Paramount Nears $150M Deal for "The Free Press” & Sora Takes Over the Internet

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0:30Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today is Sora, the end of social media as we know it. Then Friday came and went without a jobs report. So what the heck is going on in the labor market? It's Monday, October 6th. Let's ride.

0:48Good morning and welcome back to the week. A big week for people who spent 50 years in a dark lab researching a single topic. The Nobel Prizes are going to be announced starting today, beginning with the Medicine Prize this morning, followed by Physics on Tuesday, Chemistry, Literature, then the Nobel Peace Prize on Friday. As for economists, they have to wait until next Monday to find out who will take home the prestigious award in their field. So some quick history. The first Nobel Prizes were presented in 1901, and they were awarded in medicine, physics, chemistry, literature, and peace. And it wasn't until 1968 that the sixth prize was created in economics by Sweden's central bank.

1:25And it's funny because Nobel purists say that the economics prize is not technically a Nobel Prize because it wasn't created by the man himself. However, it's presented together with the others, so other people lump it in. Classic economists always being lumped in with the real sciences and making people mad in the process. Congrats to everyone who is nominated and, of course, the winners. But I do think it's funny that economics kind of got shoehorned in there. And now a word from our sponsor, LinkedIn Ads. Toby, you are the best podcast co-host I know. Oh, Neil, you're making me blush. I thought you were going to tell me I'm the best pickleball player you know.

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2:37With the government shutdown extending into its sixth day, economists are facing a data blackout worse than your college days. The Bureau of Labor Statistics didn't release its monthly jobs report on Friday, leaving investors and policymakers without their most trusted measure of U.S. employment. It's created an information gap that is just as damaging as a negative jobs report. When businesses don't know where the economy stands, the natural instinct is to pause some hiring and investments going forward. Most forecasts suggested that the labor market is actually still growing, but barely. Bloomberg's survey of economists expected around 53 ,000 jobs added in September, with the unemployment rate holding steady at 4.3%.

3:18But private data tells a weaker story. ADP says private employers lost 32 ,000 jobs last month. Indeed reports job postings are down 9 % year over year, while hiring plans tracked by Challenger, Gray, and Christmas have fallen to their lowest level since 2009. In general, the labor market looks like it's been tagged in freeze tag, stuck in what Fed chair Jerome Powell describes as a low-hire, low-fire economy, with everyone kind of staring around at each other, seeing how AI is going to affect workforces, and waiting to get more clarity from important data like the jobs report. So, Neil, it feels like businesses are back in high school sitting down for a test they didn't prepare for, mainly because the study materials, a.k.a.

3:59economic data, weren't even available to them in the first place. There are many different alternatives. There are third-party companies that have sprung up in addition to the official government data to sort of provide a picture of the jobs environment here in the United States. There's payroll processor ADP, which you mentioned. They have done a monthly report on the job situation since 2006. That wasn't taken so seriously back then. They revamped their methodology in 2022. Now the Fed considers a pretty reliable source of data. There's the job hosting site Indeed. There's this newcomer called Reveglio Labs.

4:36There are 401k plans that Vanguard has used to gauge whether people are switching jobs because they're adding a new 401k plan. that indicates that they have a new employment. Bank of America tracks its customers' cards use for Insight. So there's a mosaic of different data providers that have emerged as a complement to the government official data. Investors and the Fed say they have a decent amount of information here, but it's nothing, it's no one-to-one substitute for the comprehensive report that the government issues every month. And what mosaic is this creating right now? What picture are we seeing right now in the labor market.

5:15And it's a picture of just not a lot going on. Last year, if you look at kind of the replacement rate level of employment, you needed to add about 130 ,000 jobs a month in order to offset people moving jobs or people losing their jobs. That was kind of the baseline replacement rate to keep the unemployment rate steady. Right now, it's looking a lot closer to that 50 ,000 job mark because people are looking out, seeing a little economic uncertainty. Maybe The quits rate and the firing rate is not as high as it once was. People are just staying in their jobs because they want that security. And so you are seeing a much more stagnant labor market.

