# US Banks Post Mixed Earnings Results

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 13 Oct 2026, 23 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/35537cd3-f447-40ed-9ba9-b4e201151096/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Scarlet Fu and Alexis Christoforous -Herman Chan, Senior Analyst, US Banks for Bloomberg Intelligence, recaps U.S bank earnings. Goldman Sachs Group Inc.'s equities traders reported revenue of $6.44 billion for the three months through September, beating the expectations of analysts. JPMorgan Chase & Co. reported a surprise drop in fixed-income trading revenue in the third quarter, the first such decline in more than two years. Citigroup Inc.'s fixed-income traders had their best third quarter in at least a decade, with revenue of $4.4 billion. Wells Fargo & Co. reported third-quarter results that topped Wall Street estimates as consumers and businesses held steady, keeping loan losses in check. -Michael Halen, Bloomberg Intelligence Senior Restaurant and Foodservice Analyst, discusses earnings from Domino’s Pizza and his outlook for Jersey Mike’s. Domino’s Pizza Inc.’s US same-store sales grew 0.3% in the third quarter, below the 0.7% Wall Street had expected. The company faces an uphill battle as budget-conscious consumers eat out less and favor chicken amid the “proteinmaxxing” trend. Also, according to Bloomberg Intelligence: Jersey Mike's combination of strong sales growth, 10.4% in 1H, and a 99% franchised system is unique to the restaurant sector, positioning the company to outperform most quick-service peers on the top line and most fast-casual competitors on the bottom line amid inflation. -Deborah Aitken, Bloomberg Intelligence Luxury Goods Analyst, discusses LVMH earnings. Sales at LVMH's biggest division slumped as worsening economic conditions and a consumer backlash in China hit its key Louis Vuitton brand. Revenue at the fashion and leather goods unit slid 5% in the third quarter on an organic basis, a bigger decline than analysts had forecast. LVMH Chief Financial Officer Cecile Cabanis said the backlash from consumers over the Molly Tea case "had a negative impact, at least at the beginning of the quarter" on Louis Vuitton sales. -Geetha Ranganathan, Bloomberg Intelligence Analyst on US Media, discusses the latest at Netflix. Netflix Inc. secured exclusive broadcasting rights in Spain and Andorra for the men’s FIFA World Cup in 2030. Terms of the deal that includes all 104 matches weren’t’ disclosed in the company’s press release. Also, according to Bloomberg Intelligence: Netflix's 3Q results may do little to quiet the engagement debate even if revenue lands near guidance. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios.
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[0:24] Speaker 6: Given that we have just started earnings season, banks kicked
[0:27] Speaker 6: things off. Four big banks reporting this morning. Their share
[0:31] Speaker 6: prices are kind of all over the place, Alexis, given
[0:33] Speaker 6: the results they've delivered.
[0:34] Speaker 7: Yeah, I think it's hard to get a handle on what,
[0:35] Speaker 7: you know, because initially J.P. Morgan had a big leg down,
[0:38] Speaker 7: then it was up. Now it's sort of, you know, meh,
[0:41] Speaker 7: I guess is the technical term. So, yeah, it's hard
[0:43] Speaker 7: to wrap our heads around it.
[0:44] Speaker 1: How do you quantify meh?
[0:47] Speaker 7: I think we should ask Herman Chan.
[0:49] Speaker 6: Let's do that. Herman Chan is our senior analyst covering U.S.
[0:52] Speaker 6: banks for Bloomberg Intelligence. He's here with us in studio.
[0:55] Speaker 6: And Herman, if you had to kind of summarize everything,
[0:58] Speaker 6: what's the takeaway from the four big banks' earnings reports
[1:01] Speaker 6: this morning?
[1:01] Speaker 2: Yeah.
[1:01] Speaker 8: Takeaway is that equity trading performance continues to be robust.
[1:06] Speaker 8: Recall the second quarter, the banks really blew out the
[1:08] Speaker 8: equity trading front. It did slow down from a quarter-to-quarter basis,
[1:12] Speaker 8: but still... David Solomon mentioned CEO Goldman Sachs. We're in
[1:17] Speaker 8: a sort of top quartile trading environment versus a top
[1:20] Speaker 8: decile previously.
