Takeover Twist

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0:35BBC Sounds. Music, radio, podcasts. Wake Up To Money from BBC Five Live. Hello, morning, welcome to Wake Up To Money. Put up or shut up, that's essentially the message from Warner Brothers as it gives rival Paramount seven days to make its best and final takeover offer. We'll be live in LA shortly to delve into the continuing Hollywood business saga. Also on the programme today is the shopping centre making a comeback. The FTSE 100 boss of one of our country's biggest landlords tells us, maybe, but only in the right places. And we've got a little nostalgia for you this morning. Biddy drinks Carling Black Label.

1:12Carling what? Carling Black Label. It's a bombing lager. Carling Black Label brand, which is set for a UK revival. Wake Up To Money with Will Bane. Morning, welcome to Wake Up To Money on Wednesday the 18th of February. Just gone five o 'clock in the morning. We're with you this morning. Great to have your company again. Yes, we've got lots to pick through, haven't we? The front page is pretty dominated by something we were teeing up on the programme yesterday, which was that jobs and wages data. Turned out there was a surprise in the unemployment data. We'll be picking through that with our panel this morning.

1:45We will be talking about the latest twists and turns in that saga over Warner Brothers, Netflix, Paramount. Who is going to own the maker of the Harry Potter films, amongst other things? And yes, the latest Big Boss interview that we've done is with the chief exec of LANDSEC, one of the biggest landlords in the UK, runs a huge portfolio of office buildings, lots of them in London and Manchester, but also shopping centres right around the UK, everything from Liverpool One, Blue Water in Kent, St David's Centre in Cardiff, among those as well. So we've got some really interesting insight on what's going on with hybrid working and people going back to the office, but also what's going on in shopping centres at the moment, which was an interesting part of that chat.

2:23So we will hear a little bit more from Mark Allen, the boss of Lantzek, in the next half hour or so here on Wake Up To Money. So lots for you to get involved with if you would like to get in touch with us on the programme this morning. And 85058 is the text number to do just that, or the WhatsApp number is 08085 909 693 if you would prefer to join the conversation that way. Alongside me for the next hour, our panel, as always, And Nicky Masterman is back with us, founder and chief exec of Inspired Minds Neurodiversity based in Newcastle. Nicky, morning. Great to have you back on the programme.

2:55Good morning. Thank you for having me. Just remind everybody what you guys do. So we're a full service HR company from SMEs, public sector, large organisations. And we also specialise in neurodiversity. So with the employment law and the neurodiversity where we do training and screening and coaching. Very, very specialist and niche in the UK in what we do. Yeah. And how's business going at the moment? Pretty good. We, yeah, range in between 60 % to 79 % for the last two years, year on year. So pretty good. It's all coming through to the support around neurodiversity in the workplace and the specialism we have in that.

3:35So all's good with us. Yeah, we're going to talk a little bit about some of the changes, because some of the sort of planks of the Employment Rights Act that we've talked about a lot are going to start coming into force from today. The ones today, Nikki, are obviously very focused on trade unions, but how much work is there in terms of implementing that and helping employers and employees, I guess, navigate what's changing around that? Massive piece of work. We're doing quarterly legal updates for employers. We're doing monthly training for businesses to get it right with all the changes coming with absence management, SSP, all contracts and policies updated.

4:08So it's actually a huge piece of work for us because we have quite a big client base. So very, very good for the world of HR consultancy at the moment. Yes, I bet. As I say, we're going to talk about that in the second half of the programme. We're going to have one of the trade unions on about the changes, the trade union laws as well. But we'll expand on that with Nikki about some of that work that she and the team at Inspired Minds are doing to get her clients ready for all of those changes. The begin, as I say, from today. Alongside Nikki and me for the next hour, Rachel Winter back with us as well.

4:36Rachel, the partner and investment manager at Killican Co. Morning. Great to have you back on the programme. Morning, Will. Thanks for having me. Trailed it right at the top there. I'm going to chat about it more in a minute. But Warner Brothers Discovery, there's a nice kind of big corporate, juicy corporate story to kind of intervene to all the economics at home that we've been talking about this week. Yeah, exactly. So very excited to find out what happens here. It does feel as though it's been dragging on for a while. So it's nice that a deadline, this seven-day deadline, has been given. Yeah, it certainly does feel like it's been dragging on, isn't it?

5:06October, I think it was the first bid there as well. The first kind of moves from Netflix. Paramount then responding, the rival to try and buy Warner Brothers. And then, as Rachel says, we've had yesterday, Warner Brothers saying it's given seven days basically to Paramount to make its best and final offer to top an existing$83 billion agreement that it has with Netflix to merge. Dawn Shimelewski joins us from L.A. Now Dawn's the U.S. entertainment business correspondent for Reuters. Morning from us, Dawn. Evening to you. Good morning, Will. Here we go then. Rachel said, been dragging on for a long time.

