Expedia, barry diller is here. Were getting into streaming and a lot of Media Questions for barry diller coming up. But first, joining me to discuss the week that was and to look ahead saratoga ceo, chris overbeck, thank you so much for joining us. Thank you. Maria youve had an increase in assets under management, your best year ever . Best quarter ever. Maria congrats on that. What drove that . It was just a combination of things, you know, good credit performance, we had some equity gains in our portfolio and a lot of originations, raised a lot of equity in the stock market, so everythings in a good, healthy position x were well positioned. We can grow our assets by another 50 . Maria and, chris, weve got a couple of items that are, obviously, going to be important to that and to investors or this week and looking at the next week. Brexit is one where boris john sonthis hes got a great johnson thinks hes got a great deal. If it goes through, i think it might because theres, obviously, been a lot of turmoil, and theres a lot of momentum in the status quo over there. But if you can get a resolution here and people can get back to work and start moving to the next reality, you know, i think thatd be ad good signal for the world. Maybe itll impact some of the trade deals that are held up, and if everybody decides lets settle up and move on, i think it would be very positive. But, you know, as a business person, i think it would get done. As politics, we dont know. Maria yeah. And then theres china, and then theres usmca and, of course, a Federal Reserve meeting in about two weeks. Are you expecting the fed to cut rates . Whats the impact there . Well, i think the fed has a difficult decision because theres no inflation, so theres no real reason to worry about inflation and raising rates. Theres been a manufacturing contraction for our third month in a row, manufacturing contraction. Railroad traffic is down. So a lot of symbols, signals there. Just this month Consumer Sentiment consumer spendings down a little bit. A lot of thats auto, so we still have a lot of momentum in the economy, but theres a lot of straws in the wind, if you will. Maria yeah. A lot of uncertainty that causes managers to sit on cash. Exactly. And so, you know, the old adage an ounce of prevention is worth a pound of cure, so maybe a cut at this time might preempt what could be bigger problems down the road. Maria do you think a china deal, the one that weve heard about in the last week, that it is going to stick . That they will sign it . And whats the impact there . Nobody really knows, but the president said he is expecting shi slip ping and himself to sign a deal at apec which is just in about a month. Well, you know, its the broader context of the deal, right, if youre china, youre saying am i going to wait out until the next election and see if i get someone other than donald trump to negotiate with and maybe get a better deal, how much pain am i going to get between now and then, or does it make sense to make a deal . The whole world is pretty much lined up that china needs to adjust its relationship with everyone and, hopefully, yeah, they come to terms with that. Chinas got a tremendous economy, and if they reach a regular weight deal, they still can be maria you make a good point, because its how much pain can you take. This week we got news from china that the gdp came in up 6 , they told us, but it was weaker than expected. Does that hit the u. S. Economy as well . Well, the u. S. Economy has the benefit of being largely consumer, as long as the consumers employed and confident, you know, we can kind of ride a little better maybe. Theyre more of an exportdriven economy, so, you know, theyre trying to be more consumer, but theyre very exportdriven. I think theres a lot of pain there the, but they can take pain better than we can, and they dont have an election coming up. Maria youve got to about a billion dollars under management, how do you allocate capital in this environment where you do have all these uncertainties . Most of our assets are in senior secureed credit, so were focusing on secular growing businesses mostly in the United States. The United States economys good, and theres a lot of innovation going on, a lot of growth companies, smaller, middlemarket companies. Even if we had a recession, they would still be growing. Theres lots of improvements maria where is the growth, chris . What would you say are sort of the growth areas of in this economy right now in terms of where youre allocating capital . Lets take education. Theres a tremendous amount of improvement in the software underpinnings of education, you know, in terms of, you know, using a computer, using email, using, you know, sort of Package Solutions to curriculums in schools. Thats rolling out. Colleges are seeking to get a broader use of the intellectual property theyve developed, and a lot of their alumni are taking correspondent courses and things like that maria and youre finding companies that are doing that . Oh, yeah. And theyre growing tremendously, and its a great revenue opportunity for the maria great to have you on the show. Chris oberbeck. Dont go anywhere, my exclusive interview with media legend barry diller is up next. Facebook dives into the world of Online Dating. Can they compete with match . Its our business. For them its a little side business. Barry diller gives his take to maria when wall street returns. Chevys the only brand. To earn j. D. Power dependability awards. Across cars. Trucks. 