5:52It is funny, though. Meanwhile, you look at the stock market. Stock market is doing great in the meantime. S &P 500 finished the week at a record high. It's been on a six-day win streak despite the government being completely shut down. So it is fascinating to see a little bit of discrepancy there between what's going on in the labor market and what's actually going on in the stock market. People are staying in their jobs for longer, but they're also staying out of their jobs for longer. One of the biggest stats that the Federal Reserve and businesses are pointing to is the long-term unemployed.

6:22So the share of people who are defined as long-term unemployed are those who have been unemployed for at least six months is up to 26%. That's the highest in more than three years. If you also look at data from LinkedIn, you're seeing just very low churn around the jobs market. The share of members of LinkedIn members who have recently added a new employer to their profile is one of those alternative data measures where you can get a sense of how things are shaking out in the jobs market is about 20 percent below its pre pandemic rate, not just in the United States, but across the sort of Western world in UK, Canada and Australia.

6:55So people just aren't getting fired, but they also aren't getting new jobs. Finally, let's just do a government shutdown update. There's not a ton of new developments that you missed. The Senate is actually reconvening this afternoon. They're going to try to vote on this continuing resolution to bring things back on the line. No one is super optimistic that they are going to see eye to eye this time around. I was looking at Polymarket this morning, the prediction market, and there's a 72 percent chance that the government shutdown lasts until at least October 15th or later. It's October 6th right now.

7:27So clearly they think there's a long road ahead. The roller coaster year for CBS News is about to take another dizzying turn. Today, owner Paramount Skydance will reportedly announce that it's acquiring The Free Press, an online publication for$150 million in cash and stock, and it'll be installing its founder, Barry Weiss, as editor-in-chief of CBS News. A deal would represent a seismic shift for the 98-year-old network with a storied tradition of mainline news reporting. The names Edward Murrow and Walter Cronkite might ring a bell, and the 60 Minutes clock is surely ticking in your head. It's also everything Barry Weiss stands against.

8:03The former opinion writer and editor resigned from the New York Times, saying she had been bullied by liberal co-workers and started up the free press on Substack in 2021 to challenge legacy media. It's been a huge success becoming Substack's bestselling outlet in the U.S. politics category and boasting over 1.25 million subscribers, including more than 150 ,000 who pay. But as the top editorial leader of CBS News, Weiss would bring no experience in broadcast news to a job that requires managing over 1 ,000 employees reporting on stories all over the world. And Weiss's years of railing against legacy media will likely set up a culture clash with her new colleagues who work in and cherish legacy media.

8:44Toby, so many storylines to tease out here. It's another huge shakeup for CBS under new owner David Ellison. It's a massive exit for a newsletter-first company, probably the biggest in Substack history. and admits Barry Weiss as one of the most influential people in American news. Yeah, this is kind of Trump-area political calculus that you're seeing from CBS right now because they had to pay to settle this lawsuit. $16 million Paramount recently did over 60 minutes interview with Kamala Harris. And so installing Weiss as kind of this radical centrist as she likes to portray herself. It looks like they're trying to say that, hey, we are open to ideological diversity, which seems particularly important under the current administration and current regulators.

9:25And then also Ellison has tried to rebrand CBS a little bit too, saying that, hey, we want to have credibility with a lot of audiences right now. We want to cater to the 70 % of people he says are center left or center right right now. And then the final thing too is that it makes a lot of sense to kind of dive into this Substack era of journalism right now. We are seeing Substack minting very, very influential in people with large audiences right now. If you are a legacy media brand and you want to tap into a new audience, why not go after one of the biggest sub stacks on the platform? Why not go after Barry Weiss, who clearly has that digital native audience?

10:04It does show how the balance of power has shifted a little bit from legacy media like CBS News, which, you know, our parents' generation can't imagine news without to maybe more our generation or Gen Z that would maybe get their news more from podcasts or, say, a sub stack like Barry Weiss's, which is reportedly pulling in$15 million in revenue just four years into its existence. CBS News has really two shows that it hangs its hat on. One is obviously 60 Minutes. 60 Minutes just had its season premiere last week. That drew 10 million viewers. It is the most watched non-sports show of that week and really across television.

