BI Weekend: Live Nation Suit, Micron Earnings, Kimmel Return

16:59It's a bid to catch up to rival drugmakers after failing to compete with its own weight loss medications. For more, co-host Scarlett Foo and I were joined by Sam Fezzelli, Bloomberg Intelligence Director of Research for Global Industries and Senior Pharmaceuticals Analyst. We first asked Sam to give us some context on why this deal is important. Obesity is one of the key causes of a whole variety of diseases, cardiovascular, cancer, mental health. So if we can treat it, if we can prevent it, if we can reduce it, it's brilliant for the entirety of society. Here there is a deal where Pfizer thinks they've got something that's going to be able to give them a chance at playing in this very important area and very massive market.

17:41Right. So the drugs are interesting. They're relatively early stage. We're looking to see with some new data coming up, whether some of the promise that we've seen earlier for these drugs that the company has, which the latest stage one is still in phase two. They need to start the phase three in 2026, whether they are as competitive as they looked in the earlier trials. There were some questions on efficacy, less so than side effect profiles. So we'll have to wait and see how that pans out.

18:09Scarlet Fu:Sam, can you get into the science a little bit and maybe keep it basic for folks like Paul and me? Because Metzera is described as the next generation hopeful in obesity. They use these long-acting analogs versus GLP-1. And I'm wondering for people who might be holding out for Metzera's treatment, what that means versus the currently available ZepBound or Wigovi. Yeah, yeah. So the later stage drug is very similar to Wigo V and similar to Zepatide or Zepbound. And the amylin drug is a little bit earlier stage. There are companies with more advanced drugs in that world. but they all kind of feed into the same pathway, which is the pathway that talks between your food intake and your satiety centers in your brain and your insulin centers in your pancreas.

19:04It tries to balance, I've eaten enough, let's stop eating now, and let's release some insulin, make it more sensitive so that we can deal with the onslaught of sugar that comes into our blood. That's where they are. It's central to that space. There's cells in the gut that release glucone-like GLP-1s, glucone-like peptides, the cells in other parts of the body who are responding to it. So that's where these things sit. And amylin is just one of those agents in the middle of it. Sam, just kind of stepping back on these GLP-1 drugs in general, there's a certain level of efficacy today. There's a certain level of, let's say, side effects, whether it's nausea or something else today.

19:44Is there room for improvement on both efficacy and side effects going forward with these drugs? Yeah, I mean, it's the balance that's the most important. With efficacy, I think we're pretty much there. I mean, you know, there are folks that we know that go on a drug for a week or two and they lose four or five kilograms. That's fine. You don't want to lose much faster than that because I don't think it's particularly healthy if you lose weight at a much higher speed. And also, you don't want to get much lighter than a 80 kilo or 90 kilo or 75 kilograms, depending on your size. So the key is, how do you get there?

20:15If you get there by having lots of side effects, then your probability of staying on the drug is lower. But we want you to stay on the drug. So it's a very, very tight balance. And then, of course, you have to figure out, well, am I happy taking a weekly injection, which I think a lot of people don't have a problem with it. But what if Mitzera is right and push it to once monthly? What if some of the other competitors are coming along with once every three months? Now, those are things that we have to wait and see how the data shows in terms of that. balance I've just referred to. Our thanks to Sam Fazelli, Bloomberg Intelligence Director of Research for Global Industries and Senior Pharmaceuticals Analyst.

20:51Staying in the pharmaceutical space, this week the Trump administration linked Tylenol to autism and urged pregnant women to avoid the common pain medication. And this comes despite the lack of widely accepted scientific evidence supporting the risk. For more, co-host Scarlett Phil and I were joined by Anne Hunter, Bloomberg Intelligence Senior Equity Analyst for biopharmaceuticals. We first asked Anne about the science behind the latest news. There are a lot of studies on it. It's certainly driven by an increase in finding a solution for the increased rates of ADHD and autism. I think it's really important here to qualify or quantify what we're talking about with frequent Tylenol use.

