Streaming Saves Disney & Video Games Keep Crushing It

0:26Race the rudders! Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. On today's pod, a massive airship from Google's co-founder wants to make blimps great again. But is it too soon after the Hindenburg? Then WeWork's bankruptcy is hitting the commercial real estate market harder than reality hits an English major after college. It's Thursday, November 9th. Let's ride.

0:56What do you have against English majors? I am an English major, so I can say that, Neil. And I'm a history major, and we did okay. Okay, big news. Last night, the Hollywood Actors Union said it agreed to a tentative agreement with major studios that will end the longest actor strike in history, lasting 118 days. We don't know all the details yet, but we do know that the deal offers the first-ever protections for actors against artificial intelligence and a historic pay increase, in which most minimums will rise 7%. What does this mean for you? The new season of your favorite TV show will finally return.

1:31Hollywood production had frozen over during the writers and actors strike, but with both walkouts no over, showbiz is finally getting back to work. Toby, what are you most excited about coming back? I am most excited for celebrity late night appearances on talk shows to promote their movies to come back. My entertainment diet just hasn't been complete without it. I mean, no celebrity lip sync from the latest Marvel movie cast. No Wheel of Musical impressions to promote the new Hunger Games movies. How did we survive? Thank goodness Hollywood is back. These were some dark times. I'm most excited for Severance Season 2.

2:06That is an exceptional show, and I'm sure we'll get a lot of responses from people being like, what's that show? Or I love it. It's a great show. You have great taste, Neil. Before we dive into the news, we have a quick word from our friends at Brex. Neil, on three, I want us to both say our favorite thing about Brex at the same time. I'm ready. One, two, three. Brex AI. Wow, we are so in sync. Just like businesses that use Brex. Brex AI helps reduce expense busy work by 10x while increasing compliance and accuracy with smart automations for any kind of spend. Man, I need Brex AI to help with every part of my life, not just managing corporate spend.

2:45If you are interested in trying out Brex, head to brex.com today. Tonight on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon, series premiere tonight on NBC. Let's dive into the news. Neil, on Tuesday, we talked about WeWork filing for bankruptcy and the ugly state of its balance sheet.

3:27Now we're getting our first look at how it's trying to wriggle out from under some of those ill-time leases it signed. Yesterday in bankruptcy court, it started asking its landlords to make some concessions on certain leases in order to try to reduce the amount of debt it owes. The idea is to strategically shrink the company's footprint by getting out of at least 69 of the worst leases to start while keeping the rest of its 600 plus locations open and operational. Unfortunately, it could not come at a worse time for landlords. 20 % of U.S. offices already sit vacant and WeWork's financial woes are only going to make things worse.

4:03New York City, San Francisco, and Boston are likely to be hit the hardest by the bankruptcy, with WeWork planning to close 35 % of its footprint in those three cities, sending 1.9 million square feet of office space back onto an already oversaturated market. It is brutal out here for the commercial real estate industry. Rising interest rates have made financing projects more expensive, while around$270 billion in loans held by banks will come due in 2023, according to a commercial real estate data provider. Throw in WeWork trying to pull out of these leases. And you have all the makings of a messy few months ahead.

4:39Look, we've been talking about WeWork for a while. It seems like this story was coming to an end when it filed for bankruptcy. But this is just beginning because it has 4.2 million square feet of office space in New York City alone. And now that it filed for bankruptcy, I didn't know this, but researching this story, that gives you a ton of leverage with landlords just to say, well, I'm out. So landlords are saying, wait a second, we need you to fill this space. So why don't we come to terms and renegotiate these leases, which it's been doing for the past few years. But bankruptcy will certainly accelerate these renegotiations or it's just going to leave altogether and only increase the vacancy problem that landlords are already facing.

5:17They have hundreds of billions of dollars in loans coming due next year. Many of them could default on them. This is a another shock to a already beaten down industry. Yeah. Look at what could happen to this industry. I mean, if WeWork leaves, that will increase vacancies, which means it might lower some of the cash flow for some of these real estate operators, which might make making payments on debt much, much more difficult. In a worst-case scenario, it causes this cascade of defaults on all those loans, which then could affect the banking system. You can see how this can quickly spiral out of control just from WeWork, because I don't think people realize just how big WeWork's footprint was, especially in New York City.

