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on the Stargate Data Center project. Some people have concern about the concentration risk. You know, right now AI as seen as the world's leading frontier. 00:03:02 Speaker 4: Model lab or AI lab. 00:03:03 Speaker 5: But that's not guaranteed of course, and so they would ask what is it diversified enough? But yeah, it's a really critical question. Remember, like through ARM and the board representation that they have with ARM, there is an idea that if ARMED design staf senships, Top Bank benefits from that. What they're doing with ampare in the compute space as well. That's why they need this five point six billion dollars. 00:03:28 Speaker 3: They say, Okay, so that's one of the big stories on the top Worldwide page on the Bloomberg terminal. The other one is Corewed's results, and we talked a little bit about Nvidia earlier. In Vidia actually owns about a six and a half percent stake in Coreweaves, one of those neo cloud companies. What was the takeaway from the latest earnings report. 00:03:46 Speaker 5: Yeah, so they cut their full year revenue guidance for fiscal twenty five to a range of five point zero five billion to five point one five billion dollars. The previous high end of the range had been five point three five billion dollars, so they've lowered it by about two hundred million dollars. And they say that that is because a third party that was building data center capacity for them let them down. They're behind schedule, and because that data center won't be up and running, they can't realize the revenue for a specific customer, which they're not naming. Does that justify the stock being down eleven percent? That's not a question for us. That's a question for the sale s item, for the investors themselves. But there's a lot of commotion about what it is a two hundred million dollar trim because some capacity is delayed and the thing you need to know Scarlet is like generally speaking, call we've cannot get data center capacity up and running quick enough to meet the demand that it has. 00:04:45 Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this. 00:04:52 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple Coarclay and Android Otto with the bloom Work Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube. 00:05:07 Speaker 4: I think my new favorite stock symbol is peace guy. 00:05:11 Speaker 6: Yeah, such a good one. 00:05:12 Speaker 2: I like that one for Paramount Skydance. The company reported earnings yesterday kind of in line numbers, but there's a lot of cost cutting going over there, and the stocks up ten percent on the news today. So let's check it out with Getha rang on Nothing because she covers all the media stuff for Bloomberg Intelligence and Getha I'll ask you the one you know, Ernie's question. Then I want to get to the need of the matter here. How were the earnings for this newly combined company and what's the outlook? 00:05:37 Speaker 7: Yeah, Paul, earnings were a little bit messy. They were mixed, but the good news was that the company kind of over delivered when it came to streaming crafitability, which is the big thing that everybody's looking for, given that, you know, they've just lost tons and tons of money on their streaming business, so that was good news. I think why Wall Street is really cheering, you know, paramount Skuidance today is because the guidance that they provided for twenty twenty six was pretty promising. So A Street was in at about three point one billion for ibit dah for next year, they came in with three point five billion, and a lot of that, as you just pointed out, was because of the cost savings. So they've taken it out from two billion to three billion. Very very aggressive measures across the board, but I think overall it was you know, what really kind of came across was that this is a solid management team that really knows what they're doing. They're super focused, you know, on driving that transformation within the company, and I think that really kind of cheered investors. 00:06:37 Speaker 3: Speaking of driving transformation in the company, the big question for Paramounts guidance is whether it's going to buy Warner Brothers Discovery wholesale or at least parts of it. Did we hear anything from the executives in the earnings call. 00:06:52 Speaker 7: Yeah, Scarlet, that's a great question. I mean, obviously that was the first thing on everybody's minds. So, you know, obviously no specific commentary on Warner Brothers itself, but the one thing that they did say was that they think, you know, they don't there's no must have for them, So they really kind of downplayed the whole need for M and A. They said that, you know, they have all of the you know, they have a great portfolio of assets. Of course, we all know that these assets have been undermanaged for many many years, underinvested, so there's a lot of work to do there. There's a lot of restructuring that needs to happen. But they really kind of downplayed you know, Warner Brothers. Of course, we know that, you know, yes, they are making huge content investments. They are making huge technological investments. But if you look at their streaming service, which is Paramount Plus, it has roughly eighty million subscribers. Okay, they do have, you know, all of these new content investments. Let's say the UFC ZUOFA boxing, all of that South Park not enough to move the needle. And I think they know that the street knows that, which is why they do need something transformative like Warner Brothers Discovery, which will really kind of put them on the map when it comes to streaming for sure, and also in terms of extracting more synergy on the linear TV side of the business where they have huge exposure. Over fifty five percent of revenue still comes from linear TV. 00:08:06 Speaker 2: So when you look at the enterprise value of Warner Brothers