[1:22] Speaker 1: So, you know.
[1:23] Speaker 8: From a longer-term view, trading results really look good. That
[1:27] Speaker 8: being said, fixed income trading slowed down a little bit
[1:30] Speaker 8: in the third quarter. That's weighing on stocks like Wells Fargo, JP.
[1:36] Speaker 8: It was down in earlier reporting due to that fact
[1:40] Speaker 8: of the FICMIS.
[1:41] Speaker 7: But Herman, if you take a look at Citigroup, of course,
[1:44] Speaker 7: fixed income traders posting their highest revenue in at least
[1:47] Speaker 7: a decade, was this just that expectations were lower for
[1:51] Speaker 7: them so they met that bar? Or is it that
[1:53] Speaker 7: they're doing something that the other banks maybe could learn from?
[1:56] Speaker 1: Yeah, that's right.
[1:57] Speaker 8: Citi definitely bucked the trend in terms of fixed income trading.
[2:01] Speaker 8: Stronger on FIC relative to expectations, weaker on equities relative
[2:05] Speaker 8: to expectations. So They were a bit of an outlier,
[2:08] Speaker 8: whereas banks like Goldman and JP really beat on the
[2:14] Speaker 8: equity side, but were a bit softer on fixed income trading.
[2:17] Speaker 6: Do we know if that's because they gained market share
[2:19] Speaker 6: or stole market share from someone else, or have they
[2:21] Speaker 6: just really improved their approach to or their business for
[2:26] Speaker 6: that particular part?
[2:27] Speaker 8: Yeah, I think we'll hear more about that on the
[2:29] Speaker 8: earnings call when that happens later this morning. I would
[2:34] Speaker 8: say that predominantly for the ones that did show a
[2:37] Speaker 8: bit weaker results, a lot of that was driven by...
[2:40] Speaker 8: Really expectations across the market of higher, longer rate environment.
[2:45] Speaker 8: It didn't create a lot of opportunities in areas like
[2:48] Speaker 8: government trading and rates trading. So that could dampen expectations
[2:54] Speaker 8: going forward for the market's revenue. But overall, the power
[2:59] Speaker 8: from the trading business continues to be on the equity side.
[3:02] Speaker 7: I know we're going to hear from Bank of America
[3:04] Speaker 7: and Morgan Stanley tomorrow, but from the four banks that
[3:07] Speaker 7: reported today, are they all pretty bullish about the future?
[3:11] Speaker 7: What's their outlook like?
[3:12] Speaker 1: Yeah, so I would say that J.P.
[3:14] Speaker 8: Morgan lifted their guidance for, actually introduced their guidance for
[3:19] Speaker 8: net interest income for the following year. And those numbers
[3:23] Speaker 8: look a bit higher than expectations across consensus. So that's
[3:27] Speaker 8: a positive sign. They talked about growth in net interest income.
[3:30] Speaker 8: That's just general forecast. growth from higher interest rates. That's
[3:35] Speaker 8: helpful for their balance sheet and also just growth in
[3:38] Speaker 8: loans and deposits. And they saw some growth in low-yielding
[3:43] Speaker 8: or low-cost deposits as well.
[3:44] Speaker 1: So, that all bodes well for margin at NII.
[3:48] Speaker 6: I have a question for you about Wells Fargo, because
[3:50] Speaker 6: for a number of years, it was operating under this
[3:52] Speaker 6: asset cap imposed.
[3:53] Speaker 1: By the Federal Reserve. And that was lifted, I believe,
[3:56] Speaker 1: last year. What's changed? Has it taken advantage of the
[3:59] Speaker 1: fact that it can now grow?
[4:01] Speaker 9: Yes.
[4:01] Speaker 8: So Wells Fargo has been on this journey of getting
[4:06] Speaker 8: back some of the market share that they lost in
[4:09] Speaker 8: areas like trading and just general banking, where they weren't
[4:14] Speaker 8: growing as fast as their peer group due to that
[4:17] Speaker 8: asset cap that you mentioned.
