Daybreak Weekend: Disney Earnings, BP Reports, Apple India Shift

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1:44Tom Busby:This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, we'll look at how streaming can impact earnings at the media and entertainment giant Walt Disney. I'm Tom Busby in New York. I'm Caroline Hepker in London, where we're asking what's on the cards for BP's earnings. I'm Doug Krishner, looking at how a production shift by Apple has made India the number one exporter of smartphones to the U.S. That's all straight ahead on Bloomberg Daybreak Weekend. On Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.

2:37Good day to you.

2:38Tom Busby:I'm Tom Busby. We begin today's program with a look at a fresh round of corporate earnings, starting with the world's biggest entertainment giant, Disney. For more, we're joined by Geetha Raganathan, Bloomberg Intelligence Analyst on U.S. Media. Well, Geetha, thank you so much for being with us once again. Booming theme parks, blockbuster movies, ESPN, other networks, cruises, merchandising. And with all that, besides Netflix, no one has proven how important streaming is like Disney. So what do you expect this week from Disney's results? Yeah, thanks, Tom. So the sentiment actually has been really positive for Disney.

3:14And it's really important that you bring up the streaming segment, because I think investors are now laser focused on the rising profitability of the streaming business. And we've seen Disney kind of completely turn that business around. I mean, just a few years ago, they were losing something like about$4 billion a year. This year, they're going to probably post almost$1.2 to$1.3 billion in profits. So definitely a lot of good stuff going on there. They've increased prices. So we're seeing great pricing power. They're really kind of doubling down on their advertising business. And the one big thing that happened during the quarter, and I think we're going to want to hear a lot more about this during the call, is, you know, everybody kind of knows about this big Hulu custody battle that Disney was fighting with Comcast.

4:02That has finally concluded. So with full ownership of Hulu now under their belt, we think it will pave the way for much greater and deeper integration with Disney Plus. And that should really drive, I think, overall profitability as well as their advertising business.

4:20Tom Busby:And they've got now three properties that are streaming, right? Disney Plus, Hulu and ESPN Plus. Are they all? I know the crown jewel in that is Disney Plus. But how are the other two doing? They're doing very well. And again, very glad that you bring that up because, yes, they do have ESPN Plus right now. But the really big debut that we are all waiting for is what we call the flagship ESPN product. So what you see right now on ESPN Plus is more like the second tier sports. What we're going to see with the flagship ESPN product, which launches in a few weeks, is that everything that you get on their ESPN linear TV network is now going to be available on the streaming platform for$30 a month.

5:05And again, what is going to be really interesting here and investors are going to focus a lot of their attention on is the bundling strategy that Disney is going to adopt. So we think when they have these three great marquee products, the flagship ESPN streaming, they have obviously Disney +, as you mentioned, and Hulu and kind of the bundle there, it is really going to drive streaming profitability pretty significantly going forward.

5:29Tom Busby:Well, let's talk about subscribers, because Disney +, now profitable, has, what, 125 million or more? Yeah, somewhere in that region, yeah, about 130 million subscribers. And a lot of buzzworthy shows, not just Andor, but a whole bunch of Star Wars shows, Lucasfilms, as well as Marvel Comics spinoffs. I mean, their content has really, you know, really grown and matured. You're absolutely right. So, you know, this was something they were struggling with just a few years ago. you know there was a lot of content but people were kind of complaining that maybe you know it was more of a focus of quantity rather than quality uh they have definitely kind of completely rejiggered their content engine and we've seen that kind of play out very very well tom on the on the studio side of the business so we've seen uh you know a lot more of their films kind of perform pretty well just recently you know we had thunderbolts we had of course uh fantastic four you know so a whole reboot of the of the marvel franchise entering a new phase and you speak about content and how it's going to be such a great differentiator i mean just look at the next year so just look at fiscal 2026 for disney this is going to be an absolute bumper year for this company at the box office we're looking at the release of zootopia 2 You're going to have Avatar, Avengers, Mandalorian, Toy Story.

6:52So all their biggest franchises. And then remember, all of that is going to come to the Disney Plus platform as well. So we're going to, you know, definitely see content keep driving that flywheel for Disney, at least when it comes to subscriber momentum.

7:06Tom Busby:Well, and it's not only the movies that you talked about next year. Avatar, Star Wars, Avengers all coming back. I mean, that could be a blowout year at the box office. It absolutely is going to be because, you know, all these movies, each of these properties, Tom, I mean, they generate easily. We're talking like, you know, one and a half to two billion dollars in, you know, in global box office ticket sales. So you have multiples of those kind of coming out. You think of just even Zootopia 2. That's a huge, huge franchise when it comes to the Chinese market. So, you know, they have all of these different, you know, titles that are coming out on the on the on the movies side.