5:42Is this really the final seven days of all of this, do you think? No. I applaud your optimism, but no. Here's the timeline as I understand it. So Paramount has seven days in which it can negotiate, speak directly with the Warner Brothers board versus publishing after offer after offer, which the Warner Brothers board has summarily rejected, citing various concerns. This is an opportunity to get a deal across or put together something that the board considers to be a superior deal to the one that they have currently with Netflix. Netflix has a signed deal that shareholders are voting on on March 20th.

6:27Now, the enticement here was that a financial representative for Paramount spoke with an unknown member of the Warner Brothers board and said, hey, you know, we can come back with a slightly sweetened offer of$31 a share. And by the way, that's not our highest offer. So that's what caused negotiations to resume. Right. Take people back a bit of a step, Dawn, because as Rachel rightly says, we've talked about this loads on the program, but the center of the kind of two bids and why one at the moment seems to be the preferred one from the Warner side than the other. So the Netflix bid, although on its face, the cash value looks less.

7:09It's$27.75 a share versus$30 a share of cash. So on its face, it looks like easy math. All of us have gone through primary school. We know how to do that math. But the Netflix bid assumes that Warner Brothers will take its television assets and spin those off into a separate publicly traded company. And its shareholders will have an interest in that. And based on some regulatory disclosures, Warner Brothers has said, we think, hey, it will be worth anywhere from$1.33 US all the way up to$6 US. So when you take that value and you pair it with the offer from Netflix, the Warner Brothers said, hey, look, this is a superior offer.

7:47Plus, Netflix is a$300 billion corporation with healthy cash flow. Paramount Skydance is this newly formed entity with, you know, a bunch of debt. And so the Warner Brothers shareholders said this looks a little risky to us. In fact, it looks like a leveraged buyout. We aren't sure this is the best deal for our shareholders. Right. And so the Netflix bit wouldn't buy all those old TV assets. The Paramount one would. There's been all these wranglings, as you say, Dawn, about whether it's all cash or not, how much of it's borrowed, where the money's coming from. Throw in the last couple of pieces that add to the complications of this, the proximity of the chief exec, his father at Paramount, and the White House.

8:29Yes, that is sort of the X factor here in the US. Larry Ellison, who is a lead investor in Paramount Skydance, his son David Ellison is the CEO. Larry Ellison, who's among the world's richest men, has vouched for the equity portion of the deal. that's around$40 billion in cash, he said, look, I'm good for it. I'll cover it. So this is how Paramount is attempting to de-risk its offer. It's like, hey, we have a bunch of well-established banks. We have this rich dude. So this is the best deal. Rachel, from a share price perspective, I'm just looking at Netflix's over the last sort of six months, three months or so.

9:15There certainly seems quite a bit of nervousness from their shareholders about what it's doing here and why, you know, for a company that's never really chosen to grow by acquiring other things, is choosing to do that now, it seems. Yeah. So as you say, the Netflix share price is down about 38 % in the last six months. So it really is a very big drop. And I think that reflects, as you say, that investors are a little nervous about what Netflix is doing here. But also it reflects the vast size of this acquisition. So this is a huge acquisition in comparison to the size of Netflix. And whenever that happens, even if investors think it's a good idea, the share price will tend to drop.

9:52Yeah, Dawn, what's your take on that seeming unease from Netflix's shareholders? I think that's a really fair read. And there's also some regulatory uncertainty, as we sort of nodded to previously. Some regulators are concerned that combining what is arguably the world's largest streaming service with one of its larger competitors here in the United States would give it unfair market clout. And so there's that regulatory concern. Now, let's be clear, any deal of this size is going to come under scrutiny. And in the case of Paramount, merging Paramount with Warner Brothers would actually remove one of the largest film studios in Hollywood by consolidating two big studios.

10:34So that implies a bunch of job loss. So no deal here is without risk. And, Nicky, that's where it gets interesting for us as kind of consumers, doesn't it, as well? Because that has been the question mark. And I interviewed, for example, Tim Richards, the boss of View Cinemas, on the program a few weeks ago about this absolutely spitting fire about it. The Netflix tie-up. Basically saying Netflix has got no interest in cinema. It's basically out to outcompete cinema and that if this deal goes ahead, you're losing a big studio that could provide movies to cinemas like his as well. What do you take, first of all, from the streaming side of things?