[4:19] Speaker 1: And that's happening.
[4:21] Speaker 8: Balance sheet growth was actually a bit softer for Wells
[4:24] Speaker 8: this year, this quarter, particularly in commercial lending. So we'll
[4:28] Speaker 8: hear more about that on the earnings call. But the
[4:31] Speaker 8: general trend is that they're growing much faster in the
[4:34] Speaker 8: markets business and in commercial lending.
[4:37] Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
[4:44] Speaker 5: You're listening to the Bloomberg Intelligence Podcast.
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[4:59] Speaker 1: Of course, it's not just the big banks that have reported.
[5:01] Speaker 6: Domino's Pizza also reported results.
[5:04] Speaker 1: Let's bring in our Michael Halen.
[5:05] Speaker 6: He's our senior restaurant and food service analyst at Bloomberg
[5:08] Speaker 6: Intelligence joining us from Princeton, New Jersey. Domino's shares down
[5:12] Speaker 6: about 3.7% this morning. What did we learn from the company?
[5:18] Speaker 3: You know, the earnings call wasn't all that encouraging. You know,
[5:21] Speaker 3: same-store sales missed estimates came in pretty weak. You know,
[5:26] Speaker 3: the fourth quarter guide is still kind of wide for
[5:30] Speaker 3: our tastes. You know, discounting efforts to bring people in
[5:35] Speaker 3: via discounting are boosting traffic, but they're hurting average checks.
[5:40] Speaker 2: You know, management cited.
[5:43] Speaker 3: You know, less items per order. So that's how they're
[5:47] Speaker 3: seeing their low-income consumers and middle-income consumers cut back is
[5:50] Speaker 3: by just ordering less items when they do order from Domino's.
[5:56] Speaker 3: You know, and we have concerns about the fourth quarter. So,
[5:59] Speaker 3: you know, their new product, the Domino, is a personal...
[6:02] Speaker 3: Detroit style pizza. Um, what's problematic here for us is
[6:08] Speaker 3: it's at a lower price point.
[6:10] Speaker 2: So we think this is going to continue to pressure check.
[6:13] Speaker 7: Right.
[6:14] Speaker 3: And so, you know, you know, we're not too optimistic
[6:19] Speaker 3: here that dominoes can get back to, you know, two
[6:23] Speaker 3: to 3% seam source sales growth, especially as they're going
[6:26] Speaker 3: to be lapping a pretty strong, uh, comp here in
[6:28] Speaker 3: the fourth quarter.
[6:30] Speaker 7: So, Michael, is this a Domino's pizza problem, or are
[6:34] Speaker 7: they just sort of in the same boat with the competition?
[6:37] Speaker 7: I'm thinking, you know, Papa John's, Pizza Hut. Are they
[6:40] Speaker 7: all just struggling for market share, a market share that
[6:43] Speaker 7: continues to dwindle as people eat out less? I guess
[6:46] Speaker 7: when they do, what are they choosing, protein over pizza?
[6:51] Speaker 3: You know, for the names, that's part of it. Yes,
[6:53] Speaker 3: protein over pizza, you know, protein's hot right now. But,
[6:55] Speaker 3: you know, these companies that you mentioned earlier, are all
[6:59] Speaker 3: over-indexed to low-income consumers. And that's the segment of the
[7:04] Speaker 3: consumer that is struggling the most.
[7:06] Speaker 2: And so I think that's why you're seeing the struggles.
[7:09] Speaker 3: Domino's has outperformed Papa John's and Pizza Hut for some time.
[7:15] Speaker 3: And part of their issues are lapping very strong success
[7:19] Speaker 3: from last year. They expanded into DoorDash last year. They
[7:22] Speaker 3: they also debuted the stuffed crust pizza, which we think
[7:28] Speaker 3: which was very good. And we don't think the Domino
[7:30] Speaker 3: is going to be nearly as strong for them. So
[7:33] Speaker 3: partly Domino's is is a victim of its own success.
