Morning Brew Daily - Murdoch 'Succession' Drama's Grand Finale & Florida's Train of the Future?

Episode Date: September 22, 2023

Episode 153: Neal and Toby discuss Rupert Murdoch stepping down as chair at Fox and handing over power to his son Lachlan. Talk about 'Succession' lore. Plus, they get into the biggest business headlines from a week filled with geopolitical news. And also Florida's new high speed passenger rail line debuts after 11 years in the making. The guys share their stock and dog of the week, and how AI is creating images out of thing air. Finally.... what's the deal with expensive airport food? 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, Rupert Murdoch stepped down from a Fox Corp and News Corp, sparking succession memes and real-life intrigue over the future of his global media dynasty. Then high-speed rail network fans rejoice because for the first time in a century, we have a new private train line to talk about. It's Friday, September 22nd.

Let's ride. Neil, I just want to take a moment this Friday to thank everyone out there for listening to Morning Brew Daily. We've had a record downloads every day this week. So to anyone who's told a friend, told a coworker, or shared the good word in any way, shape, or form, we appreciate you. Yeah, I love when listeners provide context on stories we've talked about on the show. So yesterday we talked about the proliferation of mushroom foraging guides written by AI that offered dangerous advice. And I had a guy who is a fungi expert slide into my Twitter and said that actually it's okay to taste wild mushrooms. But you have to do it carefully, and you can definitely not swallow them.

So there are times when you can have a little nibble. Don't swallow it. That's according to Casey, an acclaimed fungi expert on Twitter. We really do have the best listeners. So, yes, just a thank you to everyone. And also, Neil, I was hanging out with some of my roommate's friends yesterday, big listeners of the show. And they said the only reason they tune in on Friday is to hear if it was a fast week or slow week. So give the people what they want, fast week or slow week.

For me, it was a slow week. I don't have a particular reason why, but that is my truth. All right, Neil Speaker Truth, for me, it's Fast Week because that's just who I am. I live life in the fast lane. Okay, let's head to the news. For those of us disappointed that the TV show Succession ended, we were gifted a new season playing out in real life. Rupert Murdoch, the larger-than-life media mogul who served as inspiration for Logan Roy on Succession, announced he was stepping down as chairman of Fox Corp and News Corp after seven decades running a global media empire.

Through his newspapers like the Wall Street Journal and TV stations like Fox News, Murdoch changed the way people consumed information and invited plenty of controversy along the way for his conservative perspective and recently casting doubt on the results of the 2020 presidential election. His media properties were so influential that presidents and prime ministers around the world would fly thousands of miles to meet him to secure favorable coverage. So what happens now? It's pretty juicy, considering Rupert has several kids who are vying to take take over the dynasty. It looks like his eldest son, Lachlan, has won out for now, taking the

reins at News Corp and Fox for his dad in a move that had been telegraphed for a decade. But that could all change when 92-year-old Rupert dies because there's speculation that his other son, James, could hatch a plan with the other siblings to stage a coup. James is considered to have a more liberal bent than Lachlan and Rupert and has criticized Fox's coverage around climate change and the election. But Toby, before we get into all of that, that. It's worth taking a step back and noting this is really an end of an era for media. Oh, absolutely. I just never quite grasped just how big the empire was. I mean, yeah, Wall Street Journal, New York Post, Fox broadcast, Fox News. They have talk sport over in the UK,

used to own part of SkySport as well and some Australian news companies as well. I just kept scrolling down the list and saying, wow, it is, when we talk about a news empire, it was truly a news empire. And it was interesting, too. There was a nugget in the AP News story cover his decision that apparently Rupert was the sole and singular decision maker at the company all the way up until he stepped down. I mean, this is a 92-year-old who is controlling every single decision of this massive global empire. So that was just an interesting factoid to me that this guy had so much influence and now someone is going to have to step into that void. Yeah, but there's been a lot of controversy along the way that we should talk about

because there's been, he sort of invented the whole modern town. Right. Newspaper industry in the UK. And I'm a Liverpool fan in soccer. And the son, one of his newspapers, there was this terrible disaster where more than 90 people were killed in his Hillsborough Stadium during a Liverpool match. And the son ran a front page piece that basically accused Liverpool fans of inciting the disaster

when in actuality there, it was the fault of the police. So there have been numerous controversies like that. There was a phone hacking scandal. And then the most recently, probably the biggest scandal of his career, was this 2020 presidential election where Fox News was accused by Dominion voting systems of defamation. And they recently settled for $787 million earlier this year. And that, you know, put a huge cloud over Fox News's head. Yeah, it's been anything but a smooth final year in charge because, yes, you had the Dominion's voting scandal. You also Fox fired its most popular personality, Tucker Carlson.