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Plans change every year. Use the new plan finder at medicare. Gov. Comparing plans really pays. Look how much we can save. Maria welcome back. Barry dillers iac Group Planning to spin off the Online Dating firm match group. The owner of okay cupid and plenty of fish, iac owns 80 of the match group. I spoke with barry diller, the chairman, about his plans. Iac historically has been kind of an anticonglomerate. In other words, it builds up businesses, and then it spins those businesses out so that they can be independent. So rather than a Holding Company like berkshire or someplace else, we basically either buy, build, invent, whatever businesses. When they get to a sufficient size where they, in a sense, deserve independence, we spin them out so that they can go on with their own independent life and not be part of some big megacompany, which is not a healthy way except if youre the genius of Warren Buffett to manage anything. Or at least i dont think its a good way to manage something. Maria youve done it with ticketmaster, expedia, etc. 9. Yes, yes. Maria have you gotten any sense of what the shareholders say, the minority shareholders, the board . What kind of response have you gotten . Well, what they in a situation like this, the match, which is right now a public company, we own 83 or 4 of it, but match has its own board. They will hire not hire, they have, theyve made a special committee of the independent directors, the other directors at match are all iac. So those independent directors have now hire advisors, and hire advisors, and they will negotiate with iac on the terms of the separation of the shipoff. Spinoff. And thats a normal process weve gone through the many times. We have made them a proposal, which i think, yes, we filed it the other day. So we formally made them a proposal. Now discussions will start, and within months they will be on their own. Maria is there any reason to believe this is a worry here about the leverage being take on in terms of increasing debt levels . Is there any reason to expect that the board, the independent board, the special committee, will push back on that . I think they might. I think there always is pushback in these things. But the truth is we would not add debt to match if match was not very, very capable. Match is a cash flow machine. Its cash flow is huge, 800 million on 3 billion or something which is really extraordinarily high margins. So we would not cause indebtedness at match to be beyond any kind of rational threshold. It would be crazier for us to do so. Were all going to be shareholders of match. And so while these things end up being negotiated, and of course thatll be an issue, but itll get solved. Maria what about the growth story of match now . Ridiculous. Maria yeah, okay. Its still in a ridiculous phase in terms of growth . Its just quite amazing. This tinder, you know, when we started it and this was something rarely in a Large Company do you birth something from the ground, and this was actually started here, i think in this building. And that it would grow to be basically worth probably close to 18, 17, 18, 19 billion on its own and at various points i thought, well, this is gonna its had such a skyrocket, eventually, you know, they dont necessarily fall to earth, but they do lose their trajectory. Match keeps going i mean, tinder keeps going. Maria one of the reasons that facebook came out recently and said were going to double down our efforts on Online Dating. Good for them. Maria is that going to be competition . Well, you never know. Competition could come from any place. Ive never been when facebook announced, you know, the markets are so reactionary, facebook announces theyre going to do this at some point maria match trades down. Match traded down i think 15 or 20 . Its kind of climbed back up. Then facebook announced its coming to the u. S. , it then takes another hit. The truth is we have not yet seen competition from facebook. And i thought, as i thought at the beginning, its our business. For them its a little side business. And history has shown, there are exceptions, that if its your main thing you do, you tend to do what others you tend to do it better than others who are, so to speak, dabbling. And also i dont think thats facebooks main purpose. Maria how would you characterize the backdrop in terms of housing and the consumer right now . Well, i think its good. You know . I mean, you know, things we are so reactionary today, you know, as i talk about some of these things where the market just drops your stock because of this or that instantly and then builds it back up over a period of time because they say, oh, i guess we werent right about that. Or conversely the other way. So weaver in a really reactionary were in a really reactionary period about many, many things. The economy though, the base economy is so strong in this country. I mean, in every area. And will we have a recession . Of course we will. Weve always had. But short of some cardiology misevent, im very optimistic. Maria so youre at a 51year low in unemployment right now. Its about jobs, right . Yes. And look, the truth is and i think it is an issue about income inequality i think the only solution to income inequality, i dont, i do not think its in taxes. Although i think we probably should have revision in the tax code, for sure, like any other bird brain. But it really is in wages. Workers need to be paid more. Maria stay with us, more of my one on one with media legend barry diller. The streaming wars heat up. Can amazon and disney dethrone netflix . Will they ever get to netflixs size . I cant imagine it. More of marias oneonone with barry diller when wall street returns. 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Watch. Is anybody catching up to netflix . No. Maria really . That does not mean that, for instance, what disney is doing is not sound for disney. And theyre doing it, and i have great admiration for bob iger because he made a determination that he had to have direct engagement with the consumer, and the only way to do that is through streaming. So its not like he put his little toe in the water. He put both feet, both legs and the whole body in the water, and hes going for this completely. And disney has such appealing content that i think theyll do well. Will they ever get to netflixs size . I cant imagine it. It seems incomprehensible to me that that will happen. Maria even though theyve got marvel, lucas, pixar thats okay. So what in im not saying theyre not going to get subscribers, but theyre not going to get to the level of netflix worldwide. Netflix has been in this look, it is, when you think of it, its such a radical miracle that six years ago they invested in what was thought to be an obscene amount of money in a Single Program