21:29And most of the studies are looking at measured as more than 28 days over the course of your pregnancy. So that is a lot of Tylenol use. We're not talking about you have a high fever and you take it for a day or two. This is kind of more long-term use. There is a correlation between Tylenol use and these disorders in children. And I'll probably lose listeners if I go too deeply, but correlation is not causation. Those are two separate things. And while there's a lot of literature out there, a lot of clinical studies, I would argue that the best ones look at sibling analysis. So they compare a mother who had frequent use during one pregnancy and not the next.

22:12And that's the best way to kind of look at this. And in those studies, there was no findings of increased risks. And there've been several. There was a two and a half million children study in Sweden, as well as a more recent one out of Japan. Unfortunately, randomized trials are difficult to do. There's just too many variables. But the sibling analysis is probably the best we have.

22:36Scarlet Fu:So, Anne, when I think about the companies that are affected, certainly Kenview, which owns the Tylenol brand, Tylenol's generic name is acetaminophen. And there are many other companies that make acetaminophen as well. Are we seeing them impacted in any way? You know, this is even for Kenview, this is maybe a high single digit portion of sales, and that's Tylenol overall. So you assume that the pregnant population is a much smaller percentage of those sales. And I'd argue even before all of this, a lot of physicians, certainly mine, when I was pregnant, recommended only taking Tylenol when you have one of those high fevers.

23:12So I wouldn't expect it to truly be a material impact to any of these companies. Is there anything else out there that is at risk here? I mean, from just the FDA, I mean, your coverage here, because I know there's a lot of uncertainty about which drugs are, you know, kind of favored by this administration, which ones aren't. Are you seeing that in your coverage of your companies? Well, for pregnancy in particular, I'd say there are no favored drugs. You know, you certainly were never suggested to take aspirin, and Tylenol was one of the few things that was considered okay. But overall, you know, anytime you get a lot of media attention on any drug from politics or anything else, it's typically not a great thing for the companies.

23:54But I think it does tend to even out as it passes.

23:58Scarlet Fu:You are our senior equity analyst for biopharmaceuticals. When the secretary of health, Robert F. Kennedy Jr. speaks, does he tend to move companies in your universe? I would argue yes. for better or for worse. I'd say they definitely move, but I would say that they go back to a steady state. Okay, so it's an immediate knee-jerk reaction and then things calm down. Exactly. Our thanks to Anne Hunter, Bloomberg Intelligence Senior Equity Analyst for Biopharmaceuticals. We move next to some news in the luxury space. This week, we heard that the Finnish company, Aura Health, is raising$875 million in a new Series E financing round.

24:34And it's now closing in on a roughly$11 billion valuation. That's after selling about 3 million rings over the past year. For more, co-host Scarlett Phil and I were joined by Mark Gurman, Bloomberg News Managing Editor for Global Consumer Tech. We first asked Mark for more background on the Aura Ringmaker. They want to scale production. They want to scale R &D. They want to move into new regions. They want to get into new retail stores. They want to add new software features. So they're looking to grow quickly. This nearly$11 billion valuation. This is a pretty specific hardware company. They really make one thing.

25:12And if you look at their market cap now, after that raise, you compare it to other companies that are known for really one type of hardware product, Peloton, iRobot, Sonos, Bose. Aura is now worth more than all of them combined, which is pretty crazy to think about. So far, this looks to be a success story. It's not a very old company. But it's a company doing effective things, and they're clearly building a product that people like. They've sold 3 million units in the last 14, 15 months or so. They've sold 5.5 million rings to date. They're due to cross$1 billion in revenue in 2025,$1.5 billion in 2026.

25:56They did$500 million in 2024. So they seem to be growing quite nicely. I don't know. Not being into the fit ring business myself. Fit ring.

26:07Scarlet Fu:I like that. Fit ring. I mean, this seems like something that your friends at Cupertino could come out with tomorrow in Copycat. How do you think about the competitive landscape? Yeah, the competitive landscape is interesting. There's a few smaller players that are also doing smart rings. Samsung rolled out what they call the Galaxy Ring last year. And for Samsung, it's actually been a dud. The functionality is just not on par with Aura. What Aura has is a very strong brand. They have very strong functionality and they have that big first mover advantage. But you're right. If Apple comes out with a ring, they're going to eat Aura's lunch.

