The Best One Yet - AT&T may cut NFL Sunday Ticket, Endeavor cancels its IPO, and Rent The Runway’s worst week ever

Episode Date: September 30, 2019

Talent agency Endeavor was supposed to IPO last Friday, but it called off everything Thursday night. Rent The Runway is not taking new customers to its clothing rental until Oct 15th because of a mistake that reveals what kind of a company it really is: Logistics. And NFL Sunday Ticket is the loyalty leader that got people using DirecTV — but now AT&Tis considering ending the expensive deal.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. And this is Snacks Daily. Welcome back. It is Monday, September 30th. Snackers, last week ended dramatic, but this is the best one yet. In fact, we've got a theme today. It's things that are ending or being canceled. Yes. Now, the thing not ending or getting canceled, we don't know what's happening with the president's impeachment, but we'll cover that as it affects trade deals and the markets. But our first story is the talent agency endeavor. It just canceled its IPO. Like Vinnie Chase stepping away from a movie and entourage. And we're going to look at why it canceled. that deal. Second story, AT&T is thinking about cutting its own chord by ending its long-time, prime time, NFL ticket deal on DirecTV. Even though NFL ticket is direct TV's loyalty leader,

let's say prime time one more time. Third and final story, the unicorn of the day is rent the runway. It just canceled all new subscriptions on clothings and prom gowns until mid-October. Show us, this shows us not everything can be e-commerceified. E-commerceified, word of the day. This is a very particular Monday. It's not just the last Monday in September. This is National Podcast Day. Yes, and we're going to honor Steve Jobs, who in 2015, Apple was vaguely involved in the creation of podcasts, you know, iPod, podcast, there's a connection there. And he said, podcasting is the next generation of radio. Jack, you sound like a historian over there. I love it, because 700,000 podcasts later and 14 years later, here we are National Podcast Day. There are

700,000 podcasts that have launched. And I'll tell you, a lot of them are dead. A lot of them have stopped running. Those that have survived have dedicated fans and dedicated hosts like us. And we love our snackers, but here's the thing. Only 22% of Americans, we're actually shocked at this statistic. Only 22% are listening to podcasts on like a weekly basis. What are these other people doing? This 78% they're still listening to radio and like waiting for 630 in the morning exactly when to watch their show. If you know somebody who doesn't listen to podcast, take the earpods out, remove the AirPods, maybe clean them a little bit, hand them to them, and throw on some snacks daily. Snackers, this is our request to you. Please share snacks daily with one person.

Here's the thing. National Podcast Day is kind of about us. It's like Mother's Day and Nick and I are the mothers. We would love if someone would just cook us a little brunch, say they loved us because we love you guys. So Apple makes it easy to share. There's a little button with a dot dot dot. Push that button and click share. Then you can text it, email it, Facebook post it, whatever you want. And you can do the exact same thing super easily with Spotify. which makes it easy to share your snacks for the whole community. It's that dot, dot, dot, dot button. That means share, and that means make snacks daily bigger. I kind of hate the way it looks as dot, dot, dot, dot,

but we love that you can share your snacks, and we love our snackers. Thank you for making it possible for us to do this every day. Let's get to our stories. You're tuned in to snacks daily. We spoke to the lawyers, and we got to get something legal out the way. The snacks about the hearing food.

It's air candy. They don't reflect the views of the robberhood family. It's all informational just so. You know, we're not recommending. securities. Nope. It's not a research report or investment advice. Not an offer or sale of a security. Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, this one's insane. Endeavor, the talent agency. It just canceled its IPO a day before the IPO. We talked about Endeavor about two months ago when it filed its IPO

documentation. I think we made a bunch of references to the TV show Entourage. And And the reason why was because Ari Emanuel is the leader of Endeavor, and he also happens to be who the Ari in Entourage was modeled after. Think Jeremy Piven yelling at Vincent Chase. Exactly. Now, why Endeavor canceled its IPO a mere 24 hours before I was going to IPO is actually something that's like a few years in the making here. We've got to throw some context, Jack.

Let's rewind to 1995, the golden age of Hollywood agents making bank representing actors. We're talking Julia Roberts shows up. She's doing eat, pray, love. If she's eating the pizza, boom, Endeavor represents her, they get 10% of her contract. They go into the room like Ben Affleck and Goodwill Hunting, demand a huge contract, drive a hard bargain, and take 10% of whatever they negotiate. If Julia's trailer does not have six pillows, Julie is not eat praying and love it. Here's the thing.