Discovery, it's almost three times the enterprise value of Paramount Skuidance, suggesting that if Paramounts Guidance wants to do a deal here, they're going to need a ton of equity, whether it comes from mister Ellison or whether it comes from private equity or some combination. Is that kind of where people are thinking about it. 00:08:29 Speaker 7: That is kind of where people are thinking about it. And you know what was really interesting, Paul was, you know, they've made three bids for Warner Brothers Discovery thus far, all of which have been rejected. The last one was for almost twenty four dollars a share, which was basically sixty billion equity value, about ninety billion enterprise value. And the thing there was they were offering eighty percent cash. I mean they first started out with sixty percent. They sweetened it to eighty percent, but David Zaslav, as we know, is really a tough negotiator and basically said no, So we think he's looking for something north of thirty. I'm not sure Paramount Skuidance is going to be willing to cough up that much, but let's see. 00:09:07 Speaker 6: Yeah, that's a that's a big, big question, Mark Keitha. 00:09:10 Speaker 3: As you look at the media landscape, we're focused so much on Warner Brothers Discovery and what happens to its assets, what's happening to its businesses. What are we missing when we look at what else might be a for sale or might become, you know, not a for sale, but something that a buyer might be interested in pursuing. 00:09:30 Speaker 7: Yeah, I mean, when we look across the landscape, you're absolutely right, Scarleton. The reason why there's so much of attention on Warner Brothers Discoveries because it's really kind of the last big you know, iconic studio if you're looking at it, a huge streaming property with HBO, you know, huge names in the business, just iconic franchises, big brands, big brands, core franchises, things that can really move the needle for any company, for any buyer. We don't really have anything quite like Warner Brothers. Yes, we have a lot of smaller names. You can think of an AMC Networks, you can think of a Life studio, you can think of comcasts new spinoff cable TV networks which is called worsened, but none of them as attractive, you know, as as Warner Brothers. So there there are a lot of opportunities for consolidation. You have a lot on the broadcast TV station side, whether you're thinking of a Gray or Sinclair, but again, nothing quite as attractive or as massive as Warner Brothers Discovery. 00:10:25 Speaker 4: Timing. When do you think something might happen with Warner Brothers Discovery. 00:10:29 Speaker 7: It has to happen quickly, Paul, because they you know, if Warner Brothers Discovery doesn't decide to go ahead with a sale, they do have a split of the company, which is, you know, splitting the company into the TV network's division and the streaming of studio's division. That is supposed to happen sometime mid twenty twenty six. So I'm

assuming you know, things have to move pretty quickly in the next couple of months. 00:10:52 Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this. 00:10:59 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Coarclay, and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube. 00:11:13 Speaker 3: One subject that I can't get enough of is premium credit cards and the rewards that you rack up if you use them only in certain times at grocery stores versus restaurants versus to pay for your plane ticket. Well, there's been a settlement between Visa MasterCard and merchants that may change the way that we use our premium credit cards. And Justin Teresi is here with us. He is a bi litigation analyst to hear at Bloomberg Intelligence. Justin what happened and what does this mean for my Chase Sapphire card or my AMX Platform card. 00:11:44 Speaker 4: Yeah, really big news here. 00:11:46 Speaker 8: So first of all, this case has been going on for about twenty years now, long I started before I went to law school, which was a long time ago. There's salt and pepper in my hair. So we're talking about a really really ancient case. But basically what a lot of folks don't know is when you have those really valuable premium cards, right the airline miles cards or the cash back cards, there's a fee associated with those, and it's the merchants who are eating that fee, typically