Paramount-Warner Bros. Discovery FINALLY Complete & Is Midcentury Modern Cringe?

Good morning for Daily Show. I'm Neil Fryman and I'm Toby Howell. Today, how Paramount Steel for Wonder Brothers will reshape Hollywood. Then, the war in Iran is bad for gas prices, but great for EV sales. It's Tuesday, October 6. Let's ride! In one of the world's greatest rivalries, the tables appear to be turning. Cats are becoming more popular than dogs. According to the research firm Package Facts, for the first time on record, there are more US households that own kittens than puppies. Back in 2014, there were 1.8 households with a young dog for every household with a young cat. Last year, it was 0.941. It's not that kitty ownership has surged though, but more that people are going dog free. The number of American households with dogs has fallen in 5% since 2019, as cat ownership has been stable, to which I say, "Great, more animals that will ignore me." So that's the shot. Here's the chaser. A new study also found that countries with more cats are happier, so all these cats are making people pretty jolly. However, while reading about the positive effects of cats, so I was surprised to learn about a negative one. The Washington Post wrote, "Company animals like cats and dogs are generally positive for well-being, but with cats there is a downside. They carry the parasite, toxoplasma gondi, which can affect humans and has been linked to road rage, depression, and other mooch-end changes." Is this well known amongst cat owners? I had never heard of this snuggling your cat can potentially give you a parasite. Again, the data from 93 countries found that there was a net positive association, but did not know about this potential danger. Maybe another thing in the dog owner's corner that made swing the pendulum back that way. I asked a dog owner whether they would consider getting a cat, and they were like, "Nope, he's in the house." It's different. That was the bottom line. That was the deal-breaker right there, but it seems like more people are opting for kiddies over puppies. Alright, now a word from our sponsor into it. Toby, you know how I've always been passionate about enterprise resource planning? Yeah, you talk about it a lot during meetings, at happy hours, during the impromptu speech you gave at my wedding. I won't apologize for carrying deeply about the problems facing finance teams and CFOs. They're stuck with a system that costs them a fortune and still won't let them report themselves. It's not right. Well, thankfully, there's the Intuit ERP for that. Exactly. Your team runs one close. However, many entities you have. They build their own reports, no consultant required, and getting started doesn't take over your year, all without the legacy ERP baggage. You've been waiting all day to say that. To learn more, head to Intuit.com/ERP. That's Intuit.com/ERP. Three years ago, David Ellison was known as a NEPO baby movie producer who achieved a modicum of success with Top Gun Maverick. Today, he'll be coronated as the Prince of Hollywood when Paramount closes its deal for Wonder Brothers Discovery in the industry's biggest M&A deal of all time, 111 billion dollars. The combined company, known as Skydance, offers legacy entertainment's last best shot offending off a tech sector that's encroached on its turf. As co-CEO of Skydance Ellison will lourd over two major movie studios, two major streaming services, HBO Max and Paramount Plus, a group of cable channels, two influential news operations, CNN and CBS, and IP, including the DC superhero universe Harry Potter, Yellowstone and Nicolodian. He caps a stunning rise for Ellison, who has reversed Pac-Man's way to the top through ever-bigger acquisitions. First, he bought the larger Paramount for $8 billion last year. Then he outmaneuvered Netflix to gobble up an even bigger monster, Wonder Brothers Discovery. But at what cost? 111 billion is far more than Ellison has in the bank account, and to cinch the deal, he's taken out loans and getting help from Dad. Oracle's Larry Ellison, one of the richest people in the world, who's bankrolling the merger with $46.7 billion in equity financing. The combined company will be saddled with debt of over $82 billion, casting a financial cloud over Ellison's ambitions right from the get-go. To me, now that the deal is sealed, the hard part is just getting started. Yeah, let's talk about that looming villain in this saga, the Joker of this potential merger, which is that debt load. The timeline to race his debt was insanely tight, because remember, it was facing a lot of legal issues the merger was. And so in just a week, Paramount sold $52 billion worth of loans and bonds, and the issue with the fact that they had to kick the can down the road with doing this debt issuance is that their interest bill is now a lot higher than if the debt issued the debt a few months earlier, because global borrowing costs have surged. It's what we've been talking about at nausea over the last six months. The added interest costs are adding between $250 million to $500 million a year just in interest. And now again, Ellison is saying that we're going to cut a lot of expenses. They think that they can cut $6 billion a year from expenses to keep sort of that leverage under control. But that is the thing that would ruin this party if the debt load becomes too much. And this mega merger of a company never really even gets their groove. Yeah, so how are they going to make money? Well, last year Paramount did $6.9 billion in revenue profits of $41 million. Warner Brothers Discovery was bringing in $8.7 billion in revenue on $149 million in profits for both of those companies. A big chunk of those profits and revenue came from traditional TV, these cable channels, which is an industry in decline. They both have pretty successful streaming services. And everyone's probably thinking about, okay, what does this mean for my HBO Max subscription for my Paramount Plus subscription? Are they going to mash it into one? Are they going to keep them separately going to sell it as a bundle? We don't know exactly yet. For now, we know that they are going to keep HBO Max in Paramount Plus as discrete brands. It