called house of cards. Okay . Six years ago. They put down 150 million for which no one at that time could even conceive of. But their guts and really the extraordinary thing this company, not very well capitalized, but starts in the streaming business and then makes such big bets that they change the entire entertainment business and change the hundredyearsold hegemony of these, you know, Major Entertainment companies. So that theyve done this, and then they said right away were going worldwide. So they planted their little flags in every place in the world years ago. Maria so do they have to spend 13 billion in a year to keep up . They have to spend it for a while, for sure. Its all overspending. All of the money thats going into this is deficit money. I mean, meaning in other words, youre not going to get a return on these dollars. Youre not playing for the short game. So the thing is can you get enough subscribers over the next couple of years to be able to then actually cut back on your program expenditures, probably raise some prices too and make this come out in terms of the economics. I think thats a trick, but i think its doable. The thing is that the prices that have this competition has made a, this is a land rush to get programming. Finish. Maria are you surprised at whats taking place, barry . You and i watched the internet boom and the internet busts, and now youve got some real survivors like an amazon. You surprised at what amazon looks like today . No. Im not really surprised because early on jeff bezos concentration, fanatical concentration on serving the consumer when no one else really in his area, arena was doing so with such consistency. And because of that plus just a genius of a kind of ambition that is really wildly rare, amazon, theres nothing no. Amazon, we actually tried to buy their bonds when they got into trouble, and if it werent for which owned a piece of our company at the time, we would have done so. Ive been an admirer of amazon for 20 years. Maria but stay on this tech space for a second because you look at a bag to, you look at a facebook google, you look at a facebook, these companies are more powerful than they ever have been, thats why you see washington saying we might want to break them up. Well, i dont believe breaking them up makes any sense. What i do think if they have to have there has to be sensible regulation. When these Companies Get to the size that they are, then, in fact, like any monopoly, they much sensible regulation. So for google, we spend at expedia we spend 3. 5 billion, we probably spend 2. 7, we spend 3. 5 billion in marketing maria yeah, they want your advertising, but they also want your customers. We spend multiple billions of dollars, and thats fine. We spend the money, they give us customers. What we dont like is then them competing with us in our own business. So we think thats kind of wrong. Maria do you have a thought on china and whats going on between the u. S. And china . Whats your reaction to all of this . The fact that the nba is over here defending what the general manager of Houston Rockets said, and then chinas bullying them, and they roll to oaf. And then you could kind of say it was inevitable, you know . China has been growing, china has more people than any place else, also has a regime that can basically say it here and it comes out there. They dont have to depend upon staying in office, so to speak. And theyre very competitive. And so we are seeing the results of them getting very strong and wanting to get stronger, and they will keep doing it and push back against that. Its good and healthy for the u. S. , i think, and for everybody else because that kind of, that kind of economic potential imbalance and china absolutely does believe in one man standing, in other words, you know, weve done business in china, and in the end we basically had to sell out because, in fact, in almost every industry theres only one survives. Thats a very competitive place to play. And youre going to see all these tensions and all these reactions. Maria my thanks to barry diller. Dont go anywhere, more wall street right after this. I get it all the time. Have you lost weight . Of course i have ever since i started renting from national. Because national lets me lose the wait at the counter. And choose any car in the aisle. And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. vo go national. Go like a pro. Come on lets hide in the attic. No. In the basement. Why cant we just get in the running car . Are you crazy . Lets hide behind the chainsaws. Smart. Yeah. Ok. If youre in a horror movie, you make poor decisions. Its what you do. This was a good idea. Shhhh. Im being quiet. Youre breathing on me if you want to save fifteen percent or more on car insurance, you switch to geico. Its what you do. Lets go to the cemetery and i. Was. Shocked. Im from cameroon, congo, and. The bantu people. Greater details. Richer stories. And now with health insights. Get your dna kit at ancestry. Com. Maria welcome back. Coming up next weekend on the program, join me, sales force founder marc benioff, my special guest. Lots to talk about. Plus, this weekend right on Fox News Channel join me for sunday morning futures at 10 a. M. Eastern, live. House minority leader kevin mccarthy, my special guest. A lot happening in washington. Catch the show live on sunday. Plus right here on fox business, start smart every weekend 69 a. M. Eastern for mornings with maria on fox business. Hope youll start your day with much for being with us. Have a great rest of the weekend, everybody. Ill see you next week. Gerry hello and welcome to the wall street journal at large. This week the leading democratic president ial hopefuls squared off against each other for the fourth time in the key battleground state of ohio for the largest debate ever, 12 candidates in all. And its the first time theyve been on stage together since House Speaker nancy pelosi launched a formal impeachment inquiry into president donald trump. Needless to say, the reactions were topic number one and, of course, the situation that prompted it was very prominent, thats
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