# SK Hynix ADRs Surge After Record $26.5 Billion US Offering

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 10 Jul 2026, 24 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/e6dbc01e-d54f-490a-afdd-b4830119e9de/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 Paul Sweeney and Scarlet Fu -Anthony Hughes, Bloomberg US Equity Capital Markets Reporter, discusses SK Hynix’s U.S listing. SK Hynix Inc.'s American depositary receipts surged above their offering price after the company raised $26.5 billion in the largest-ever US listing by a foreign company. The ADRs are trading at a premium over the closing price of the Seoul-listed common stock due to restrictions on exchanging the South Korean stock for the US instruments. - George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense, & Airlines Analyst, discusses earnings from Delta Airlines. Delta Air Lines Inc. reaffirmed its full-year profit guidance, citing strong demand for premium, corporate and international travel. The airline's revenue rose 14% from a year earlier, with capacity increasing just 1%, and it earned an adjusted $1.56 a share in the second quarter. -Beth Kowitt, Bloomberg Opinion Columnist, discusses her column: “Meta Ushers In the Era of the K-Shaped Company.” A new class divide is emerging in Big Tech, between those at the top of the artificial intelligence hierarchy and everyone else, with the former receiving high salaries and resources and the latter being viewed as disposable. -Kevin Near, Bloomberg Intelligence Senior Equity Research Analyst, discusses how a fuller release slate is helping push domestic box office toward $10 billion this year or next. According to Bloomberg Intelligence: longer exclusive theatrical windows are broadening big-screen demand for AMC, Cinemark and other leading North American exhibitors. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the
[0:10] Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
[0:14] Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
[0:17] Speaker 1: Business App. Listen on demand wherever you get your podcasts,
[0:21] Speaker 1: or watch us live on YouTube.
[0:24] Speaker 2: We have sk heinez ADRs opening for trade. They opened
[0:28] Speaker 2: fourteen percent above the offer price. They opened at one
[0:30] Speaker 2: hundred and seventy dollars. The offering was at one hundred
[0:34] Speaker 2: and forty nine dollars. The company raised twenty six and
[0:37] Speaker 2: a half billion dollars in selling American Depository receipts on
[0:40] Speaker 2: the Nasdaq.
[0:41] Speaker 3: Let's bring in Anthony Hughes.
[0:43] Speaker 2: He is our senior equity capital markets reporter here at
[0:46] Speaker 2: Bloomberg News, and Anthony, you've been monitoring this.
[0:49] Speaker 3: This was a very oversubscribed offering.
[0:51] Speaker 2: There's a lot of demand for it, and this opening
[0:54] Speaker 2: indicates the demand has not stopped.
[0:57] Speaker 4: Yes, for the size that is offering this game that
[1:00] Speaker 4: you can see here, you know, around fifteen percent is
[1:04] Speaker 4: what you'd expect for perhaps a deal like this where
[1:07] Speaker 4: it's pretty large, you would expect maybe to go up,
[1:11] Speaker 4: you know, like fifty one hundred percent or.
[1:12] Speaker 5: Something like that.
[1:13] Speaker 4: But you know, really what this confirms is that s
[1:16] Speaker 4: k Heinez has been able to achieve a premium to
[1:19] Speaker 4: it's you know, the price at which the stock trades
[1:21] Speaker 4: in Korea, and that was part of the part of
[1:24] Speaker 4: this exercise here. This was a offering which was designed
[1:29] Speaker 4: to fund the capital expenditure of the company, but it
[1:32] Speaker 4: was also trying to do that in a way which
[1:34] Speaker 4: was most efficient for the company and enabling the company
[1:38] Speaker 4: to get a cost of capital that was more the
[1:41] Speaker 4: best the lowest they could and you know, basically as
[1:46] Speaker 4: good as Micron's getting in the US. So you know,
[1:49] Speaker 4: obviously it's an efficient way for the company to raise
[1:51] Speaker 4: money in the US. This is the way they did it.
[1:54] Speaker 5: What does the company said about their need for additional
[1:56] Speaker 5: capital going forward? Did they put out a message we
[2:00] Speaker 5: may come back for equity, we may access to the
[2:03] Speaker 5: US debt markets would did they say anything about that? Yeah?
[2:05] Speaker 4: I think if you see the interview with the chairman,
[2:07] Speaker 4: he did say that there was a possibility they could sell
[2:09] Speaker 4: more ad rs and obviously they can raise debt in
[2:11] Speaker 4: the future as well. So I think the company is
[2:13] Speaker 4: going to have significant capital expenditure needs and This is
[2:18] Speaker 4: the sort of interesting thing about the mark at the
[2:19] Speaker 4: moment where there's a lot of interesting companies that do
[2:21] Speaker 4: have heavy capital expansion needs, and I think in the
[2:24] Speaker 4: past we'd probably think they were not the best companies
[2:26] Speaker 4: to invest in, but these things are different these days.