Their ratings have recovered a little bit from the dip that suffered in the post-Tucker era. But yeah, definitely not the rockiest or not the smoothest kind of ending to his career. But some reporters were almost surprised that he did step down at all because one author who's currently writing a biography about Murdoch said, I thought that he'd be in charge until his very last breath. So maybe he just decided 92 years all the time. He wanted to spend some time on the beach or something. He said he was healthy and would still be plugged in as he's always been. One little, another little nugget for football fans is that the way you watch NFL today

across these major broadcasting networks with all of the gadgets, this entertainment, this huge deal was sparked by Rupert Murdoch because in 1994 Fox usurped the existing three broadcasters to win the rights to the NFL. He paid $1.6 billion. Looks like a steal now. It looks like a steal now, but back then it was not. And now NFL is the biggest media property around. It accounts for, you know, 95 of the top 100-watched broadcasts every single year.

So Rubenur Murdoch is sort of credited with, you know, making the NFL into the entertainment behemoth. It is today and sparking these sports rights deals that have become astronomical and key to like pretty much every broadcaster and streamer's success now. But just like we talked about Disney, yeah, was it yesterday or two days ago? Fox is facing the same sort of headwinds and News Corp. I mean, they are a newspaper empire and they are a broadcast TV empire. And both of those industries are in secular decline. So just like Disney has pivoted to streaming, Fox needs to figure out a way to chart a path forward. And it looks like Lachlan is going to be.

It's on Lachlan. It's on Lachlan for now. And he'll probably chart the same course as Rupert did. But we'll see if James and his siblings do anything in the future. So that's kind of juicy. Succession season four? Five, five. You don't want. All right, moving on, there's been a ton of news in geopolitics this week.

So Toby and I are going to quickly run through three stories that we've been following and think you should know about. Let's start with this deepening crisis surrounding Canada and India that is now threatening travel and trade between these two countries. What happened was on Monday, Canadian Prime Minister Justin Trudeau made the shocking claim that agents of the government of India had assassinated a Canadian citizen in British Columbia in June. that citizen was a Sikh activist named Hardeeb Singh Nizjar, and India's government has long viewed its Sikh population, both inside India and those who immigrated elsewhere, as a concern because some Sikhs want to break off of India and create their own independent state inside Punjab. But Trudeau took things up a notch by actually accusing the Indian government of murdering a dissident on its own soil, which is just unheard of among democracies.

India has angrily rejected this claim and launched a forceful response against. Canada suspending visa applications this week. That means most Canadians who want to travel to India for business or leisure can't at the moment throwing plans into disarray and threatening economic ties. And Canada and India have very strong links. Canada ranks number four in tourist visits to India each year. While many Indian students travel to Canada to study, Indians make up 40% of Canada's overseas students, the highest share of any country. Yeah, and there is a fair bit of money on the line. There's a trade, a recently proposed treaty between the two countries that could end up adding as much as 6.5 billion to each country's GDP. So those talks are fraying

and these relationships have been fraying a little bit for years. There's been tit for tat expulsions of senior diplomats, tip for chat, travel advisory. So tensions between these countries have been on their rise. But yeah, they really took a notch up recently. And yeah, you just don't see something like a blanket visa ban against Western countries very frequently. So this is definitely a situation that will continue to evolve with, yeah, definitely some economic juice on the line. All right, Neil, let's move on to our next story with geopolitical implications. This one concerning the sudden influx of the majority of Venezuelan asylum seekers in the U.S. As of two days ago, the Biden administration made it legal for the around 470,000 Venezuelans

who arrived in the country before July 31st to live and work legally in the U.S. for the next 18 months. This came on the heels of some pretty intense advocacy from certain states, especially New York, who said the city's social programs couldn't support the 100,000 plus immigrants who arrived in the city in recent months. Currently, the city is already providing shelter to around 60,000 asylum seekers, which Mayor Eric Adams predicts could cost the city up to $12 billion if you factor in education and health care. Neil, this feels like a rock and a hard place issue for lawmakers. Because on the one hand, you have asylum seekers far from home fleeing political, economic, and humanitarian issues in their own countries. But at the same time, it's putting immense strain on a lot of the city and country's resources. Yeah. And the blue state leaders in charge, the Democrat mayors have been sort of angry at Biden for not doing anything to help out this crisis.

But they think that this work program will allow immigrants to be more self-sufficient and work for themselves and sort of lessen the burden on state. and local resources so that this is a, Biden handed a bone to them. Yeah. And I mean, Republicans have seized on the opportunity to kind of call out these policies saying all you're doing is making it more attractive to, by providing this path illegal employment. But at the same time, all these people want to do is be able to support themselves. So you have to provide some way forward for them to legally work here.

So definitely a situation that we'll keep an eye on going forward. All right, Neil, for our final international roundup story, let's talk about what's been going on during the United Nations General Assembly Week this week in New York. The big name on campus has been Ukrainian President Zelensky, who has been bouncing back and forth between D.C. and NYC, working to unite countries behind his cause, which includes asking for more funds specifically from the U.S. Neil, U.S. politicians are still heavily divided on the issue

of providing more funds to Ukraine in lieu of spending them on domestic issues. So far, Congress has directed more than $75 billion in assistance to Ukraine, which includes humanitarian financial and military support, according to Akeel Institute estimate. And Biden has recently asked Congress for an additional $24 billion to help Ukraine while continuing to voice his unwavering support for the war effort. So, Neil, any major takeaways from Zelensky's time in the U.S.? To me, it was a little less pomp in circumstance than when he came in December. He issued a joint address to Congress, and there was a lot of support for Ukraine.

And to me, it's showing the fraying of support among certain right-wing politicians that don't want to provide this funding, this $24 billion. And it's all tied back to this government shutdown negotiations that we talked about yesterday because they want to include this $24 billion in aid into a broader spending bill. And the Republicans who want to stop this from happening are holding up the government from funding itself. So this all ties together. but you see the top Republicans and the top Democrats kind of united around the cause of Ukraine because Zelensky said if we don't get this aid, if we don't get this $24 billion, we will lose the war. And they're in the midst of a counteroffensive now that's going okay but slower than expected. Yeah, this is not the last time we'll talk about that $24 billion number for sure.

All right, now let's shift our focus back to home soil where we have some big news on the high speed rail front, the first private U.S. passenger rail line to open in over 100 years, is about to begin operations and none other than my home state of Florida. With a top speed of around 125 miles an hour, the Brightline train will link Miami in Orlando covering the 235 mile journey in about three and a half hours,

which is around 30 minutes quicker than the average drive. This has been an expensive bet from Brightline's owner Fortress Investment Group that people will shout $158 for round-trip tickets between Florida's two biggest tourist hubs. So far it's point. poured over 11 years and $5 billion into the project to take it from planning to completion. Neil, a high-speed rail in Florida.

I almost can't believe the words as they come out of my mouth. Well, this has existed between Palm Beach and Miami, right, since 2018. So this represents a major expansion. Not quite as fast. The top speed of this new rail line is much faster than the speed between that. But, yeah, Brightline has been in operations in the state for a while. I mean, Orlando, people travel from Orlando to Miami a ton, right? I think there's 40 million annual people who go back and forth between those cities.

It's becoming like a very heavily populated corridor. So, I mean, as a, you know, I grew up in the Northeast, taking trains all the time along the Northeast corridor here from Washington, D.C. to Boston. And so I'm very, you know, used to just hopping on a train. And I think it's an incredible experience because you can just open your laptop and work. Look at me. I'm just like, yeah, it's amazing because you can work more. But when you actually crunch the numbers for how much it costs to drive when you take in gas and tolls,

that probably amounts to more than $100 right there between a round trip. So if you're like, okay, I have $158 round trip for business class that I can take on a train where I can do whatever the heck I want or I'm in a car for maybe $110. There's a $50 difference there that might not be, you know, might not be a huge gap for people. I just wish it saved more than 30 minutes because that just feels like too short of a number. So I feel like people might get hung up on that. But hopefully it goes well. Hopefully Brightline makes money off this because then it sets the stage for more expansion.

And who doesn't want more rail expansion? I certainly know. The best intercity rail I've ever seen is the Roadrunner, which connects ABQ, Albuquerque, and Santa Fe. And this thing is so cool. It's a double-decker train that has a lot of like the paint job is so southwestern themed. It's called the Roadrunner. And you're just like, I am in New Mexico right now. This is the coolest train I've seen.

You learn something. I need some corroboration from our listeners. All right. All right, Neil, before we jump into our next story, let's take a quick break. We're the Hartford, with decades of experience ensuring millions of unique small businesses. When it comes to your small business insurance. Thank you. One size, absolutely, does not fit all.

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Stock of the Week, Dog of the Week, where we look at one stock who just hit a one rep PR, on the front squat and one stock that skipped leg day altogether. As always, we are just humble podcasters, not financial advisors, so please don't take any of this as financial advice. I won the pre-show half marathon, so I'm up first today. Okay, and our stock of the week is the cybersecurity company Splunk. First of all, incredible name for a company.

But the reason it earns our stock of the week nod is because yesterday it was announced that Splunk is getting acquired by Software Giant Cisco, in a deal that values it at $28 billion. The stock jumped 21%, which is a nice win for Splunkers. That's my name for Splunk shareholders. But also the reason I want to talk about this company is because of a trade that surfaced on Twitter by the stock analysis site, Unusual Wales. Someone bought cheap call options for Splunk on Wednesday, then exited the position yesterday

soon after news of the acquisition broke. After all the dust settled, the mystery trader had turned their $22,000. investment into over $10 million. Neil, I tweeted this out yesterday from the Morning Brew account, but that's either the greatest trade ever or someone's got to be going to jail for insider trading. Very suspicious. So they, their call option, it means that they are betting that the stock will hit a certain level by a certain day.

And this might have, this must have been a, they must have bet that it was a huge, dramatic jump because the stock went up 21%. And I don't know another way to turn 22K into $10 million, unless you're, betting on a miracle to happen, like a literal Hail Mary, and they executed it. The common refrain is someone always knows. And so someone clearly knew because there's no way that you just buy tons of splunk call options for no reason. But yeah, this was the talk of financial Twitter yesterday. Also, it was a big spunk of change for Cisco. I just had to put that in there. I'm leaving. The purchase pride is equivalent to about 13% of its market cap,

which is a big number for a company that's historically kind of avoided these big blogbuster deals. Previously, its biggest purchase was just $6.9 billion. So this was a big chunk of change. Yeah, this is becoming one of the biggest software companies in the world. It keeps growing. 20 billion. Okay, let's go to the dog of the week, which is Arm.

As we've talked about on the pod, the chip designer Arm went public two weeks ago and ushered in a new IPO era, followed by Instacart and the marketing software company, Clavio, this week. But Arm and Instacart and Clavio, for that matter, haven't particularly impressed on the public markets. After a first-day pop, Arm is declined to close just above its IPO price yesterday. Instacart is also trading right at its IPO price as well. It's all pretty underwhelming for investors who hope that these three would jolt a sleepy IPO market awake. But I would caution we're still in the first inning and there's a long way to go in the public markets for these companies. So no one on Wall Street is panicking, but they're not exactly pop.

the bubbly either. Yeah, all things considered, I'm not actually sure we can say the IPO market is hashtag back, because that was kind of the narrative throughout this week is that it is back because all these companies got these huge first day bumps once they started trading. But yeah, they've all settled to back around or below their IPO prices. All told from the three IPOs, they raised around $6.5 billion in the past week. And there's just, there's been just $21.4 billion raise this year, which was roughly in line with last year's horrible haul. That's down 92% from 2021. So again, the narrative has been IPOs might be back. Like, look at these big three companies that just debuted. I don't think we can say that. We're right in line with last year.

This is just a long haul. You can't take anything away from the first or two weeks. I mean, Facebook, when it IPOed in 2004, it was down after its first five days of trading, it was down 16%. We'll get it now. All right, let's talk about a major new release from the world of artificial intelligence. OpenAI released the third version of its generative AI visual art platform, Dali, which turns text prompts into visuals. Think Drippy Pope or Tiny Potato Kings wearing majestic crowns sitting on thrones, overseeing their vast potato kingdom filled with potato subject and potato castles.

The ability to generate images from your unhinged thoughts has been around for years, but Dahl E3 is dropping jaws with its capabilities. For one, it's now integrated with chat GPT, making it much easier to create effective prompts. Plus, Dolly 3 more faithfully executes the image you want to create in stunning detail and without many of the common errors of past AI image generators, like adding too many fingers on a hand. Unfortunately, or maybe fortunately, if you care about misinformation, you won't be able to make a drippy pope with this software. OpenAI included a number of new safety features, including blocking the ability to produce images of public figures. Toby, this visual AI tech keeps getting better and better feel like it could have just as big of an impact as tech-based ones like chat GPT.

Oh, absolutely. But you know what I thought about when this news dropped is actually the company behind Drippy Pope was not OpenAI. It was this other startup called Mid Journey. And remember Mid Journey, we've talked about on the show before. It has this massive discord, this really robust community. It's got 16 million people in its discord alone. but what Open AI did is they just dropped a feature that could basically undermine Mid Journey's entire company. And this reminds me of, do you remember the Clubhouse era back in 2020?

It was this social audio feature where you could jump into a room and talk with your friends. But then all of a sudden, every other kind of audio-based platform like Spotify just dropped a feature that was the entire product of Clubhouse. So this to me is a very similar moment in time where Open AI, who's like the big fish in the pond, is dropped Dolly 3. It's on par or even better than mid-Journey. And so if I'm mid-Journey, suddenly my entire company just got usurped by this one feature drop. So I do think that what we are seeing here is just the consolidation of power even further into OpenAI on both the tech space and the text-to-image-based front. Plus they're only releasing it for enterprise customers or for those who pay for chat GPT plus, which is $20 a month.

So my first thought was they, the Open AI is going to make a bazillion dollars. This is like incredible software that I think a lot of people and companies will want to use. And they have to pay it. And now that there's a subscription business, they're going to pay up. And I just think this is going to become a massive business for Open AI. Although traffic and monthly users to both Dali and ChatDBT has fallen in recent months. So we'll see if this actually boosts interest back again. This is a very powerful thing.

Yeah. To be able to create things out of thin air to just type something and have it appear like a logo or anything. I think this is extremely powerful and we're only beginning to see the impacts. First innings. First innings. All right, Neil, to close out this week of show, we have to talk about a controversy that erupted on the interwebs yesterday. New York Times columnist David Brooks posted a tweet, showcasing his meal while he waited for a flight in the airport. Seems innocuous enough.

It consisted of a burger fries and a mystery amber liquid for a drink. is caption, this meal just cost me $78 at Newark Airport. This is why Americans think the economy is terrible. This set off an absolute firestorm. Twitter's community notes feature quickly chimed in and said that the food costs likely just 1890 based off the restaurant which he was at, which led many to conclude that the whiskey he was more than likely drinking was doing a lot of the hefty lifting in that $78 price point.

Neil, whether it was a joke or not from Brooks, It gave everyone, including us, the opportunity to dive into airport food, its pricing, and if the economy is really terrible or not. It was like the good old days of someone becoming the main character online and everyone dunking on them in good fun. But the point that Brooks was trying to make is what economists, it's actually a serious concept that a lot of economists have been wondering about this year, which is unemployment is at near record lows.

Job growth has been very robust. And yet, you know, the people's views of the economy has. have not been good. And what Brooks was trying to say is that it's all because of inflation, because no matter all of the other good metrics, uh, because of, you know, all the other metrics going on with the economy, they're going great. But the one thing that is giving people a hang up is that inflation is eating into their wage growth. And, uh, you know, it's hurting people's wallet. So that's the point he was trying to get across. I would say the single malt scotch there that costs, you know, wherever $40 to $50 did not really help his cause and sort of undermine the

message he wanted to make. Yeah. People have been making jokes about there's saying this meal costs $60 and it's a Biscop cookie and then like a whole bottle of like vodka behind it. And so they're like, wow, like you're really pushing the budget here. I'm going to an airport after this. So I will do some on the ground reporting and see, I'll order a burger and fries and see what my tab comes out to. Do you remember? Yeah, this also sparked a discussion around the price of airport food, which is generally a little more expensive than what you would get in the surrounding area outside of an airport. And do you remember a couple years ago when, uh, someone spotted a $27

Sam Adams summer logger at LaGuardia. Insane. I do. That was another big kind of internet day for sure. $27. Well, that was a mistake, but it led to this audit of the Port Authority of New York and New Jersey, and then they created more guidelines around

airport food needs to be somewhat in line with the regional market. So you can't, like, you know, go crazy charging for airport food, but I think they still do. I mean, $78 for a burger? Damn. All right, that's a wrap on our Friday show. Have an awesome weekend, everyone.

Looks like it's going to be a total washout over here in New York City, so I guess I'll just park my butt on the couch and watch an unhealthy amount of football. Remember, you can always write to our email address, Morning Brew Daily at Morningbrew.com with your thoughts on anything you heard on the show. Let's roll the credits. Emily Milliron is our editor and producer. Samantha Vela's and Raymond Lou are associate producers. Dan Bousa is our technical director.

Billy Manino is on audio. We love you hair and makeup, but you are not a serious person. And Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. I wish you all well. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot Machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package.

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