Morning Brew Daily - Small Bizz Leans on Layoffs & Netflix Investors Wary of Warner Bros. Discovery

Episode Date: December 5, 2025

Episode 729: Neal and Toby discuss why small businesses had so many layoffs last month compared to larger corporations. Then, the FIFA World Cup drawing is on Friday an event that will generate billions of dollars in revenue. Next up, stock and dog of the week where the guys look at American Eagle and Netflix. And finally a look at the headlines you need to know before heading into the weekend. Check out ⁠https://www.linkedIn.com/mbd⁠ for more. Join this channel to get access to perks: https://www.youtube.com/channel/UCJGeBpBh9_Q0B_EKPmj14Pg/join Listen to the podcast here: https://www.swap.fm/l/mbd-note Follow us on Twitter: https://twitter.com/mbdailyshow Follow us on Instagram: https://www.instagram.com/mbdailyshow/ Follow us on TikTok: http://www.tiktok.com/@mbdailyshow Sign up for the Morning Brew Newsletter: https://www.morningbrew.com/daily/subscribe?utm_campaign=mbd_yt&utm_medium=multimedia&utm_source=youtube Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.wc.com slash U.S. slash brew AI. That's pwc.com slash us slash brew AI. Good morning brew daily show. I'm Neil Fryman. And I'm Toby Howell. Today, the eyes of the globe will be on Washington, D.C. with the World Cup

Draw. Ben, remember American Eagles ad with Sidney it totally paid off. It's Friday, December 5th. Let's ride. Good morning and happy Friday. Just a heads up. We recorded the show yesterday afternoon ahead of our live show Thursday night. So you're getting our PM energy rather than our

AM energy for a change. If you detect a difference, please do let us know. Also, I'm not sure how to say this. Louvre. Lever. Seems no one does. The Paris Art Museum that was the scene of a daring crime was among the most mispronounced words in the U.S. this year. This list comes from language learning company Babel and the captioning group who teamed up to find the words that public figures like news anchors and politicians struggled with the most this year. The Louvre was up there, nailed it, along with New York City Mayor-elect Zoran Mamdani, Monjaro, the weight loss drug, and acetamapentin, the active ingredient in Tylenol. You nailed all of those, Neil, so hats off to you.

If I had to make one of these lists for Morning Brew Daily, it would be long and humbling, but some contenders are Dooring, which is a Neil Freyman special, as is gasoline, which is an inexplicable injection of some South Jersey into your speech. I am certainly not off the hook, though. Turning known into no-in is a Toby special. That is not a compound word. As is mispronouncing Chipotle, which I got no one else to blame but myself for that one. How do I not know how to say Chipotle yet? Now a word from our sponsor, LinkedIn ads. All right, smart guy, I answered yesterday. What's the best return on spend you've ever gotten? So there's absolutely no reason to make fun of me whatsoever. Hard disagree. But I bought a little device that can open any jar. I have an

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once more after a strong September. The first sign, things are not hunky dory in Labor Land, was an ADB report on Wednesday, which showed the U.S. private sector shed 30 32,000 jobs in November, a surprising loss after a positive September. The losses led by small businesses who cut a whopping 120,000 jobs last month, represented the largest private headcount dip since early 2023. Then on Thursday, a separate report from Challenger Gray in Christmas said that layoff announcements crossed 1.1 million this year the most since the pandemic. Companies announced 71,000 cuts last month, pushing the total to 54% higher than the

same 11-month period a year ago. Where did all the jobs go? The most cited reason for cuts were plain old restructuring, but market and economic conditions and tariffs were close behind. Sifting through all this data is the Fed, which is looking for signs on whether to pull the trigger on another 25-point cut or go bigger or hold their fire entirely. The final piece of the puzzle is still hidden between the couch cushions, though, as the government's official November jobs report originally due this Friday was delayed until the six. due to the shutdown. Neil, it's a messy puzzle for sure. The big story here, I think, is the decline in jobs in small businesses. Small companies of companies that employ fewer than 50 workers do

employ almost half of all U.S. workers in the economy. And things have been going in the wrong direction, not just last month, but over the summer as well. For the three-month period ending in October, companies with 50 or fewer employees had a net loss of 88,000 jobs. Now, firms with more than 500 employees, the ones we mostly talk about on this show that are publicly traded or a bunch bigger than the small businesses, they gained 151,000 jobs. So it seems like a case of Wall Street doing pretty well, while small businesses not doing as well. And they are just left to defend for themselves in the face of headwinds like tariffs, in a much more weakened position than someone with like a Costco or Walmart that has scaled

to diversify suppliers or tinker with things. They just have a lot more wiggle room. than these small companies, and they're starting to start hurting. Now, one confounding data point to all the data that I just expressed is the fact that unemployment claims actually fell to their lowest level in three plus years. That was another report that dropped on Thursday. So initial unemployment claims fell to just $191,000 in the week ending November 29th. That is below every estimate in Bloomberg's Economist Survey.

