Morning Brew Daily - Bezos' WaPo Lands in Endorsement Mess & CA's $750M Offer to Win Hollywood

Episode Date: October 28, 2024

Episode 440: Neal and Toby discuss the decision made by the Washington Post and LA Times to not make any official endorsements for either presidential candidate which has left many debating if it was the right move in a wavering media industry. Then, the latest ‘Call of Duty’ adds to its money-making franchise but this time, it’s the first major game to test the success of Microsoft’s acquisition of Activision Blizzard. Plus, California Governor Gavin Newsom proposes doubling its film tax incentive as it tries to win back Hollywood to make more productions at home. Meanwhile, the McDonald’s right-to-repair and food recalls are the weekend winners. Lastly, the biggest news you need to know this week. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Find your fit at bonobos.com and use code BREW20 for 20% off.  Get your Morning Brew Daily T-Shirt HERE: https://shop.morningbrew.com/products/morning-brew-radio-t-shirt?_pos=1&_sid=6b0bc409d&_ss=r&variant=45353879044316  Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - Timothée Chalamet Lookalike Contest 02:45 - Newspaper endorsements  06:40 - Call of Duty Release  10:30 - CA Tax Credit to Hollywood  15:30 - Winners of the weekend  21:50 - Week ahead  Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today, California Governor Gavin Newsom is placing a big bet to keep Hollywood in Hollywood.

Then breaking news, McDonald's ice cream machines might break less frequently now thanks to a key copyright ruling. It's Monday, October 28th. Let's ride. If you are strolling through New York's Washington Square Park this weekend, you may have encountered a throng of sharp cheek-boned floppy-haired men

who were gathered for a viral Timothy Salome look-alike competition. With thousands of RSVPs and a whopping $50 up for first place, Salome lookalikes came from afar dressed in Wanka attire and toting peaches to see who channeled Timothy the best. And it turns out they were all competing for second place because guests who showed up to the Timothy Salome lookalike contest, Timothy Salome himself. You know, this is exactly what you are supposed to do as an A-LIS celebrity.

Crash your own look-alike competition. Yes, but it was absolutely chaotic. Police ordered the group to disperse. They hit organizers with a $500 fine for an unpermitted costume contest. At least one person was led away in handcuffs. So, all intents and purposes, this was one of the most rowdy Timothy Shalmay look-like contest that has ever been put on. And Timothy Shalemay, his next movie, he's starring as Bob Dylan in a biopic. or yeah, the biopic, is that how you say it? Biopick. And he's doing his own singing, his own

guitar playing, his own harmonica playing. And so I'm officially out on Timothy Salome. The man is just too talented. Now a word from our sponsor, Bonobos. Neil, did you check my Instagram story yesterday? I did not, Toby. I see you enough as is already. Well, you missed out because I went to a wedding this weekend, and you know I had to rock my Bonobos fit. That tuxedo has turned out to be a lifesaver. It really has, but honestly, I have to show up rocking a perfect fit because then everyone will be so distracted by my stylist Taylor Get Up to notice the fact that I have zero rhythm on the dance floor. A tuck so good, people overlook your bad dancing. Bonobos is a miracle worker. It truly is. Plus, their stuff is comfortable enough so you can dance the night away with no extra stiffness

beyond a god-given lack of rhythm. If you want to dance better than Toby and be comfortable while doing it, head to your nearest bonobos store to find your fit, or head to bonobos.com and enter brew 20 for 20% off. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill three burner gas grill, or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together.

Shop Spring backyard days for seven days at the Home Depot. Now through May 6th. Exclusion supplies to homedipo.com slash price match for details. Decisions by two billionaire newspaper owners not to write a story has in itself become a huge story. Last week, both the Los Angeles Times and the Washington Post ended their tradition of endorsing presidential candidates resulting in resignations from high-ranking staff and a spike in cancellations by subscribers. Patrick Sunshion, the biotech billionaire owner of,

the LA Times, made the decision to end presidential endorsements for his outlet, while two days later, Jeff Bezos made the call for his newspaper, The Washington Post. These moves have sparked a heated debate about the role of newspaper endorsements and the influence of billionaire owners on their outlets editorial operations. I mean, historically, you look back at newspaper endorsements. They have been a pretty crucial part of the democratic process. The idea is that you provide this informed opinion to voters. However, that has been changing recently. fears of increased polarization, I've led some of these publications to kind of walk back this tradition. And I have seen people from both sides critiquing this. Some people from the

media industry said that some readers of these newspapers probably equivocate the editorial board of a newspaper with the actual position of the newspaper itself. And so getting rid of it is actually probably better because it does create this better air of neutrality. But then the question is, is that neutrality worth it at all? Because we have seen a rash of cancellations of subscriptions. We have seen a rash of high-level people within the organization stepping down. So is that neutrality worth it? That is what these organizations are grappling with at this point. Let's talk about motivations. Why did they do this? Or at least, what are their stated intentions? Why did these owners cancel endorsements? The Washington Post, and this did not come from Bezos.