10:40Then also has CBS Sunday Morning, which is the most watched weekend morning program that averages close to 5 million viewers weekly. But other than those two programs, it has declining ratings and revenue. And therefore, David Ellison is coming in and shaking up so many things across CBS and also its movie division and also Paramount Plus, part of this big constellation of this huge media company. Thinks there's good reason to change things up at CBS News. And obviously, there's, you know, that huge political bullying factor from Trump as well. Welcome to Winners of the Weekend, the segment where Toby and I picked two things that scored all the free samples at the farmer's market.

11:17I won the pre-show pumpkin carving contest, so I get to go first. And my winner is AI Slop. Sora, a new AI video generation app from OpenAI, has reached number one on the App Store, toppling its own ChatGPT chatbot and Google's Gemini. The reaction has been intense, and Sora has been called a lot of different things, from a serious TikTok competitor to the future of social media to the end of our understanding of reality. It lets users create short videos by typing in a prompt, and the AI will spit out a hyper-realistic clip, which you can share and consume on a TikTok-like feed. You can even include yourself in these videos by scanning your face to appear as an avatar.

11:56Many have criticized Sora as exacerbating the problem of AI slop or mindless AI-generated media that hijacks people's brains but doesn't serve any purpose or contribute to the world. The Financial Times compared it to ultra-processed food, dopamine-dense with at best negligible information value, and at worst, corrosively negative. Still, it seems that, at least for now, enough people want this. Sora is currently invite-only but still managed to hit number one on the App Store. And invite codes have been selling on eBay for up to$45. Plus, OpenAI isn't the only one leaning into AI social media.

12:30meta just released a new feature to its ai app called vibes that allows people to create and share ai videos toby so now that soar has been out in the world for a few days what are people actually doing with it well i haven't been able to personally see because i'm still waiting for an invite code myself but they clearly have broken containment these videos are being posted on other social media platforms and going viral there and they are some crazy videos i mean one super viral example so far has been AI SpongeBob in a Breaking Bad, you know, cooking blue barnacles under the sea with Patrick.

13:03I'll let you fill in the gaps there. Stephen Hawking ones have been going viral as well, either on a racetrack in his wheelchair or doing flips on a half pipe. And then one of the very first viral ones too was Sam Altman, the founder of OpenAI, stealing GPUs from Target on a CCTV camera that caused everyone to kind of say, hmm, generating these hyper realistic videos of notable people stealing stuff. What could possibly go wrong here? So I do think one, there's that aspect of it is these are deep fake videos of real people doing things that look very realistic. But then there's also the copyright issue when you go back to the SpongeBob example as well, that they're going to have to address.

13:43Right. So let's talk about the copyright issue. The first thing that people noticed when one of the first things that people noticed when Sora came out was this is just a huge litigation waiting to happen because it was allowing users to create a bunch of copyrighted IP. You mentioned SpongeBob, and they were also creating Disney characters. Disney is very quick to sue over it to protect its copyright. And initially, OpenAI had this policy that was you need to opt out. Rights holders need to opt out. So if you see your character, if you're Paramount and you see a bunch of Nickelodeon characters on there, you actually need to file a complaint with OpenAI to get that taken down.

14:18So it was a ask forgiveness, not permission situation. In recent days, OpenAI, Sam Allman has come out saying, yeah, you know, actually we don't have enough lawyers for all the copyright lawsuits that we're about to get. So we're changing it to be a little more protective of rights holders. But, you know, still it looks like, you know, there's going to be so many lawsuits because it still seems like despite the changes that OpenAI is making, there's a bunch of copyrighted IP flowing around this platform. And then finally, just the economics of Sora don't necessarily make a lot of sense yet because these videos take a ton of compute to produce and the vast majority of them are not going to be viral and they're certainly not going to be revenue producing.

14:57So what are you doing? You're just sinking a black hole of compute into this app right now that has no real monetization strategy going forward. Like is how are you going to monetize AI slop going forward? So very interesting. Maybe you have to also start sharing revenue with rights holders, which would dent profitability. even more. So just the GPU costs in general, not even to mention the litigation costs that are likely coming down the pipeline. Maybe Sora was a very expensive example of, you know, move fast and break things that Silicon Valley likes to preach. But maybe the break things, a portion of this is going to be a lot worse than Altman actually calculated.