11:12Do we have too many of these streaming platforms at the moment? From a pure consumer's perspective, would you like fewer options or do you like the range of choice, do you think? I actually discovered a few months ago how many actual streaming, how much I paid for. I think when I looked at it, I didn't realise it was this much. I think I was paying something like£130,£140 a month on all the streaming services. And I was like, oh, my God. So there was a bit of a shock there and a bit of a thing of keep an eye on what you subscribe for. I mean, there's some great shows out there. You know, I'm a regular watcher of many things that are coming up, which I won't name because let's not advertise them on radio.

11:51But yes, I have some favourite programmes that are only available on certain streaming, which is frustrating. so I have to keep paying for the different subscriptions. But look, cinema, you're never going to beat that experience with your child. Streaming's great when you're at home, but cinema, as a child who absolutely adores Harry Potter, we've not long come back from Florida. He loves the cinema. He loves Harry Potter. These are childhood experiences that create memories. So yeah, we'll see what's going to happen, but we still need all those memories and the films for the children. There's the sort of two arguments that the sides are going to make in one there, Dawn, aren't they, in a nutshell?

12:30One is the cinema argument and the pipeline. And I know it's not just been the cinema chains here in Europe, has it? But the actors unions and the writers unions where you are in LA concerned about that too. but then on the flip of it as well, saying, you know, actually the competition doesn't exist between individual streamers anymore when you've got YouTube out there as the most watched place on TV and we're competing with them actually. Exactly right. I will say one thing that Netflix co-CEO Ted Sarandos has said repeatedly. There is no doubt that he has over the last decade or more really talked about theater as being sort of a vanishing experience and how streaming is superior.

13:14But he has done a 180 in speaking to investors and to the public about how, look, that doesn't mean he doesn't love cinema. He loves going to the theater. And the only way the economics of this deal work, the only way these big blockbusters can be financed is by releasing them in theaters. And he has pledged that he will continue to do so for 45 days. Admittedly, there's a bit of scepticism on the part of the exhibitor community about that pledge. And presumably, Rachel, as well, it wouldn't just be regulated in the US. You might have a look at this. I'm guessing competition regulates a bit like we saw with Microsoft and when it was trying to buy, when it was trying to do various deals as well in the past, that regulators here might want to get involved too in all of this and in Europe too.

13:59Exactly. I mean, Netflix is very much a global company. So there will be regulators all around the world who would need to get involved in this deal. Dawn, go on then. How many more times are we going to talk about this on the program, do you think? I guarantee we'll talk about it at least twice more. So there are a couple of things down. You know, so Netflix has, even if Paramount does emerge victorious, which would be an interesting twist in this long-running story, Netflix has the opportunity to come back in four days and match that. So that's another wrinkle perhaps in this conversation. we're looking forward to having you back on to steer us through it all as well it's good drama isn't it apart from anything else we need a good kind of sort of hollywood fight like this we're always here for you will when i say we i mean us in journalism land of course as well perhaps not you as consumers as we talked about well let us know what you think as well if you're like uh and i would say i'm very much in nicky's camp with that where i'm regularly aghast as to how many of these things my and my wife have got on the tv if you're in that that area um then get in touch with us and let us know what you think about this or perhaps you're worried about the pipeline of films coming to the cinemas too from this deal.

15:03Now, the boss of the UK's largest commercial property company says he's more confident about shopping centres than any other part of his business. We've been speaking to Mark Allen, the chief executive of Lansick, Lansick, FTSE 100 listed company and owns a portfolio of shopping centres and offices and other buildings around the country worth around£11 billion. Last year, Lansick announced plans to shift a little bit of some of that investment focus away from offices into residential property as well. So Mark Allen told us that if the government wanted more affordable homes to be built, it would need to figure out how to boost overall housing supply.

15:39For the last 40, 50 years plus in the UK, the way we've been delivering affordable housing is by effectively attaching it to private residential development and saying a certain proportion of a development needs to be affordable and then it's a variety of different types of affordable within that percentage. so as soon as private residential development becomes challenging you get an automatic sort of downward pressure on affordable housing delivery if we're going to stick with that mechanism to deliver affordable we need to first and foremost say how are we going to build more homes and then ergo we should see more affordable housing at the time if if we always try and fix the affordable housing first we're just going to be dealing with a larger percentage of a very small number because the other side of the argument the other side of the concerns is isn't it that if it's all just driven by the private side of it that that drives up the rents all around that area too we've got to think really carefully and deeply about the affordability of our of our rents we've got to understand it what proportion of someone's disposal of income is going to be comfortable paying on rent there's no point us saying oh we can rent this out at a really high level yeah we've ultimately got to be comfortable that the demand is going to be deep and strong at the price points that we deliver and that that can grow i just wonder if we're trying to have too many things at the same time that we can't have both right that we can't have lots of new housing but also loads of it kind of protected and ring fenced i think you fundamentally what i prioritize do we want to deliver more housing and economic growth or do we want to deliver more affordable housing i don't think you can deliver both of those at the same time we've got to decide which one are we going to prioritize and which one will ultimately be a beneficiary of that office is still the biggest part of your business by some distance yes it is yeah what's the picture what's the landscape broadly before we get into it at the moment the landscape ultimately is the different businesses and different parts of different businesses are figuring out what works best for them still but fundamentally i think still working that out but it's not a one-size-fits-all approach we've definitely seen examples of of employers being more strict about things on on work from home others that i think continue to be uh more flexible within that but i suppose what's most important to us is how is it translating into the utilisation and demand for our office space.

