Morning Brew Daily - Disney Fights Back Board Takeover & Amazon Ditches Grab n’ Go

Episode Date: April 4, 2024

Episode 294: Neal and Toby talk about Bob Iger’s successful defense from a Nelson Peltz takeover and the conclusion of the Disney proxy battle. Then, egg prices are coming back up as America’s largest egg producer has an unfortunate discovery of bird flu in its stock. Next, Amazon is taking a step back in its Grab n’ Go concept since it’s yielding little return. Also, Neal goes through his favorite numbers from the week. Meanwhile, NYC congestion pricing is happening…and it might not just be for cars. Lastly, monkeys are running amok in this Thai city that’s halting its businesses 00:00 - Intro 02:40 - Disney wins board battle  07:00 - Egg Prices and bird flu 09:43 - Amazon check out  14:00 - Neal’s Numbers  20:00 - NYC Marathon vs MTA  23:00 - Monkeys in Thailand Get your Morning Brew Daily Merch HERE: https://shop.morningbrew.com/products/morning-brew-daily-sweatshirt?utm_medium=multimedia&utm_source=podcast&utm_campaign=mbd&utm_content=shownotes Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Many employees can't afford a hefty medical bill that pops up out of the blue, but it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, AFLAQ plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbrewerdaily. That's aflack.com slash morning brewdaily. Good morning, Brew Daily Show. I'm Neil Pryman. And I'm Toby Howe.

Today, egg prices are back on the rise and the spread of bird flu might only make things worse. Then the fate of Disney's corporate battle royale has been decided. Did Bob Eager prevail or is the mouse getting some new blood in the boardroom? It's Thursday, April 4th. Let's ride. As if you didn't already have enough Apple products in your life, the company is reportedly considering getting into personal. personal robotics. According to a Bloomberg report, engineers at Apple have been exploring a mobile

robot that can follow users around their homes. This hunt for the next big thing comes on the heels of a failed push into the auto industry with an electric Apple car that never quite came to fruition. Neil, as our resident Green Texter, would you like a little AI-powered Apple robot dude following you around your apartment? Well, it's got to do something because soon Apple's just going to run out of surface area to put more cameras on the back of its phones by like the iPhone 30. Definitely feels like Apple is going through a midlife crisis right now. It's just trying all these different hobbies to see what sticks. It's got the VR glasses.

It tried the car. It didn't work. I don't know. Maybe he needs to pick up a musical instrument or something, get the gang back together, play a band with its friends. But Apple's definitely just like throwing darts at the wall right now. I would play an Apple clarinet, by the way. Maybe they should get into musical instruments. That's not what I meant.

I think you're totally right. Now let's hear from our friends over at Robin Hood. Neil, I can see it now. White sandy beaches, tropical beverages on tap. And the hardest this isn't I have to make is which floaty to ride. Wait, what are you talking about? Do you need a day off? Well, yes, but also, I'm opening up to you describing my ideal retirement.

What's yours? Oh, me. Nothing much. Maybe a quaint palatial spread with AI everything and maybe a pool. But that's not for a while, so don't stress me out. It shouldn't stress you out. It's exciting. You can open an eye.

R-A in minutes on Robin Hood and start getting excited about your potential retirement dreams. I guess you're right. It's never too early to start thinking about retirement. And it's never too late either. Future you will thank you so much. You don't even need a traditional employer. I knew that. I also know that Robin Hood retirement offers a match on contributions. So ha. All right. Good for you. And good for all of us with Robin Hood. Learn more by downloading the free app in the app store or Google Play Store and get started in minutes. disclosers terms apply to the match and limitations apply to IRAs all investing involves risk and returns are not guaranteed visit robin hood.com slash retirement for more information

robin hood financial lcc member sipc disney movies are full of epic battles simba versus scar peter pan versus captain hook ant man quantum man quantumania versus actually good cg i but yesterday the battle that has been playing out in its boardroom finally came to a conclusion disney ceo Bob Eiger fended off billionaire activist investor Nelson Peltz and his hedge fund try-in, who wanted to ask Iger and take the company in a different direction. Ultimately, despite a fairly loud press tour by Peltz and nearly $70 million spent by all parties to woo voters, Disney shareholders approved the board members backed by the current company leadership in a pretty lopsided vote.

Iger secured 94% or 94% of votes casted, while another Disney director who's Peltz's fund had contested 163 per the Wall Street Journal. Peltz only earned 31% of votes cast. So the status quo was maintained at Disney's corporate Magic Kingdom, but now comes the hard part. Following through on the vision, Iger and Co. painted for shareholders, mainly making its streaming division profitable and turning around a content studio that has seemingly lost a bit of its magic touch. Yeah, I mean, this is a big win for Iger. I mean, his job was never in doubt, but Peltz definitely wanted some more

influence. So what was wrong with Disney? There was so much wrong that Iger needs to address. One thing I want to talk about is the box office downturn. Go back to 2019. This is a crazy stat. Disney had seven one billion dollar movies. Since then, it's had just one, if you can guess. I can't remember what it is right now. Avatar, the way of the water. The second avatar was the only billion dollar movie that Disney's had since 2019. Yes, there was COVID. But this is just one of the myriad problems that Bob Eiger has to solve. Another big one that Peltz identified is his failed succession plan. He brought in Bob Chapic, who was his handpicked successor. That didn't work. Three years later, Iger came back. And now the big task for Iger ahead is to find the next

person who's going to replace him as Disney CEO. Yeah, this was not a zero-sum game just because Iger won the shareholder vote. It doesn't mean that his reputation wasn't bruised a little bit. This was a very public proxy battle. People were calling it the most expensive proxy battle of all time. So this was not just that it shook. It kind of shook the foundation of his once rock solid control over Disney. And you're right. The succession thing was a one part of Peltz's playbook that people were resonating with.

Shareholders were resonating with because Iger's contract runs to 2026. He's promised to step down. So this is kind of a warning shot to all big corporations that you better nail your succession. because if not, then you're going to face pressure from shareholders. One major boost that came to Iger's side was George Lucas, who sold Lucasfilm to Disney for $4 billion in 2012. George Lucas is the largest individual shareholder in Disney, so he has some sway, and he came out in full support of Iger.

He said, creating magic is not for amateurs, which is maybe a side swipe at Peltz. On the other side, Peltz did have some support, especially for those who think that Disney got to, quote, woke. Elon Musk came out in support of Peltz and tweeted a bunch about Disney and said that Disney shareholders should vote for Peltz. So it's not like Bob Iger could had, you know, the full support behind his back. A bunch of major institutional shareholders like CalPERS, like institutional shareholders services, which is one of these advisory firms. And another one came to Peltz's defense, which showed you just how rocky and lacking of confidence Disney shareholders had an Iger and his plan to turn Disney into the 21st, the second

decade of the 21st century. Yeah, looking ahead a little bit, one priority for Disney is figuring out what to do with ESPN. They are trying to launch this ESPN direct-to-consumer app while also managing the decline of its cable channels that it owns. There's also this online sports bundle that Disney's launching alongside Fox and Warner Bros. Discovery. So figuring out what to do with its sporting properties is definitely a big priority as well, as well as figuring out how to make movies and make a million dollars again. Okay, you might have heard rumblings of bird flu going around. So let's get to the bottom of what's happening so you can eat your eggs in peace this morning. Earlier this week, Cal Maine Foods, America's largest egg producer, said it would

cull about 1.6 million hens and 337,000 young chickens after some tested positive for avian influenza at one of its plants in Texas. That amounts to 3.6% of the company's total flock. Separately, officials have detected highly contagious bird flu in dairy cows across five states. And in an extremely rare occurrence, it appears that one of those dairy cows infected a worker in Texas who became only the second human case of bird flu in the U.S. Authorities have stressed that the risk to human health is low because cow's milk is required to be pasteurized before it enters interstate commerce. And pasteurization kills bacteria and viruses like the flu in. milk. But even if the health risk is low, another resurgence of the bird flu could limit supply

and send egg prices higher, and eggs have already been climbing to their highest level since last April. Right. So the playbook here when an avian flu outbreak is detected is to depopulate the birds, which is the poultry industry's way of saying you kill all the infected chickens. You attempt to eradicate the virus before it can spread and then you bring in new birds to replace the other birds. You're right, though. It is going to lead to a momentary sharp decrease in egg production in the short term. So egg prices might see it. We might see them climbing back up, seeing higher egg prices on grocery stores. It doesn't look to be a persistent thing, though, but you still might feel that momentary bite from the constrained in supply.

Yeah, we'll see what happens. I mean, it depends on how fast this bird flu spreads. I know a lot of people are getting deja vu because in 2022 we had the deadliest outbreak of bird flu in U.S. history, 57.8 million birds were impacted during that outbreak, and it led to surging egg prices, which was the talk of the town across the internet and elsewhere because of just the sticker shock at grocery stores. I think a dozen eggs surge to an average record of, or an average of $4.82 in January 2023, which was a record. They plummeted last year, and now they're ticking back up. They have been for months.

Now they're at their highest level in a year. So this is definitely something to watch because it will impact the cost of your staples at grocery stores. Yeah. And just finally on the health side of things, USDA does remain confident that the meat supply will remain safe because, again, if it's affecting chickens and cows, you automatically wonder how is the meat supply going to do.

But they say that as long as you're cooking meat to the proper internal temperatures, 165 for chicken. I always think that's a little too high. Dries it out just a tad. But as long as you're doing that, it should kill bacteria and viruses, including the bird flu. Let's move on. Amazon once had a vision for the future of grocery shopping. It wanted to create a world where you can walk in and grab some spaghetti, marinera sauce, maybe that chicken breast that we're talking about, walk out without waiting in a checkout line. But as it's gearing up to open a new batch of grocery stores that Just Walk Out technology is nowhere to be found. Instead, Amazon's next generation of Amazon Fresh stores will offer dash carts, which let customers scan items while they shop.

Still, admitting defeat on Just Walkout is surprising. It was supposed to be the game changer that would let Amazon make headway into the grocery market powered by technology. But there were limitations with relying on a bunch of cameras and sensors to keep track of all the items customers were leaving the stores with. And despite Amazon, on tallying the tech as a real-world application of AI. Some outlets reported that there was a larger human element to monitoring the camera fees than they let on. Neil, think this is a smart pivot from Amazon?

Well, this tech just apparently didn't work. They rolled it out in 2018. It was Jeff Bezos' pet project in his big annual letter to shareholders. He said, no one likes to wait and lied. We imagined a store where you could walk in, pick up what you wanted and leave, but the tech just never got there. And the big revelation from this Just Walkout fiasco was that this AI, machine learning computer vision, all those corporate buzzwords, that tech relied on actually an army of more than a thousand people in India who were reviewing transactions and labeling images from videos to train Just Walkout's machine learning model. Amazon contended that these people were there just to help train the AI.

But the information found that they were actually reviewing these purchases manually. it amounted to 700 human reviews per 1,000 sales, which was far more than Amazon's target of about 50 per 1,000 sales. So it appears like this Just Walkout tech was kind of smoke in mirrors and just had people reviewing all of these purchases in the back end because the tech never got to the level where Amazon was confident that it could work. Right. It was incredibly expensive to install, also expensive to maintain. And the other revelation about this technology was that there was a bunch of frustrating issues. use for consumers, mainly that sometimes the receipts wouldn't come out for minutes or sometimes hours after you would check out. So again, the beauty of this technology is you don't have to pay. It just charges your Amazon account. But one of the big psychological things about grocery

shopping is some people have budgets and they want to keep track of exactly how much they're spending. And if you don't get your receipt until after the fact, you don't really feel comfortable loading your card up. So I do think these new dash cards where you're scanning the items as you're picking them up, and then that's the way that it will kind of keep track and tally up what you're buying. That's a much better psychological experience for people, because you can see, if you got $100 grocery budget, you get $100 of groceries in your car, and then you can walk out. Yeah, it's definitely reflective of Amazon's really half-hazard and chaotic approach to physical retail. It has these Amazon fresh, larger format grocery stores. It has these Amazon Go convenience

stores. It bought Whole Foods for nearly $14 billion in 2017. But, that hasn't really amounted to much of a market share take in the grocery business. I mean, when they bought Whole Foods, it was considered that Amazon would inevitably dominate grocery, and it just hasn't come to pass. I got a good grocery stat for you. It's fourth quarter revenue from physical stores came in at $5.1 billion, this most recent fourth quarter, which is up just 14 percent from the first full quarter after it acquired Whole Foods. That was back in 2017. So it's a sensely remained stagnant for all these years now. It certainly has not taken over grocery as many expected. Up next, you have a treat coming your way because it's time for Neal's numbers.

Welcome to Neal's numbers, the segment where I share three stats from the week's news that will give you an endless supply of small talk material. For my first number, a thought experiment. How much money would you need to retire comfortably? What is that magic number? For the typical American, it's $1.5 million, according to a new survey from Northwestern Mutual. There's just one problem. That's 17 times more than the 88,000 savers have set aside on average. And it's also more than 50% higher than what people thought they need before the pandemic. To economists, this ballooning retirement benchmark reflects so-called retirement anxiety where people just don't know how much money they'll need in retirement. For instance,

that 1.5 million, probably right for some high earners, but most families with lower income, likely need far less. So people are significantly overestimating the amount they need in retirement, and that comes down to uncertainty. With a shift from pensions to 401Ks, all the decisions for retirement investing and planning are left to the individual, and many people just don't know how much they'll end up needed. One thing that stood out to me about the survey, too, is the difference in generational perception of how much wealth you're going to need to retire with. Gen Z millennials had the highest bar. They thought they would need over $1.6 million, Gen X was close behind. But then the generation that was closest to their retirement, which is baby boomers, they set the bar the lowest at $990,000.

And I think part of it is because you are just more in tune with your spending habits. You're more realistic. And you're also closer to that retirement age. So the generational gaps here was an interesting wrinkle to the survey. Yeah. And I think it perfectly explains what Larry think, the CEO of BlackRock, said last week in his call for refurbation. forming the retirement system here in the United States from, we over the past few decades, we went from this defined benefits, pension plans to define contribution, which left so much uncertainty into how much income you're going to get after retirement. I think we're seeing it play out in these numbers where people just have no idea how much they're going to need. Fidelity

does say, here's a rule of thumb to measure your retirement readiness, which is that you should save 10 times your annual salary by age 67. Oh, I got a way to go. I was doing the math right there. some mental math. All right, my next number might shock you, or at the very least, sting you. America's honeybee population has skyrocketed to an all-time high. It's bewildering. For almost two decades, article after article has warned that bee colonies are collapsing at a rapid rate with major consequences for the crops that are pollinated by them. But according to the definitive census of agriculture and spotted by the Washington Post, the U.S. has added almost one million bee colonies in the past five years for a current total of 3.8 million.

In fact, honeybees have been the fastest growing livestock segment in the country. So what's behind the surge? There are a couple of factors, but the most interesting of them to me is in Texas, which has seen an explosion in small bee producers in the past couple of years. And that is the direct result of a 2012 law that grants agriculture tax breaks to farmers who keep bees on their plot of land for five years. And because of that law, Texas has more bee operas. then the bottom 21 B states combined.

Yeah, Texas has absolutely been popping off here. It's kind of these quasi-hobvious with just a few hides. These aren't these big, massive hive operations. What's interesting, too, is that they talk about feral bees as well. They're not even counted in this agricultural census. So just the term feral bees in general was an interesting way of putting it. But yeah, bees, shout out bees. Bees are, they went through it's so over.

We are so back arc. and now it looks like they're so back. Meanwhile, while Texas has the most producers, California has the most bees of any other state, four times as much as the second largest state, and that is primarily because of this booming almond crop. So 170 million almond trees every spring. They unite in one of Earth's Great synchronized acts of sexual reproduction,

and the thing that makes them happen is honeybees. The acreage of almonds has doubled since 2007, so one can assume, according to the Washington, post, that honeybee population has doubled with it. So as the almond crop has boomed in California, so is the honeybee population. We've staved off collapse and looks like we're in an okay place. So you're telling me when I order my almond latte at almond milk latte at Starbucks, I am saving the bees. That makes me feel a lot better right there. You are. Okay, my final number is the largest TV audience ever for a woman's basketball game in the U.S. It's 12.3 million,

and the record was set Monday night when Caitlin Clark in Iowa defeated Angel Reefiated Angel and LSU in an epic elite eight showdown. For context, that game had more viewers than every MLB game last season, every NHL game last season, the 2023 NBA finals, and every college football regular season game last season except one. Thing is, the woman's basketball record might not even last a week. On Friday night, tomorrow night, Iowa will take on Yukon in the final four, and given the star power of Iowa's Clark and Yukon's Paige Beckers,

analysts predict that game will likely see an even higher audience, than the LSU matchup. Just to contextualize that insane number in a different way, Amazon paid the NFL $100 million for the rights to air a single regular season game on Black Friday. That average just 9.6 million viewers. Iowa LSU came in at 12.3 million viewers. So when you put that rights deal in comparison with what ESPN paid to air the entire NCAA women's tournament, which was $65 million annually, that is looking like an absolute steal now.

Meanwhile, LSU, the star forward Angel Reese, she declared for the WMBA draft. So she'll join Caitlin Clark in the WMBA next year unless Caitlin Clark decides to go to Ice Cubes League. But it sparked an interesting conversation about these players are such stars in college. Are they sort of dimming their star power if they go to the WMBA, which does have fewer people watching than women's college basketball? Hopefully they bring those eyeballs over to the WMBA. That would be the ideal scenario. Big city marathons are usually a day for celebration, a little bit of chafing, and good vibes for runners in places like Boston or Chicago, but the Metropolitan Transit Authority in New York is bringing zero good vibes to the New York Marathon. The MTA wants the organizers of the New York Marathon to pay it $750,000 a year to make up for the loss in toll revenue and encouraged when it shuts down the Verrazano Narrows Bridge for a day.

The bridge connects Staten Island to Brooklyn and has long been the very famous starting. point for the biggest marathon in the world. The MTA knows it's playing the bad guy here, but it doesn't really care. The president of MTA Bridges and Tunnel said, New Yorkers love Marathon Sunday, but taxpayers cannot be expected to subsidize a wealthy non-government organization like the New York Roadrunners to the tune of $750,000. Neil, the elephant in the room here too is congested pricing, which would charge automobiles a fee to enter certain parts of the city during peak traffic hours.

federal officials have allowed New York to move ahead with its congestion pricing plans, but the extra revenue the transit authority can expect from those new laws hasn't come in yet. So the MTA is nickel and diming the New York roadrunners in the meantime. Oof, yeah, the MTA is not making any friends these days. First of all, it's not a bad business to have a bridge here. $750,000 per day. That amounts to $273 million per year. So the Verrazano is bringing in almost $300 million per year from tolls.

that's not bad. So if the road runners do not pay, they can still use the bridge, but they can't use both decks. It can just use one, which might lead to fewer people entering the race. And as you know, there's already a very long wait list past the 50,000 people that are allowed in. Or they could extend the duration of the race by just, you know, elongating it because they have fewer lanes to use at the Verrazano.

And that would require many more people to finish the race at night. So there are sort of contingency plans if the roadrunners decide to just stick it to the MTA and say we're not paying. Yeah. And the MTA has kind of said, listen, you have insane demand, just raise the prices of the price of emission, which again, it's just a massively unpopular thing to say. It already runs you over $300 to enter this race. But I guess there is just pretty much unlimited. There is no price sensitivity here for runners. Only 4% of people who applied got accepted into the marathon this past year.

So technically they could raise prices, but again, it's just not a very popular agenda to be pushing. Let's check in on that congestion pricing a little bit because, remember, this is supposed to be the big thing that will help boost revenue, also reduce a lot of the car traffic that we're seeing in New York from time to time. Those transportation officials have allowed New York to move ahead. The one group that is very angry about this, though, is New Jersey, because New Jersey says, we're going to be forced to shoulder kind of this extra environmental and financial costs of rerouting a lot of the cars from Lower Manhattan into New Jersey. So there's definitely some legal pushback from New Jersey as well.

So even though that plans are being made, we might see some roadblocks hitting the congestive pressing. Yeah, there are six lawsuits going around. But for anyone who wants to go into New York, if this does get enacted below 60th Street, that's $15 during the daytime hours. And that could come if these lawsuits are defeated by mid-June. and become the first U.S. city to have congestion pricing. Finally, a city in central Thailand has decided that enough is enough.

It will no longer tolerate warring gangs of monkeys that overrun public spaces, terrorize the city's tourists, and have left it a ghost town. This week, officials in LaBerry announced a monkey-catching campaign to snatch 2,500 urban monkeys and put them under the care of wildlife authorities. Monkeys are the symbol of this province, and tourists from all over the world come to see them, feed them, and of course, take selfies with them. The region even holds an annual monkey festival to thank the animals for attracting visitors to Lopbury. But if you give monkeys an inch, they're going to take down your economy. Businesses in the once bustling city center have had

a close-up shop because the monkeys harassed customers and damaged storefronts. A deserted local mall that put itself up for sale two years ago had to discount its price by 30 percent, and it's still on the market. Now, facing economic disaster, the city is done monking around. It is definitely a catch-22 for the city because the macaques that roam the city are the symbol of local culture. They have a festival for them. It is a major tourist draw, but too many, it scares the tourists away.

These monkeys have been trying, they've been snatching food. They dislocated a woman's knee as they were grabbing food. They knocked a guy off the motorcycle. So they are doing more than just causing monkey business, causing a kerfuffle. And part of the issue, too, is that these macaques are very very. very territorial animals. So there are literal monkey gangs that are warring against each other. And humans are kind of the collateral damage caught in the middle right now. Yeah. And they've gone viral too. I think that's a big part of this about like why we're

talking. It's because there's been over the past couple years, there have been various viral videos that show these monkeys coming in, fighting with each other, fighting the humans. And that sort of caught the eye of a lot of people because it is kind of a wild sight to watch these monkeys go at it. This is not just a 2024 problem either. If we go back to the pandemic as well. There was reports of during March 20th, 22, one of the Lopbury monkey gangs took a two-hour train ride and back to go look to food in a in a different city. They also found and dominated a local monkey gang there. So these monkeys are very smart. They're literally taking train rides to look for food. And also during 2020, when everyone was quarantined inside, the monkeys basically

took over the city. There was one report that they took over a movie theater and converted a projection room into literally a cemetery for their dead. And any humans that entered would be attacked. So it's kind of scary in a way. But yeah, these monkey gangs are certainly more intelligent and more aggressive than you could ever imagine. And they're scaring off investors. I mean, there were reports that a Chinese investor came to town, was ready to plop some money down on a new facility in the city and saw all the monkeys. It was like, no, I'm getting out of here. This is not good for my business. All right. We have to wrap it up there. Thanks so much for listening. Maybe the sun will come out today? Probably not, but one can hope the vitamin

D levels are being depleted rapidly. The sun is always shining in our inbox, though, so soak up the rays by sending a note to Morning Brew Daily at MorningBrew.com with your thoughts and feedback. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer. Olivia Graham is our associate producer. Eugenawa Ogu is our technical director. Billy Minino is on audio. Hair and makeup has gone off the grid to become a beekeeper. Devin Emory is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.