Hollywood has evolved, and so Endeavor has spent billions of dollars converting from just in talent agency to a media company. Case in point, they've invested huge and Miss Universe. They own 50% of Ultimate Frivate. fighting championship. They do pro bull riding. They do 700 events a year. So the company's feeling good about its pivot. And it mentioned in the S-1, the IPO document, that we are well positioned for whatever the entertainment landscape looks like in the coming decades. And that's exactly why you'd ever want it to IPO. They needed to raise money to pay for all those things we just mentioned, including like

buying 20 companies. Yeah, those 700 events it produces a year, that's expensive and it needs the IPO for it. So Jack, can you give me a little more context here on what's going on in Hollywood right now? Okay, so Endeavor was right. The industry has changed, but it changed more and faster than Endeavor was even ready for. Get this. Compared to like a decade ago, Hollywood is putting out almost half as many movies as it used to. So Endeavor can't make as much money representing the talent. Also, movies are focused on franchises, not actors in those movies. Like, remember back in the day when you'd see like an Adam Sandler movie and then three weeks later, they'd be like another Adam Sandler movie with literally the same exact cast. Billy Madison, happy Gilmore,

wedding singer, boom, boom, boom. Well, these days, it's like Avengers, the superhero stuff. They're coming out every other week and it's all about the characters. It's not about the actors. Movies depend on Bruce Wayne, not Christian Bell playing Bruce Wayne. Exactly. Now here's the thing. Although movies have reduced and that's bad for Endeavor, TV shows have increased because of the streaming wars. Endeavor could make some money there, but Wall Street's not sure what it'll do when Netflix is negotiating directly with actors. So Jack, can you tell me what the takeaway is for our buddies over to Endeavor, who just ditched things very quickly last minute.

Last week, Wall Street turned aggressively against the loss-making companies that are trying to IPO like Endeavor. Endeavor canceled its IPO for pretty much the same reason that WeWork did. Wall Street's like giving the cold shoulder and isn't into these loss-making companies right now. They're not feeling it. In the two weeks prior to Endeavor's IPO, it was talking to investors and realized that the IPO was going to be a disaster because they wouldn't have sold for a high price. Think of what's happened in the last couple of months. Smile Direct Club. IPOed, stock down.

Peloton, IPO, stock down. Uber and Lyft. IPOed. Stock still down. All these IPOs are connected. Investors are not happy and not thrilled about companies that are losing money and they're not sure they'll make profits. So if your endeavor, you can't afford to have an unsuccessful IPO. So instead of going to the party and being embarrassed, you just don't show to the party. For our second story, rent the runway, just made headlines. for all the wrong reasons. Nick, they announced they're not taking any new customers until October 15th. Jack, imagine if it was your friend's wedding. You just got your nails done. Your head looks fantastic. You went to get to the blowdry bar and boom, your dress doesn't arrive on Wednesday. It doesn't arrive on

Thursday and he spent all day Friday with customer service. And you are in crunch time trying to find a dress that fits you just so for the wedding, which is tomorrow because Rent the Runway botched your dress delivery. Now, Rent the Runway pioneered the concept of renting. gowns for key weekends and just renting subscriptions on like a monthly basis. And it's become a $1.2 billion valued company, but now it's suffering from a major supply chain crisis. So that issue we just mentioned, it affected like 14% of their customers. They just didn't get their dresses when they were supposed to at key moments. Late last week, people went to customer service at where's my dress and the wait just to talk to a human being was over three hours. And then rent throw

night comes out. They had to dish out not only refunds, but they gave $200 in cash, cold hard cash to customers who are dressless. Not store credit cash. That's because they had to go to some other store and buy a dress for the event that happens in like two days. And then the head of supply chain, they had to step down. And then the big one, the biggest of them all drama from the week, Jack. No new customers until October 15th. And here's the deal, Nick. For two weeks, people are going to be talking about rent-through runway, not taking new customers, and that'll go past October 15th. You hear what happened to Julie? You hear what happened to Tanya? All these people. are talking. This confirms that rent the runway isn't a fashion company. It's really a logistics

company. And the reason for this whole situation came down to a software changeover, like over at their New Jersey warehouse where they redo, re-up, revamp, and re-dry clean all the dresses. Tech glitch meant people didn't get the dresses. Yeah, some software platform, like lost track of the dresses. So you're sitting there, you're like, hey, my Marquesa Emerald Floramaxie with the black borsadonna toad? It's not here. Yeah. Is it in iCloud? Did anyone save it on the computer? Where are the files? How long? does it take to get the maxi and why do I have to wait this long? So the general challenge with Rent the Runway is that shipping dresses is expensive. Shipping them back is expensive and then

cleaning them on a dime so you can give it to another customer the next week for another prom. That's expensive. And since shipping is so expensive, if a problem happens with your shipping, it becomes even more expensive. So Jack, what's the takeaway for our buddies over at Rent the Runway? When it comes to food and fashion, trust with customers is hard to keep. So e-commerce and Subscriptions are everywhere, but Jack and I whiteboarded all the options out there, and it looks like grocery delivery and clothing delivery are the toughest of all. Well, that's because food spoils, you want it fresh. Clothes get dirty, you want them clean. Very true. And even your food gets dirty, too. You want your kale nicely clean. So we're talking about two things where the stakes are