17:57So as you say, it's still the biggest part of our business. It's about 60 % of our business by value. It's about 50 % of the rent that we collect is coming from offices in the main in central London. We are over 99 % occupied across a 5 million square foot portfolio. So we're essentially full. Now, people are using that space quite differently to how they might have used it a decade ago but we are essentially completely full we've got a couple of new developments that we'll be completing over the course of the next six months and so we're leasing up brand new space again in the centre of London and the indications of demand are similarly strong for that but I think it is focused on a certain type of office I don't think you could just assume this is the case across the rest of London or indeed across the country if you're really well connected in terms of transport if you've got lots of amenity stuff to do in and around the building if you've got a flexible adaptable office space and if you've got the right sustainability credentials energy performance energy efficiency that's where all of the demand is concentrated and there just isn't enough of that space what about ai is the challenge to that lots of those companies the type of companies you're talking about and the type of parts of the city of london for example are the ones that are right on the forefront of this what looks like a kind of revolution in in who does what work between AI and human being?

19:18How much have you had to factor that in? Certainly something we think about a lot. Right now, we've just, three or four months ago, finished a new quite small office development, one of our flexible office offers up near King's Cross. That's leasing up pretty rapidly at the moment. A significant proportion of the people that are taking space there. So these are smaller office suites in sort of flexible, high-end type office space. A lot of those businesses taking space are AI businesses drawn to the fact of a sort of tech type ecosystem in and around that part of King's Cross. So there's a new part of demand coming through.

19:54We then spend a lot of time talking to our major customers. We have a lot of law firms, a lot of professional services firms. And, of course, they're grappling with what's going to happen to my workforce. course the sense we get from that and no one's got the correct answer of course on this the sense we get from that is the nature of roles and the nature of jobs going forward is going to change in 10 years time there'll be a huge number of jobs that probably don't even exist today that are created as a result of this what i don't see any evidence of is people saying oh this is suddenly transforming we need a lot less space if i if i looked all of the law firms at the moment who are currently looking for office space either to replace or extend what they currently have over the next five years.

20:40There's probably one and a half to two million square feet. That's a lot of, sorry, a bit of an abstract number that means lots to people in the property world and a lot less to other people. That's a lot of office space. And there'll be signing leases that will be probably 15-year leases. So they're confident in their requirement for that space on at least a 15 to 20-year view from where we sit. Well, let's come back to your bread and butter again, then. Retail. I'm going to rattle a few off here for people around the country. St. David's in Cardiff, Blue Water, Kent, Trinity Leeds, Liverpool One, even sort of smaller developments, right, in Gloucester and places like that as well.

21:14Are we seeing a resurgence of the kind of shopping centre? What we're seeing in the retail space is we had a huge amount of change that I think everyone will be very aware of in terms of the emergence of online. And that's had a deep and profound longstanding impact on the amount of retail space that we need in the UK. Consumers have responded to that. Retailers have responded. And what we see now is both consumers and retailers focusing their investment and their spend on fewer, bigger, better locations. So if you have a truly dominant destination shopping centre, that's where people will gravitate towards to spend their money.

22:00That's where retailers look to invest in their stores. So we've got so many examples in our portfolio of retailers doubling or trebling the size of their stores. You look at some of the most successful retailers in the UK. They're reducing the number of stores, but they're not reducing the retail footprint they have. What they're focusing on is fewer, bigger, better stores in these great locations. There's a consumer data business called CACI, and they track where people in the UK, consumers spend their money. And they use payment provider data to get that. And there are 6 ,000 individual locations they track.