It came from the Washington Post, editor Will Lewis, said ending endorsements was a return. to its roots of not endorsing a candidate. The Post generally did not endorse presidential candidates until 1976 when it endorsed Jimmy Carter, but it has made an endorsement in nearly every election since then until this year. And then at the LA Times, the owner posted on X that instead of an endorsement, he instructed his editorial board, tried a factual analysis of policies from each candidate, and let readers decide who was worthy of the White House.

But this coming, maybe it was a communications issue, because the optics around the this coming 11 days out ahead of the presidential election, did China spotlight on their owners and their dealings with the federal government and a potential future Trump administration. Let's look at Jeff Bezos, who owns Blue Origin, which has a $3.4 billion contract with NASA. The federal government is its main customer and Bezos founded Amazon, which has a Amazon Web Services Cloud Computing Unit, which competes for contracts with the federal government. upwards of tens of billions of dollars. Remember in 2019, Amazon lost to this $10 billion cloud computing contract to Microsoft.

And at the time, Amazon actually filed the lawsuit saying that their loss was the result of Trump, not liking the Washington Post reporting and wanting retribution against Bezos its owner. Yeah, there's such a tangled web of conflicts of interest here, which is why you said even that in trying to not publish a story, they've made it a story in and of itself. I did look back through history, too, if there is any correlation between endorsements of election outcomes and the actual outcomes themselves. And since 1972, there's only been three instances, 76, 96, in 2004, where a candidate with the most editorial approvals lost the election. So for a while, they have been relatively influential, because for the most

part, the candidate that the papers endorse end up being the candidate that is elected, the president of the United States. So this departure here, it's still just a few news outlets at this point. Washington Post is a rather big one, but we'll see if it kind of continues this path down towards a more neutral approach to editorial endorsements. If you weren't getting many texts back in your college group chat over the weekend, it's because the new Call of Duty game just dropped. Blackop 6, the latest installment in the first-person shooting franchise,

is probably a big deal for the gamers in your life. But it's an even bigger deal for Microsoft, who after drop, dropping $76 billion to acquire Codmaker Activision Blizzard needs some return from the crown jewel of its catalog to justify the whopping price tag. One thing that makes Black Op 6 extra notable is it's the first cod to launch day one on Xbox's Games Pass, which is essentially Microsoft's version of Netflix for video games. You pay between 10 and 20 bucks a month to get access to a catalog of games instead of dropping $60 plus to buy a singled game.

The catalog became a lot more valuable after Microsoft bought Activision and therefore Call of Duty. The hope is that the Blue Chip franchise will boost its Game Pass numbers, even if it might eat into the total sales of the game itself. Neil, it's a bit of a complex calculus here. Right. Microsoft is hoping to transform the video game industry from an all-a-car restaurant to an all-you-can-eat buffet with its Game Pass subscription offering like Netflix for video games.

But there are early signs that people, may not want this subscriber count for a game pass peaked in 2021 during that COVID boom, but it's remained pretty flat since then. Their analysts say they have not seen much growth in the video game subscription space that many had predicted, but Microsoft has huge aspirations for Game Pass. It has a goal of reaching 110 million game pass subscribers by 2030, which is a huge rise from the 34 million in February this year. analysts predict that call of duty specifically will add 2 to 2.5 million new subscribers of GamePass.

That is moving the needle a little bit. It's still a far cry from that 110 million that Microsoft wants. But it is interesting to see whether people, video game players, will want this more buffet approach that has worked really well for Netflix and video TV streamers. but it has remained to be seen whether this can be applied to the video games space. And a lot of people don't think it can be applied to the video game space because if you think about how gamers actually play games, you usually hyper fixate on a couple of titles at a time. You can't be playing 20 games at the same time. One, you just want to be better at the games that you want to be better at. And then two, there's always continuous updates to the games you play.

So it does add to the lifespan of the amount of time you can play a game. So do you really want a $20 a month subscription or do you just want to buy the games that you want to play? So there's been some question marks about this model for a long time. And then also another thing working against this sort of streaming model is that really hardcore gamers don't like playing games via cloud gaming because you can see how they look a little over compressed. There's maybe some latency, some lag in those games as well. So if you are truly a hardcore person who loves playing video games, you're not going to want to play these games. via a streaming setup. So I don't know.

