Iran War Sparks Market Mayhem & Will Live Nation Be Broken Up?

13:55Neal Freyman:Crucially, Ellison says there are no plans to reduce theatrical output, which has been a key fear from the industry. And in fact, he publicly committed to releasing 15 films per studio per year, though there's no word on how many of them will be Minecraft movie sequels. Ellison was also already trying to straddle the line between assuring investors that Paramount made the correct move without appearing overconfident in raising the hackles of regulators. For instance, he is selling the Paramount BO plus Mac service as a pro competition because it challenges Netflix in the streaming world. Neil, Paramount is trying to say all the right things, but there's still a ways to go before this thing gets the sign off from regulators.

14:34Toby Mervine:What an odyssey this has been for HBO in the streaming world. It dates back to 2010 when Time Warner, its parent company, launched HBO Go. Four years later, HBO Now came along. AT &T then bought Time Warner in 2018, launched HBO Max in 2020. Three years later, Warner Media merged with Discovery after being divested from AT &T. And the new CEO, David Zaslav, said, OK, I don't like HBO Max anymore. Let's just make it Max. that drew a huge backlash as well. And then last year they reversed it back to HBO Max. So this has been an absolute journey for HBO. I think a lot of fans of HBO and those who want it to stay independent and perhaps keep its name will be maybe heartened by David Ellison saying, we know how important the HBO brand is.

15:22Toby Mervine:We are going to protect it. And whatever this larger streaming service is called, it'll be a very prominent sub-brand within it and won't be diluted by whatever else Paramount is bringing to the table.

15:31Neal Freyman:I think it's very funny how David Ellison is on this call with investors yesterday and saying, yeah, this is going to compete with Netflix. It's going to be this big 200 million plus subscriber base that we can go toe to toe with Netflix. But also you have regulators listening to that and going, oh, if you're so big, then why should we allow you to combine at all? So I think he is trying to play both sides of the fiddle here. I don't even know if that's a saying at all, but straddle the line between appearing confident and not saying that this is actually going to reach a scale that would attract the interest of regulators.

16:05Neal Freyman:I do also just want to talk about how expensive this deal is just in the history of leverage of buyouts. Netflix, when they were trying to, you know, kind of solely this deal, said that this is the largest proposed leverage buyout in history. 7x is the amount of debt to the ratio between the debt to the revenue that the proposed merger would create, which is a lot of debt. And some people have been drawing comparisons to the fact that last time that private equity or any of these leverage buyouts happened, thinking back to something like KKR buying out Toys R Us in 2005, that had a similar leverage debt ratio.

16:42Neal Freyman:That ended up in bankruptcy, losing 33 ,000 workers. If you look at the combined entity, Warner Bros. Discovery has 35 ,000 employees. Paramount has about 18 ,000. Usually when you take on this much debt, it does lead to layoffs, which is something that David Ellison is trying to stay away from, but others in the industry are saying like, this is the most likely scenario here is that people are going to lose their jobs.

17:04Toby Mervine:Yeah, but did Toys R Us have Minecraft? Probably, they actually probably had something like that. They had something along those lines. Yeah, regulators, this is not across the finish line yet. Looks like it'll get a pretty easy pass in Washington. But state attorneys general, especially in California, can challenge the deal on antitrust grounds. They can sue to stop the merger, and that could potentially happen. I know we've been focusing on streaming, but I think regulators are going to pay more attention in the monopoly space to the combination of the two movie studios, Paramount and Warner Brothers, because right now there are only five major movie studios.

17:38Toby Mervine:That would be combining two of them to just make for. And there are grounds for antitrust action on this front, because back in 2022, the Justice Department successfully blocked Penguin Random House from buying Simon & Schuster on the same grounds that you would argue this combination would lead to, which is that there's fewer buyers now for creatives. Back then in 2022, the DOJ said that, well, if Penguin Random House combines with Simon & Schuster, then if I'm an author, I have fewer potential buyers, and that leads to my lower compensation. You could say the same thing for directors and writers here, if two of the five movie studios do combine.

18:18Toby Mervine:So it looks like this is not across the finish line. I know they want to sign the deal by Q3, and we'll see whatever happens with this new streaming service, whatever it's going to be called.

18:25Neal Freyman:All right, we're going to take a quick break and come back with Toby's Trends right after this.