[2:29] Speaker 4: But obviously they're generating a huge, huge amount of huge
[2:34] Speaker 4: return on the assets they have the moment. But you know,
[2:37] Speaker 4: I think the really interesting thing from that interview I
[2:39] Speaker 4: thought with the chairman was that you know, he has
[2:41] Speaker 4: to balance off really you know, maximizing profit for the shareholders,
[2:44] Speaker 4: but he's also got a supply his customers with the product,
[2:47] Speaker 4: and you know, obviously he has to expand the production
[2:52] Speaker 4: of the memoryships and doing this is something that you
[2:54] Speaker 4: know could subtract a little bit away from shareholder returns
[2:57] Speaker 4: at a time. But that's a balancing act that you know,
[2:59] Speaker 4: management has to has to achieve, and that's really interesting
[3:03] Speaker 4: challenge for the company looking forward here.
[3:05] Speaker 2: So the market where eske Heinez has its primary listing,
[3:09] Speaker 2: SOUL is the world's best performing stock market, right. I mean,
[3:13] Speaker 2: it's done incredibly well, and this is even after it
[3:16] Speaker 2: basically had this moment of whiplash the last couple of weeks.
[3:21] Speaker 3: You know, it's been very, very volatile.
[3:22] Speaker 2: Just this week alone, I'm looking at it, the costpy,
[3:25] Speaker 2: the benchmark index. They're closed down five percent. Last night
[3:29] Speaker 2: it rose three percent, So it's kind of all over
[3:31] Speaker 2: the place. Is there a sense that this was kind
[3:34] Speaker 2: of the not I don't want to say the top,
[3:36] Speaker 2: but you know, it was kind of a dicey time
[3:38] Speaker 2: for eske Heinis to go public in the US, given
[3:41] Speaker 2: that there's so much volatility in its home market.
[3:44] Speaker 6: Yeah.
[3:44] Speaker 4: Well, I think when the stock's up six or seven
[3:47] Speaker 4: hundred percent in the last year, finding the right price
[3:50] Speaker 4: here it was always going to be a little bit challenging.
[3:51] Speaker 4: And I think although the offering did price at a
[3:54] Speaker 4: premium to the translated value of the stock in career,
[3:57] Speaker 4: you know, it did come back twenty five percent and
[4:00] Speaker 4: thirty percent ahead of this offering and in the past
[4:02] Speaker 4: few weeks, and that was something that I think the
[4:04] Speaker 4: investors in the offering, the US investors that came into
[4:06] Speaker 4: for the ADRs, were pleased about. I mean, obviously it'd
[4:09] Speaker 4: be much better to have bought the stock a year
[4:12] Speaker 4: ago when it was before it had gone up six
[4:14] Speaker 4: hundred percent, But you know, the investment opportunity was laid
[4:16] Speaker 4: out to them here, and you know, the stock did
[4:19] Speaker 4: come back ahead of the offering, and then it priced
[4:20] Speaker 4: a premium and now it's trading, you know, up again,
[4:23] Speaker 4: so you know that the company is trying to get
[4:26] Speaker 4: a multiple that's closer to Micron, which has been an
[4:30] Speaker 4: outstanding stock in the US. And you know, but whenever
[4:33] Speaker 4: you see stock prices go up in a a in
[4:36] Speaker 4: a straight line like they have, or at least go
[4:38] Speaker 4: up very, very sharply over a short period of time,
[4:40] Speaker 4: there's always a chance for retlacement. But to your point,
[4:43] Speaker 4: the Korean market has been hugely volatile. It's been very
[4:46] Speaker 4: it's been very strong, yes, one of the strongest market
[4:49] Speaker 4: in the world, but it's highly it's very volatile. So
[4:51] Speaker 4: I think the interesting thing for investors is whether this
[4:53] Speaker 4: stock is going to be volatile now that it's trading
[4:56] Speaker 4: in the US, and so that is some of that
[4:58] Speaker 4: volatility in career get imported into the US.
[5:01] Speaker 2: Very well said, Okay, you keep bringing up my Cron
[5:03] Speaker 2: and that's because that's the US's biggest memory chip maker,
[5:06] Speaker 2: But ask heinez has a rival at home, and that's
[5:08] Speaker 2: Samsung Electronics. Does Samsung Electronics trade in any way in
[5:13] Speaker 2: the US, and if not, would it consider listing in
[5:16] Speaker 2: the US because aske Heinez.