5:57At one point, it was the largest commercial leaser of office space in the city. And in Boston and in many other cities. It is not a small company. Even still to this day, it still has this massive footprint. It's not going to affect all buildings the same. When I worked in – I did some work in commercial real estate at one point in my life before I was a podcast host or a newsletter writer. And it's subdivided into different classes. There are different categorizations. There's class A, which is, think, like Hudson Yards. Super nice. Class B, which is older, Class C, which is even worse than that and lower quality.

6:30Class B and C were already doing really badly. It was hard to find tenants for them because, you know, if a company wanted to lease office space at this point, post-COVID, they wanted to be the nicest thing possible. So WeWork had a lot of Class B office space and some Class C as well, not as much Class A. So landlords that were already trying to find tenants for class B and C, which are average like 96 years old, these buildings are 96 years old and older. The fact that WeWork was overexposed to those and those are going to become more vacant makes those particular properties even more toxic than they were.

7:07Absolutely. The funniest thing of this, the funniest part of this whole thing to me, Neil, is now is Loki the perfect time for WeWork to be founded? I mean, there's tons of cheap and vacant office space right now. remote and hybrid work is more popular than ever and people are coming to terms with the fact that they don't really want to be stuck in their apartments all day so they're looking for a place to work i am legit not kidding adam newman has a chance to do the funniest thing ever he still has he got that golden parachute when he left we work's enterprise value is only like 44 million dollars right now between 40 and 50 million dollars their market cap what if he just bought we work again there's no way the board would approve it i know but soft bank like owns most of this company now and they they got burned by him for 15 billion dollars a man can dream though how toby wants that for content please please adam okay moving on there was a flood of earnings reports this week particularly yesterday and we got some juicy updates from companies that we think you'll be interested to learn about we grouped them into two broad categories entertainment and video games which i guess is not so separate but we're going to start off with some entertainment news, starting with Disney.

8:14The company just turned 100 years old this year, and it has been showing its age with declines in its legacy TV business, box office struggles, and mega losses in its streaming push. But yesterday's results show that things might be headed in the right direction. Disney's streaming service unit only lost$387 million, which is lower than its 1.5 billion last Q3. Plus, it added about 5 million subscribers. The division that includes its theme parks and cruise ships continue to rake in the profits, posting a 31 percent rise in operating income. And I got to say, after months and months of people talking about Disney in crisis, does not appear to be in total crisis.

8:53CEO Bob Iger is cutting seven point five billion in costs across the company and his streaming service could end up being profitable next year. So it's lasted 100 years. I think it's going to last many more. It's got too many good things going for it. Yeah, I think the Disney Plus number was really good to see. It added 7 million new core Disney Plus subscribers, which, again, I feel like Disney is kind of coming and going with our – it ebbs and flows with how Disney Plus is doing. They're also looking to combine Disney Plus and Hulu into a single experience for subscribers. So, I mean, it's a little confusing right now because they have so many different properties.

9:29But if they can kind of consolidate everything, get it all under the same umbrella, maybe go like the HBO, which we'll talk about the Max route. I do see a good future ahead for Disney, especially as they're entering like this. I don't want to steal Zuck's terminology, but year of efficiency, the cost cutting measures. Did you know Hulu is not available outside of the U.S.? No, I did not. I thought you were going to say, do you know Hulu has live sports? That's how conditioned that is. Hulu is not available outside the U.S., and they think that's a way because Disney hasn't owned all of Hulu. It still had to buy out Comcast's stake, 33 % stake in it, which it's doing now.

10:04And the going theory in Hollywood is that it didn't expand it globally because it would inflate the valuation of Hulu, which would make it even more expensive to buy out Comcast's stake. So there's room to run that. So it's buying at the stake now, and then maybe our listeners around the world will get to experience Hulu, whatever that means. Okay, let's head to another entertainment giant, Warner Brothers Discovery, which owns properties like CNN, HBO, and Warner Brothers Movie Studio. This is kind of the opposite story of Disney because even though it scored$1.5 billion from the Barbie movie, shares fell 19 % for their biggest daily drop in more than two years.