It's definitely a tough thing here. Call of Duty is the franchise that you want. It is like the goat of all AAA video game franchises. So if they can't make it GamePass subscribers increase when releasing Call of Duty, then I don't know if it will ever work. So this is definitely an inflection point in Microsoft's gaming journey. There's only $76 billion riding on it. But yeah, Call of Duty is, I just want to mention this,

It is one of the most successful entertainment properties that has ever been released. It's brought in over $30 billion in lifetime revenue, which is more than any other shooting series and most movie franchises outside of Marvel. Yeah, it is a big. I've actually never played a Call-F Duty game. It's so bad. Or maybe it's good. Who knows? The next tale of a daring escape to come out of Hollywood might not actually be in a movie, but will be the story of the film industry itself.

Yesterday, California Governor Gavin Newsome proposed a $750 million tax credit package to benefit the state's film and TV industry with the hopes of helping Hollywood get its mojo back. It would double the incentives the state currently puts towards Tinsletown and reestablished California as one of the more generous places to make a movie in the country. Despite his reputation as the epicenter of entertainment in America, other states have quietly lapped Cali when it comes to the film incentives. offer. Thirty-eight states offer some sort of sugar for filming in their backyards, led by Georgia, who has offered $5 billion in film tax credits since 2015, and New York, who has chipped in $7 billion,

compared to just $3 billion for California. Neal, the region and the film industry has had a tough go of it recently, still reeling from the dual actor and writer strikes from last summer. Is this package the way it can get its movie magic back? Well, there's no question that there has been an exodus of TV and film production out of Los Angeles due to various factors. In Q3, film and TV production was down 5% year over year, which may sound like a slump, but then think about what happened in Q3 the year before. There was no production happening at all because there were two strikes going on. So the fact that you declined 5% over a year in which there wasn't anything going on is truly

raising alarm bells in the California State House. So they're proposing more than doubling this tax credit from $330 million to $750 million to $750 million to compete. with states like Georgia, which is really eating Los Angeles' lunch for when it comes to production. And you're also competing with not just other states, but other countries as well. Canada has taken a huge bite out of LA's entertainment industry. Really, any country is upping their tax incentive game to lure film production, UK, Ireland. You know, the UAE is shelling out tons of money as well because they see it as a good return on investment that if you bring in filming crews, then they have to spend money and it starts

to trickle down effect on the local economy, which is essentially what California is banking on and what it has seen dried up over recent years. Yeah, that is how Gavin Newsom and Coe have to sell this as a package that will trickle down. Government officials have said that tax incentives for film and television productions do end up benefiting local economies because, think about it, creating a movie. You also are employing electricians, hair and makeup, ironically. hotels, dry cleaning, dining out, like these are all industries propped up by it.

But then some economists have voiced skepticism warning that you actually get a very poor return on investment with this. Studies have shown that tax revenue generated by film incentive programs only comes to about a quarter or even a dime of every dollar invested. So in some cases, they're saying it even cost taxpayers' money. So California is dealing with a massive ballooning budget deficit. And here they are increasing tax credits or potentially increasing tax. credits to the film industry, but you can't let it die. Like it is synonymous with the state.

It is a big part of their economy, so they're kind of in a rock and a hard place right now. Meanwhile, because of these tax incentives, when you go to the movies, you might see some weird settings for places because film crews are going to the lowest cost area to film, and Paddington is coming out in the UK this month. The next Paddington film opens. Everyone knows that Paddington is from Peru, but actually this was filmed in Colombia, which has raised hackles at the highest levels of the UK government. Gladiator 2 was filmed in Malta specifically because of tax incentives.

So it really is reshuffling the geography of filming, which will play out on screens as you go to the movies. Up next, take a sip of coffee and hang tight. Winners of the weekend is coming your way. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both. World's. Get the Unreal College deal, everything you need, to study and play with select Windows 11 PCs.