[5:17] Speaker 4: Has Yeah, well, I think people are expecting other companies
[5:20] Speaker 4: to look at ADR programs. I mean Kiyoksa kiyoksya of Japan.
[5:26] Speaker 3: Oh right here, Sarah, right, yeah, yeah, I've got the
[5:28] Speaker 3: name right.
[5:29] Speaker 4: But you know, I think ADR programs are not necessarily
[5:34] Speaker 4: simple things for companies to roll out, and I think
[5:36] Speaker 4: a lot of Asian companies have probably shyed away them
[5:37] Speaker 4: in recent years. Certainly Chinese companies have not really been
[5:40] Speaker 4: encouraged to in either direction to do ADR programs. So
[5:44] Speaker 4: you know, this might be a little bit of one
[5:45] Speaker 4: off and really reflective of these amazing conditions in the
[5:48] Speaker 4: in the memory chip market, but yeah, it's this has
[5:53] Speaker 4: been a pretty orderly outcome so far.
[5:56] Speaker 5: Real quick, Do we expect Stark the treaty to Premium
[5:59] Speaker 5: in the US for career from evaluation perspective? Yeah?
[6:02] Speaker 4: So, I guess to Scarlet's point there, even though Samsung
[6:07] Speaker 4: is a rival, they're really the direct camp here was Micron,
[6:10] Speaker 4: and Micron does trade it to premium to to s
[6:14] Speaker 4: k Heinex based on forward earnings. I mean, obviously you
[6:17] Speaker 4: can value companies in different ways. But and part of
[6:20] Speaker 4: the exercise here was to close that gap at least
[6:22] Speaker 4: as far as the stock trades in the US. And obviously,
[6:26] Speaker 4: when the company goes to look to raise further capital
[6:28] Speaker 4: a little bit, raise it in the cheapest way possible.
[6:30] Speaker 4: And if stock is trading at a premium in the
[6:32] Speaker 4: US versus career, there's obviously going to be an incentive
[6:34] Speaker 4: for them to raise the money in the US. And
[6:36] Speaker 4: obviously the other thing about the US is there's a
[6:37] Speaker 4: lot of money in the.
[6:38] Speaker 5: US as well to play that arbitrage.
[6:40] Speaker 4: Yeah, but that was very much expected that there would
[6:43] Speaker 4: be a premium here and that's part of the exercise
[6:46] Speaker 4: that that that.
[6:48] Speaker 3: They've been able to do that.
[6:49] Speaker 4: But obviously there is a Korean discount that people talk
[6:51] Speaker 4: about that reflects the fact that there's a lot of
[6:53] Speaker 4: governance concerns about the way Korean business.
[6:56] Speaker 5: Korea does business a little bit differently to America.
[6:58] Speaker 4: I think they're less the Korean companies are less focused
[7:01] Speaker 4: on capital returns and dividends end Also, just you know,
[7:06] Speaker 4: Americans is a bit more shape price focused.
[7:08] Speaker 2: For more accounts, stay with us more from Bloomberg Intelligence
[7:11] Speaker 2: coming up after this.
[7:16] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[7:20] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[7:23] Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
[7:26] Speaker 1: you get your podcasts, or watch us live on YouTube.
[7:30] Speaker 5: All right, let's switch gears to the airspace business, the
[7:33] Speaker 5: airlines business. We do that with George Ferguson, and he's
[7:38] Speaker 5: a senior airspace analyst at Bloomberg Intelligence. And George, the
[7:41] Speaker 5: only thing between me and the beach is this discussion
[7:44] Speaker 5: with you. So I want to get through this. George
[7:47] Speaker 5: talk to us about Delta earnings came out. I thought
[7:50] Speaker 5: they were pretty good here. It seems like demand's holding
[7:53] Speaker 5: up for these airlines.
[7:56] Speaker 6: Yeah, I mean I think that, you know, Delta United
[8:00] Speaker 6: and to a lesser extent, American are going to probably
[8:03] Speaker 6: be the best part of.
[8:04] Speaker 3: The story this quarter.
[8:06] Speaker 6: And I think Delta showed some resilience in that in
[8:09] Speaker 6: the revenue lines, right, and I think you know, if
[8:12] Speaker 6: you remember, this is a pretty diversified from a revenue
[8:16] Speaker 6: standpoint company. They have maintenance business that brought in some
[8:20] Speaker 6: great double digit gains They've got They had cargo, they
[8:25] Speaker 6: had loyalty that all sort of brought in gains as
[8:28] Speaker 6: well as premium. Uh and then and Basic lagged a
[8:31] Speaker 6: little bit, although they indicated that, you know, they've been
[8:34] Speaker 6: cutting down a number of Basic seats. But I think
[8:37] Speaker 6: Jenner of this story was pretty good on the revenue front.