15:31And then there are existential questions about what this means about the future of social media, because this is really the first social media app that explicitly is geared toward only exclusively fake AI videos. None of these are real. And we've seen a shift in social media over recent years from sharing posts about your life and hanging out with friends to something that's more of like a TikTok, Instagram reels, now algorithmic feed, watching videos of people you don't really know. And maybe this is the next logical evolution of that. You're not just watching videos of people created by people you don't even know, but now it's completely fake videos.

16:09And the Financial Times kind of went viral a few days ago when it pointed out, it looked at some research and found that time spent on social media peaked in 2022. Across the developed world, adults are spending an average of two hours and 20 minutes per day on social platforms as of 2024, which is down by almost 10 % since 2022. We'll see what Sora means for the future of social media that was already in decline. Up next, we're going to go to my winner of the weekend. toby and i don't work in accounting so we're shielded from handling company ledgers bank transactions and financial reports but for the pros who do deal with all that fivespan can help make your job easier it embeds your bank right into your accounting software so silo data is centralized and you can get more done and gain better visibility into daily cash positions imagine payments and remittances being sent directly from your accounting software Reconciliations that are completed in minutes, not hours And financial reports that are consistently accurate and on time You can do more than imagine all that Head to FISPAN.com to transform how your firm manages money That's FISPAN.com Toby, the modern workplace is a digital mess Is my laptop dusty again?

17:27Yes, but that's not what I'm talking about Teams are scattered across locations using a chaotic mix of apps and devices It's a logistical nightmare that creates security risks and eats up valuable time. Well, it's a good thing there's JumpCloud and Aaron Akan for that matter. JumpCloud is a unified IT management platform that securely manages all employee identities and devices from a single place, cutting through the chaos. By consolidating IT tools, JumpCloud helps businesses save money and avoid the complexity of managing multiple systems. Its AI-powered platform helps you protect, manage, and monitor your entire workforce so you can stay one step ahead.

18:04This isn't just about making IT easier. It's about giving your business a strategic advantage. JumpCloud frees you up to be more productive, flexible, and innovative, allowing you to work smarter and grow faster. Toby, you should really keep some screen wipes around. As for the rest of us, clean up the digital mess. Learn more at jumpcloud.com slash brew. That's jumpcloud.com slash brew. My winner of the weekend is smaller portion sizes because restaurants from Olive Garden to Cheesecake Factory are serving up entrees that aren't leaving leftovers. Olive Garden is testing out a new section of lighter portions at about half its restaurants where they offer the exact same food but in smaller sizes and at reduced prices.

18:45Customers loved it with an internal affordability metric jumping 15 % as diners felt like they were getting better bang for their breadstick. It's a sentiment that other diners are sharing too with the National Restaurant Association's annual survey finding that 74 % of customers say they want smaller portions. Part of the shift comes from a change in eating habits. 64 % of customers say that they are replacing three traditional meals with more snacks during the day. And a cheesy eggplant parmesan doesn't necessarily feel like a snack. Restaurants are adapting to the new normal. The Cheesecake Factory launched a Bites menu, which serves small portions under$10 to try and appeal to budget-sensitive diners who still want to go out to eat.

19:26P.F. Chang's also overhauled its menu to offer entrees in two portion sizes, traditional, a.k.a. really big, and medium. Neil, it's part of this larger shift in the American eater post-COVID, where more people are grazing throughout the day, eating solo, and generally looking to avoid these massive sit-down feasts. We've become a nation of birds. And there's this bar that me and you used to go to, Clinton Hall. I don't know if you noticed, in April, they introduced something called a teeny weeny mini meal. And for$8, you get a bite-sized burger and fries paired with a miniature beer, margarita, or wine.

20:01And something you didn't necessarily mention is perhaps why these restaurants are offering lighter portions. And that is GLP-1s. The guy who owns Clinton Hall said that everyone he knew was on GLP-1s like Ozempic or Wiggovy. And so that is another reason why he said, well, we need just to make our portion smaller because my friends who are on this aren't eating as much. And 8 to 10 percent of Americans are now taking GLP-1s, according to a survey from PricewaterhouseCoopers back in October 2024. So there's a lot of different trends influencing restaurant menus here. And it just seems so distinctly un-American to order something a little bit smaller at places like Olive Garden and Cheesecake Factory, which are just known for their size and scale of their breadth of menu as well as their portions.