7:46And then, of course, you have a whole bunch of different series that they have for Disney Plus. So it looks really, really strong. I mean, the setup looks extremely strong for both this year as well as fiscal 2026.

7:57Tom Busby:Well, a lot to look forward to. Disney Q3 earnings out on Wednesday. That's ahead of Wall Street's opening bell. Our thanks to Geetha Raghunathan, Bloomberg Intelligence Analyst on U.S. Media. We move next to earnings from the nation's biggest ride-hailing giant, Uber, which, like rival Lyft, is now offering a lot more than just rides. And for more, we're joined by Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst. Mandeep there is ride-hailing, Uber One subscriptions, Uber Eats, partnerships with Instacart, Home Depot, Delta Airlines, and a burgeoning robo-taxi business, including a deal with Lucid to make the next-generation high-end cars.

8:35Tom Busby:That's a lot going on. So what do you expect to see from Uber's latest earnings? I mean, look, when it comes to this quarter, you know, the futuristic stuff like the robo-taxis don't really matter as much. At the same time, you know, everyone cares about the ramp-up of Waymo. So you want to see, you know, them expanding that partnership that they have in two cities, Austin and Atlanta. Waymo has talked about using, you know, different partners, like they've recently announced a partnership with Avis. So it sort of puts Uber in a tough spot that they don't want to rely just on Waymo. At the same time, they've been doing their own stuff.

9:19You know, you mentioned Neuro. I think that probably will help them and Lucid, you know. So to my mind, robo-taxis is an important aspect of how investors look at Uber for the next five to 10 years bet. But there's no doubt that Uber still has the scale with 175 million monthly active users. They've aggregated their demand when it comes to both delivery as well as ride-sharing. And that is what has worked to their advantage. So being the scale player, being able to grow EBITDA faster than the top line growth, that is what has driven that shift in sentiment for the stock over the last three, four quarters.

10:05And I expect them to execute on that where top line will grow around 16, 17 percent. The EBITDA line would probably grow over 30 percent and they continue to show a steady operating leverage.

10:18Tom Busby:The 175 million active monthly users, with all the economic uncertainty, it's really an astounding figure that they're still adding customers. When it comes to ride sharing and delivery, I mean, these are integral part of our day to day lives. You know, everyone has to, you know, eat three meals a day. Now, you're not going to order it on Uber or DoorDash every meal. But there are always times when you like to use these type of services. And that's what's drive the frequency for both DoorDash and Uber. The field has consolidated now to these two players. I think Uber's partnership with Instacart has also helped them sort of connect with more users.

11:01That's why that MAU number has grown faster over the last few quarters because of that cross sell. But with that being said, look, they've ramped up ads. Now, the reason why operating leverage has been better over the past few quarters is because ads is a$1.5 billion business for Uber. That wasn't the case. And the reason why ads are working is because they have the scale. They aggregate demand. They have the supplier on the platform. And once you have that, ads become an obvious choice for monetization. And that's what they've been successfully able to do. DoorDash is doing the same. Lyft's problem is because of the smaller size, their ads are just not as useful to the advertisers as they are on Uber.

11:50Just not reaching the volume of people. That's right.

11:53Tom Busby:Well, I want to go back to the robo-taxi wars because that's what it really is. And you're right. A lot of this is futuristic. A lot of it is five, ten years. But there are more players than ever now. We know that Tesla, just in June, finally came out with its CyberCab in Austin. Very small, very limited. But Lyft, we talked about their self-driving shuttles, Uber, you know, the partnerships and expanding more. However, Waymo looks like it has another partner in Dallas next year with Avis. I mean, is it are they just hedging their bets or or is there enough out there, enough business, enough partners, enough autos that we're going to see this everywhere or try to see it everywhere?

12:34Tom Busby:And is it really going to be a game changer? I mean, just to give you a sense of Uber's scale, they do almost 9 billion ride-sharing trips every year globally. And out of that, U.S. is close to 4 billion. So when you compare that to Waymo's current volume, Waymo is at a run rate of maybe 13 to 15 million rides annually. Uber does that in one day. No comparison. Exactly. And Uber has that scale that no one else has. And that's where Waymo, even though they're hedging their bets, I think partnering with Uber does give them that, you know, demand in terms of the user base and the volume of trips that they can do with Uber that they can't do elsewhere on their own.

13:24At the same time, you're right. I think Waymo's approach right now is to hedge their bets and partner with as many people because they don't want to be overly reliant on Uber because it hurts the take rates. You know, in the end, it's all about how much is Uber going to keep? How much is Waymo going to keep? How much is fleet operator going to get? Because there is some cleaning and maintenance involved with these autonomous rides. And, you know, there are different parts of the ecosystem. So I think lowering your reliance on one player does serve Waymo well in the long term.