[7:36] Speaker 3: But there's competition everywhere. You know, Casey's General Stores apparently
[7:42] Speaker 3: has has a very good pizza out there. You know,
[7:47] Speaker 3: it's just a very difficult segment of the market and
[7:50] Speaker 3: it's exacerbated when you're mainly serving low and middle income consumers.
[7:54] Speaker 6: I like what you said about they're over indexed to
[7:55] Speaker 6: lower income consumers. We've seen other consumer facing companies solve
[7:59] Speaker 6: that by really catering to premium customers and getting chasing
[8:04] Speaker 6: that segment of the market. Do we presume that that's
[8:07] Speaker 6: something Domino's will likely chase as well?
[8:11] Speaker 3: Well, they are, and they are doing that by going
[8:14] Speaker 3: to Uber Eats and then DoorDash. That's their way of
[8:18] Speaker 3: trying to get more higher-income consumers.
[8:23] Speaker 2: Under their umbrella, right?
[8:24] Speaker 3: And so they're going to continue to market that.
[8:26] Speaker 2: They're going to continue to push that.
[8:29] Speaker 3: What they said on the call was that they still
[8:31] Speaker 3: don't have their fair share of that third-party marketplace aggregator market.
[8:37] Speaker 3: And so they're going to continue to spend money there
[8:39] Speaker 3: to try to attract higher-income consumers, yeah.
[8:41] Speaker 7: And I guess Domino's is not going to be opening
[8:43] Speaker 7: up as many new stores as it had hoped or
[8:46] Speaker 7: as it was expecting to in this year.
[8:49] Speaker 1: What did they say?
[8:50] Speaker 3: Yeah, that was probably the biggest red flag on the call, right?
[8:56] Speaker 8: Yeah.
[8:58] Speaker 3: Domino's has had strong net unit growth for years, and
[9:01] Speaker 3: that's kind of something that investors in Wall Street has
[9:05] Speaker 3: banked on year after year. And, you know, their commentary about,
[9:09] Speaker 3: you know, franchisees, franchisee profitability dropping and that impacting net
[9:15] Speaker 3: unit growth. I don't think was taking taken very well
[9:19] Speaker 3: by the street. And I think that's a big reason
[9:21] Speaker 3: why the stock is down so much.
[9:23] Speaker 10: Right.
[9:23] Speaker 3: I think there's some concern now that, you know, number one,
[9:26] Speaker 3: they're not going to hit their 125 to 105, 150 U.S.
[9:30] Speaker 2: Store goal for this year.
[9:32] Speaker 3: But that net unit growth as a system may come
[9:36] Speaker 3: in lighter next year than investors had expected.
[9:40] Speaker 6: And before we let you go, Michael, just a quick
[9:42] Speaker 6: roundup of what you think we might expect when Jersey
[9:45] Speaker 6: Mike's reports. And I believe this is the first earnings
[9:47] Speaker 6: report as a publicly traded company.
[9:51] Speaker 2: Yeah, they've reported that this will be the second.
[9:54] Speaker 3: They were a little bit off cycle, so you might
[9:56] Speaker 3: have missed it. Yeah, they reported a little bit late.
[9:59] Speaker 2: I guess they got it.
[10:01] Speaker 3: The chance to do that since they IPO'd. You know,
[10:04] Speaker 3: what we are expecting, you know, what we think is
[10:06] Speaker 3: unique about this name, which we know is unique about
[10:09] Speaker 3: this name, is that it's one of the few fully
[10:11] Speaker 3: franchised businesses that are experiencing growth.
[10:15] Speaker 9: Oh.
[10:15] Speaker 2: Like strong growth.
[10:16] Speaker 3: We're talking about 8% to 10% net unit growth. We're
[10:18] Speaker 3: talking 3% to 4% same-store sales growth. We think marketing
[10:21] Speaker 3: is going to, you know, get them same-store sales that
[10:25] Speaker 3: are better than the street expects.