10:40The problem? Television. television tv ad revenue was down 12 and as you and i and everyone listening knows this money isn't going to start magically appearing since more and more people are cutting the cord of course wonder brothers has streaming to the newly renamed max but that's losing money during what its cfo called an extraordinary light content slate this quarter in other words there was a writers and actors strike so at least max will be getting more new shows heading into the new year as those strikes came to an end. But as its CEO David Zaslav said, this industry is going through a generational disruption and it's hard to go on offense.

11:15Yeah, it feels like Warner Bros is Disney without any of the bright spots. They don't have any of the parks revenue to offset the losses because Disney and Warner Bros are facing like this very soft ad market and this generational shift in how people are consuming media. But yeah, Warner Bros doesn't have this awesome division to kind of offset everything. I was just thinking, where would they be without the Barbie movie, though it'd be really really ugly without barbie so yeah give greta gerwig a little pound back do you know they don't have theme parks but you know what they do have video games they have a pretty good video game studio and hogwarts legacy was a massive blockbuster for them and so i think they're going to start leaning into more video games as we'll talk about it we'll talk about is uh is a big money making opportunity okay for our final entertainment company update we've got to talk about the Sphere.

12:03Las Vegas's buzziest attraction that opened this fall actually lost money last quarter, nearly$100 million. And that's despite debuting with a sold out run of shows with U2. But the biggest news around the Sphere comes around the scandalous exit of its CFO, Gautam Ranji, who worked for the Sphere for 11 months, quit his job last week. And here's why, according to the New York Post, in a meeting to prep for the earnings report, Sphere and MSG owner James Dolan went on one of his quintessential tirades, yelling at screaming at the CFO, who in response left the room calmly and gave his notice. God, I want to quit a job like that one of these days.

12:43One of these days, Neil, we're going to be having a particularly tense pre-show meeting. I'm just going to calmly walk out and say I am done. But yeah, I'm not worried about this fear, honestly, because I do think things were still just ramping up. The advertising business was just ramping up. The shows weren't a full, full packed slate as of now. I've been seeing great advertising plays already on the Sphere. The Xbox bought it out, and they turned the whole thing into the Xbox logo. So I do think it eventually will become a major moneymaker. It's just too conspicuous not to. And I think we have the F1 race in Vegas coming up, which the Sphere is going to be everywhere.

13:16Center of attention. Prepare for that. It's going to be a massive spectacle. Okay, our next little earnings roundup takes us to the video game sector, where it's pretty much been nothing but good news recently. up first i want to talk about take two the company behind rockstar games who makes the massively popular grand theft auto franchise its stock jumped as high as nine percent yesterday as the company teased that they would release a trailer for grand theft auto 6 yes just a teaser for a trailer was enough to send shares flying that's because the new gta game is a really really big deal in the gaming community mainly because the last edition of the game came out almost over a decade ago in 2013.

13:54Just to give you a sense of how excited people are for this game, Rockstar's GTA 6 trailer announcement post is currently the most liked gaming tweet of all time. The second most is Rockstar's statement after someone leaked part of the game, and the third most is a tweet from them confirming that GTA 6 was in development. It beat earnings expectations on revenue yesterday, but the focus is squarely on the future. Shares are up 39 % year-to-date, purely based on the hype for this one GTA 6 game. It's crazy. I didn't realize that the last one came out 10 years ago. It sold a billion dollars worth in three days.

14:27So you can imagine why investors are super excited about this next edition, which is going to take place apparently in fictional Miami and feature the first female protagonist of the series. I've never played it. My mom always says, stay away from Grand Theft Auto. But I mean, mom, I'm a big boy now. Maybe I'll try out Grand Theft Auto VI. Speaking of bestselling game franchises, Nintendo reported earnings yesterday. and the big news is that it's developing a live action film of its game franchise, The Legend of Zelda. That caused shares to rise as much as 7 % on the Tokyo Stock Exchange, their biggest intraday gain in almost three years.