looks like down the line. They will probably sell them as a bundle because why, why have to, if you're not going to have them synergize in corporate speak, the one promising thing, I think, is that Casey Boyz is going to oversee the whole thing. This guy has been in charge of HBO for over a decade. Long time veteran considered one of the best programmers in the business, I think, as anyone who is a fan of HBO shows can attest. He's going to be overseeing programming of the entire portfolio, Paramount Plus, HBO Max, Pluto and Discovery Plus. So he's getting a bigger role at this company. And I think people who are concerned about what might happen with streaming are a little heartened that Ellison is keeping him on. So I was reading some industry folk and what there takes on this was media analyst Rich Greenfield at Lightshed Partners basically said that Paramount and Warner Bros. still isn't Netflix. That was kind of what Larry Ellison is trying to do is build up enough, oh, sorry. And Larry on the side, I know. It is a Freudian slip there in all senses of the word. He is saying that they want to become Netflix. They want to get big enough, quick enough to compete with Netflix. But the one issue that they have with actually going after Netflix and actually YouTube he mentions as well is the fact that the advantage that Netflix and YouTube have is that they have vastly more things for people to watch, which dials in their content recommendation algorithm to a point that Paramount and HBO have never been able to achieve because when you open Paramount, the vast majority are going to go watch Yellowstone or Taylor Sheridan movie. That's not an helpful signal for the algorithm if everyone is flocking to a couple marquee shows versus Netflix. You open Netflix. You can watch everything from a cooking show to a K drama to anything under the sun. That helps it become better and better at surfacing content that you like same thing for YouTube. They have an abundance of content. So their recommendation algorithm is really good. So Rich Greenfield is basically saying you're not going to be able to compete even though you have many more prestige shows. So maybe this is just a fool's errand from the get go. And a final question that a lot of people have about this mergers. What happens to these news operations? Because remember when David Ellison bought Paramount, which CBS was under last year, he installed Barry Weiss from the free press and Barry Weiss really shook things up at CBS and 60 minutes had this big exodus. And there was a lot of controversy around that. Would he do the same with CNN? Looks like for now, just like with the streaming services, not really rocking the boat. CNN chief Mark Thompson is going to stay on to keep CNN stable. So that seems to be David Ellison's first sort of foray here into this new massive company is not necessarily rock the boat right away. See how things shake out because he has his eyes on a bigger prize, which is taking down the tech giants like YouTube and Netflix that have completely gone roughshod over this entertainment industry is trying to save. Spend a turbulent few days in global politics with elections in Spain and Brazil setting the stage for a rightward turn in both countries. Let's start in Spain where yesterday longstanding socialist prime minister Pedro Sanchez called for snap elections next month. It's a direct response to a housing crisis that is engulfed the country. Over the weekend, tens of thousands of people marched in cities to demand greater protection for tenants sparked by the public eviction of an elderly woman. A few weeks ago, an 87 year old Madrid resident was forcibly evicted from the apartment she had lived in for more than 70 years on a stretcher on television after she couldn't afford a rent increase. While she will be allowed back in her home, the incident sparked outrage over affordability frustrations that had been mounting for some time. The elections on November 29 could help Sanchez cement the left's control or grant more power to the insurgent right wing. Here is the massive gamble that Sanchez is undertaking. He has been prime minister since 2018. Housing has deteriorated under his watch and yet here is called. a snap election trying to say that housing is the core issue that we're gonna go to battle over. So he's trying to turn it into the center of his campaign instead of, you know, he's going to open himself up for criticism that like, hey, if housing has become such a big issue, you've been in charge. How come you didn't address it here? So that is why it's a massive gamble. The one thing that may be in his corner is that Spain's economy is growing a little bit faster than the rest of the Eurozone group, 0.7% in the second quarter. It doesn't sound like much, but when compared to the rest of its, you know, sister in the brother countries, it's doing all right. So maybe the macro economy can give him a little bit of wind in his sales. Crossing the Atlantic to Brazil, things are also looking bad for the left. In the first round of the presidential election, incumbent Luis Ignacio Lula de Silva, aka Lula, suffered a stinging defeat to conservative Flavio Bolsonaro. Since neither of the candidates secured more than 50% of the vote for an outright victory, they'll head toward a runoff on October 25th. Lula cannot be confident. The 80-year-old leftist is facing backlash for a stewardship of the economy by an electorate that is increasingly conservative and religious. His opponent, if you recognize that last name, is the son of former Brazilian president Jair Bolsonaro, who is currently serving a 27-year prison sentence for trying to overturn the 2022 election. Few are excited by either candidate. Half of Brazil's population disapproves of the Bolsonaro family. Well, the same amount disapproved of Lula's workers party. It was an insane day in Brazil's stock market yesterday. They exploded on this news that it was going to go to a runoff Brazil's stock index surge as much as 8.1%. That is his biggest inner-day gain since April 2020, across 200,000 points for the first time. It made Brazil the best performing major equity market in the world yesterday, as people were just very