extremely high. You're either going to ruin your customer's promite or you're ruining their dinner. The test here is whether customers will forgive rent the runway for these growing pains or tell themselves and all of their friends never use the rent-the-runway again. Because there are a lot of options out there these days. It's not just rent-the-runway. For our third and final story, AT&T is considering ending its exclusive direct TV deal with NFL Sunday ticket. This is further proof that AT&T regrets acquiring DirecTV. It's actually kind of awkward. By the way, everyone has an NFL Sunday ticket memory, I'm thinking. Yeah, we got NFL Sunday ticket when we were like 23, East Village of New York, four guys living in an apartment.

We had it for three years just for the NFL. You wake up, your buddy Timmy gets up, he's only wearing boxers, 6 p.m. rolls around while NFL Sunday tickets been on. He's still wearing boxers. And he still is eating that same gigantic bag of chips. Because that's what NFL Sunday ticket does. It keeps you hooked. It's a loyalty leader.

So DirecTV was acquired by AT&T in 2015 for $67 billion. That's about five lifts, give or take. There's only two reasons in this world while you would be a direct TV. TV customer. One, you live in the boonies and there's no cable offered near you. Potentially. You're doing the satellite thing. It seems cool. It's blowing things up into space. Or two, you wear NFL pajamas to bed every night and use a football as your pillow. Not that there's anything wrong with that, Timmy. Now NFL Sunday ticket is the direct TV loyalty leader. It gets you hooked. You're committed to the brand and it happens to exclusively be on direct TV.

Since 1994, you've been watching games in your boxers all day exclusively on direct TV. TV any games except the local blackouts. And that's because it was only possible on direct TV for 25 years. A lot of sports bars have direct TV just so that they can offer every NFL game on Sunday and sell tons of chicken wings. So this is the development that happened over the weekend. There were reports that AT&T is thinking about not extending its exclusive deal for NFL Sunday ticket. That means the NFL Sunday ticket could shift to Netflix, could shift to another cable company, could shift to whatever. It's throwing another cable company there. I ran out of ideas, man. Running out of streamers over here.

Now, the NFL Sunday ticket itself, it actually wasn't cheap because it cost AT&T about $1.5 billion a year to exclusively own it, and they would pay that to the NFL. NFL makes a lot of money off this deal, so AT&T could save money by not extending, but it's definitely going to lose a lot of revenues from football fans who are only direct TV customers because of NFL Sunday ticket. It's also a sign that AT&T maybe should just sell or spin off all of DirecTV, because without Sunday ticket, is DirecTV really that worth it? I'm not even sure it's a thing without Sunday ticket. Jack's brow is really furrowed right now as we question us.

So Jack, what is the takeaway for our buddies over at AT&T? AT&T is embracing the future, forgetting the past. Now, remember, we mentioned this a month ago. Activist investors have started campaigns to push AT&T to stop thinking like an old telecon company and start thinking like a tech company. Jackers, remember, AT&T acquired Time Warner. It owns HBO and it's a streaming company now. And HBO Max, that starts up in April. So this is proof AT&T is listening to those calls for changes by considering ending NFL ticket, which effectively ends really the value of DirecTV.

Jack, can you whip up the takeaways over there for us to start the week? After all the terrible IPOs of 2019, Endeavor's doing what WeWork did, not IPOing this year. Jack, Endeavor's going home, it's being mindful, it's self-reflecting, it's going to become profitable again, and then IPO in the future. It hopes to become profitable again. Second story. Rent the Runways, Promagetan could kill customer trust. Dress delivery has a really, really small margin of error. Third and final story, AT&T is thinking about ending DirecTV's NFL Sunday ticket deal. It's been a great 25 years of not wearing pants like your buddy Tim on Sundays in the fall.

Snackers, time for our snack fact of the day. This one's standing by Gabriel Ionita. Jack, what's going in iPhones. In 2007, the iPhone launched that year, Nokia was the leader of mobile phones with 40% of the market. And while they were looking back on the realm of power, the Nokia exec said that the iPhone was but a niche product. Oh, really? Five years after the iPhone was released, Nokia's market value had dropped by 92%. It happens quickly. It happens fast. And before you know it, you're out of the market. Snackers loved having you with this to start the week. Jack, how you feeling right now? Happy National Podcast Day. Don't forget, share it. snacks with one friend by sending that simple share link. Everyone likes a taste of snacks. Tap the person

in front of you in line when you're getting that salad. They're going to want snacks. See you tomorrow. Teaboy Tuesday. Can't wait. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security. The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC, member FINRA, SIPC.