around three or four percent depending on the varying swipe fee when you use it at a register. So merchants, no surprise, they're upset about that, right. So Visa, you know, big litigation here, the accusation being that they fix those fees and that you know, the merchants are basically the ones eating the costs there. So big deal announced yesterday between Visa, master Card and merchants would make a little bit more flexibility on the part of merchants here. They could basically say, hey, we're going to take the lower tier version of a Visa or a master Card, but we're maybe not going to accept airline miles cards or cash back cards. And then alternatively, they also might have the option of passing those fees onto you, the consumer at the register if they do take them. So some big changes here and how things are shaping up. 00:12:50 Speaker 2: Well, I've noticed in the last couple of three years they are doing that. Yeah, I mean, almost every merchant I go to now, I don't know if it's just a state of New Jersey thing, but they're saying, hey, here's the cash price, here's the credit card price. 00:13:00 Speaker 8: Yeah, Paul, this is actually a really interesting issue here because state by state there's a lot of differences in how this actually plays out. In New York, and I see this too when I go to my dry cleaner, it's like, oh, maybe that's four percent more if I'm going to use my credit card here. That's actually illegal in New York right now to do that, But the enforcement seems to be lacking that this is a new law pass in twenty twenty four, there has to be an upfront kind of price on a tag if they're going to pass a surch charge onto the consumer. In New York, Massachusetts, Connecticut, you can't surcharge at all. So if this settlement goes through, you know, that's a big question mark. 00:13:33 Speaker 3: Too interesting that you say that the surcharge is illegal in New York, because what I've seen is the dry cleaner will say we'll give you a discount if you pay in cash. Here's the regular price, but you get the discount if you pay cash. 00:13:43 Speaker 6: So it's no longer a surcharge. 00:13:45 Speaker 3: Justin you said that this has been a case that's been around for twenty some odd years. So yes, this settlement that was announced yesterday, I mean, is it just going to get caught up in a more legal jegmire? 00:13:55 Speaker 8: You know, it really could. So last year there was a first attempt to this. This is the second try now, right, And the big issue that blew up the deal last year is that the smaller merchants kind of pushed for the terms that they set in the first place, and big folks like Walmart, et cetera kind of got ice out from the discussions on that. It seems like that might have happened again here. The National Retail Federation was out yesterday saying, wait a minute, what kind of business practice would this be for us to say, hey, we're going to take these cards and not those cards. And they're also criticizing the fee concessions that were part of this deal too for the next five years or so. So I think there's still a lot of questions here. There's probably enough changes from last year's deal to get it over the finish line, but there's a big period here with objectors who are going to be weighing in on what they think of the deal. And honestly, the judge last year she said, look, you guys can do a lot more than you're offering to do in this deal. So is this enough? That's going to be a huge question moving into an approval hearing. What are the dollars dollar amounts we're talking about here, you know, so it's quadrupled according to the National Retail Federation since two thousand and nine. But if you said MasterCard, they've got eighty percent of this market for the the card fees, right, one hundred and eleven billion dollars last year alone collected in these wipe fees according to the NRF, So really massive, massive. But you know, these companies are also diversifying their streams, right, They're looking into digital wallets and other payment platforms too. So there's a lot more on the table now than there was when this was first brought back in two thousand and five. 00:15:20 Speaker 3: And to be clear, this is Visa and MasterCard and merchants. What about American Express? Where does it sit here? 00:15:26 Speaker 8: Yeah, so that's another great question. American Express basically settled a version of this loss or one a version of