15:04And all that investor enthusiasm comes from the potential success of the movie. Remember, the Super Mario Bros. movie pulled in$1.4 billion at the global box office. And while Zelda probably doesn't pack the same punch as Mario and Luigi, it's not far behind in terms of popularity. Neil, these movie remakes of games have unlocked a whole new revenue stream for these gaming companies. Yeah, and they've extended the life of consoles because the Switch has been going on for six years now and the release of Zelda has only extended that even more, even though Zelda, the first one, came out 40 years ago.

15:36So just like GTA, it's very... I meant to say Mario extended the life of Switch. I'm sorry. But just like we're seeing with GTA, that these franchises that have been going on for decades continue to be beloved by consumers. Finally, let's talk about Roblox. Roblox is back, baby. Turns out when all the youths are home from school for summer break, they play a lot more video games. Roblox's average daily active users searched 20 % to 70 million in the past quarter, which also helped drive a 20 % jump in hours spent on the platform. And when the kids are online, they are buying Robux. Purchases of the in-game virtual currency came in at$839 million smashing expectations.

16:21Neil, the secret to success for a$24 billion company, just be bored at home over a break. Yeah, so just taking all of these together, all these video game reports, Nintendo did well, Roblox did well, Take-Two is doing well. The post-pandemic slump for video games has not really extended. People are still playing video games. This is not a boom and a bust thing. This is a boom during COVID, maybe a little trough right after. And the video game industry is still doing very fine. People are still playing video games. Okay, Neil, before the youths make fun of us for how we're talking about their favorite games, we're going to take a quick break.

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17:40From afternoon coffee runs to stocking office supplies and even team dinners, you can earn miles on all your business expenses. Plus, you can earn 125 ,000 bonus miles for a limited time through October 29th. The Delta SkyMiles Reserve Business Card. If you travel, you know. Minimum spending requirements and terms apply. Offer ends October 29th, 2025. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will make your head spin faster than Jupiter, which is the planet that spins the fastest. Did you know that? Thank you for that. OK, for my first number, let's talk about oil, because as hairy as times are around the world, you wouldn't know it if you went to the gas station.

18:19Oil prices fell to their lowest level since mid-July yesterday, and they're now below their price before the Israel-Hamas war began. It's an indication that contrary to fears, traders aren't expecting the conflict to spill over to other areas in the oil-rich region and disrupt shipments. And then there's that's the supply side on the demand side. New data from Europe and China signaled their economies were slowing. So here we are with falling prices. That's, of course, great for drivers in the U.S. Thousands of gas stations are selling regular below$3 a gallon, and there are some below$2. And if you're looking for some of the cheapest gas in the country, I will direct you to an exit off of I-25 in northern Colorado.

18:58There is a price war going on between the quick trip there, the Circle K, and the Phillips 66 at a single intersection. And someone spotted 99-cent gas at the Phillips station on Sunday. So I think it's risen to the low two since then. But that town, Firestone, Colorado, might have the cheapest gas in the country. Would you wait in line? Because obviously a line developed. You wouldn't do it? Absolutely. No, there were hundreds of cars in line once this picture went around. I would absolutely not do it. I feel like if I had a big, like, Ram truck or something, I would. Because you're saving probably$100 there.

19:29It totally depends. Yeah, on your car. So, all right. I really don't like waiting in line. And I'll always like pay maybe three to four dollars or something just to not, you know, to not wait in the line because I do value my time. Time is money. OK, for my second number, let's talk about WhatsApp. Many Americans probably know WhatsApp as the messaging service they download when traveling abroad or the one that's popular from their international friends. But it is growing like a weed in the US. A New York Times report revealed that more than half of Americans aged 18 to 35 who own a cell phone have installed WhatsApp, making one of Meta's fastest growing services in its most mature market.

20:06And Mark Zuckerberg, who bought WhatsApp for$19 billion in 2014, is starting to think about ways to make money from it. In an interview, he said that if you're envisioning what will be the private social platform of the future, starting from scratch, he thinks it would basically look like WhatsApp. So safe to say he's bullish. And honestly, me too. I think Meta's sitting on a gold mine. Yeah, they have this little story, Snapchat-esque story product within WhatsApp. And Mark Zuckerberg said that it's become the world's most used stories product. So you think about Instagram stories, you think about, I don't know if anyone's using Snapchat stories anymore, but it turns out this WhatsApp story feature is just so used.