Now, the caveat to that caveat is that around the holidays, these reports get a little bit wonky. as lots of things are going on in the labor market in terms of seasonal employment. So take it with a grain of salt. But that is one data point that shows, okay, maybe things aren't as bad if they seem if technically less people are applying for unemployment, which means less people are out of a job. So the Fed is looking at all of this and saying, okay, what the heck are we going to do next meeting, which is next week, December 9th and 10th. Stocks did get a bump this week, even after all these kind of weak job reports that came in, you know, smattering here, Wednesday and Thursday, and they're likely to, and stocks rose because it seems like the Fed is pretty much a lock

to cut interest rates by another 25 percentage points at this meeting on Wednesday. It's about 90% probability at this point. So stocks are getting a boost from the fact that the Fed is growing convinced that the labor market is weak enough where they have to cut rates to boost the economy. If I just had to sum it all up, which is difficult. ADP showed outright job losses driven by small businesses. Layup announcements remain elevated. We had the highest November in three years. We also have a delayed jobs report so we don't get, you know, the official look into the entire labor market until after the Fed has to meet. And then in the middle of that, unemployment claims actually collapsed to a three-year low. So you make what you will of all of that. But that's all the data points that we are working with right now to sum up what the state of the labor market is. bring Tom Brady, Heidi Klum, Wayne Gretzky, the village people, and President Trump all together later today.

The World Cup draw, that's what. This afternoon, the Kennedy Center in Washington, D.C., will host the grand spectacle of drawing balls to determine which countries play in which groups, kickstarting the sprint to the globe's most lucrative sporting event next summer. Everything about this World Cup is bigger and more logistically complex than any in years past. For one, it's being held across three countries for the first time,

the U.S., Mexico, and Canada. It's also the first with an expanded field, whereas the 2022 World Cup in Qatar had 32 teams, this one will have 48, meaning more games, more venues, and more money. It will also have a very Trump flair, if today's ceremony is any indication. The draw was originally supposed to be held in Las Vegas, but Trump convinced his friend, FIFA President Gianni and Fontino,

to move it to the Kennedy Center, the storied venue Trump took over earlier this year. Trump will be present at the event alongside sports figures, he's friendly with like Brady and Gretzky. The village people will also sing YMCA, one of the president's favorite tunes, in another gesture by Infantino to get in his good graces. Tova, the entire world is going to be watching to see

whether their team ends up in a friendly group or the group of death. I really hope the U.S. gets an easy group. And if Trump's, you know, relationship with Infantino is any indication, maybe we will. You never know. Read between the lines there. But I think you summed it up perfectly. Big is the word to describe this World Cup

because not only are we having the expanded field, everything is just going to be so expensive this year. FIFA is selling tickets for up to $6,730 for a single ticket. Hospitality package, if you want to go big, can run you $73,200. If you go back to 1994, which is the last time the World Cup was in the United States, you could pay $25 for parking and get a hospitality package for $475. Obviously, inflation has something to do with that, but it just goes to show how much of a moneymaker this event is expected to be for the United States in FIFA as well.

There are a lot of questions around the logistics of this, too, because all U.S. World Cup games are NFL stadiums. And if you ever been to an NFL stadium, there's not a lot of public transit options, especially for MetLife Stadium here in our backyard in New Jersey, which is hosting the semifinals and the finals. Getting there by train is a little difficult. It's possible.

But there is going to be a lot of parking, and that does seem to be another facet of what I'm going to call a money grab by FIFA. FIFA is selling parking spots near these World Cup stadiums, these NFL stadiums that go for minimum $75 and maximum $175 per spot and per game date. That is more than the price of some actual match tickets at previous World Cups. FIFA is saying that for all of this U.S. and Canada and Mexico, you're going to get a huge economic boost. We're saying FIFA, we're saying this World Cup is going to generate $25 billion for the economy, create almost 200,000 temporary jobs. There's going to be 1.2 million people entering the country to see these games.