26:44You know, Aura's perspective is that they have this gigantic and tried and true in legal proceedings patent portfolio. And so they feel that if Apple were to come out with a ring or another company were to really hit the nail on the head with a ring, that they would be able to defend their patents. And they've shown to be able to do that. They have some cases in front of the International Trade Commission and other organizations right now for some of the other competitors. So we'll see what happens. I don't anticipate Apple coming out with a ring anytime soon. I will say that this$10 billion valuation is a little bit of a double-edged sword.

27:25On one hand, that's amazing for the company. On the other hand, it puts them in territory where they're probably not going to be acquired or bought, and which would spur another company like Apple if they wanted to develop one versus buy them. And definitely, they're going to have to make a decision in the next couple of years whether they're going to go public via an IPO, via a SPAC, or if they're going to stay private. Our thanks to Mark Gurman, Bloomberg News Managing Editor for Global Consumer Tech. Coming up, a look into the current succession plan at T-Mobile. You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in-depth research and data on 2 ,000 companies and 130 industries.

28:01You can access Bloomberg Intelligence via BI Go on the terminal. I'm Paul Sweeney, and this is Bloomberg.

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29:51Scarlet Fu:Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together.

30:29Scarlet Fu:Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions, Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney on Bloomberg Radio. We next move to some news in the telecommunications space. This week we heard that T-Mobile is promoting Chief Operating Officer Srini Gopalan to the top job. He will replace CEO Mike Sievert, who will become Vice Chairman.

31:12And this comes as T-Mobile competes for customers in a market that now also spans home internet and satellite service. For more, co-host Scarlett Fulham and I were joined by John Butler, Bloomberg Intelligence Senior Telecom Analyst. We first asked John if he's surprised with T-Mobile's changeover. Not at all. This was incredibly well broadcast. Srini has been hitting the conference circuit. So at this time of year, all the major investment banks hold these conferences. And he's been in almost every one sort of out there telling the T-Mobile story. And in my mind, it answers one or two questions, right?

31:48With any incoming CEO, you're like, can they manage the company effectively? And can they manage the stock effectively? Can they get that narrative out, spin a good story? And he is really good at that. So he's answered the second question. And I think in some ways he's answered the first as well. Talk to us about the wireless business these days. It's just a brutally competitive business. Just give us the lay of the land there between AT &T, Verizon, T-Mobile, and I don't know anybody else who might be out there. I mean, the big three are still dominant, Paul. And T-Mobile has executed beautifully over the past few years.

32:26They've done a very good job of sort of securing the lead in terms of subscriber growth by marketing on this hip counterculture brand image. They continue to be, I think, having an outsized impact on consumers. When you think of wireless, it really is a consumer retail business. They all have thousands of stores. They advertise on the Super Bowl. They have giveaways. And I think T-Mobile more than most really does that well. And I think the big three, because of their scale set, it sort of sets this sort of wide moat for any newcomers that want to come in. So T-Mobile as number two in the industry, I think is going to remain firmly in that place, if not move into the number one position over the next several years.

33:17Who's number one? Verizon? Number one is Verizon still. I'm a Verizon person. I am too, by the way.

33:23Scarlet Fu:You just went to Italy. Yes. And what did you do for your phone needs? Fine. I have a plan that just ports over to an international. Okay. As do all of my offspring. That's the only thing that I still pay for. They're on the payroll in that regard. Me too, by the way. Yes. No one wants to give that up. Why pay for your own cell phone service when dad will pay for it? Yes. I switched over to T-Mobile because of the giveaways. Yes. Because of the free iPhone last cycle. and also because you get free data and free international texting when you're overseas up to five gigabytes. So that means I never have to buy an international day pass.

33:57Comparison shopping. That is the single biggest hook I hear. So when people come to me and they're like, I'm a T-Mobile subscriber, they have all these giveaways, and they have international calling.