22:35The top 60 of those, 1 % of those locations, a third of the UK population spends money during the year in that top 1%. It's extraordinary just how focused that is. Now, that's not going to be where they're going all the time. But at some point in the year, a third of the UK population spends money in these top 60 locations. That's where our portfolio exists. No one is building any more shopping centers. We bought Liverpool One, which is a fabulous centre. It is the heart of Liverpool in many ways. We bought that for, round numbers,£500 million just over a year ago. If you wanted to build it today, it would cost you probably three times that.

23:15So no one's building any new ones. So in terms of us having to think about where's competition, we don't need to worry about someone building a new shopping centre next door that's going to take retailers away. So I think there's a really long-term trend now of those best destination centres if you can invest in them and keep them appealing and evolving and changing over time. You want to see shoppers continue to go there, retailers continue to invest. So it's the business-speakie, really, but it's our highest conviction sector by quite a long way at the moment. Interesting. Mark Allen, Chief Executive of Lansing, thanks so much for your time.

23:47Great. Thank you. And as always, you can hear much more of that on the Big Boss Interview podcast. It's out now. If you don't subscribe already, well, I don't know why you haven't already, subscribe to it. Give us some five-star reviews on there as well. Rachel, interesting. I think that trend, we've heard it a couple of times with the kind of bosses that we've interviewed as part of that series about, I guess, especially much younger people returning to physical shopping again. Yeah, just anecdotally, so I'm coming into London every day and there are a couple of big destination shopping centres in London, particularly the two Westfields in Stratford and Shepherd's Bush, and they do feel incredibly busy.

24:23There are no empty shops. They feel very luxurious. So I'm not surprised that investors are keen to start investing in some shopping centres again. Nicky, having that sort of more than just shopping there, though, Mark Allen, not the only one talking about that. And actually, we've had a text in from Mark in Glasgow to a point to that point. Is the shopping centre making a comeback? Mark says. Absolutely. Shopping for food online is too expensive. There's better ranges and prices in the shops. and Mark's talking about Parkhead Forge which I think is near Celtic Park in Glasgow talking about how with congestion in the city centre easier to kind of get out there as well but going on to say Glasgow Celtic need extra facilities this is a perfect location for pre and post match fan zones having more than just the shops there Nicky Yeah I mean I live near the metro centre at Gitzhead in Newcastle and I'm an admitted shopaholic shoe and handbag I'm seeing the rise of luxury brands again I see certainly some of the circles I'm in buying luxury handbags as investments and starting to keep hold of them and things like that but I have seen at the Metro Centre following post-pandemic to now all of the shops are reappearing it's not like a ghost town I'm really seeing it So what is it, big chains coming back there then?

25:38I'm actually seeing growth in brands like Flannels so where you've got the luxury high end different things in there I'm seeing a lot more people actually going into London to Harrods and Selfridge to buy kind of higher end when it comes to claws I'm actually seeing a bit of a surge in what I refer to as reloved sustainable clothing where people are buying you know high street to high end clothing from sustainable organizations but certainly the high end makeup shoes handbags things like that I'm seeing a surge in that certainly unless that's just because they're the places I go at the shopping centres.

26:15Interesting. But it kind of, it does speak, doesn't it, a little bit, Rachel, to that sort of at-home luxury, sort of mid-luxury that we've talked about a lot or the economists talk about a lot about our spending habits that we're finding sort of those little at-home luxuries rather than sort of, I don't know, sort of, I don't know, bigger trips or bigger purchases. Yeah, that's true. I mean, when people are spending less on holidays and experience, they'll probably tend to spend a bit more on luxury physical things. So I think that's definitely a trend that we're seeing happening. And just on offices, because again, you've got a good view of that, Rachel, going in and out of central London and Mark Allen, lots of his in your part of the world, in the city as well.

26:51Hybrid working and AI, obviously, the kind of twin challenges to what happens in terms of the number of people in those kind of offices. What are you kind of seeing anecdotally kind of around you as well? Seeing a massive increase in people coming back into the office. So not just at the company I work in. So I work for a wealth management company. We were back in five days a week quite soon after COVID, which I think is quite unusual. But I'm now seeing that my trains in the morning are getting much, much busier. London to walk around is feeling much, much busier. And just anecdotally speaking to friends, they're also being expected to be back in the office more frequently.

27:26So the trend is definitely going back closer to how it was before COVID. Although I don't think working from home will ever go away entirely. Nikki, what about Newcastle City Centre? Newcastle City Centre, and as someone who is serviced office space, I've just took on, I'm about to move into an office that is three times bigger. I'm seeing the workspace filling up in Newcastle, it's filling up. I'm certainly seeing growth in the workspaces again. As a HR company, a hybrid will never go away. But it is, there's more people coming into the offices now and more people are expecting people to build that social skill and be back in the office again as well.