20:45I just recently redownloaded it. I'm not a WhatsApp guy, but my soccer team I play on, mostly international guys, they're like, you gotta get on WhatsApp. So I'm one of the numbers. I've moved all of my group chats to WhatsApp, mainly because I'm the only Android in the bunch. They're so frustrated that they can't react and send pictures. But yeah, it's so huge globally. I was talking to my friend in Tanzania yesterday. We're talking about this article actually on WhatsApp, of course. And he was like, this is the most important communications platform for business after email. And then another crazy stat from the article was that in Brazil, 30 to 40 percent of new leads for Nissan, the car company, come from WhatsApp.

21:21It is big for businesses. If you give businesses the tools to use this, I think, I don't know. It's getting even bigger. Yeah, like for all the talk about metaverse and AI, I think meta's core social media product like WhatsApp and Messenger are going to really drive revenues going forward. So, man, WhatsApp. I love it. OK, for my final number, some good news for people who like to listen to books rather than read them. Spotify said it would be allowing its premium members in the U.S. to access more than 200 ,000 audiobooks in an expansion of a program it began earlier this year in the U.K. and Australia.

21:53So as part of your Spotify subscription, you'll get 15 hours of monthly listening, which is plenty for a couple of Sally Rooney novels, but not long enough to find out what happens to Boromir at the end of the Fellowship of the Ring. So I won't give that away. Why is Spotify rolling this out? Because audiobooks are huge among the youths. In an internal survey, 72 % of 18 to 34-year-olds listen to audiobooks. And it's part of CEO Daniel X push to make Spotify your home for all things audio, not just music. Yeah, this to me is finally the fruition of his vision because audiobooks was the one big thing they were lacking.

22:27Not great for Audible, though, because why would you ever go to a separate app? A lot of the kids already listen to Spotify primarily. And if it is included under your base subscription, then now it finally is becoming that home for all things audio that it's always promised. Yeah, I think the 15-hour time limit for a month is not a lot. Yeah. I don't know. Audiobooks are pretty long. I see people reaching the max there and maybe going with Audible for a more comprehensive audiobook experience. That's true. All right, Neil. Thank you for those numbers, as always. But we have to move on. Our next story is perfect for me because it involves a lot of hot air.

23:02Yesterday, the little-known airship company backed by Google founder Sergey Brin unveiled its first craft for a test flight, and it is massive. When I say airship, I'm talking bigger than a blimp, bigger than an airplane. The helium and electric motor powered Pathfinder one that hovered off the ground yesterday is actually longer than three Boeing 737s. It's made by the company called LTA, which stands for lighter than air, whose eventual goal is to mass produce these gigantic ships. Bryn, who's worth over$100 billion, is funding the company mostly because he's just really rich and loves airships.

23:38But also he and CEO Alan Weston see them ushering in a new era in flight. Airships are better for the environment, provide a much more pleasant riding experience for passengers, and could also eventually carry 200 tons of cargo, which is roughly 10 times as much as a Boeing 737. Neil, there are so many interesting angles to this story, from the eventual use cases to the brand new manufacturing process LTA has developed. Where do you want to head first? This is what happens when you have a midlife crisis and you're worth$100 billion. I'm sorry. You don't like it? You don't think I'm all for innovation.

24:14I'm a huge aviation geek. Like I love all things airplanes, but there is just not a market for this. That is there's not an organic market. This is a pet project by Bryn. He loves airships. I don't think there's any particular demand for this. We do have a lot of other options going on. There's, you know, electric electric drones being developed and different types of helicopters. So I don't know exactly where this massive airship fits into the overall transportation, aerial transportation infrastructure, besides being like a novelty thing for luxury tourists or maybe some cargo, but I don't know, I'm pretty bearish.

24:54200 tons though is a very big cargo load. So I do think there's certainly a cargo angle. There's also this humanitarian aid angle because these airships don't need any infrastructure. They don't need a landing runway to take off or land. So you can kind of put them down anywhere around the world. So I see that angle as well. And yeah, I mean, this is a very pleasant form. I don't think you can overlook the fact that you can stick your head out the window while you're flying. And it's kind of this ethereal, magical experience. So I don't know. I'd love for it to work out. I just don't think it is.