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20:30Neal Freyman:Try Whoop on for size at join.whoop.com slash brew daily. That's join.whoop.com slash brew daily. Sweet green has turned sour. The salad chain has seen its stock tumble 75 % over the past year. It tried and failed to launch French fries and it's gone from being the future of lunch to a poster child of the fall of a very millennial point of time. A long spiral I want to get introspective about on today's edition of Toby's Trends. Last week, Sweetgreen reported earnings that set the stock into the bitter red, reporting a same store sales drop of 7.9 % last year. Financially, Sweetgreen operates on a knife's edge with a complex supply chain full of organic ingredients.

21:15Neal Freyman:But beyond the bottom line, Sweetgreen's demise also reflects a decline of a very specific breed of millennial optimism. The Atlantic wrote an article titled How Sweetgreen Became Millennial Cringe, where author Ellen Cushing notes that the chain was achily of its era, an era where aspiration and health and productivity became symbolized by a$15 bowl of salad. Cushing calls it the perfect fuel for grinning strivers of the 2010s, where eating your desk lunch at a WeWork accompanied by the soundtrack of Hamilton was the norm. Yet, culture changes. Hamilton is cringe, WeWork is bankrupt, and Sweetgreen's moment seems to have passed.

21:54Neal Freyman:Neil, younger generations rarely look kindly upon their immediate predecessors, but the relentless march of time has been especially unkind to millennials that love Sweetgreen, maybe even more so than the stock market has. the edible embodiment of the 2010s has gone stale.

22:11Toby Mervine:I feel personally attacked as a gritting striver who ate many harvest bowls in a WeWork in 2018. But it does seem like that era is ancient history. The bigger question is, did Sweetgreen change or did we change? The answer is probably both. Yes, millennial cringe is on its way up. At the same time, Sweetgreen has, by all accounts, dipped in quality. And its CEO even predicted this. Back in a podcast in 2023, Jonathan Neiman said, most food companies, as they get bigger, they typically get worse. Scale kills the product. And at the same time, people are complaining that Sweetgreen has dipped in quality.

22:46Toby Mervine:Its prices have surged. Back in 2014, a kale Caesar with chicken was, this is crazy. I can't even believe this. $8.85. This week in certain locations, it is nearly$15,$14.75. That's$2 higher than broader inflation. So at the same time, Sweetgreen has a dip in quality. It's at a huge price spike. People don't feel like they're getting value. And at the same time, maybe there's something to this whole grinning Stryver millennial cringe being on the way out and people just aren't necessarily drawn to this product anymore.

23:17Neal Freyman:Yeah, they are throwing everything at the wall too, to try to recapture some of that magic. They dropped seed oils, which was kind of part of the Maha movement wellness trend that's been coming to the restaurant space right now. They added protein plates because it, when in doubt, just put protein in everything. That seems to be the strategy right now. They've also talked a big game about robot kitchens and automating the process of building your$15 sad desk lunch. None of that necessarily worked. They just launched wraps the other week. So they really are trying everything right now. But the fact that it's no longer 2010, the fact that some people just don't really like salads, no one ever really liked salads that much, which probably reduced the size of their total addressable market.

24:01Neal Freyman:People are going to come after you for that. Well, I'm just saying that if you want to be a broad appeal chain, salads are harder to sell than maybe cheeseburgers are. They were really big in pioneering online ordering. They were early to that. That's why you saw so many people munching down on salads at their WeWorks, and they really were just a millennial aspiration brand. So yes, have we changed? Has Sweetgreen changed? Everything has changed, and Sweetgreen is worse off for it. Now let's sprint to the finish with some final headlines. Apple unveiled its cheapest iPhone in years yesterday to kick off the wave of product releases it has coming this week.

24:37Neal Freyman:Now, a cheap iPhone is sort of an oxymoron. The 17e will still run you at least$599, but Apple thinks it will be popular, especially in emerging markets like India where price point matters more than camera quality or screen size. If a cheaper iPhone doesn't tickle your fancy, Apple also unveiled a faster version of its iPad Air. iPads have been hot lately, selling well through the holidays. And now you have a faster, skinnier version that you'll still probably end up leaving in the seat back pocket of an airplane. Neil, this was day one of Apple's big product push. It's off to a decent start.