34:07Scarlet Fu:That makes a big difference because when I was on AT &T, I was paying$10 a day, and that adds up really quickly. It does. It really does. And then only one person in the family can get it because not everyone's going to get it. Right. And you have four offspring, plus an ex-wife you're still paying for. Well, there you go, Paul. Charlie Pellett is on the T-Mobile. He always tries to sell me to go to T-Mobile. Charlie also knows the great deals. That's the secret here at Bloomberg. Charlie knows all the great deals. He's always traveling to strange parts of the world where he probably needs that kind of stuff.

34:32So what's the future of wireless in this country? Is it just our growth, average revenue per user? I mean, is that kind of the story for everybody? So that is a great question. That is what's driving growth now for a telco. you sort of run out of room for adding new subs. And so you need to drive that up, that average revenue per user. And they're doing it with the giveaways we were just talking about. They actually charge modestly for those in some cases. They're selling you phone insurance. T-Mobile is now pushing into the advertising business. But the real avenue of growth to watch for them going forward is broadband.

35:11They are making more and more inroads into that market. And T-Mobile, it's what I'm watching with the new CEO here to see what he does in fiber broadband, because if T-Mobile has had any sort of a misfire over the past decade, it's not getting into fiber broadband in a bigger way, in the way that AT &T and Verizon both have through sizable and aggressive acquisitions. So it'll be interesting to see what he does there. My call is he's going to start building quickly and aggressively, would be my guess. Our thanks to John Butler, Bloomberg Intelligence Senior Telecom Analyst. We move next to the media entertainment space.

35:51This week, late night host Jimmy Kimmel returned to television. ABC parent Walt Disney had pulled the show off the air. That's after Kimmel said conservatives were trying to score political points off the fatal shooting of conservative activist Charlie Kirk. In his return, Kimmel didn't shy away from poking fun at President Donald Trump and FCC Chairman Brendan Carr and making an impassioned case for free speech. For more on all this, co-host Scarlett Phil and I were joined by Geetha Ranganathan, Bloomberg Intelligence Senior Media Analyst. We first asked Geetha what this news means for late night networks and whether they still make money.

36:24Scarlet Fu:They don't make a whole lot of money, Paul. Not anymore. It used to be that, you know, late night television would bring in a lot of ratings, would bring in a lot of ad dollars. that has really changed. We've seen linear TV kind of hemorrhage viewers now over so many years, and late night is no exception. So if you just kind of look at Jimmy Kimmel's show, for instance, it generates roughly about$50 million in ad revenue. Compare that to a few years ago when it used to generate close to about$150 million. So definitely ad revenue going down. And most of these late night shows are losing money just given the programming budget for these shows.

37:04Scarlet Fu:So not really a needle mover in a financial sense for Disney. Okay, but in a cultural sense, it is because these are shows that define the networks. And so thank you for putting numbers to that, because I think there's a lot of concern or skepticism from certain corners of American communities that question whether Stephen Colbert's show should have been canceled for financial reasons, as CBS asserts it was. Geeta, is ABC going to pay some kind of price for allowing Kimmel to go back on air? Because the president, for instance, alluded to making more money off the company for doing so. Yeah, it's certainly possible.

37:41Scarlet Fu:I mean, we've seen President Trump kind of go after, you know, the broadcast networks, threaten to kind of revoke licenses. So he goes after anybody. He uses his power, you know, the courts to attack anybody who says anything unflattering about him. So that's, you know, definitely possible. From a Disney perspective, though, you have to remember, this is a very, very diversified company. So yes, ABC is definitely a very important asset. But again, if we put some numbers around this, Scarlett, it makes up only about, they generate, Disney itself generates about 90 to 100 billion dollars in revenue every year.

38:17Scarlet Fu:ABC is about 5 billion, 5 to 6 billion in revenue. So it's just about 5 % for the company. So again, you know, small potatoes in the context of the company's financials. But yes, you bring up a very important point about culture wars. Unfortunately, I think Disney is in a losing position, whichever way, because they're either going to anger, you know, the conservatives or the other end of the spectrum. So it's just tough. Yeah. Very quickly, Geeta, in the days following Kimmel's suspension, a number of people canceled or threatened to cancel their Disney Plus streaming services. Do we have a sense that this might get kind of noisy when it comes to the earnings reports and the streaming numbers and subscriptions?