[8:40] Speaker 6: They grew less than United in Americans, so I think
[8:43] Speaker 6: that means they could support some of those higher faares.
[8:46] Speaker 6: They were like, at one percent seat count growth, We're
[8:49] Speaker 6: going to see United and they come in closer to six.
[8:52] Speaker 6: We're going to see American around three ish, so they
[8:56] Speaker 6: I think this might be the best part again of
[8:59] Speaker 6: the revenue story for US airlines as we get into
[9:02] Speaker 6: this earning season. And one of the challenges I think
[9:04] Speaker 6: too and growing a little slower on the capacity front,
[9:08] Speaker 6: is that some of their cost ballooned a little bit.
[9:12] Speaker 6: But look again, I think they made some good ground.
[9:14] Speaker 6: They haven't totally compensated for higher fuel prices, but they
[9:17] Speaker 6: made some good ground. I think it was a it
[9:19] Speaker 6: was it was a pretty decent earnings you know, earnings numbers.
[9:24] Speaker 5: Hey, George, talk to us about just maybe the trend
[9:26] Speaker 5: in the industry to maybe taking out some economy seats,
[9:30] Speaker 5: putting in more business or first class seats. How is
[9:32] Speaker 5: a cabin changing within the industry these days?
[9:36] Speaker 6: Yeah, I think you're just you know, on the big
[9:38] Speaker 6: full service guys, you're seeing a lot of I don't
[9:41] Speaker 6: know what we call it, upgrading improving, right, And remember
[9:46] Speaker 6: like that premium seat, you know, that can stretch anything
[9:49] Speaker 6: from premium economy to more business seats. And you know,
[9:54] Speaker 6: I think they're finding again, you know, they're sort of
[9:58] Speaker 6: they're focusing on the well healed concer tumor your retiree
[10:02] Speaker 6: you know, and your four to one K accounts. I
[10:05] Speaker 6: guess it's not a former anymore. Your investment accounts are
[10:08] Speaker 6: rocking and rolling. You don't want to fly overseas, you
[10:11] Speaker 6: don't want to fly to the West coast in something
[10:14] Speaker 6: that's has cramped as some of that basic economy in
[10:16] Speaker 6: the back of the airplane. So those carriers are sort
[10:19] Speaker 6: of pushing that upgraded seat, trying to get more money
[10:22] Speaker 6: from it. And again I think, you know, Delta has
[10:25] Speaker 6: shown some success on that front, and I would expect
[10:28] Speaker 6: to get to see the same out of United an
[10:30] Speaker 6: American but to a lesser extent.
[10:33] Speaker 5: But what happens, what about guys, what happens to the
[10:37] Speaker 5: lower end consumer? Where does that consumer go? Do I
[10:39] Speaker 5: have to fly? I mean, aren't some of these airlines
[10:41] Speaker 5: going out of business, these discount airlines.
[10:43] Speaker 6: So we saw spirit, you know, we saw a spirit
[10:46] Speaker 6: leave the business. I think that helped. Look, I think
[10:49] Speaker 6: still at the bottom end of the scale, right, that
[10:52] Speaker 6: basic economy traveler one, they're under a little more pressure economically.
[10:57] Speaker 6: I think inflation's hurting them a little harder. Right, if
[11:00] Speaker 6: when you raise the price of gas, it hits them
[11:04] Speaker 6: in the pocketbook a little further too, Right, you know,
[11:06] Speaker 6: the cost of the more to commute to work of
[11:08] Speaker 6: their total income. And so I think that means demand
[11:12] Speaker 6: is probably a little bit softer in that basic economy
[11:15] Speaker 6: world than it is in the premium world. And so
[11:19] Speaker 6: and so I think, you know, that kind of took
[11:20] Speaker 6: away some of the gains we might have seen as
[11:23] Speaker 6: spirit left. And again, I think, you know, you've got
[11:26] Speaker 6: to bear in mind that Delta, United and American are
[11:30] Speaker 6: going for that basic economy travel Right, there's still a
[11:34] Speaker 6: basic economy section in the back of those airplanes that,
[11:38] Speaker 6: you know, provided they can sell that seat at a
[11:41] Speaker 6: price that's higher than their incremental cost to deliver it.
[11:46] Speaker 6: They're going to do it to that basic economy traveler.