It's just going to be larger than life. It's going to be more expensive than life. And it's all anybody's going to be talking about in June and July. Let's head to our Stock of the Week, dog of the week, this segment where we pick one stock that got the full range of motion on their one rep squat max and one that stopped above parallel. I won the pre-show game of Limbo. And my stock of the week is American Eagle because all the hullabaloo over at Sydney, Sweeney, ad campaign translated into actual financial results. The simple formula of putting Sydney Sweening in its clothes drove Q3 sales that came in comfortably ahead of Wall Street estimates. It also forecasted a boost in same store sales going forward, having previously said they'd come

in flat on the year. CEO Jay Schottenstein called out the ad campaign saying the jeans that we had made specifically for Sydney Sweeney, they sold out within like two days. The company has also partnered with Travis Kelsey on a merch collab with their creation. Native director saying that the Kelsey and Sweeney partnerships alone garnered more than 44 billion impressions. Zooming out, denim in general, is hotter than wearing jeans on a beach. American Eagle's stock is up 41% in the last month. Levi's is up 15% over the same time, while Gap, who also ran a successful marketing campaign

that featured the girls group Katzai is up 20%. Neil, time to dig out your pair of skinny jeans from the closet. So there's this big question about who would win the denim war? of 2025. Was it American Eagle, was seeing the Sweeney Gap with Katzai, Levi's with Beyonce. And I think the answer is everyone. Everyone was a winner. Brands aired nearly 70% more denim TV spots this year compared to the last year as they just leaned into this growing market. And it is a rapidly growing market. The global jeans market is up to $101 billion. That's up 30% since 2020. So everyone's wearing jeans these days. And they say,

The reason is because in the past, there's been one type of gene that everyone wears, and that is the style for that particular year or era, whether it's skinny jeans or bell bottoms. But now everyone is wearing all types of jeans and not just on their legs, but on their arms and their torsos as well. Everyone's just denim head to toe, and all these companies are doing really well because of it. Some people attributed the rise in denim to coming out of the pandemic. Pandemic era was definitely a time for sweatpants and just wearing whatever you wore in your house. everywhere because you couldn't really go outside. When COVID kind of started waning off, said bust out the jeans again. Like, let's go outside. I'm going to put on my skinny jeans.

I'm going to put on my wide flare jeans. So that is one driving force. The one thing I would be wary of if I was one of these brands that are fighting over consumers is a lot of Gen Z has been indicating that they value price above anything rather than actual loyalty to a specific brand. So yes, you can do these massive marketing campaigns. But if you are out, if you, if you, you are pricing your jeans above what your core audience wants, then they're going to shift to American Eagle if they were a fan of Levi's and vice versa if the price is switched. Are you wearing jeans? Not right now. I got some loose. Neal's got some jeans on. I just showed the YouTube audience what I'm wearing. I wear jeans every single day. They're so not skinny though. I don't know if skinny jeans are

fully back. You said that all the cuts are in right now, but I feel like wide is where we're at right now. I don't have any wide jeans. So someone sent me a wreck. I feel like they look bad on me, but maybe I just got a, you know, buck up and put on a pair in the mirror. All right, we're going to take a quick break and come back with our dog of the week. Own it all. 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

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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 homebopo.com slash price match for details. My dog of the week is Netflix because investors don't really want it to adopt Harry Potter. Shares fell more than 5% after Netflix submitted a mostly cash bid for Warner Bros. Discovery, the film in TV giant whose IP includes DC Comics, Friends, Harry Potter, and everything HBO. A few months ago, Warner Bros. went up for sale, sparking a Titanic bidding war that now includes

Netflix, Comcast, and Paramount. The winner will take possession of an entertainment colossus that's developed some of the most lucrative stories and characters for over a century. Whoever Nabs Warner Bros will instantly become King of Hollywood. But as Netflix's falling stock shows, many shareholders think Netflix would be better off on the sidelines. For one, they don't see huge upside in Netflix gaining control of smaller streaming rival HBO Max, primarily because most people who are subscribed to HBO Max are already subscribed to Netflix.