38:57Scarlet Fu:I mean, we've seen this kind of backlash before happen, you know, in the case of certain programming and, you know, with Netflix, with other streaming services. Typically, we haven't really seen it reflected in the numbers, even though there's a lot of noise around it. So yes, maybe a little bit of up and down, but I don't think it'll have, again, any big needle-moving effect on the Disney Plus subscriber numbers. All right, Geetha, while we got you here, I have to ask, do we have any news on succession to Bob Iger? Not yet. Not yet, Paul. I mean, that's the biggest question always for Disney.

39:29Scarlet Fu:He is supposed to retire by the end of 2026. There is a lot of rumblings that it might be somebody internal. You know, we keep hearing about Dana Walden. Of course, nothing certain just yet. Our thanks to Geetha Ranganathan, Bloomberg Intelligence Senior Media Analyst. We move next to some news in the food and beverage industry. The coffee giant Starbucks announced it will close stores and eliminate 900 jobs in a$1 billion restructuring effort under new Chief Executive Officer Brian Nichol. For more, co-host Scarlett Fu and I were joined by Michael Halen, Bloomberg Intelligence Senior Restaurant and Food Service Analyst.

40:01We first asked Michael for his take on this week's news. This was very clearly communicated to the street back in April on their fiscal 2Q call. management said that, you know, we expect more restructuring charges. We're going to continue to evaluate our store base. Really, management wanted new CFO, Kathy Smith, to be involved in the process. So this was not a surprise. All right. A shout out to my Starbucks on Route 35 in Wall Township, New Jersey. They do a great job. Great folks. Very efficient. Very good. Mike, what does this company need to do? What do they say is on their to-do list to turn this company around.

40:39What are you looking for? Yeah, it's more operations and marketing. And we're starting to see things kind of inflect here. We think fiscal 26 should be a nice bounce back year. So, you know, first it's with the operations, right? So it's eliminating menu items, increasing labor, which baristas were very happy about, creating a smart queue for mobile orders, right? So the stores aren't as chaotic and baristas aren't serving mobile orders for somebody 30 miles away before helping someone inside the store. And then service standards, right? They're rolling out these green apron service standards this year.

41:22It's a big investment on training and really nailing the consumer experience in the store. And then from there, it's the marketing. And marketing seems to be working. They pulled back on discounts. And what they're doing is more marketing. You'll see some TV ads, right? They're doing more digital marketing. And we think that's a smart move. It seems to be paying early dividends. Starbucks non-rewards member transactions are up. Non-discounted rewards members transactions are up. And we think these are a sign that sales are going to inflect higher in the coming months.

41:57Scarlet Fu:Okay, but this is taking a while. Paul and I were just saying that Brian Nickel owns this now. He's been CEO for a year and they're still in turnaround mode. They're still in kind of like, let's figure out our path forward. Investors, please be patient. Are investors going to continue to be patient for another six months to one year? I don't think they're going to be patient for six months to one year in terms of the stock price. I think Brian Nichols' job is very much safe. You know, you can't turn around an air craft carrier on a dime, right? This is a massive organization, 18 ,000 stores just here in North America, over 40 ,000 globally.

42:31So, yes, this is taking longer than a lot anticipated, you know, myself included. You know, our investors going to be happy if they don't see same-store sales inflect here in the first quarter of fiscal 26. No, they're not going to be happy, and you're going to see it reflected in the share price, right? So, yeah, I mean, I think they're making the right moves. This has been a longer turnaround than most had expected. But, you know, I think Brian Nichols pressing all the right buttons right now. Our thanks to Michael Halen, Bloomberg Intelligence Senior Restaurant and Food Service Analyst. That's this week's edition of Bloomberg Intelligence on Bloomberg Radio, providing in-depth research and data on 2000 companies and 130 industries.

43:13And remember, you can access Bloomberg Intelligence via B.I. Go on the terminal. I'm Paul Sweeney. Stay with us. Today's top stories and global business headlines are coming up right now.

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