[11:49] Speaker 6: Fill out those load factors and create you know, efficiencies,
[11:52] Speaker 6: which improves profitability. And so that's the challenge in this
[11:55] Speaker 6: businesses United Delta, especially under the again six percent seats,
[12:01] Speaker 6: there's probably going to be about that much in basic
[12:04] Speaker 6: economy growth. They do that for long enough, and they
[12:08] Speaker 6: kind of make up pretty quickly for Spirit Airlines leaving
[12:11] Speaker 6: the business. So there's still a lot of competition. I
[12:13] Speaker 6: think in that basic economy we'll see as earning season
[12:16] Speaker 6: goes on.
[12:16] Speaker 5: All right, folks, George, in addition to covering the airlines,
[12:19] Speaker 5: also covers the airspace companies think Boeing. And all I
[12:22] Speaker 5: know is every summer right around this time he gets
[12:25] Speaker 5: to go to these lavish trips to your One year
[12:27] Speaker 5: it's London, the next year's Paris. They alternate, and they're
[12:31] Speaker 5: these air shows. I have no idea what happens to
[12:33] Speaker 5: djash shows, but George tells us he must go, So
[12:36] Speaker 5: we send them George, where are you going this summer?
[12:40] Speaker 5: I see the week of July twentieth might be penciled in.
[12:44] Speaker 6: It is, so July twentieth, Farmborough Air show in the
[12:49] Speaker 6: the verbs around London, and so you know, we go
[12:55] Speaker 6: there to sort of keep a pulse on demand for airplanes.
[12:58] Speaker 6: Usually there's a fair amount of orders placed the show
[13:02] Speaker 6: for airplanes, but you know, by airlines around the world
[13:05] Speaker 6: this year may be a little bit muted, you know,
[13:06] Speaker 6: sort of the on again, off again of the sort
[13:09] Speaker 6: of Iran fight has fuel prices sort of bouncing all
[13:13] Speaker 6: over the place. So we'll see how much airlines want
[13:15] Speaker 6: to get in the back of very large cues for airplanes.
[13:18] Speaker 5: Don't work too hard over there. I heard the Rose flows.
[13:22] Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
[13:28] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[13:32] Speaker 1: weekdays at ten am Eastern on Apple Corplay and Android
[13:35] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[13:39] Speaker 1: you get your podcasts, or watch us live on YouTube.
[13:42] Speaker 5: Great Bloomberg opinion column out here Today, Meta ushers in
[13:47] Speaker 5: the ear of the K shaped company. A new class
[13:50] Speaker 5: divide is emerging in big tech between those at the
[13:52] Speaker 5: top of the artificial intelligence hierarchy and everyone else, with
[13:56] Speaker 5: the former receiving high salaries and resources and the latter
[13:59] Speaker 5: being viewed as disposed well. Beth poh It joins us here.
[14:02] Speaker 5: She has a Bloomberg Opinion columnist author of this piece. Beth,
[14:06] Speaker 5: what's going on out there with some of these big
[14:08] Speaker 5: tech companies. It seems like we are if you're an AI,
[14:12] Speaker 5: they love you.
[14:13] Speaker 3: Yeah.
[14:14] Speaker 7: I mean it's really interesting because I think tech has
[14:16] Speaker 7: long thought of itself as this egalitarian utopia and that
[14:20] Speaker 7: you know, that's a much more complicated story, and we're
[14:22] Speaker 7: seeing that play out again here where I really think
[14:25] Speaker 7: there is an AI hierarchy. There's the AI elite and
[14:28] Speaker 7: then there's everybody else. And even if you're doing things
[14:32] Speaker 7: with AI, even if you're using AI tools, unless you
[14:34] Speaker 7: are at the very top of this hierarchy.
[14:37] Speaker 3: You are at risk less.
[14:39] Speaker 2: Unless you're the kind of person who is recruited to
[14:41] Speaker 2: work at say a Meta and in charge of developing
[14:44] Speaker 2: the AI capabilities, everyone else just feels like they're you know,
[14:48] Speaker 2: hired hands and disposable. Increasingly, what is happening at Meta
[14:52] Speaker 2: that is really exacerbating this divide.
[14:55] Speaker 3: So we really are seeing this here.
[14:57] Speaker 7: So there's you know therecutives have thrown massive paypack like
[15:03] Speaker 7: nine figure salaries at developers, researchers, engineers who are really
[15:08] Speaker 7: at the top of this field. Everybody else is really
[15:11] Speaker 7: has faced the prospect of mass layoffs. I mean we're talking,
[15:15] Speaker 7: you know, ten percent of the company multiple multiple times
[15:17] Speaker 7: over right, We've we've seen multiple rounds of mass layoffs here.
