Morning Brew Daily - Carlson Wipes $500M+ from Fox Stock, LVMH passes $500B, Snap's Hated AI

Episode Date: April 25, 2023

Episode 46: Toby and Neal discuss how Tucker Carlson's departure from Fox led to over a $500 million stock loss. They also discuss LVMH's rise to a $500 billion valuation and how the family behind the company may reflect one of the top shows on television right now. Plus, First Republic bank lost over $100 billion in deposits and why we hate Snapchat's new AI. Toby shares why the kids are loving chess and we break down the lawsuit between... Ed Sheeran and Marvin Gaye? Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning brew daily show. I am Neil Freyman. And I'm Toby Howell. On today's show, Cable News has a real anchorman vibe this morning, with big stars leaving their networks. I mean, this really got out of hand fest. Snap also is one Kylie Jenner tweet away from reversing course on another unpopular redesign. Then we'll talk about LVMH making its claim as the Apple of Europe. Educate Neil with another edition of Toby's Trends and finish up with a lawsuit featuring the songbird of our generation, Ed Shearin.

Neil, it's Tuesday, April 25th. Let's ride. Toby, Joe Biden really reminded me of you this morning because he's wrapping up an 18 whole round of golf and he wants to go around another time. Oh my God. That's a Toby classic. He launched, Biden launched his reelection bid for 2024 in a video message this morning. Unlike you, though, he's 80 years old. He wants to go around another time.

It's actually going to be crazy. He'd be 86 by the end of his second term if he were to be reelected. Man, we've talked about it, but we live in a stuck culture. just repeats over and over again, but I mean, good for Joey. I guess he's feeling he's feeling young. He's feeling sprightly. The Republican National Committee came back with a video about, you know, after, after Biden announced his reelection. And it was AI generated. And it painted this picture of a dystopian future with Biden at the helm for another four years. And it was made up of completely AI generated images. And it just struck me that this is going to be an AI race.

a wild election cycle with AI. That is the dystopian future right there, by the way. The fact that AI is generating political videos. So we're in for a doozy. We're in for a doozy. Like the debates are going to be, people are just going to AI them up and make people say stuff that they didn't say. It is going to be really interesting. AI is going to be a huge factor in the 2024 presidential election, something we didn't think we'd say six months ago. For sure. All right. Let's go to our first story. If anyone is looking for a TV hosting, there are two juicy slots available one on Fox News at 8 p.m. and the other on CNN at 6 a.m. Waking up is not that hard trust us. In an absolute TV host of bloodbath yesterday, both Fox News's Tucker Carlson and CNN's Don Lemon were forced out of their jobs. Let's start with Tucker, who is perhaps the most powerful TV journalist in the U.S. right now. He's a big Trump supporter who pushed anti-immigrant and sometimes racist ideas that only gained influence after the 2020 election. And his populist message, though, resonated with a lot of Fox viewers and resulted in him becoming an absolute ratings powerhouse. So his exit came as a huge shock yesterday.

Everyone was like, are you sure? Everyone was like, are we sure we can trust this Twitter account that just said that Tucker is leaving? Because it is so surprising. Yeah. I mean, I have written down that Tucker absolutely rips on ratings. And by that, I mean, he pulls three million viewers regularly, which is just a wild stat in today's era of like, streaming and our attention being so fragmented. He's literally the top non-sports show on cable, which just goes to show how much influence he has. And just to kind of put it in context on some of

his rivals, MSNBC and CNN averaged roughly 1 million to 700,000 viewers in that same time slot. So he's at least three times, a little bit over three times his competitor. So obviously a huge decision for Fox. The stock dropped 500 million on the new. 3% yeah on news that it that he was leaving so definitely not a decision that fox made lightly no so why did they push him out we don't know exactly why but obviously this comes on the heels of this massive settlement that fox had to pay dominion over 787 million dollars about conspiracy theories related to the 2020 election uh carlson didn't necessarily have a lot to do with that specific lawsuit but i think it spooked uh chairman ruper murdock who was like i don't want any more legal challenge just apparently Rupert you can be on his good side and be his pal and then it'll turn on you in an instant like he did with Roger Ailes and Bill O'Reilly. So Carlson seems to have a potential legal liability going forward. He's pushed this theory that this guy Ray Epps, who was at the January 6th riot, was a secret government agent and Epps has threatened legal action. And then also