[10:28] Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
[10:35] Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
[10:39] Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[10:42] Speaker 5: Auto with the Bloomberg Business App. Listen on demand wherever
[10:45] Speaker 5: you get your podcasts or watch us live on YouTube.
[10:50] Speaker 1: This is Bloomberg Intelligence.
[10:51] Speaker 6: Alexis Kristoforos and Scarlett Fu here with you as Paul
[10:54] Speaker 6: Sweeney is off. He's actually in Europe and I wonder
[10:57] Speaker 6: if he's doing any shopping.
[10:58] Speaker 7: Oh, I have a feeling the person he's with is
[11:00] Speaker 7: doing some shopping.
[11:03] Speaker 6: Certainly, he can enjoy the strong dollar versus the euro
[11:05] Speaker 6: because that's been a theme here as political concerns drive
[11:09] Speaker 6: that euro weaker. The reason we're talking about shopping in
[11:13] Speaker 6: Europe is because LVMH has come out with results. This
[11:16] Speaker 6: is the French luxury giant, LVMH Moet Hennessy Louis Vuitton.
[11:21] Speaker 1: It's a mouthful.
[11:23] Speaker 6: And their results kind of give us a sense of
[11:25] Speaker 6: what the Chinese consumer is doing and what especially consumers
[11:28] Speaker 6: who are visiting Europe are doing with their purchases as well.
[11:31] Speaker 6: Deb Akin is our Bloomberg Intelligence Luxury Goods Analyst, and
[11:35] Speaker 6: she joins us now from London. Deb, what did LVMH's
[11:38] Speaker 6: latest results tell us?
[11:40] Speaker 8: Hi.
[11:43] Speaker 10: Yeah, so we had the third quarter sales figure.
[11:48] Speaker 9: The first to report, and they'll be joined by a
[11:50] Speaker 9: raft of a dozen companies over the next couple of weeks.
[11:55] Speaker 9: The big takeaway from positive stance is that the US
[11:59] Speaker 9: is robust. We saw growth of 5%, Europe 4%, Japan 6%.
[12:05] Speaker 10: The area that isn't is Asia.
[12:07] Speaker 9: ex-Japan, where China has continued on the back of the
[12:11] Speaker 9: macro environment to trend down. So we actually saw mid-teens
[12:16] Speaker 9: decline in in China overall, which brought Asia X Japan
[12:21] Speaker 9: down to.
[12:24] Speaker 10: Minus 5%.
[12:25] Speaker 9: And what we're seeing there is more price cyclicality, really
[12:31] Speaker 9: locals and newness fighting over traditional styles.
[12:37] Speaker 10: We ran surveys.
[12:38] Speaker 9: Actually as a department through August, and there's a lot
[12:41] Speaker 9: of detail on terminal on which brands, which bags, which
[12:46] Speaker 9: categories are doing best. And there was a noticeable shift
[12:51] Speaker 9: towards more affordable product. Whereas for Louis Vuitton, for example,
[12:57] Speaker 9: they would hold and say, you know, we're in this
[12:59] Speaker 9: for the long term.
[13:00] Speaker 10: Our product is worth, our design is worth what it is.
[13:04] Speaker 9: And we're doing so much more to stimulate the economy
[13:08] Speaker 9: to make good and to do well with the local shopper.
[13:12] Speaker 10: And I think that that will be something that will.
[13:14] Speaker 9: Feed through this earnings season as we progress over the
[13:18] Speaker 9: next couple of weeks out of China.
[13:20] Speaker 7: Deb, I'm just looking at the brands that fall under LVMH.
[13:23] Speaker 7: There are 75 luxury brands divided into six core business categories.
[13:28] Speaker 7: One of them, of course, being fashion and leather, but
[13:30] Speaker 7: they've also got perfume and cosmetics, wines and spirits. Don't
[13:34] Speaker 7: mean to catch you off guard, but was there anything
[13:36] Speaker 7: in there that was showing real promise or strength in
[13:39] Speaker 7: this latest report?
[13:41] Speaker 10: Yeah, absolutely.