[15:21] Speaker 7: Workers have been surveyed in order to basically train their
[15:24] Speaker 7: AI replacements. They've been drafted onto teams that are described
[15:29] Speaker 7: as sort of soullless gulogs. So it's it's, you know,
[15:32] Speaker 7: this company that once was really one of the most
[15:36] Speaker 7: coveted employers in Silicon Valley for a lot of people
[15:39] Speaker 7: has now become you know, it's people are sort of
[15:42] Speaker 7: hoping to get laid off.
[15:43] Speaker 3: They want out.
[15:45] Speaker 5: What are the companies saying, if anything? Are they responding?
[15:48] Speaker 7: Well, what's really interesting here is Meta has walked some
[15:51] Speaker 7: of this back. They've acknowledged recently that the way some
[15:55] Speaker 7: of their various initiatives were rolled that was atrocious. They've
[15:58] Speaker 7: said the environment is rutal. And I don't think this
[16:02] Speaker 7: is because all of a sudden they've discovered empathy. I
[16:04] Speaker 7: think this is because it wasn't working right, Like they
[16:06] Speaker 7: are not winning the AI race, and I mean that's
[16:10] Speaker 7: not a big surprise that if you treat employees this way,
[16:12] Speaker 7: they're not going to perform for you. So I think
[16:15] Speaker 7: they I think they've kind of realized that a little bit.
[16:17] Speaker 7: They know what the problem.
[16:19] Speaker 2: Is, they know what the problem is. How are they
[16:22] Speaker 2: solving it because there is a talent war. You just
[16:24] Speaker 2: talked about these nine figure salaries for folks who are
[16:27] Speaker 2: at the top of the AI game, but at some
[16:29] Speaker 2: point you also need everyone else to kind of continue
[16:33] Speaker 2: to keep the ship moving in the right direction.
[16:35] Speaker 7: Yeah, so it's interesting they've said things like, we're not
[16:37] Speaker 7: going to have any more mass layoffs this year, better
[16:40] Speaker 7: micro kitchens, you know, smaller teams they were having in
[16:44] Speaker 7: some cases where one manager would have fifty reports, so it's.
[16:47] Speaker 3: More attentive leadership.
[16:51] Speaker 7: They stopped their surveillance program because there actually was a
[16:54] Speaker 7: data leak attached to that.
[16:56] Speaker 3: That's why they stopped it, and that's why they stopped it.
[16:58] Speaker 7: That's why they stopped it, And so we're kind of
[17:01] Speaker 7: seeing that they're saying, Okay, we're going to try to
[17:03] Speaker 7: move back to how things were a little bit.
[17:05] Speaker 3: But I don't think it's that simple.
[17:07] Speaker 7: It's once you break the trust of employees, it's really
[17:09] Speaker 7: not that easy to gain it back.
[17:12] Speaker 5: So are the established Silicon Valley companies like the Metas
[17:16] Speaker 5: of the world of Google's are they seeing AI startups
[17:19] Speaker 5: in the valley take poaching talent away? Is that is
[17:21] Speaker 5: that at risk as well?
[17:22] Speaker 7: Yeah, Well, what's what's interesting here is that the way
[17:25] Speaker 7: Meta actually got some of its top AI talent was
[17:28] Speaker 7: by acquiring, but investing in and then bringing on some
[17:31] Speaker 7: of the Yeah, it was a big investment. They invested
[17:34] Speaker 7: and then brought in some of the talent. So this
[17:36] Speaker 7: is you know, this is these are the employees that
[17:39] Speaker 7: they are really focused on, and then there's sort of
[17:42] Speaker 7: the bottom of the pyramid. And you know, I think,
[17:46] Speaker 7: just like we see in the ke shaped economy, these
[17:48] Speaker 7: employees they are fearful. They they really they resent what's happening,
[17:54] Speaker 7: and you know that is also happening here at in
[17:58] Speaker 7: corporate America.
[18:00] Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.
[18:07] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[18:11] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[18:14] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[18:17] Speaker 1: you get your podcasts, or watch us live on YouTube.
[18:21] Speaker 5: I tell you. One of the many, many, many industries
[18:23] Speaker 5: that were hurt by the pandemic was the theater business
[18:26] Speaker 5: going out to movies. A lot of folks said, that's
[18:29] Speaker 5: gonna be the final nail on the coffin of the
[18:30] Speaker 5: theatrical window. It's been tough, but they're getting an inch
[18:35] Speaker 5: and a way back there. Kevinnier follows this industry. He's
[18:37] Speaker 5: senior equity researchannels from Bloomberg Intelligence in studio.