there's this former producer, Abby Grossberg, has sued Fox over misogyny on Carlson's team. It was also discovered in texts that Carlson used her. derogatory language toward Trump lawyer, Sidney Powell, and kind of just trashed Fox management in these texts that came out from the lawsuit. So it just feels like Carlson was kind of just a bad employee was trashing his boxes. And who wants that around? Well, it was, I saw both sides of the equation where people were like, holy crap, like, what did he do? Yeah. That made him like so unceremoniously leave the network. But then you list all those things and you're kind of like, okay, what didn't he do to incite them to decide to part ways?

So, yeah, it's a whole lot of everything. It could, maybe there's something else that's going to leak in the coming days. But it does seem like it was a big step to make. But like once you start putting the pieces together, you can see how they reach the conclusion. We'll see what happens to Fox going forward because they basically pushed out their biggest star. And now they have this gaping hole at 8 p.m., which is a huge time slot for primetime viewership. I got to give my dad credit for this metaphor. But he texted me yesterday.

He was like, Tom Brady, this is like Tom Brady leaving the, the, Patriots and Bill Belichick after a huge amount of success together. In other words, is Tucker's success the result of the system of Fox News or is he a unique talent? He's a system news host. That's what we're, that's what we're figuring out. Yeah. Credit to your dad on that one. That's a good metaphor. We can, we should talk about Don Lemon too because he's the other big star at CNN who was fired yesterday. Crazy. You said it was a bloodbath. It was a bloodbath. Yeah. Lemon was not as surprising as Tucker because he's been just there's been a ton of controversy around Don Lemon in the past year over sexist comments he made on the show.

Other allegations of misogyny behind the scenes. The biggest face palm for Lemon was when he said Republican presidential candidate Nikki Haley isn't in her prime, which got him, you know, public rebuke from CNN chairman Chris Lick. And he was kind of on icy footing. That's not the term. Uncertain footing. He was on thin ice. I think I finally got that for a couple months.

and then they were just like, this guy's not worth it because he's kind of a loose can and we don't know what he's going to say on the air. It's a tough time to be a TV show host. Luckily, we are just podcasts and YouTube show host, so hopefully we'll be spared from the bloodbath. Okay, Neil, let's move on and jump into the world of luxury fashion. So yesterday, LVMH became the first European company

to surpass a $500 billion market cap. It also further cemented CEO Bernard Arnaud's place as the richest man in the world with a fortune of $240 billion. He's leaving Musk and Bezos in the dust. Musk is at $173 billion. He's almost lapping Musk at this point. So it's actually been a crazy rise for LVMH over the last couple of years. So the stock is up 33% this year alone.

And one of the big reasons it is it comes back to China. So China is a massive market for luxury goods. And as it's gradually reopened in the wake of COVID, it's sent LVMH's stock price soaring. So a lot of people are comparing LVMH to kind of the big tech and specifically the Apple of Europe. And so people are saying that these are both these industry giants who sell these kind of wallet-busting products, these really expensive products, that thrive even among economic uncertainty and downturns. So it is almost like this recession-proof industry we're seeing.

So it's crazy. Bernard is running away with the richest man on Earth title. And he's running a very succession-like operation, too. Yeah, yeah, we have to talk about the succession thing because it is pretty juicy. So he's 74 years old. He has five adult kids, or at least over the age of 24. They all run various departments in the business. The eldest child runs Dior.

