Breaking down the Disney-Charter deal
Hours before “Monday Night Football” was set to air, Disney settled its fight with Charter Communications that would have kept nearly 15 million cable subscribers from seeing the day’s big N.F.L. game (and the injury-shortened debut of Aaron Rodgers as the New York Jets quarterback) live at home.
Analysts and media watchers had wondered how much the fight, in which channels including ESPN were unavailable on the nation’s second-biggest cable provider for more than a week, would weaken Disney. The early verdict: Disney gave up less than expected — but made concessions that could eventually remake the pay-TV business.
Disney will gain more reach for its streaming services, which the company views as a vital part of its future. Charter agreed to offer the ad-supported version of its Disney+ streaming platform to some of its subscribers, paying a wholesale rate for the service instead of getting it for free as the cable provider had demanded. That could help boost subscriber numbers for Disney+, which has lost millions of customers in recent months.
Charter also agreed to provide ESPN+ (largely a companion to its cable-channel sibling) as part of its sports-focused bundle. More important, when Disney finally introduces a direct-to-consumer version of ESPN that includes streaming of big sports events, the broadband provider can also offer that to its consumers.
Charter claimed some victories, too. It will pay more for Disney’s top-tier channels like ESPN, but it will cut its costs by dropping a bunch of others, including Disney Junior and the women-focused Freeform. The analyst Michael Nathanson of MoffettNathanson estimated that the move would cost Disney some $300 million a year in lost fees.
Disney executives conceded that they lost ground, but achieved something else: “We protected our primary entertainment channels,” Dana Walden, the co-chair of the company’s entertainment division, told The Hollywood Reporter.
The battle may shape other fights over content. Charter had threatened to drop Disney channels altogether if it didn’t get access to Disney’s streaming services, a scorched-earth move that would have deprived the entertainment company of billions in carriage fees. Charter is now getting them — not for free, but still at a reduced rate.
Analysts credited Disney with dodging a worst-case scenario. But while Disney executives argued that the settlement wouldn’t set a precedent for future negotiations with cable companies, media watchers say that’s still what happened.
Expect more battles soon. Charter is set to hold talks with more content providers over the next 18 months.
HERE’S WHAT’S HAPPENING
The White House says more companies pledge to make A.I. safe. Eight businesses, including Nvidia, Palantir and Salesforce, said they would join Google and Microsoft in voluntarily abiding by standards for safety, security and trust. The news comes as prominent tech executives meet with lawmakers in Washington this week to discuss the fast-evolving technology.
The C.D.C. will weigh in on new Covid boosters. The Centers for Disease Control and Prevention is set to confer with advisers on who should receive the new shots from Pfizer-BioNTech and Moderna, after the F.D.A. cleared the vaccines on Monday. The government is expected to roll out a new vaccine campaign, urging Americans to receive the updated doses like they do with annual flu shots.
The order book for Arm’s I.P.O. will reportedly close early. Underwriters for the chip designer’s stock sale may stop accepting bids on Tuesday instead of Wednesday as planned amid strong demand, according to The Financial Times. That would be good news for the Japanese tech giant SoftBank, which owns Arm — and which desperately needs a win after years of investing flubs.
The U.A.W. is said to lower its demands for wage increases. In contract negotiations with America’s Big Three carmakers, the autoworkers union is now seeking a raise in the mid-30 percent range, instead of 40 percent, according to The Wall Street Journal. The concession comes ahead of a Thursday evening deadline for the talks; the U.A.W. has threatened to strike if provisional deals aren’t reached by then.
Antitrust armies prepare to battle over Google
The biggest antitrust trial of a generation — the Justice Department taking on Google over its dominance in search — is set to begin Tuesday in Washington. On one side is the government, animated by the most aggressive and progressive views on competition law in decades. On the other is Google, which prosecutors accuse of effectively being the new Microsoft, the subject of the last big antitrust fight.
Many of the lawyers involved have been battling for years. The government team is overseen by Jonathan Kanter, the Justice Department’s antitrust chief who is cracking down on tech titans. Before his appointment two years ago, he represented Microsoft and Yelp in their own legal fights against Google. (In 2021, Google sought to force Kanter’s recusal from an investigation into the company’s dominance of advertising technology.) Four prosecutors working on the case also worked on the Microsoft antitrust fight in the 1990s, including Ken Dintzer, who is leading the trial for the government.
Meanwhile, Google’s top lawyer, Kent Walker, was deputy general counsel at Netscape — which had accused Microsoft of improperly bundling a rival web browser with Windows.