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Welcome to winners of the weekend, the segment where Toby and I share two things that caught a Jaden Daniels, Hail Mary. I won the pre-show espresso art competition with a beautiful tulip, so I get to go first. And my winner is food recalls. It feels like there have been so many recalls in the past few months that the next time you walk into a supermarket, the shelves will be completely empty. The trend continued on Friday when Costco said it was recalling certain packages of its Kirkland-smoke-Somond product, which I've eaten, over possible contamination from Listeria. It was the third time Costco has been impacted by a product recall in two days, and it follows a slew of other scary headlines, a deadly listeria outbreak stemming from Boar's Head deli meats this summer, an E- coli outbreak from onions on McDonald's quarter-pounders, and numerous other recalls effect during grocery stores from ready-to-eat, chicken. into frozen waffles. So here's the big question. Is our food getting less safe? Are outbreaks and recalls getting more common? Before we get there, it's important to distinguish

between a recall and an outbreak. An outbreak, like in the case of Boreshead and McDonald's, indicates when people have fallen ill from a foodborne disease. Or recall, on the other hand, doesn't mean anyone has gotten sick from the product. They happen because of the detection of potential contamination. There hasn't been a jump in outbreaks recently. Recauls have have ticked higher this year, but not to have normal levels. They're about in line or below pre-pandemic trends. So Toby, what explains all the headlines? Yeah, it's an interesting scenario because on the one hand, you don't want there to be too many food recalls because that means there's contaminated food out there. But on the other hand, it does mean we are getting

better at catching them. Government agencies are using more advanced testing. One is called a culture independent diagnostic tests that are just a lot more sensitive to some of these pathogens that we are trying to detect. Also, the CDC and the FDA are trying to digitize better to better track these outbreaks as they happened. So better testing does usually lead to more of these popping up, popping up. But our food supply chain is getting a little bit more complicated. There are more steps that contamination can potentially infiltrate and get into the food

supply. So potentially that is leading to it as well. A lot of people eat processed foods too, and processed foods are more likely to, you know, attract these pathogens. So it's two things are happening at once. Maybe this food supply chain is getting more complicated, but also just getting better at identifying these recalls when they happen. Right. And then among all countries, the U.S. ranks near the top for food safety. And good news when it comes to that McDonald's quarter pounder outbreak.

Those burgers, if you love them, are coming back to the roughly 900 restaurants this week. which is roughly a fifth of the company's total U.S. footprint after that deadly E. coli outbreak, which was linked to onions from a single supplier, a farmer in, or a farming operation in California. I think they're just bringing them back without the onions. So those onions are still contaminated. They've been recalled and will not appear in your quarter-pounder. But McDonald's is bringing those burgers back to those affected outlets. My winner of the weekend is everyone with a bit of a sweet tooth.

time you roll up to a McDonald's craving an ice cream cone, the notoriously fickle machines might actually be working. The U.S. Copyright Office recently granted a key win to third parties, allowing them to diagnose and fix commercial equipment, including the machines that make you both McFlurries and McFurious because of how often they are broken. So why is the Copyright Office getting involved in this at all? Well, technically, the software that runs on the ice cream machines is copyrighted work, and the law states that only the manufacturer of the equipment can buy.

the digital locks to provide maintenance. But the new so-called right to the repair was won through an exemption filed by Consumer Advocacy Group last year, asking the Copyright Office to allow someone other than the manufacturer retailer to fix them. Neil, this is finally some good news for McDanks. It is because this, when you read into what the heck is going on, why, according to Mickbroken.com, which tracks broken McDonald's ice cream machines, nearly 15% across the U.S. are currently broken, including 32% in New York.

When you look into those numbers, you're like, wow, McDonald's really can't fix their machines. But actually, this is a problem that is because of a monopoly, because of this one manufacturer, Taylor, is blocking people, regular people, who actually operate these machines, the McDonald's franchisees, from actually fixing it because of their copyright.

So they have this monopoly over this. You have to pay their service workers to go in, And it's part of this broader right-to-repair movement where adequacy groups are pushing against manufacturers to open up their tech and allow regular people to get in there with their Allen wrench. And I'm sure it takes a lot more than an Allen wrench and a screwdriver to actually fix these machines. We've seen wins when it comes to Apple allowing people to fix their own iPhones. There's been a lot of pressure on John Deere as well. So this continues the momentum of the right to the repair movement to allow regular people to fix machines that had previously you had to take to a technician that had been licensed and pay a bazillion dollars. My thought was always why is McDonald's still using this manufacturer?

Because everyone knows that McDonald's action machines are always broken. But the reason is it really is just historical precedent. They've been using these same machines dating back to a partnership all the way back in 1956. Ray Kroc had a handshake agreement with Taylor machines. and they've just been using them ever since. You do want to create a consistency across your franchisees as well. You don't want one franchise using this machine, another one using this machine. So it is easier to just let the momentum and inertia of Taylor just continue, carry on.

