say that they want to focus on the innovation and get the word out, what does that mean in terms of spending on marketing? What does that mean on, in terms of capital expenses?
- [20:20]
Ken Shea
Well, I think broadly speaking, more social media advertising, I mean on a purview basis that's a lot more cost efficient than the, you know, traditional ways like television. Paul, you would know that, right? Analyst days. So it's more of that. It's also working more closely with their bottlers in terms of co marketing ventures. That could be a wide range of things, not only digital marketing, but perhaps coming out new packaging, whether it's multi packs to attract, you know, an economical consumer to spending more on its fountain dispenser. You see a lot of, a lot of fast food restaurants where they can make their own sodas and so on to spread that out more to have more consumer engagement no matter where they are. Yep, so I see more of that.
- [21:06]
Podcast Host
This is the Bloomberg Intelligence podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 10am to noon Eastern on Bloomberg.com, the iHeartRadio app TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.