[13:42] Speaker 9: And really outside of fashion and leather, the big thing
[13:44] Speaker 9: on fashion and leather is that it has a big
[13:46] Speaker 9: exposure to China.
[13:49] Speaker 10: And a lot of volume from the Louis Vuitton bag.
[13:53] Speaker 9: So if the Louis Vuitton volume is down on the
[13:57] Speaker 9: bag category, it's going to hit fashion and leather overall.
[14:01] Speaker 10: But aside from that, yes. If we look across the board,
[14:04] Speaker 10: we can see.
[14:08] Speaker 10: Wines and spirits.
[14:09] Speaker 9: So it's been for the last couple of quarters, improving gradually,
[14:13] Speaker 9: and that was up 6%. So we're starting to see
[14:16] Speaker 9: some good numbers come through, sell out and selling equal.
[14:21] Speaker 9: So we should see some more growth coming forward there.
[14:25] Speaker 9: Perfume and cosmetics, I kind of feel with the LVMH group,
[14:30] Speaker 9: also with Hermes and others, they don't do as well
[14:32] Speaker 9: as a L'Oreal. So perfume and cosmetics up 1%. And
[14:36] Speaker 9: I think that this is more there's more that these
[14:39] Speaker 9: companies can do and i think that they will be
[14:41] Speaker 9: able to do once their bigger market categories have firmed
[14:45] Speaker 9: themselves up a bit um watches and jewelry up six
[14:48] Speaker 9: percent we've seen jewelry has been strong across the board
[14:51] Speaker 9: for so many of these categories including um carrying jewelry
[14:55] Speaker 9: for example where new companies gucci and others are going
[14:59] Speaker 9: into this category and are enjoying the huge success that
[15:04] Speaker 9: Richemont with brands like Cartier, Van Cleef and Arpel and
[15:07] Speaker 9: others have enjoyed. So, for example, under the LVMH group,
[15:11] Speaker 9: Bulgari is a big brand and the acquired Tiffany brand,
[15:15] Speaker 9: which is doing more and more to upscale and doing
[15:19] Speaker 9: very well on the back of that. And then their
[15:21] Speaker 9: selective retail in the one big area under there that
[15:24] Speaker 9: you will know very well, Sephora. So selective retail growth
[15:29] Speaker 9: is 8% within that area. And also duty-free stores where
[15:34] Speaker 9: they pulled away from some parts of China with disposals.
[15:38] Speaker 9: So that's evened out for them there. So everywhere except
[15:42] Speaker 9: for fashion and leather goods was a positive score. And
[15:46] Speaker 9: that gave them 1% overall because actually fashion and leather
[15:49] Speaker 9: goods is their biggest category by far.
[15:51] Speaker 6: Deb, very quickly, the wobbliness in China means that overall
[15:56] Speaker 6: LVMH and other brands will need to rely more on
[15:58] Speaker 6: the U.S.
[15:59] Speaker 1: Can the U.S. make up for the Chinese market?
[16:05] Speaker 9: The big thing on China over the last couple of
[16:07] Speaker 9: years is that we've seen double-digit decline. And actually, I
[16:10] Speaker 9: made some presentations in September where I actually think we
[16:14] Speaker 9: get about 6% growth coming solidly the next few years
[16:18] Speaker 9: from the K-wealth positive curve, the impact out of the US.
[16:24] Speaker 9: I see the US shifting from 26% to around about 30%, 31%
[16:29] Speaker 9: of the market overall. Meanwhile, my estimate, China and Chinese
[16:33] Speaker 9: cluster shoppers across the greater region, pre-COVID used to be
[16:37] Speaker 9: about a third of sales, including when traveling.
[16:40] Speaker 10: And I think they're only just over 20% now.
[16:43] Speaker 9: So in answer to that, yes, with the US solid,
[16:47] Speaker 9: with Europe robust, another key emerging markets growing, I think
[16:51] Speaker 9: there's still a way forward for the luxury market until
[16:54] Speaker 9: China can gradually improve and they can work their products
[16:58] Speaker 9: directly for the Chinese market as a group.
[17:01] Speaker 1: Stay with us. More from Bloomberg Intelligence coming up after this.
[17:08] Speaker 5: You're listening to the Bloomberg Intelligence podcast. Catch us live
[17:12] Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
[17:15] Speaker 5: Auto with the Bloomberg Business app. Listen on demand wherever
[17:19] Speaker 5: you get your podcasts or watch us live on YouTube.
[17:23] Speaker 6: We are looking at Netflix making an announcement. And Alexis,
[17:26] Speaker 6: you mentioned this earlier. It's going to show the 2030
[17:28] Speaker 6: World Cup in Spain as part of its push to
[17:32] Speaker 6: add live sports content to its programming.
[17:34] Speaker 7: Yeah, also has some NFL games. It's got women's FIFA.
[17:39] Speaker 7: I think some of their games coming to the platform
[17:41] Speaker 7: as well. So it's really making a huge investment in
[17:44] Speaker 7: live sports.
[17:44] Speaker 1: Starting to add up. And of course, that's a lot
[17:46] Speaker 1: of cash outlay as well.
[17:47] Speaker 6: Geetha Ranganathan is our Bloomberg Intelligence Analyst on U.S.
[17:51] Speaker 4: Media.
[17:51] Speaker 6: And Geetha, just looking at this announcement once again, exclusive
[17:54] Speaker 6: broadcasting rights for the 2030 FIFA World Cup, Men's FIFA
[17:58] Speaker 6: World Cup, in Spain and in Dora. It just reminds
[18:02] Speaker 6: you of how they have to slice and dice these
[18:03] Speaker 6: deals up so carefully. I mean, this is for two markets,
[18:07] Speaker 6: not for the 2030 World Cup overall. So there's going
[18:11] Speaker 6: to be a lot of announcements like this. To negotiate
[18:13] Speaker 6: something like this takes an incredible amount of time. Is
[18:16] Speaker 6: something like broadcasting the World Cup going to be something
[18:21] Speaker 6: that really moves the needle for Netflix?
[18:24] Speaker 4: Yeah, absolutely, Scarlett. So I think they're making very measured investments,
[18:28] Speaker 4: very calculated moves here. I think the real, to answer
[18:31] Speaker 4: your question, it's definitely a big move in Spain. I mean,
[18:35] Speaker 4: let's remember, these are the defending champions. This is a
[18:37] Speaker 4: nation that is really, really passionate about the sport. They
[18:42] Speaker 4: are also one of the hosts of the 2030 FIFA
[18:45] Speaker 4: Men's World Cup. All of that definitely makes a difference.
[18:48] Speaker 4: This is a big move for Netflix, at least when
[18:51] Speaker 4: it comes to advertising. You really get a share of
[18:54] Speaker 4: eyeballs and you're able to make a pretty big dent
[18:57] Speaker 4: from an advertising standpoint. Is it going to move the
[19:00] Speaker 4: needle for them overall? Maybe not.
[19:03] Speaker 1: I think they need a much bigger splash.
[19:05] Speaker 4: I think maybe getting the rights to the FIFA World
[19:08] Speaker 4: Cup in the United States will be something that is really,
[19:11] Speaker 4: really huge. And we know that that's in negotiation right now.
[19:15] Speaker 4: But just remember, that's going to be a huge, huge
[19:17] Speaker 4: price tag. We don't know the financial details behind the
[19:20] Speaker 4: Spanish broadcasting rights. But we do know what it's going
[19:23] Speaker 4: to be in the U.S. It's going to be somewhere upwards.
[19:26] Speaker 2: Of $ 2.
[19:27] Speaker 1: Billion per tournament.
[19:29] Speaker 4: So that's a huge step up from what Fox paid
[19:32] Speaker 4: for this year, which was around $ 485 million. So FIFA
[19:35] Speaker 4: is really looking to score big. And it's going to
[19:37] Speaker 4: be interesting to see if Netflix is willing to pay up.
[19:40] Speaker 7: Now, I'm just taking a look at the stock here, Geetha.
[19:42] Speaker 7: One-year return down nearly 42 percent. Talking about Netflix here.