this lawsuit years ago. Their card acceptance terms are a little bit different. Surcharging doesn't really allowed with those when it's not applied to all card types, right, But that begs the question if you start allowing surcharging through card holder through acceptance agreements for Visa MasterCard, does Amex now have to allow us for charging on its card? So that's another big question mark. If this deal goes through, it really has the potential to impact everything, not just Visa MasterCard. 00:15:56 Speaker 6: Paul. 00:15:56 Speaker 3: I remember when MX used to be accepted everywhere, and then after while it was like, oh we'll take Visa master Card, but not American Express because it was always for the merchants. 00:16:05 Speaker 6: Too expensive, too expensive. 00:16:06 Speaker 2: Okay, yeah, I haven't. I can't remember the last time I used my AMEX card. 00:16:10 Speaker 4: Literally can't. 00:16:10 Speaker 6: It's there in your pocket, though it's in my pocket. 00:16:12 Speaker 7: Okay. 00:16:12 Speaker 6: See that's the thing. 00:16:13 Speaker 3: I mean, what does this mean for companies that have corporate cards justin. 00:16:18 Speaker 8: So that's one of the different brackets here too. So the way the settlement works is that it's going to divide cards into three different types, so it be commercial cards, standard customer cards, and then premium customer cards. 00:16:28 Speaker 4: I think the. 00:16:29 Speaker 8: Commercial and standard cards you know, you want that corporate business. I think those two really are of the less concern. It's those premium cards, I think, with the rewards that really are on the line here in terms of whether or not they continue to have that universal acceptance everywhere. 00:16:44 Speaker 3: So there's so many businesses built around how to gamify your points. 00:16:48 Speaker 4: Oh yeah, I love it, So you do that question. I absolutely love it. 00:16:52 Speaker 8: I mean every day it's like, oh, these annex offers, you know, what can I get here for this discount paper. 00:16:57 Speaker 6: And redsheet tracking? 00:16:58 Speaker 8: But I really should, honestly, I mean it's that good, I think. 00:17:01 Speaker 6: So Paul's like, I cannot get into this. 00:17:04 Speaker 4: But the kids are. 00:17:05 Speaker 2: Because I mean I've noticed it that they really are good at gaming the system and to the point where, you know, I'm going to Barcelona for the weekend on points, you know, right exactly. 00:17:15 Speaker 3: And these premium credit cards are almost like coupon books in any ways, right because they offer you know, like fifty dollars a quarter at well, actually it's seventy five dollars a quarter at Lululemon for instance, right, the Camic's Platinum card. And then people try to buy gift card and stack them and use them like a year later. 00:17:31 Speaker 4: Paul's laughing. 00:17:31 Speaker 8: I mean that's true, and they carry those really high annual fees. But I always think to myself, look how much I'm getting back for this, and that ways the fees sometimes at least in my mind. 00:17:40 Speaker 7: So there you go. 00:17:41 Speaker 6: What are what are Visa MasterCards saying about this? 00:17:44 Speaker 8: So they are they signed onto this deal, they reach this agreement. I think they're pretty happy with the terms of it because you know, that kind of lets them walk away. The issuing banks like JP Morgan, Bank of America, all of them are also defendants. They get to walk away from this litigation. The overhang would be removed, right, So it's really the merchants. Are all of the merchants going to sign on? And what are those objections look like in the coming months to the court? 00:18:07 Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this. 00:18:14 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarclay, and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube. 00:18:29 Speaker 2: I don't know, for a lot of us that have been in this market for a long time, this is kind of the end of an. 00:18:33 Speaker 4: Ear, if you will, Warren Buffett. 00:18:35 Speaker 2: Warren Buffett saying that he is going quiet and marking the end of an ear for one of the business world's most watched investing gurus. He will stop writing BERTRAI Hathaway's annual letters and speaking at its meetings. 00:18:48 Speaker 4: Let's bring in Matthew Palozoli. He's a senior analyst. 00:18:50 Speaker 2: He covers Berkshire Hathaway and the property and casualty insurance business. 00:18:55 Speaker 4: He joins us here in our Bloomberg Interactive Brooker Studio Boy. 00:18:58 Speaker 2: Again, for most of in America, this is a big piece of news that Warren Buffett is stepping back from the day to day, which he's been doing over time. 00:19:07 Speaker 9: I yes, so you know, kind of sad day said for us Berkshire watchers. But we've known it. I mean this, so we knew this letter was coming out. He does this every year around Thanksgiving. We also knew he was stepping down as CEO, so not huge surprise in this letter. I think the going quiet thing was kind of to everyone a little bit by surprise. I think maybe the thought was, hey, he's he's gonna he's stepping back a CEO, but maybe he'll kind of be out there in the public and he's still chairman, so maybe we'd still hear more from him. A little while ago he said he wasn't going to speak at the meeting, and now he's going to kind of focus on his philanthropic work. And he's also a ninety five years old, he's maybe a little tired. 00:19:50 Speaker 4: Yeah, exactly. 00:19:52 Speaker 2: And he's going to donate more than one point three billion dollars to four family foundations and plans to quote step up the pace of his childable giving to kids foundations while he's still alive. 00:20:01 Speaker 4: So that seems to be the point of life. 00:20:03 Speaker 2: He