Yeah. So that's kind of like the biggest one, but they run like Tag Hoyer, Watch brand, and they're just kind of spaced out throughout this business. And apparently he puts them through these tests, like this audition. So he holds every month, he holds a 90-minute. lunch where he has these discussion topics on his iPad and just kind of ask people, ask his kids questions. It's a very Logan Roy, you know, social experiment to see what they're going to say. So it seems like a pretty high pressure environment about who's going to succeed in. It's actually

very critical decision. It's extremely succession. Like it's kind of crazy. Yeah, there's a 24-year-old running, yeah, tag who are, which is one of the biggest, like, brands under the the umbrella. So honestly, LVMH is this massive conglomerate. It is. acquired its way to the current market cap it's it's at so I have a little quiz for you Neil I'm going to give you some brands and you have to tell me whether or not you think it's owned by LVMA okay I think I can do this okay brand number one Sephora no that's into text I think Sephora is owned by LVMH oh whoops balenciaga no Valenciauga is not owned by LVMH Bergenstock Bergenstock I will say

no. Yes. Oh, God. It's crazy. You think of it as luxury, but it's technically a leather good. Yeah. Off white? Yes. That is yes. Virgil Ablo. Yep. Fenty beauty. Fenty, yes. Yes. Yes. I know. It's all the celebrity friends. And then final one, Crocs. Crocs is definitely not. It's his own public company. Dang it. Couldn't get you with that one. Yeah. So the takeaway here, I think, is that luxury is like an innate human need, just like a smartphone. And I think the comparisons between tech and luxury are really apt. And I just want to end on this L'Oreal CEO. He had, Luriel's also crushing it and Hermes and all the other French luxury companies. But he said in a recent earnings call that beauty is an essential need and the quest for beauty

is a never-ending quest. I don't know. I just like feel that in my bones. Essential is a heavy word there. All right. Let's move on to the banking sector. So First Republic Bank, not in a good place. The regional lender that caters to wealthy people.

got caught up in the SVB collapse and yesterday revealed the damage. There was a lot of damage. First Republic lost more than $100 billion in deposits last quarter alone, which was a 41% drop. That plunge would have been more than 50% had the big banks did not rally together to plug First Republic with $30 billion of deposits as a sign of confidence in the banking sector. But there is still very little confidence in First Republic. The bank is planning to lay off up to 25% of its workforce, cut executive compensation and pursue strategic options. And whenever anybody says they're pursuing strategic options, not a good sign. Plus, execs hung up on their earnings call after 12 minutes without taking any questions. Also not a good look. Shades of 2008 for sure. Whenever, yeah, you're not

taking questions on your earnings call, not a good look. But so, yeah, we were kind of digging into, like, why did First Republic in particular be so affected by the fallout from SVB? One, it's, that similar sort of regional bank, it's not considered one of the big banks, and two, it kind of cater to the same wealthy sort of clientele. It's a San Francisco-based bank, so you can see how it kind of mirrors SVB a little bit. So that's why it got caught up in the SVB drama. But we also learned that the SVB drama can be attributed a little bit to social media. Right, because after there was this bankground, people were saying, okay, well, all these VCs were tweeting about it on social media and did that actually lead to a bank run? Did that fuel it? In the past, social media

didn't exist and bank run still happened, but did this particular bank run? Was that a result of all these VCs saying, you know, in all caps saying yank your money out, yank your money out? And so this is the first piece of official academic research that was published on the impact of those tweets. And this team of five professors concluded that social media post did amplify the bank run on SVB and said that banks that were talked about on social media would be at more at risk of bank runs in the future. To me it was a very logical conclusion. Like, of course, when there's more chatter around a bank as specifically a certain bank, you're going to see outsized activity around the bank stock, around the deposits and the withdrawals. So to me,

that was very logical, but it was interesting to see and academically quantify this thing that we all kind of deep down to. And that's why there's really, research because we can put data on it. I mean, we can have these intuitions and this got checks where it's like, well, obviously this is happening, but people got to go to the data and find out. For sure. All right, Neil, before we jump in the next story, we're going to take a quick break. All right, like everyone else, Snap has released an AI chatbot. This one sits at the top of its chat tab where you can ask it questions and talk with it. However, like Snap's infamous redesign of 2018, users are rebelling against it. Over the past week, Snap,

average app store review in the U.S. was 1.67, and 75% of these reviews have been one star. I don't think that's good. The number of daily reviews has jumped 5x in the past week. The top keyword in those reviews, AI. Yeah. People are very not happy about this. Censor Tower, who helped kind of parse through this data, gives each term an impact score, and they rate it on a scale of negative 10 to plus 10, with negative 10 being the most negative thing and most negative sentiment you can have, these ratings had an average impact score of negative 9.2.