[18:42] Speaker 3: In studio, it's a Friday in the summer.
[18:45] Speaker 5: The BI management team ascons at their various locations. We
[18:49] Speaker 5: appreciate Kevin coming in here talk to us about the
[18:52] Speaker 5: theatrical business.
[18:53] Speaker 8: Here.
[18:53] Speaker 5: Where are we kind of historical levels pre pandemic to
[18:57] Speaker 5: now what's going on there?
[18:58] Speaker 8: Yeah, Paul, you set it up nicely. I mean, you said,
[19:00] Speaker 8: it's been a really tough road back from the pandemic.
[19:02] Speaker 8: We've had just years of stunted supply. Theorters have been
[19:05] Speaker 8: struggling really in survival mode for a long time. This
[19:08] Speaker 8: year we're seeing a total inflection in demand, and really
[19:11] Speaker 8: that's coming from the supply side. We're seeing more movies
[19:14] Speaker 8: and really just as importantly, these movies are staying in
[19:16] Speaker 8: theaters for longer. That's retraining the consumer that you don't
[19:20] Speaker 8: have to go and see these movies at home, go
[19:22] Speaker 8: to the theater, go out on a midweek see the movie.
[19:25] Speaker 8: And we're seeing that's a really really driving the box
[19:28] Speaker 8: office to a post pandemic record.
[19:29] Speaker 5: Hall.
[19:30] Speaker 2: Okay, so you set it up for me to ask
[19:31] Speaker 2: obvious next question, which movies are convincing people to pay
[19:35] Speaker 2: up and go to the movie theater?
[19:36] Speaker 5: Yeah?
[19:36] Speaker 8: I mean Scarlet is a great question because I think
[19:38] Speaker 8: it's the totality. Right, it's a diverse slate. We're not
[19:41] Speaker 8: seeing nearly as much emphasis on a single blockbuster carrying
[19:44] Speaker 8: an entire month or the entire summer like we saw
[19:47] Speaker 8: with with Top Gun Maverick just a few years ago.
[19:50] Speaker 8: This year, there's just more content, right, So there's horror,
[19:52] Speaker 8: there's something for different audiences, family audiences. We're seeing more
[19:56] Speaker 8: IP back in theaters, so there's something for everyone.
[19:59] Speaker 5: Really, how about the demos? Here are you said training
[20:03] Speaker 5: an audience to go back into the theaters? Is that?
[20:06] Speaker 5: What are we seeing? Are younger people going to the
[20:08] Speaker 5: theaters differently as much less than older folks. Houses that work.
[20:12] Speaker 8: You picked up on my next point, younger audiences have
[20:14] Speaker 8: been some of the strongest to come back to the
[20:17] Speaker 8: theaters really honestly, surprisingly, we think of these younger people
[20:20] Speaker 8: gen z more as the digital age. You know, they're
[20:22] Speaker 8: particul to their phones. That hasn't been the case, and
[20:25] Speaker 8: a big reason is because of the pandemic. You know,
[20:28] Speaker 8: they lost out a lot of the communal experience, whether
[20:30] Speaker 8: it was prom, whether it was all these things that
[20:32] Speaker 8: a lot of us have taken for granted. Now that
[20:34] Speaker 8: we're back, they really value in person experiences. And it's
[20:38] Speaker 8: not just theaters, right, it's concerts, it's sporting events. We're
[20:40] Speaker 8: seeing these hillwinds in a lot of different verticals.
[20:42] Speaker 2: And going to the movie theater is a lot cheaper
[20:44] Speaker 2: than going to a concert. So there's that to keep
[20:46] Speaker 2: in mind as well. What are the theaters doing to
[20:49] Speaker 2: make sure that once customers go in there they have
[20:51] Speaker 2: a good experience, because you know a lot of times
[20:53] Speaker 2: you go in there and the floor is sticky, there's
[20:55] Speaker 2: popcorn on the seats, like, it's not a great experience.
[20:58] Speaker 8: Yeah, yeah, it's true. And you know a lot of
[21:00] Speaker 8: those underperforming theaters have gone away, right, So we're thinking
[21:03] Speaker 8: about more high quality. We want to improve the consumer
[21:05] Speaker 8: experience because when people are in there once foot traffic
[21:08] Speaker 8: rises with a high quality slate, naturally, concession spending goes up.
[21:12] Speaker 5: Food and beverage.