is any reason to think that the business strategies, the operations Hathaway may change now that he has kind of stepped back on another step, I guess so. 00:20:13 Speaker 10: I don't think so right away. 00:20:14 Speaker 9: So he is always praising his successor Greg Abel, talking about how he maintains the ethos of Berkshire, and they'll be doing the same thing. I think Abel walks a fine line now where I think over the next couple of years he will want to put his own stamp and make a name for himself, but also not stray too far from what has led to this massive value creation of Berkshire. So I don't think anything dramatic happens in the near term. 00:20:43 Speaker 10: You know, we talked about this. 00:20:44 Speaker 9: I think in the past the amount of capital they're sitting on and Able is a good capital allocator, at least according to Buffett. Maybe something happens there special dividend or something like that. You know, no guarantees on any of that stuff, but I could see Able wanting to put that kind of stamp on the company. 00:21:00 Speaker 2: Because again what we learned I guess from the last quarterly released was the cash is now three hundred and eighty two billion dollars. 00:21:06 Speaker 4: You know, it's a number that's you know, most portfolio managers what have wouldn't know where to start. 00:21:11 Speaker 10: Get boggles of mine. 00:21:12 Speaker 9: I think even in the letter he had mentioned, uh, there's just not a lot of things that moved the needle for them. So they bought a twelve billion dollar company in Alleghany a couple of years ago doesn't really move the needle that much. Help the insurance businesses grow a little bit, but overall for the company. 00:21:27 Speaker 10: Not dramatic. 00:21:28 Speaker 9: They bought this eleven billion dollar chemical business from Occidental. You know these are these are ten and twelve billion dollar deals, but they're just not moving the needle for the company. So there's not not a ton they can do too dramatically. 00:21:41 Speaker 2: Historically, why is Warren and the company what's been their thought about returning cash to shareholders? 00:21:47 Speaker 9: The thought has been, we don't want to do that, right, even said, you know, Berkshire shareholders have foregone dividends for a reinvestment in America. I forgot the exact line, and that was Buffets. He likes collecting dividends, he didn't like paying them. I think he always thought we are the best allocators of this. So if you're a owner of Berkshire shares, would you rather have some money or would you rather have warm Buffett invest that money for you? 00:22:13 Speaker 10: I think over the past couple of years, again, they've had so. 00:22:16 Speaker 9: Much money that's been tough for them to invest it in effective ways. But that's that's been the philosophy. 00:22:21 Speaker 2: Yeah, because I mean it's I guess my response would be, I can put it in cash too and get similar rates of return to you. And I guess that when it's ten twenty fifty one hundred million dollars line around, not that big of account argument. 00:22:35 Speaker 9: Now it's you know, it's significant, and it helped their earnings over the past couple of years. Just getting four percent on that was a dramatic tailwind to their earnings. So you know, it didn't do much for the stock after Buffett said he was leaving. That's been the thing that's weighed on it more than anything else. But annual see short term rates going down, so that tail wind diminishing. 00:22:59 Speaker 10: I mean, I think the. 00:23:00 Speaker 9: There is a school of thought that Berkshire, you know, not the same without Buffett, but just maybe not as good at almost all of their things. 00:23:10 Speaker 10: That's one school of thought. 00:23:12 Speaker 9: I could see other ones where you know, still able, maybe takes a different direction. So that's another maybe catalyst for the shares. But you know, it's it's a kind of darker time for Burshure. 00:23:23 Speaker 4: And what's Warren's ownership stake in the company. 00:23:27 Speaker 10: So I don't know this of my head. 00:23:28 Speaker 4: I don't controlling yeah, oh for sure. 00:23:31 Speaker 2: And you're not going to have an activist investor come in here and say this is just a poor allocation gun. 00:23:36 Speaker 9: It would be impossible. He owns too much in the The A shares I believe are ten thousand votes to a B share, he owns most of them. He will he's going to step up the amount he's giving away, but he still owns. 00:23:49 Speaker 10: Too much for anyone else to step in. 00:23:51 Speaker 9: And should he should he die in his will, he would. I think it's over ten years. His ownership goes to these foundations run by his children, who I can't imagine. Would you let them kind of immediately fall into the hands of some sort of actives investor. I think he'd set a timeframe of over ten years that he'd want. 00:24:12 Speaker 10: That stuff divested. But he does want to divest it. He doesn't want them to just hold on to it. 00:24:16 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday ten am to noon Eastern on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal