Morning Brew Daily - Millions Lose ESPN and ABC In Disney-Spectrum Beef & NYC's Airbnb Crackdown

Episode Date: September 6, 2023

Episode 141: Neal and Toby discuss the fight between Disney and cable provider Charter Spectrum and why ESPN and ABC has been blacked out for millions of people, and what does it mean for the future of cable? Plus, NYC cracks down on Airbnb and video game 'Starfield' finally hits the market after years in the making. Also the guys break down why the German economy is struggling and what CEO makes $379 million a year. Finally, who is trying to dig through the great wall of China? 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

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Good morning, Brew Daily show. I'm Neil Fryman. And I'm Toby Howell. On today's pod, we extend our deepest sympathies to everyone blacked out of ESPN and explain why your frustration could lead to the demise of TV as we know it. And Germany is struggling so hard, not even Octoberfest can turn around its economy. Then an Airbnb apocalypse could be coming to New York City after new regulations have made it tough to operate in the Big Apple. Plus, one of the biggest video game releases in years drops today, and Microsoft kind of needs it to be a banger. It's Wednesday, September 6th.

Let's ride. Okay, Neil, so I did my fantasy football draft yesterday, and I know a lot of people's eyes glades over when they hear fantasy, but two things are interesting to me. One, I did it on Yahoo Sports, and Yahoo gives out a draft grade rating how you did in the draft. I got a D, so that was great. But then they also write a brief draft recap for each team telling you which picks were good

and which picks were bad. And at the top, it says generated by chat GPT. And I was thinking, okay, these were probably always written by AI, but now there's like this branding piece to it. So I thought that was an interesting angle to it. Okay. So what did Chad GPT say about your D grade? It absolutely demolished me.

It said I reached on a lot of picks. And my team name was auto-generated as Toby's tip-top team. And they're like, he's not living up to his namesake by these draft picks. And it forecasted me to go 3 and 11. So I got roasted by ChatGVT on a Tuesday. You know, I'm maybe dubious of some of AI's capabilities, but I'm thinking it's spot on here. Oh, gosh. It's really come a long way.

Here's what I'm thinking, though. If inverse towi hits and I'm projected go with three and 11, that means I'm going 11 and 3, right? So it works both ways, Neil. It works both ways. We're all rooting for you. I'm just happy that there are wings in the fridge here. I came in and there's like pizza everywhere and buffalo wings. And I'm like, how early is too early for pizza and Buffalo wings?

We're heading right from the studio straight to the wings. All right. to kick things off, we need to talk about the fight between Disney and Charter only because the future of TV hangs in the balance. Here's what's going on and why it's such a big deal. Some angry people listening to this may know that subscribers to Charter's Spectrum cable service were not able to watch any Disney-owned channels like ESPN ahead of the long weekend, meaning they couldn't catch the return of college football, US Open tennis, or F1. Those channels were blacked out because of a contract fight between Disney and Chart.

the second largest cable company in the country. Disney, which sells content to Charter, wants Charter to pay more than the $2.2 billion it shells out each year for Disney channels, saying that content costs more now, so we're raising our prices. That's life. Pay up. Charter, meanwhile, says it could pay more, but only if Disney lets it get creative with how it bundles programming for subscribers, like leaving expensive sports out of more packages for non-fans or offering Disney streaming services like Disney Plus or ESPN Plus for free. Because if you didn't know, people are cutting the cord in droves, and if Charter raises prices, it'll probably only accelerate the decline.

Fights between cable companies and content companies happen all the time like this, but this one does feel different. It feels bigger. That's because both companies have essentially acknowledged that the current cable TV model is broken beyond repair, and they're fully prepared to break off this relationship entirely. Even the Charter CEO, which runs a cable service said that TV is reaching a point of economic indifference and that they'd be fine moving on if they don't reach a deal. So in conclusion, what gets worked out or not between Disney and Charter could determine whether cable TV still exists as a business model? Toby, this is a bit complicated. Did I miss anything? No, you broke it down really well. What's been interesting to me

is the fact that both of these services have been pushing their customers in different directions. So you see Disney has been steering people towards Hulu Plus Live TV, which basically, basically, Basically, it controls. It owns Hulu. And it's a cable alternative, cable TV alternative that costs $70 a month. That includes all the channels that Charter is blacking out. But then Charter has been pulling this weird move as well, where it's steering people towards Fubo TV, which is another one of these live TV offerings.

And it's a competing service to Hulu Plus and all the other ones that cost $75 a month. But it doesn't really have a relationship with Fubo TV. It's offering a discount to it. So a lot of people have been scratching their heads thinking, why is Charter pushing us towards this competing TV service? But it kind of just goes to show the stakes of this fight and that Charter's almost willing to burn it all down in order to make sure that Disney doesn't win this battle. The image that comes to mind is the Joker and the Dark Night walking out of the hospital

without maybe a little grin just like blowing up everything. Because, yeah, it does seem like Disney and Charter are ready to burn it all down. both have been making moves away from the cable model anyways. Disney, as we know, has been investing in its streaming services like Hulu, Disney Plus, and ESPN Plus. Eventually, it says it wants to take ESPN direct to consumer, and ESPN has been holding up, basically putting the cable team on its back for years now. Spectrum and a bunch of other cable companies have also seen the writing in the wall. 25 million subscribers have cut the court in just the past five years, thanks in part to raising

prices like this and higher content costs. So they've been moving on to internet and other broadband business models. So they're just like, look, cable TV is just not making money anymore. We need to move on. What I thought was interesting, though, is that if you look at across all cable providers and pay TV providers, only one actually increased its customers. So like if you look at Verizon, Sling, charter, Comcast, Hulu TV, all the ones we've mentioned, only YouTube TV actually solid boost in subscribers. So it really is kind of, there's so many options out there. So we might eventually start seeing a consolidation. It looks like YouTube might emerge from them, this multitude of offerings and kind of hoover up all these subscribers that are looking for an option. But they've

been jacking up their prices. I know. I think the thing is, it's actually the UI and U.X that is the best because I have YouTube TV and it's via our PlayStation. I just go on and just, it's very easy to navigate because it feels like YouTube. So I think it's like one of this, this very native feeling thing. So if I had to pick a winner from this whole scenario, it could be YouTube TV. Yeah, my friend also said that he unsubscribe from Charter over this because over the weekend, you couldn't watch any sports. And he signed up for YouTube TV. There you go. So that, there's, YouTube TV is definitely seeming like the winners here. And I feel like the longer this dispute goes on, the longer people can't watch the things they want to watch sports wise.

just going to cut the cord and will only accelerate this shift. I think the big thing will be Monday night football coming up on Monday because Aaron Rogers is making his debut as in the New York Jets. That's happening on Monday night on Disney and ABC. And Spectrum's big in New York. If New York Jets fans can't watch Rogers play, then they're just going to be like, I'm done with you, Spectrum. Like, it's over. Yeah, dire times for Spectrum for sure. Okay, Neil, let's move on to our next story where it looks like the Airbnb dream is dying for thousand of owners in New York City. New rules went into effect yesterday that require hosts to meet strict occupancy regulations and building codes.

But in a classic, in classic bureaucratic fashion, the Office of Special Enforcement is struggling to keep up with applications for new licenses. This thing could get ugly for a lot of owners. Around 7,500 units don't even meet the requirements to apply for a license, so it will likely just disappear from the platform altogether. And all told, market analytics firm ARDNA estimates that only 9,500 of the 38,500 Airbnbs in the city are legal. So, Neil, combine these new regulations with pre-existing rules that only allow home rentals a fewer than 30 days within the city. And this is looking like the end for lots of Airbnbs in the big apples. There's been, there's been restrictions here

for a while, but this looks like the enforcement that actually has some teeth. And these rules are essentially going to snuff out Airbnb. That's what Airbnb said. And kind of when you look at it objectively, it's hard to imagine an Airbnb host complying with these things. I mean, you can't read out your entire apartment or home, or home, even if you own it. You also must be present while your guest has a short-term stay of less than 30 days. And then here's the kicker. Host and visitors must leave their doors inside the dwelling unlocked so occupants can access the entire unit. So you basically have to leave every single door open under these regulations. So that's why Airbnb has said, look, you're not calling it an Airbnb ban.

And also there's VRBO and booking.com and other platforms here involved. But they're like, essentially, this is going to snuff out all Airbnbs in the city, which, you know, from Airbnb's perspective, offers flexibility for people who don't want to go to hotels. Yeah, I mean, there's two ways to look at it. people on Airbnb's side is saying that, ah, this is just another case of the hotel industry dominating New York City and that by getting rid of Airbnb's, you're just giving all the power and there's no flexibility anymore when you're coming to stay. But then on the other side, there's a very real housing and affordability angle to this where a lot of critics of Airbnb

says there's too many units in the city hoovering up too many livable premises just for Airbnb. So by reducing the amount in the city, like it could, free up some units for more affordable rentals. I guess from the city's perspective, it makes sense that you don't want, they're essentially unregulated hotels that are going on. I mean, I read about this one guy, and he says he does Airbnb arbitrage where he basically rents out units. I think he said he had eight at his peak.

And then he rents, you know, he doesn't even live in them. He's renting them out to Airbnb people. So he is an example of someone who's kind of running a hotel on his own by just renting out units, taking them off the market. To me, though, you know, putting on my little. urban planner. I don't know if Airbnb is like the big problem here in terms of housing affordability. I feel like you should need to register with the city. There needs to be transparency and accountability because you can't have these things running illegally, essentially.

But I don't know if Airbnb is the big problem here. And as a traveler, it's nice having as a traveler. It's nice having options. And then as a host, I know so many people that earn a little extra income on the side for renting out things on air, for renting out their spots on Airbnb. B. So this definitely drives up one of those income sources that they had come on to rely on. For sure. Okay, Neil, let's move on to our next story where I want to tell you about a new video game that is coming out today. It's called Starfield, and I can tell you, Neil, the industry is a titter. This is a big deal because it's coming from the studio Bethesda Games, who is behind other classics like Elder Scrolls and the Fallout franchise. But Starfield is its first

original release in 25 years, and it promises to be epic. It's in that open world genre that we've talked about on the show before where players can explore over a thousand real and fictional planets, complete quests, or simply frolic around the universe and talk with any aliens the encounter, using 3 million different words of dialogue. Microsoft in particular is holding its breath around this release because it sold out $7.5 billion two years ago to buy Bethesda games, mainly so it can ensure Starfield would be available on its Xbox consoles. Neil, there's a lot writing on this game. Who do you think has more at stake, though? Bethesda or Microsoft? I think Bethesda has a great reputation. And Microsoft, there's a lot for Microsoft here.

They paid, what? $7.5. Almost $8 billion for, honestly, it seems like just because of this game. Right. They were really afraid of it going to PlayStation. They've been ravaged by PlayStation and Switch. They're clearly the number three console and Xbox. Halo is kind of fading from relevance.

They need another block. here and they scooped up Bethesda shout out Maryland suburbs to get this game and they're hoping that it is going to be, you know, the next big Bethesda release. So I'm just not sure. Sometimes games are too big. Right. Right. Sometimes games are too big. And when you build a thousand planets and you want people spending 30 to 40 hours on this game, which is what they want, getting lost everywhere, you need some sort of AI generated content. And this has a lot of AI generated content. And this has a lot of AI-generated content and people are a little worried that it could lead to sort of less engaging gameplay.

When you build at such a scale, you create the potential for glitches and just kind of spaces where you're just roaming around not doing anything. The thing that this reminded me of, do you remember the game called No Man Sky? It was supposed to be this massive generated universe with over 18 quintillion planets. So the huge scale of it, but then players started playing it. They're like, well, this is the most boring thing in the world. Nothing happens. So I do fear for it running into the same issue as that.

But also, so I was digging into the gameplay a little bit. And then apparently there's some insane physics in this game. One player stuffed 20,000 potatoes into their ship's cockpit, and then opened the door just to see how the potatoes would interact and see if the frame rate dropped or anything. And I watched the video. It looked like how the physics of potatoes spilling out of a cockpit would look. So it does allow you this crazy experimentation.

And then another weird detail is that having sex in the game actually is a great way to level up. You get this experience buff called emotional security. And then this is the funniest part. There's no way to have a one-night stand in the game with MPCs. So the only way to get this buff is to get to know your crew on a personal level. So you have to put in the work. So again, like, I do think the game size could work to its disadvantage. But also there's so many of these little things.

And if it really catches on, people are going to start. exploring it. So I'm bullish overall, I guess, but mainly because the potatoes in the sex thing. All right, Neil, before we jump into our next story, we're going to take a quick break. 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. Not loving your AT&T or T Mobile Bill? Yeah, we've been hearing that a lot. Good news. Bring your AT&T or T mobile bill to Verizon and we'll give you a better deal. So get away from that unfortunate phone bill and get to Verizon. Run, ride, canoe. Whatever it takes, we'll be here.

Bring your AT&T or T mobile bill to a Verizon store. today and we'll give you a better deal on the best network. A better deal. No surprises. That's Verizon. Best network based on route metrics, best overall mobile network from the U.S. second half 2025. All rights reserved. It must provide a recent consumer mobile bill in the name of the person giving me the deal. Additional terms, conditions, and restrictions apply. We're back and Toby. We need to talk about Germany because outside of snagging Harry Kane, things are not going well for the world's fourth largest economy. Well, just a few years ago, Germany was an economic powerhouse on the global stage. COVID and the war in Ukraine has led to all

sorts of disruptions that reveal structural rot. And this year, it's the only developed economy that's expected to shrink per the IMF. So what's going on? A few things. Energy prices are too high to promote growth in the manufacturing industries that have fueled Germany's economy, which are chemicals and cars. Germany got more than half of its natural gas from Russia before the war. So when that got cut off, prices skyrocketed, causing German companies to look elsewhere for expansion because their power bills just got too expensive. Meanwhile, as a major exporter, Germany was one of the biggest beneficiaries of globalization and closer ties to China. Anything it could make, China would snap up in a second.

But after the supply chain disruptions of COVID and the Ukraine war, the world has been retreating a bit from globalization. China is in a major economic slump in buying less, and Germany is feeling the effects. Now, some experts are giving Germany the infamous title, The Sick Man of Europe, which is just shocking, given its reputation for having some of the best, engineering on the planet. Toby, you are the economic minister of Germany. You've just been appointed by Olaf Schultz. How do you turn things around? Okay, I'm going to actually create a campaign here. So you know how Volkswagen is obviously a huge part of their economy? I'm going to say hitching our wagon to something else. I'm going to make a wagon joke and make that my new campaign slogan and like hitching our wagon to technology or energy development because right now the wagon has

been hits to aging industries like cars, machinery, chemicals. There's only one major software company in Germany, and that was SAP, which is founded in 1975. So again, it does seem like they hits their wagon to kind of the wrong industries, especially for the direction that a lot of the industries are going. Like, they kind of ignored the EV industry, which was a really bad thing. It was kind of like this hubris thing where German suppliers of automotive components basically were so confident in their strength. They just stopped developing. They didn't invest at all in their electric vehicle development.

So I'm hitching my wagon to EVs to whatever industries that we need to kind of modernize. Well, they're working on it now. But yes, it does feel like Germans got a little complacent because they were on top of the world in cars and chemicals. But, you know, they're still using fax machines and they're sort of a digital revolution that still needs to happen. A recent survey of 500 companies show that fax machines remained in use as the most secure form of communication. That also, I think, I remember I was happening in Japan, too.

So you have these two, like, economic powerhouses that kind of sat down on the couch, got a little too comfortable and watched as others pass them by. The New York Times, in a recent article, spotlighted the Munich Auto Show, which used to be this great coming out party for German cars and was a way for German automobile manufacturers to flex. And guess who dominated this year? Chinese companies like BYD, which are just eating Germany's lunch right now. And Germany used to be the de facto, you know, auto provider in China. But now because of the EV revolution and China's, you know, China's becoming a huge EV leader, they're selling more cars than Germany in their own country. Yeah.

And then also, just to put a bow on thing, German laws are restricting innovation a lot, too. One recent law required all German manufacturers to, vouch for the environmental, legal, and ethical credentials of every component supplier. And essentially, businesses are like, we can't do that. We can't do the due diligence on every little screw that we're using. And so most companies are just setting up operations in another country because they're saying, listen, if you're going to make it this hard to operate within our borders, we'll just go elsewhere. And that's the fine line you walk where you like, you want to regulate these industries, but you don't want to disincentivize people from opening

factory. There is like a little Germany industrial power region in Alabama. Yeah. If you drive like a little near Tuscaloosa, everything is, because there's a massive Mercedes plant, you're just driving in the middle of rural Alabama, and then you see just huge Mercedes plant. Everything Mercedes, like one Mercedes way is the name of the street. So I just remember being like, where am I in like Dusseldorf? Let's do October Fest down there next year. Okay, let's move on to our next story, which is about the highest paid CEO in the automotive industry. When I say, the words highest paid in auto industry names like Tesla CEO Elon Musk or GM CEO Mary Barra might come to mind, but it was actually Peter Rawlingson, the CEO of Lucid Motors that

took home the title. Neil, good old Pete received a pay package worth, are you ready for this? $379 million in 2022. That included a $575,000 base salary, $5.5 million in stock options, and an absurd $373 million in stock awards. Now, this type of compensation package isn't out of the ordinary for an exact. 88% of the 250 largest publicly traded U.S. companies use performance-based compensation for some portion of their executive pay. But the irony is, Lucid hasn't exactly performed. Its stock fell more than 82% in 2022, and the company earned total revenue of just $608 million.

Neil, this isn't the first time. we've seen a gaudy CEO pay package come out of an underperforming company. But when the CEO is getting compensated over half of the total revenue, that's a tough look. Yes, I think it's the way these are structured is obviously, obviously is a little messed up if his salary is over half of the company's revenue. But Elon Musk, and, you know, he's apparently building a glass house. He is not necessarily one to talk because while he has a very, you know, a very small pay pack, sat-based salary. He, a couple years ago, he hit performance bonuses that awarded him $23 billion.

Yeah, technically he didn't make any money as the CEO of Tesla last year. But yeah, he hit that $23 billion mark. So I think he's going to be okay for the next few years. But yeah, if we want to compare it to other competitors, it was 11 times greater than the $34 million earned by the second highest paid automotive CEO, which was Mary Barra from GM. And 21 times, greater than Ford CEO Jim Farley. But also, he's not even the goat of overpaid CEOs. If we want to look at the CEO of OnlyFans, which was, I'm not... He's just the owner.

The owner of OnlyFans. He raked in $338 million in bonuses last year. That comes out to right around $1.3 million per working day. At least in his case, OnlyFans is doing well. user spent $5.6 billion in 2002, up 16%. It generated a pre-tax net profit of $525 million. It has 3.18 million registered creators, which is kind of crazy. And total users of $238 million.

It's pretty crazy how many people are on OnlyFans and then using OnlyFans as well. Can't be me. All right. For our final story, don't you just hate it when one of the seven wonders of the world gets between you and finishing your construction project. Two people in China were arrested after they were accused of plowing a hole in the great wall with an excavator. According to authorities, they were in the middle of a construction project and going through

the wall offered a time-saving shortcut. But now, after getting caught in the act, they are in custody for inflicting irreversible damage to one of the most famous feats of human engineering ever. This is maybe one of the most brazen examples of people treating historic monuments like dive bar bathroom. A few weeks ago, two drunk Americans slept overnight in the Eiffel Tower, and who could forget the British dude, who earlier this summer scribbled two names into the Coliseum, only to apologize later saying he didn't know how old the Roman arena was. Toby, what is going on here? What's going on here is that humans are just being humans. We've done

this for generations, literally since like the ancient Roman times, there's nothing new. There was an engraving from 1892 where someone named Jay Milberg. indicated that he had traveled from Strasbourg to go see it. And then even the ancient Romans did it. There's ancient graffiti in Pompeii that says Lucila made money from her body. These are literally things written in ancient Latin. Something's on your mind this morning. I know, exactly. And then also let whoever loves prosper, which is just like a classic thing to graffiti. It doesn't really mean anything, but it's like this quasi-deep phrase. So my big takeaway from this is that people have been defacing and inscribing their, they're leaving their mark on these ancient artifacts for

since literally they would, humans were could. Right. So what's going on now is there's a few theories is that social media obviously is capturing a lot more of these defacements. And there's this other professor who was interviewed an article I read that said, we have like a greater appreciation for these historical monuments now, which I guess is true. I don't know like in the 18, you know, in 19th century, they were just like, yeah, we got an old. thing here like it's not a big deal we'll let it rod and build something new that just like wasn't appreciated in their society like it is now and now we're like oh yeah so you know this is a unisco world heritage site like rightly we should we should try to protect these these ancient things

but i guess it this is kind of a new phenomenon where we're like yeah maybe you shouldn't draw on something that's super old i just think the the older things get the more valuable they become so the longer and longer like these these things exist the more we're going to want to protect them. I hope so, at least, because you don't want to see people take an excavators to the Great Wall of China, that's for sure. Yeah, Toby, you've said that for a while. You want to protect the Great Wall of China. Speaking of that, it is, this is an amazing feat of engineering. It is half the length of the equator. It was built over 1,800 years. So it's one of those things where someone starts it, another empire, another dynasty comes and builds off of it. But this excavator

is maybe the least of its worries, because as much as 30% of the original structure, may have already disappeared. And I also want to dispel one myth. You cannot see this from the moon. Or the naked eye from space. Every astronaut comes back and they're like, hey, did you see the Great Wall of China? And they're like, no.

I don't know. I'm going to have to go see for myself. Yeah, go to Starfield and see if you can. Yeah, you can see it. But why wouldn't you, it's not that tall. It's long. That's the whole point. It's not tall, but it's long.

Why would that make it easier to see? I don't know. There's greater surface area. I don't know. Let's call it. Either way, you don't. tell anyone that you can see the gray wall of China with the naked eye from space because it's just not true.

All right, that is our show for today. Have a wonderful Wednesday, everyone. Don't hesitate to write us at the email Morningbrewdaily at Morningbrew.com to roast Toby on his fantasy football draft. Let's roll the credits. Emily Milliron is our editor and producer. Samantha Vela's and Raymond Lou is our associate producers. Yucenoa Ogu is our technical director.

Billy Minino is on audio. Hair and makeup is lost in space. Devin Emery is our chief content officer. And our show is a production of Morning Brew. Great show you today, Neil. Let's run it back tomorrow. All. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly

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