[21:12] Speaker 8: That's where profit comes from the movie theaters. So movie
[21:16] Speaker 8: theaters are investing more in premium options. I think, you know,
[21:20] Speaker 8: popcorn and soda are still the biggest profit drivers, but
[21:22] Speaker 8: think like you know, chicken fingers, pizzas, even alcohol. A
[21:25] Speaker 8: lot of theaters are getting alcohol licenses now and that's
[21:28] Speaker 8: been a really big success story as well.
[21:30] Speaker 5: One of the key things that you mentioned earlier is
[21:32] Speaker 5: at the theatrical window. What are the are the studios
[21:35] Speaker 5: making a conscious decision to keep movies in theaters longer?
[21:41] Speaker 8: They are? They are and this is a direct reaction
[21:43] Speaker 8: to the demand, right, So the demand has risen now,
[21:46] Speaker 8: studios are investing more in the contents. We've heard of promises,
[21:50] Speaker 8: we've heard of vocal commitments. The proof is actually showing
[21:53] Speaker 8: up with the data, and we've seen a material materially
[21:55] Speaker 8: higher dollar recovery in midweek gross box office. There could
[21:58] Speaker 8: be some things going on there. Maybe some people are
[22:01] Speaker 8: putting less emphasis on those expensive opening weekends and just
[22:04] Speaker 8: going to the discounted tickets on you know, Tuesdays or Wednesdays.
[22:07] Speaker 8: But really, you know, the flip side of that is
[22:09] Speaker 8: just there's now as much emphasis to see it on
[22:11] Speaker 8: that opening weekend where there can be capacity constraints, especially
[22:14] Speaker 8: during the summer. So I don't need to see it
[22:16] Speaker 8: on a Friday. I'll go see it on a Wednesday.
[22:17] Speaker 2: Last movie that you went to the theater for, thank
[22:20] Speaker 2: God past I can't remember.
[22:23] Speaker 3: Devil Worre's Prada. What's devil wors.
[22:25] Speaker 5: Double Wor's product thing?
[22:26] Speaker 7: Yeah, I.
[22:28] Speaker 4: Fantastic.
[22:28] Speaker 5: What did you see most recently?
[22:30] Speaker 8: I saw Session, which.
[22:31] Speaker 2: Was just, oh yeah, So that's the hard movie that
[22:33] Speaker 2: you're talking about. Write something for everyone, John Tucker.
[22:36] Speaker 5: The last one, my son Dragon went seen Dune or
[22:39] Speaker 5: Dune that wasn't recent.
[22:41] Speaker 3: Well, that's the last time. I there's way too much
[22:44] Speaker 3: sand in that movie too.
[22:45] Speaker 5: Nixon was resident. So what's the slate coming out of
[22:48] Speaker 5: Hollywood over the next couple of years.
[22:50] Speaker 8: Yeah, absolutely, So we have much much better visibility, not
[22:53] Speaker 8: only into the second half but also into twenty twenty seven, right,
[22:56] Speaker 8: And that's just something that's been a big change from
[22:57] Speaker 8: the prior years. That's giving us a lot of confidence
[23:00] Speaker 8: and why we see kind of a structural reduction in
[23:02] Speaker 8: downside risk where the visibility goes away is twenty twenty eight, right,
[23:07] Speaker 8: And this is where we're just not sure what's going
[23:09] Speaker 8: to happen, especially if the studios consolidate, which it very
[23:12] Speaker 8: much seems like the windsor point in that direction. We
[23:14] Speaker 8: have Paramounts set to take over Warner Bros's Discovery comcasts.
[23:17] Speaker 8: NBCUniversal is now kind of a question mark two extremely
[23:21] Speaker 8: important healthy studios for this ecosystem. So there is a
[23:24] Speaker 8: historical precedent. When Disney bought twentieth Century Fox, we saw
[23:27] Speaker 8: that their combined output really really dwindled over the last
[23:30] Speaker 8: seven years. That's the same concern with these other studios combining,
[23:35] Speaker 8: I think in naturally defensive moves, is if the studios
[23:38] Speaker 8: or excuse me, that the cinema is combined to get
[23:40] Speaker 8: better to negotiating terms with the rental costs. But we'll
[23:43] Speaker 8: just have to see what happens.
[23:45] Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,
[23:50] Speaker 1: and anywhere else you get your podcasts. Listen live each
[23:53] Speaker 1: weekday ten am to noon Eastern on Bloomberg dot Com,
[23:57] Speaker 1: the iHeartRadio app tune In, and the Blue Bomberg Business app.
[24:01] Speaker 1: You can also watch us live every weekday on YouTube
[24:04] Speaker 1: and always on the Bloomberg Terminal

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.