20:45But it looks like this is just a sign of the times. Yeah, Darden's CEO, which owns Olive Garden, said that maybe our customers evolved that you don't need to have uneaten food on their plate to feel like you've gotten good value. It basically is when you have a clean plate, you actually do feel like you paid what you were hungry for. Not necessarily, you don't need an eggplant parmesan that is sprawling and covering the entire plate right now. So maybe it's less about abundance, which again, it feels almost anti-American to say it's more about fill and the satisfaction. If you feel like you've eaten your fill, then that is something that you will leave happy from the restaurant.

21:18Also, these restaurants, whether they like it or not, are competing on value now with fast food chains, with quick serve restaurants like Chipotle, etc. And so even if you have much larger portion sizes, really what customers want is value. And so when you're competing with McDonald's, obviously a$10 meal makes more sense than a$25 meal. So fascinating how this has just become the de facto norm. Like every big sit-down chain that you used to go to with just overwhelming portion sizes, now you can also find a subsection of the menu saying like, hey, if you want something a little lighter, this is the section for you.

21:52They have a word for that, and that is called the kid's menu. And there's a survey by Lightspeed Commerce published back in August that found that 44 % of U.S. adults are ordering from kids' menus, citing lower prices and portions that are more satisfactory to what they want. But here's my question. Should adults be able to order from the kids' menu? No, probably not. I mean, I think that the restaurants that figured this out, though, and called it the biked portion of the menu, don't call it the kids' menu. The final thing that we didn't necessarily touch on is people are eating alone a lot more.

22:21This has been a trend that we have spoken about on this show in the past. And so when you sit down alone at a restaurant, you don't want a family-style meal just for yourself. You want, like, the smaller portion sizes. So just fascinating how all these different trends feed into this one mega trend of portions getting a little bit smaller. I think a lot of people would say this is probably progress for Americans to not just stuff ourselves with food all the time and leave a lot of waste. Okay, it's Monday, so here's what you need to know to stay ahead in the week ahead. Hope your bench is informed because the new Supreme Court term starts today, as it always does on the first Monday in October.

22:56Over the next few months, the nine justices will consider several disputes centered on President Trump's power over the economy. Circle your calendar for November 5th, when SCOTUS will hear a case on the legality of reciprocal tariffs, and January, when they'll weigh if Trump can fire Fed Governor Lisa Cook. Yeah, a big showdown here. A lot of Trump's big ticket, you know, constitutional issues are up on the docket this time. So some of these policy initiatives are just going to come to a head. We're going to see if, you know, the tariffs can stay. We're going to see if Lisa Cook is on her way out or not.

23:26So it seems like a lot of the bedrock of Trump's economic nationalism is up for debate right now. We'll see how it all shakes out. Tomorrow is the two year anniversary of October 7th, and the Israel Hamas war is closer to ending than at any point since that date. Today, the two sides will begin mediated negotiations in Egypt after Israel accepted and Hamas partially endorsed President Trump's 20-point plan to wrap up the war, which includes a swap of all of the Israeli hostages in Gaza for Palestinian prisoners held by Israel. U.S. Special Envoy Steve Wyckoff and Trump's son-in-law Jared Kushner are traveling to Egypt to take part in the talks.

24:03As for economic data releases, there won't be much because the government is still shut down and all reports are on hold. Instead, investors will try to hunt for clues about the economy in the Fed Minutes released on Wednesday, the University of Michigan Consumer Survey on Friday, and a fresh earnings season. Pepsi, Delta, and Levi's are the big names to report this week, while the big banks get going the week after. I think it's funny. We're fighting over scraps here. We're looking at Fed Minutes and University of Michigan Consumer Sentiment Surveys and Levi's to try to piece together a piecemeal approach to the Jobs Report, the Thinking man jobs report, if you will, Levi's, Pepsi's and Fed minutes over in sports.