14:02Tom Busby:Well, Uber Q2 earnings out this Wednesday just ahead of the opening bell. Lyft is out that same day after the close. Our thanks to Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst. And coming up on Bloomberg Daybreak Weekend, we'll look ahead to earnings from the British oil and gas giant BP. I'm Tom Busby, and this is Bloomberg.

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16:23Tom Busby:This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program, we'll look at how a production shift by Apple is impacting smartphone production elsewhere in Asia. But first, following a deluge of European results, oil giant BP reports its earnings this week. The London-based energy firm recently replaced its chairman amid pressure for a new direction. But has that change paid off? For more, let's get to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker. Tom, BP is one of the big names of the oil industry, but it's lagged behind fellow oil and gas majors in recent years, with lackluster returns, a mountain of debt and an aborted attempt to transition to renewables.

17:11Activist shareholder Elliott Investment Management has criticised the company for lacking urgency and ambition, appealing to new chairman Albert Manifold to focus on improving the firm's cost base and capital allocation. This is in contrast to rival Shell, which has focused its business on oil and gas and denied reports in June that it was in talks to acquire BP. Also to contend with are the sector headwinds, a trading environment beset by geopolitical uncertainty, conflict in the Middle East and between Russia and Ukraine. The plight of oil markets and energy providers is such a precarious environment.

17:52It's something that Bloomberg's Asia energy editor, Stephen Sapchinsky, expanded on recently discussing the risks posed by current White House policy. While oil prices did rise and there is a fear that Trump will do something that could restrict Russian oil on the market, there is also the view that this could be a taco sort of situation. Trump always chickens out. So how exactly will this play out? It's unclear. But because there are so few details, it's hard for people in the market to take a really bullish position on this at the moment. That was Bloomberg Energy reporter Stephen Stapchinski.

18:27So can BP put its best foot forward against the difficult backdrop? I'm joined by Bloomberg's team leader for oil trading in Europe, Aloeck Nightingale, and our markets reporter, Sam Unstead. Welcome to both of you. Al, can I start with you? Just give us the context ahead of BP's earnings. What is your impression of the first half of the year for BP? Do they have a turnaround plan?

18:49Tom Busby:Yeah, they've got a turnaround plan. They haven't got into the real meat of the turnaround yet. They need to kind of start looking at asset disposals and a lot of the big work is still to come. They have got a new chairman, which was an important part of their strategy and just getting things on the right footing. They've made changes to the board. So things are starting to come into place and now they're under pressure to deliver on the big kind of strategic reset that they've promised investors. How has uncertainty from tariffs and geopolitical instability affected the market around BP, the oil market?

19:37Tom Busby:That's a great question. And what we're seeing time and time again so far this quarter is that the oil majors and oil companies are saying that they've had the wrong kind of volatility. These guys are really good at trading supply and demand. They've got better visibility than anybody else on where things are tight, when there's not enough supply or when there's too much supply. But when you move into kind of tweets and geopolitical things and things that, you know, we have as good an idea as anybody else of whether the US is going to bomb Iran or something like that, you know, it becomes a bit more of a guessing game.

20:17Tom Busby:So what they do, they retreat from risk. It doesn't mean that they become worse traders. It just means that they retreat from risk and risk and trading is a big part of kind of profit boosting for the European oil majors like BP and Shell. So I think it's probably been a tougher environment on the trading side for the whole space. We're yet to see. BP didn't warn about that in their update. So maybe they did OK. But I think there is, you know, Total said they have to be careful about trading. Shell said that there's a risk off environment. Equinor, similar stuff. So, yeah, there are issues around just trying to be more risk averse when you've got these geopolitical headlines and headlines that are not about supply demand fundamentals.

21:05Sam, how are BP's results likely to compare with other energy companies in the market in the middle of results season? Yeah, I think actually what I was just talking about there is really the interesting part of it, because BP didn't have such a weak trading update, you know, in terms of how their oil trading is doing and that kind of thing. But that has been what we've heard from everyone else across the sector. And what you're also hearing as well is that investors are trying to sort of look through this a little bit. You know, that hopefully with tariff deals getting done, with a little bit of those trade tensions coming down, the oil traders can get back to focusing on the supply-demand fundamentals and get away from the kind of, as I was saying, the kind of wrong kind of volatility.

21:48However, I think as we've seen with the copper market, for example, the potential that these unpredictable events can keep happening is very much still in play. So I think that will be a key part for BP. And then across the rest of their results, it'll be the same things as a lot of the other companies. With the trading put aside, if you like, because they released a little bit earlier on that, how are the actual operations doing? How are they performing within the company? And then for BP specifically, buybacks, you know, are they going to keep up the pace of buybacks? Are they going to cut it?

22:21And the restructuring, you know, have they made any kind of extra progress on this very big, very significant restructuring they have to do? Al, in terms of the buyback, paying out dividends, that is always a very important component in the London market, isn't it? What are we expecting around that?