So anytime someone mentioned AI, they were mentioning it in the same sentence as we hate this AI. And my takeaway, this is honestly, one, people hate app redesigns. Like, they moan and get mad at whenever anything changed. Like, yeah, you mentioned the redesign in 2018. They had another redesign in 2020 where people just exploded. And then now a couple years later, you don't even remember it at the this point. So I think number one, people just don't like change. But then number two, the fact that it's taking up this real estate at the top of your chats, that's what's really pissing people

off. And the fact that you can't remove it unless you pay. You pay for Snapchat Plus. Yeah, the history of this thing is that it only rolled out to Snapchat plus subscribers, which is their paid subscription, which seems to be way more successful than Twitters, by the way. Yeah, it's doing well. And then they rolled it out to the public. The problem was that it became an opt-out. situation, not an opt-in. So the only way you can remove it now is by paying. Right. And they're doubly mad too because there's also the, there's a chat box that's my Snapchat where Snapchat can send you like product updates and they can say like happy Thanksgiving on holidays. So now there's two Snapchat chats that are pinned to your top of your chats. So people are just like really angry with how

much real estate is taking up. People still use Snapchat. A ton of people still use Snapchat. And honestly, that's one of the concerns about this my AI is that a lot of kids use Snapchat. And so you're now turning these AI loose to children. And the AI has been saying some like age inappropriate things. Like it's been telling 15 year olds how to cover up the smell of alcohol after you throw a party or something like that. Like giving like sex guys. That would be helpful. I know. So it is one of those, this is one of the Pandora's boxes of AI. Like what happens when you turn a chat bot loose to an audience mostly of children. So Snap has a lot of like parental controls put in place, some age restrictions put in place. So this is definitely one of the AIs I'm most closely monitoring because kids always

find a way to break stuff and hijack stuff. So I really am interested to see how, yeah, this AI fares going forward. It's unclear whether this is ready for prime time though. And I saw this one analyst say that in the AI race, Snap is collateral damage forced to implement before their competitors do or otherwise they'll lose. So it feels like people are, you know, you have to put an AI chat bot out no matter if it's ready or not, or else you'll be seen as living in 2019. And so maybe all of these competitors are, all these social media companies and tech companies are rolling out these AI chatbots, just to say they have one. And it may not be ready. It may still have all of these kinks,

and it may be showing up in your feed and not be of value to users. But, you know, especially public companies feel like they need to put this forth to satisfy investors, even when they're not ready. Yeah. I'm long-term bullish on it. Honestly, I think Snap will figure it out. It does make sense to have a chat. They have a chat function already.

So I think we'll figure it out, but I do think you're correct. They rolled it out a little too early. Okay, Neil, we're going to now move on to our favorite Tuesday segment, Toby's Trends. So today, our trend is all about a game that teachers and parents alike cannot get their children to stop playing.

When they're getting ready for school, playing. When they're in school, So what is this trendy new online game that has children glued to their phones? It's chess. It's the world's oldest game. So chess is so unbelievably hot right now, and I personally am super excited by this. I'll give you some quick numbers just to show how big chess is right now.

So we all remember that chess got that pandemic boost from Queens Gambit when it came out. So before Queens Gammon came out, chess.com's average daily user count was right around 1.5 million. after Queen's Gambit came out, that rose to five to seven million. So a huge jump there. Right now, it's currently at 12 million daily users. So this is not a Queens Gambit thing at all. We are beyond Queens Gambit at this point because it's doubled again. And part of the reason is there is this huge streamer and entertainment aspect to Chess currently.

So there's this guy, Levy Roseman. I call him the Mr. Beast of Chess. He's kind of the biggest chess content creator out there. He's an international master, which is still a very good player, but not a grandmaster. He just rips YouTube videos. It's unbelievable. Like his views, videos get multimillions. It's him breaking down popular chess matches.