[19:46] Speaker 7: They're out with earnings next, I think it is Tuesday,
[19:49] Speaker 7: October 21st.
[19:50] Speaker 4: 20th.
[19:50] Speaker 7: There's been talk about engagement. It's just not where it
[19:53] Speaker 7: needs to be with Netflix. What are you expecting from
[19:56] Speaker 7: that profit report?
[19:58] Speaker 4: Yeah, it's going to be really interesting because as you
[20:00] Speaker 4: just pointed out, sentiment has been really muted on this talk.
[20:03] Speaker 4: And yes, it's coming down all to engagement. So we
[20:06] Speaker 4: really need something to kind of re-energize the growth narrative here.
[20:10] Speaker 4: You know, when we're kind of looking at the financial metrics,
[20:12] Speaker 4: revenue growth, we kind of expect it to be in line.
[20:15] Speaker 4: They're guiding to about 12%. you know, operating margin, all
[20:18] Speaker 4: of that to be in line, you know, but it's
[20:20] Speaker 4: going to be interesting to see if they do make
[20:22] Speaker 4: any major announcements regarding their advertising, how that is progressing.
[20:26] Speaker 4: They've said a couple of times that they expected to
[20:28] Speaker 4: hit $ 3 billion this year. Again, I think the market
[20:32] Speaker 4: will definitely be looking for updates to see if, you know,
[20:34] Speaker 4: if they're pacing right there on track or if they're
[20:37] Speaker 4: going to exceed that. And then again, whether they set
[20:39] Speaker 4: a target for advertising going into 2027. That is also
[20:44] Speaker 4: going to be something interesting. And also whether they set
[20:47] Speaker 4: other broader financial targets, whether it's operating margin, which has
[20:50] Speaker 4: kind of been hovering around 30%, 31%. But I think
[20:53] Speaker 4: the street really wants to see that get closer to
[20:55] Speaker 4: about 35%. And then again, revenue growth is the big number.
[20:59] Speaker 4: Can they hold on to the double-digit gains? This year,
[21:01] Speaker 4: we know they're going to get to about 13%, 14%.
[21:02] Speaker 4: Can they keep that same margin? low to mid teens
[21:07] Speaker 4: for next year as well. Those are all going to
[21:09] Speaker 4: be the big questions when they report on Tuesday.
[21:12] Speaker 6: Did they have any big hits in the third quarter
[21:15] Speaker 6: that got people super excited? Because I think about the
[21:17] Speaker 6: prior year and there are things like K-pop Demon Hunters,
[21:20] Speaker 6: Happy Gilmore 2, Squid Games, the third season. It feels
[21:24] Speaker 6: like they didn't have any really big show to rally around.
[21:29] Speaker 4: That's an excellent point, Scarlett. And I think that is
[21:31] Speaker 4: what has been driving all of this nervousness. So you
[21:34] Speaker 4: had a combination. So there's a couple of different things here.
[21:36] Speaker 4: You had the World Cup in the third quarter, which
[21:39] Speaker 4: really kind of took away a lot of the eyeballs.
[21:41] Speaker 4: And then you kind of combine that with this lack
[21:44] Speaker 4: of hits.
[21:44] Speaker 9: Right.
[21:45] Speaker 4: And then you're going up against tough comms. You brought
[21:47] Speaker 4: up exactly that. the Squid Game, the K-pop Demon Hunters,
[21:50] Speaker 4: the Wednesday, all of that. So you're going up against
[21:53] Speaker 4: tough comps and they're not coming up with any hits. Meanwhile,
[21:56] Speaker 4: the thing that is really scaring investors is that they
[21:59] Speaker 4: actually took up their content budget this year by 10%.
[22:03] Speaker 4: So they're spending about $ 20 billion on content this year.
[22:07] Speaker 4: And I think the street is really worried that if
[22:08] Speaker 4: with 20 billion, you're not able to come up with
[22:10] Speaker 4: two or three big hits, what is going to be
[22:12] Speaker 4: the future of Netflix?
[22:14] Speaker 5: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
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