25:10Toby Mervine:Yeah, the most exciting thing for me is this new soft pink color for the iPhone. It comes in black, white, and then something called soft pink. And I think it looks nice. I think a lot the reaction to this was generally positive because there's a lot of cool stuff packed into this iPhone E 17 E that doesn't cost a whole lot, at least relative to other iPhones. You can get Apple intelligence and, you know, pretty, pretty high quality tech that's stuffed in there. The other thing is the iPod. Yeah, I did not know this, but the iPad lineup was a very strong seller in the holidays. It generated eight point six billion dollars in the December quarter, up six point three percent from a year earlier.

25:47Toby Mervine:and half of iPad buyers were new to the product. So they're getting new people into the iPad ecosystem. Now I have to say, iPad people freak me out. Like it's so crazy when I walk into somebody's house, they're on their couch and they're just like going to town on their iPad because that is a complex thing for me. I can't wrap my mind around it. I can barely get through my phone, but there are some people who are absolutely devoted iPad people.

26:10Neal Freyman:I am getting the iPad itch lately. I don't know why. I think it was because I was flying home this weekend and this guy was reading a magazine on his iPad and it was beautiful and it was tactile. He was turning the pages and I don't need an iPad, but I kind of want one now. So maybe I am becoming, you know, the Apple fanboy that many have accused me of again, but the iPad is calling me right now.

26:32Toby Mervine:All right, the year is 2026 and Michael Jordan can't stop three-peating. The basketball legend who won back-to-back-to-back titles on two different occasions with the Bulls has done it again, this time in an entirely different sport, NASCAR. After a victory on Sunday, Tyler Reddick, who drives for Jordan's Team 23xi Racing, won the first three races of the season, Daytona, Atlanta, and Austin, becoming the first driver in NASCAR history to accomplish the feat. Of the bar Jordan set, Reddick said, yeah, he reminded me earlier this week that he does things in threes. Meanwhile, Jordan, he preys on the team and his co-owner, Danny Hemlin, saying, look, I just put up the money.

27:10Toby Mervine:He knows his place, which is why I

27:12Neal Freyman:I was kind of digging through NASCAR's subreddit, and people are saying that Jordan is succeeding in NASCAR while maybe failing at his other executive positions that he's had in the NBA with the Charlotte Bobcats, which became the Charlotte Hornets. And people were positing that in most cases, goats in their own sports don't turn into good execs in their own sport because in their mind, the only way that they can be perfect or to hold people to the standards is if they are on the court themselves. it's why people are pointing to Tom Brady or Peyton Manning coming into broadcasting instead of going into coaching because they just have this insane sense of perfection that doesn't necessarily translate well into managing a team which is why when you come to NASCAR Michael Jordan knows his place like he was never a NASCAR driver so he does put up the money he brings in the sponsorship dollars he does the things that you need an owner to do without maybe meddling in the day-to-day operations of the team that is kind of why people are saying He's off to a very hot start.

28:09Neal Freyman:Also, he's just got dang good drivers.

28:11Toby Mervine:It's been a great few days for people named Michael Jordan in general, because the actor Michael B. Jordan was a surprise winner at the Actor Awards on Sunday night. He brought home Best Actor for his role in Sinners, which was a huge surprise and certainly shakes up the Oscar race coming up in a few weeks because Timothee Chalamet was kind of the odds-on favorite by far to win Best Actor for Marty Supreme. But now after this one, Michael B. Jordan is making a strong case of his own. OK, that is all the time we have. Thanks for starting your morning with us and have a wonderful Tuesday. It's that time of the month again.

28:45Toby Mervine:Trivia. We are hosting our next MBD Trivia Night in New York one week from today, next Tuesday, March 10th. And we'd love to see you there. Head to the link in the show description to sign up and come meet us in the flesh. If you'd like to reach us, send an email to morningbrewdaily at morningbrew.com or DM us on Instagram at mbdailyshow. Daily Show. Let's roll the credits. And hey, some people got some promotions. Emily Milliron is our supervising producer. Raymond Liu is our senior producer. Our producer is Olivia Graham, and our associate producer is Olivia Lake. Hair and makeup has the same title.

29:19Toby Mervine:Devin Emery is our president, and our show is a production of Morning Brew. Great. So, Daniel, let's run it back tomorrow.

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