The case carries echoes of the Microsoft fight. The Justice Department is explicitly comparing Google’s search approach to Microsoft’s actions during the so-called browser wars. In today’s case, prosecutors say Google paid partners like Apple billions of dollars to make its search engine the default option on their web browsers, unfairly diminishing the reach of rivals … like Microsoft’s Bing.
Google is playing down the Microsoft comparisons. Walker says that his company is different in a key respect: Its dominance is because it’s popular with users, rather than being foisted upon them by default. He adds that users are able switch to competitors’ offerings.
Will the case end up like the Microsoft antitrust fight? In that instance, the Justice Department initially won, but an appellate court overturned some aspects of that decision. The two sides eventually settled, with the government agreeing not to pursue a breakup of the company in exchange for the tech giant agreeing to change some of its business practices.
Experts say that even if Kanter and his team win, it’s unlikely that Google would be forced to break up. The key question is what limits might be placed on the tech giant — assuming that it also loses what will assuredly be an appeal.
A big day for Apple
Apple is expected to reveal the 17th generation of its iPhone on Tuesday, as it looks for another hit to lift a stock that has fallen more than 8 percent since late July. But concerns around the sputtering smartphone market and the company’s hurdles in China are dampening some of the buzz around the iPhone 15’s debut.
Here are three things to watch for at Tuesday’s event:
The cost: Analysts say Apple will probably price the iPhone 15 at least $100 above the iPhone 14. The iPhone has fared better than its lower-priced competitors, even as the economy flails. But cracks are appearing in its premium-priced strategy as sales have ticked lower for three straight quarters.
Will the phone’s new features be enough to lure customers? Richard Kramer, a partner at Arete Research, told The Times last month that the iPhone had entered a phase where improvements were becoming “incrementally incremental.” (That seems to be the case with the latest model, the iPhone rumor mill has reported.) To wit: Customers are now upgrading their handsets less frequently.
A new charger: In order to comply with new European regulations, Apple is expected to replace its proprietary Lightning charging port with a standard USB-C charging port (the same connector found on Android phones and other non-Apple consumer electronic devices), starting with the iPhone 15.
— The economic cost last year of parents leaving New York City or cutting work hours because of child care, according to the city’s Economic Development Corporation.
What to watch in tomorrow’s C.P.I. release
After a messy August, stocks have rebounded in recent days on renewed hopes that the Fed is done raising interest rates. But a new batch of inflation data to be released this week — the Consumer Price Index comes out tomorrow, followed by the Producer Price Index on Thursday — is expected to test that conviction. And consumers are still feeling squeezed.
The C.P.I. figure is forecast to show the inflation fight is far from over. The closely watched core inflation reading for August, which excludes food and fuel, is expected to reveal a 4.3 percent year-on-year gain. That would be a big improvement from a year ago, but still well above the Fed’s 2 percent target.
The headline figure is more troublesome. Energy and food prices have been increasing again — airfares, insurance and online subscriptions costs are higher, or are rising, economists say — and that will lead to a 3.6 percent year-on-year increase. That’s up from 3.2 percent in July.
Even still, Wall Street is betting the Fed will hold tight on rates at next week’s meeting. “We believe the underlying inflation trend remains soft,” Aichi Amemiya and Jeremy Schwartz, economists at Nomura, wrote in a research note on Monday. They added that “the Fed will likely keep rates on hold through year-end.”
Consumers are feeling less upbeat. The New York Fed released its latest consumer survey on Monday, with respondents saying they see declines in both income-growth and access to credit. They expect inflation in the short term to nudge higher, too.
Plugging into the uncertain outlook, Jamie Dimon, the C.E.O. of JP Morgan Chase, warned on Monday that it would be a “huge mistake” to bet on the consumer powering economic growth well into the future.
Most economists see the U.S. avoiding recession. But doubts about the economy look set to be a major talking point heading into the 2024 race for the White House. A bad sign for the Biden administration: even for those who feel the economy has performed better than expected, few appear to be giving the White House much credit for it.
THE SPEED READ
J.M. Smucker agreed to buy Hostess, the maker of Twinkies, for $5.6 billion. (NYT)
National Amusements, the holding company of the media mogul Shari Redstone and which controls Paramount Global, struck a deal with creditors to reorganize its debt. (WSJ)
Best of the rest
Like many companies, Boeing is navigating a return to office, though its C.E.O. works largely remotely and takes company-owned private jets when he does go in. (WSJ)
“Republican megadonors wait for their anti-Trump champion” (FT)
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