But I would be drilling into some other machines out there, see if we can get some that just don't break down because I'm a McDonald's ice cream fan. I hate when I can't get a McFlurray because the machine is broken. Okay, it is Monday. So here's your preview of the big events of the week. ahead. If earnings season were a Thanksgiving meal, the turkey is about to be served. The five most valuable corporations in the United States, Alphabet, Microsoft, Meta, Apple, and Amazon are reporting their earnings this week. Given that these tech giants account for nearly 25% of the S&P 500, it could cause some volatility in the market depending on what they report.

And of course, it's 2024. So investors will be dialed in on how their AI investments are panning out. We are in such a top heavy market right now where you have five companies, essentially accounting for a quarter of this S&P 500. So these weeks are almost as important as any government data reports, any jobs reports that come out. Looks like the consensus that is that growth is still there, but it might be slowing a little bit. Speaking of the jobs report, that is coming out on Friday for what will be the previous month, October, with the one we're in right now.

And it's going to be really wacky, actually, because of those two hurricanes and the Boeing workers strike. So it might come in lower than you would be expecting, but it's going to be very hard to understand anything about the labor market because of those huge shocks to the system. We could see a decline in employment figures in October, which is something that we haven't seen in a long time. It's been since December 2020, which was obviously when we saw resurgence of COVID-19. So we have a very long streak on the line here. It is so weird. Like you just don't know because of all these external factors going into this jobs report. And election day is just over a week away, and former President Trump and Vice President Kamala Harris are hitting the swing states hard.

Remember, there are only seven toss-up states that are going to determine the election. Pennsylvania, Wisconsin, and Michigan in the north, and Georgia, North Carolina, Arizona, and Nevada in the South and West. And according to the most recent polls, the race is just extremely, extremely tight. To baseball, we go. The World Series shifts to the Bronx tonight with the Los Angeles Dodgers up to again. games to kneel against the Yankees. And because of those back-to-back Yankees losses, ticket prices have fallen 28% for tonight's game at Yankee Stadium,

but it still costs you at least $1,000 to get in. So are we going, Neil? That's what I need to know. It's like perfect fall baseball weather. But I don't know, Shohay Otani is supposed to play, and he had a bit of an injury scare. I think that's going to make the ticket prices go back up. I think that was part of reason why they fell for a little bit.

That's true. In fall news, Halloween is on Thursday, then early Sunday morning, daylight saving time ends. That means you get an extra hour of sleep Sunday night, Saturday night, but we are about to enter those brutal months where it's dark out when you leave work. And then for some early birds, you're entering work when it's dark, and then you're leaving when it's dark. That is not good territory to be in,

but you do have to get to work pretty early. That's why I didn't say when you come into work early because it's always dark when we come into work in the morning. And then finally, the New York City Marathon, the largest marathon in the world, is this Sunday. you're planning to watch the race. Look out for a formally blonde podcaster, clocking 430 miles. Our dear Toby is running it. How are you feeling less than a week out? Oh, man, I tell you what, I'm feeling a little nervous because my brother actually just ran the Marine Corps Marathon in Washington, D.C. this weekend.

And he split a three-hour and 27-second marathon, which, by the way, is agonizingly close to breaking the three-hour barrier. But also, it just put a target on my back, because I don't know if I got that. You're very competitive. Yeah, I'm competitive with him. So hopefully I get in under that three-hour marathon mark, but it is just going to be an incredible day, my first marathon ever. I hope to see some of you out there. And we'll talk later this week about how people can track you across the route. I'll be watching at Mile 11 so you can come hang with me. That is all the time we have for today. Thanks so much for starting your morning with us and have a wonderful start to the week. For any questions, comments, or feedback on the show, send an email to Morningbrewdaily at morningbrew.com.

And we'd be so grateful if you shared Morning Brew Daily with your friends, family, and coworkers. Nothing says I love you, but you should probably know more about the news like giving the gift of MBD. Toby, who should listeners share the pod with today? I want you to share the podcast with someone who has kids because I was hanging out with my little cousins this weekend and they listened to the podcast. I think our new demographic might be the eight and under age group. So if your kid is in kindergarten, send them to school with a note saying share this episode of the podcast. we might be inspiring the next generation of views. Let's roll the credits.

Emily Milliron is our executive producer. Raymond Liu is our producer. Olivia Graham is our associate producer. Yucenoa Ogu is our technical director. Billy Minino is on audio. Hair and makeup has never felt the call of duty. Devin Emery is our chief content officer and our show is a production of Morning Brew.

Great show day, Neil. Let's run it back tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th, and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at Yamavatheater.com,

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