He broke down the chess cheating controversy. He's really one of these influential figures. But then also on TikTok, and this is, I'm speaking from personal experience, there are like four or five different chess influencers that have popped up on TikTok recently who are not even good players. Like some of them are extremely low-level players that people just love watching because it's almost like more you see yourself in them because it's hard to relate to these

international masters, these grandmasters. There's this whole like workers, man, like crop of players who are really bad at chess not all things considered but are great entertaining. They're just entertaining. It feels like a very good Twitch thing. Right. It's definitely a Twitch thing. But I've seen some TikTok native people too

where like they are clearly building their biggest audience is on TikTok. Some of them don't even show their face. They're just commenting over their playing. And I do think it's funny, though, that you're watching these 600-rated players. Well, it's the equivalent of watching, like, a men's league, like, flag football game

instead of watching the NFL. But again, sometimes that's a little more relatable. What's your rating these days? I'm right around, like, 1,100, 1,100 or something like that. It's not great, Neil. It's not great. Let us know in the comments if you want to see me and chat,

me and Toby play chess against each other. I think Neil is better than me, though. I think it would be competitive. Yeah, it'd be a fun. one. Yeah. Okay. That is our Toby's

trend for the week. Let's take the show home. So, Neil, we started off the show with some spicy kind of courtroom drama surrounding

Dominion and Tucker Carlson. And we're finishing the show with some spicy courtroom drama as well. So we've got a music copyright

trial in our hands that kicked off yesterday. It pits Ed Sheeran in his song Thinking Out Loud against Marvin Gay's famous song,

Let's Get It On. I'm not going to sing either of this. You have to just imagine those in your head. So according to the suit filed by the family of the songwriter who co-wrote the song with Marvin Gay, the heart of Ed Shearren's song is too similar to Let's Get It On.

So Shearin denies this and says that if the two songs sounded like, it's because the use of fundamental music building blocks that don't fall under copyright protection. So this is a big deal in the music world. It involves one of the underlying parts of musical composition, the melodies chords, and of the two songs, not necessarily like the lyrics or anything like that. So it's kind of setting a precedent, whichever way the court rules,

on how the music industry is going to be governed going forward. This is BS. You're not on... This is total BS. I listened to both songs beforehand, and they have a similar chord progression. This case hinges on whether the court progressions are identical and whether Sheer and ripped off gay's chord progression.

They're not even identical. Yeah. There, as Sheeran says, there's only 12 notes in music. You can accuse Sheeran of being a lazy songwriter and, you know, maybe just like a basic pop artist who uses four chords. But every pop artist uses the same sort of four or five chords in their songs. You can, everyone's seen that four chords video where they play, you know, 30 songs over the past five decades that all have the same chord progression. And you can go from one to the next to the next to the next seamlessly. This is absurd. And Shearin thinks it's absurd. and he's taking, and a lot of other musicians that have been hit with similar copyright lawsuits have settled. But Sheeran says, no, I really want to prove a point here. Like, stop with these lawsuits. Like, I didn't rip you off. There's only, there's a zillion other, a sillion other songs with the same exact core progression.

Maybe these two have similar themes about, you know, making whoopee. Yeah, one of the things, I think it's so funny that musicologists are weighing in on this, because you do need to bring in, like, scholars of music theory in order to, like, really get down to if this is a unique chord progression or not. And one of the evidence submitted in the case is the fact that this chord progression is found in guitar textbooks. So it's clearly, like, the... It is very simpler. It's simple.

Right. So I do think a lot of people in the music industry are hoping Ed Shear and comes out on top of this, because if not, like, it really throws a wrench into, like, what is free use? it would become very hard to create music without being sued by someone else who said, I've done that first. If you're using a sample with lyrics, like, if you're ripping a sample, then obviously you have to get a license. But this is like beyond the pale.

I hope Ed Sheeran wins for all musicians, for all really lazy pop musicians. All right, that is our show. You can always reach us at Morningbrewdaily at Morningbrew.com. Thanks to everyone in our control room. It's busy. It's a party over there. The show's producer and editor is Emily Milliron. Our supervising producer is Bryce Belloff.

Our technical director is Eugenwa Ogu. APs are Sam Vela's, Henry Stockwell, and Raymond Lue. Billy Menino is on audio. Dan Bousa is our VP of technical and production operations. Heron and makeup got traded to the Jets. Devin Emery's our chief content officer. Our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.