They also see a tough regulatory road ahead. If Netflix acquires Warner Bros. Roe Bank of America analysts, Netflix would become the undisputed global powerhouse of Hollywood beyond even its currently lofty position. A proposed takeover has already generated congressional scrutiny, and antitrust regulators would take a long, hard look at how Netflix Warner Bros. combination would mean for consumers.

So at first, many thought that Netflix just submitted a bid to drive the price higher for its competitors, but it looks like it's absolutely serious about making a play. Yeah, and all cash bid is, not a symbolic bid because that is not, you know, a stock tie up or anything like that. That is showing, hey, we have money and we want to spend it on at you. So that was a little bit surprising. I think caught some shareholders off guard. The fact that Warner Bros. is getting this attention is interesting because on the one hand,

it's got a hundred plus years of really, really valuable IP. I mean, these names are the gold standard across all of Hollywood, Harry Potter, Lord of the Rings, everything that you mentioned. So why wouldn't everyone want it? But then you look at the stock reaction here. And as you said, if you are not making your streaming division more valuable, then what's the point of shelling out on all this content? For someone like maybe a Comcast whose Peacock streaming service only has 40 million

subscribers, yes, it makes sense to try to combine that with HBO and start taking on Netflix. But when you're already the king of streaming like Netflix, do you really need all this extra IP? You've done pretty well developing your own in the last decade or so. So maybe you don't need to actually go and, and spend on this legacy stuff. Let's talk about the leader in the clubhouse in this bidding war because it's not Netflix and it's not Comcast.

It's Paramount. Paramount is now run by David Ellison, who is the son of Larry Ellison, the CEO, founder of Oracle, and they are very close with Trump. So when it comes to a regulatory process and what is a regulatory review to get this deal across the finish line, Paramount, because of its coziness to the White House, is seen as a much smoother process than that. Then certainly Netflix and maybe even Comcast, Paramount, has submitted an all-cash bid alongside three Middle Eastern sovereign wealth funds from Qatar, Saudi Arabia, and UAE.

Wonder whether that will spark any regulatory scrutiny because you would have maybe foreign interests, now owning a CNN, which is one of the globe's largest news corporations. So a lot of different moving pieces here. Paramount is seen as the leader, but they just wrote a letter, actually, to Warner Bros. Discovery that was just reported on Thursday by CNBC saying that they are questioning the fairness and adequacy of the process. They say they're citing news reports that say that Warner Bros. Discovery is favoring Netflix pretty explicitly that they want to tie up with Netflix, and they say this is not a fair process to us at all. So they're already sending strongly word letters to lawyers.

I mean, it makes sense. This is a once-in-a-generation general. reshuffling of the entire entertainment landscape. So it's not going to be a smooth process, but fascinating to see the different stock reactions as these rumors come out. It's a very confusing entertainment landscape out there right now where everyone seems to have the ability to license everyone else's content when it comes to theme parks when it comes to their actual studio business. So I don't know how is this all going to shake out. You said Paramount's leader in the clubhouse. I'm just going to put my hat on Netflix. I mean, the biggest usually wins in situations like this or just in life in general.

So I'm just going to pick Netflix and we'll find out mid-December. So right now, Warner Bros. Discovery, their board is, you know, they're probably going to spend their weekend looking at huge stacks of paperwork, talking amongst themselves saying, which do we want to go with, whether it's a fair process or it's not a fair process, who are we going to get by regulators with easier? There's a lot of different variables. And we will be on this story for the next few weeks as they announce it perhaps mid-December. I'm going to watch some Harry Potter to brush up, you know.

Okay. Let's run to the finish with some final headlines. Remember the Metaverse? No. Well, even the company that renamed itself Meta is looking to move on. C.O. Mark Zuckerberg is expected to significantly slash resources to his Metaverse group, Bloomberg reported, cutting its budget as much as 30% for the next year. Those cuts will fall heavily on Meta's virtual reality group, which belongs to a Metaverse business unit that's lost more than $70 billion since the start of 2021. investors were thrilled that less money would be set on fire, sending meta stock up more than 4% on the report. Toby Zuck is full steam ahead on AI and cutting some of the baggage of the Metaverse. Time to change the name again. I mean, reality labs has lost over $70 billion

since 2021. So in terms of like the greatest money incinerating machines in corporate America right now, reality labs is absolutely up there. So any cuts was just the market saying, finally like you're seeing the light here, apparently internally, Zuck, is still bold. on the vision that people are going to hang out and work in a virtual worlds, but he is also realizing that if we're spending all this money on AI, we got to find that money somewhere. So the logical place is reality labs. That doesn't mean they're ditching hardware in general because they are very bullish on hardware like meta ray bands, which are the use case that they see in the physical world for

AI. So it's not that they're just ditching physical things in general. They're just reshifting some of those resources towards what they think people actually. actually use in the age of AI, which are, you know, sunglasses and other on-body displays. Are we ready to declare metaversa flop? I mean, I think that ship actually already passed. A lot of people said that. What would they rename? It would be so funny if they rename the company again, meta-a-I. I think that all they needed to do, and I think this was smart, was I'm watching the wire now, too, and he's taking a business

class. He's talking about the fact that his product, and you can imagine what his product on the wire is, is lower quality. And he's talking with the business professor. He says, well, just change the name. This is what WorldCom did in the past. This is what many companies do when their brand has been tarnished in some in some way. So I think Zuck was thinking at the time back in 2021, 2021, when they were making the name change. I need to change this thing from Facebook, which has a bad reputation at this point. He chose meta. He could have chose any other thing. And therefore, I don't think, I think they're just going to stick with meta and not change, not change it to anything else. But it's pretty.

clear that this massive bet on the metaverse that everyone was so convinced about at the time, at least in Silicon Valley, has not turned out the way expected. Moving on, do you know who the singer David is, the one who spells his name D4VD? If it's not ringing a bell, you are not alone, because he was Google's most search person of the year, according to its year-end report. Google's year in search dropped on Thursday, showing the topics that have seen searches spike from last year. So no, David was not the most Googled person by sheer volume. That was probably Neil Freiman, but he did see the biggest bump.

David's popularity stems from his music career, but also a viral murder case involving a teen girl, which he remains an active suspect in. Other trending searches, including Charlie Kirk assassination in the news category, Mikey Madison for actors and hot honey in the food and drink section. In a real-life version of the Spider-Man pointing meme, Google's own chatbot Gemini was the most Google.

term of the year. Neil, what else stood out to you about the year in search? What stood out to me is that people, it appears to me, that people are starting to use Google search with the expectation that they will get an AI overview in response. They aren't looking for blue hyperlinks anymore, a list of just links that they can click on. They're looking for full paragraph answers which they've come to expect from Google search now. So what's the deal with phrases like, what's the deal with as a start of search? were more, were recorded more than ever by Google. Searches for, tell me about dot, dot, dot.

We're up 70% year over year. Queries starting with, how do I dot, dot, dot, dot, reach an all-time high with a 20% increase from last year. So these more open-ended, big picture questions stood out to me as, and also as a searcher myself, I may be doing this implicitly or subconsciously because I do want to read an AI overview that is very similar to a Gemina response or a chat GPT response instead of the traditional hyperlink and it shows how Google search is changing with the times. And yeah, just evolving into the age of AI. The other thing that stood out a lot about this report was that there was this

polymarket user that showed a suspicious level of understanding of what people were going to use the search engine for. He opened or he or she opened a series of position on Polymark's number one search person on Google this year market and made $1.2 million by betting $10,000 on yes, that David would end up being the most searched person of the year. That netted them $200,000. And then they also coordinated that with no positions across all the other candidates like Donald Trump, like Pope Leo, like Bianca Sensori, who was actually in the running for

a long time as well. So all of those profited very substantially and also brought a lot of scrutiny to prediction market saying this clearly looks like a case of manipulation. How would they ever know that David, which most people had never heard of before this, was going to top the list if they did not have inside. information so that's just another subcontext this year in search report how is it going to vibe in the age of prediction markets that is all the time we have thanks so much for starting your morning with us have a wonderful Friday and an even better weekend if you want to get in touch

you can send a note to morning brew daily at morning brew.com or DM us on instagram at mbbydaily show let's roll the credits emily miliron is our executive producer raymond lu is our producer our associate producers are Olivia graham and Olivia lake i never mispronounce hair and makeup is our president and a show is a production of Morning Brew. Great show today, Neil. I wish you all well. Hey, Mama. Thanks for making all my favorite recipes. Hi, Ma. Thanks for your unfiltered advice. Hi, Mom. Thanks for always being by the phone.

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