excited for this. Why did investors like the results so much? Basically, a very similar situation to what's happening here in the US. Investors have become concerned that government spending in Brazil's fiscal credibility under Lula has been lacking. And so Flavio is seen as someone who is going to tighten the fiscal environment a little bit under his administration. There's also the Trump angle. Trump is a little bit more amicable towards the Bolsonaro family, his father and now the son. And so the fact that Flavio is a Trump alley means maybe the beef industry will get a little bit of break. Trump has kind of pivoted away from Brazil's beef industry and towards Argentina's maybe some of those tensines of wealth thaw a little bit. So just a boondoggle of a day, the greenest market in the world, all thanks to this election being a lot closer than people expected. And whenever Brazil's presidential election has gone to a runoff, the candidate who finished first in the first round has gone on to win the presidency. So yes, it is looking very good for Bolsonaro, the son, which is why you saw it stock market surge. And we're seeing a huge right-wing shift across Latin America. If Bolsonaro does win in that runoff later this month, that would be the seventh consecutive win by a right-wing presidential candidate in the region. Let's move on. Electric vehicles looked to be on life support. A major tax credit was rescinded this year. Elon got sidetracked by AI and robots. And Americans never quite showed up to buy like brands thought they would. But the war in Iran has been a defibrillator for the industry, shocking it back to life as high gas prices made that charging port look a little more attractive. Tesla and Rivian both beat delivery expectations last quarter, while Hyundai and Ford say some dealers are actually requesting more inventory on their lots again. Worldwide, the floodgates have been opened. Gas-powered cars now account for less than half of global new vehicle sales for the first time ever. Just 49% of new car buyers are opting for gas guzzars, which is down from 74% in 2021, according to mobility global data. China is leading the charge with gas cars sales falling 26%, but Europe is not far behind. Buying up nearly 50% more EVs in the first six months of this year compared to the last as diesel prices saw a 38% higher since the Iran war began. Neil, when fuel gets pricey, consumers start looking for more fuel-efficient cars, meaning this is a pivotal moment for EVs and hybrids. People respond to prices going up and oil shocks. We've seen it a number of times throughout history. Back in the 70s, there were two oil crises, 1973 and 1979. What happened? Well, before 1973, global oil demand growth was about 8% according to Bloomberg. Then 1973 happened and it slowed to 3.9%. Then 1979 happened and global oil demand growth slowed to 1.7%. That's happening now. We don't know the exact macro numbers, but we are seeing anecdotal reports and reports from folks like Rivian and Tesla saying that people, despite higher prices because of that tax credit being removed, are once again embracing electric vehicles. It's not a huge turning of the tables like the Cat's vs Dogs things, but we are seeing the inkling of a comeback because people are going, are driving and they're filling up for 60, 70, 80, 90, 100 dollars, especially if you're a truck driver, it's a lot more. They're saying, well, maybe EV isn't a bad option. You mentioned trucks. Americans are starting to downsize a little bit. They're not going for the full side lifted trucks that you see in my high school Florida parking lot. Full size truck sales fell 2% in the quarter across all brands. Large SUV sales fell 6%. That's important because those have been the money makers that all the American car brands pivoted towards. This is where we're making our cash. Let's make more of these and let's actually get rid of some of these high brids and these smaller in mid-sized trucks and SUVs that no one wants. Turns out that's exactly what everyone wants right now. So it is another pivot that they seem to have missed the mark on. The real winner too beyond EVs and beyond smaller in mid-sized vehicles is hybrids. 83% of new cars still have an engine in them. Gas cars are under 50 so that you think that they're all turning to EVs. No, actually a lot of these are hybrids that have gas and battery powered vehicles and that is great for Korean automakers. Hyundai hybrid sales up 39% this year. Kia hybrid sales up 152%. So they are stepping in where the American companies are dropping the ball to say you want a hybrid. Here it is for you. Our businesses grow in like gangbusters right now. All right, we're going to take a quick break and come back with Toby's trends right after this. Neil, do you know where AI actually creates an advantage when it comes to deals? Finding coupons. Wrong kind of deals. Data site and FD longitude recently heard from 1000 deal makers to understand how AI changes the way deal makers do deals. More than half of respondents say human only decision making is no longer enough for complex deals. The real competitive edge is knowing where AI can have the biggest impact and where human judgment still makes the difference. Go to datacite.com/brew for a full breakdown of the results. That's datacite.com/brew. Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard too. Vanguard investor choice makes it easy to set your proxy voting preference for your eligible Vanguard index funds. In just a few clicks, you can have a say on important shareholder topics like executive pay and director elections. Visit vanguard.com/investorchoice to learn more. It's your shares, it's your voice, it's easy. Vanguard investors own shares of their index funds and those funds own shares of the companies they invest in. Vanguard Marketing Corporation Distributor. Neil, I love a staple, don't you? Finally, something we agree on. There's nothing more satisfying than neatly organized stacks of paper. I meant clothing staples like the one's quince makes. They focus on high-quality wardrobe staples made with premium materials like 100% Mongolian cashmere organic cotton and marina wool. The styles are timeless, versatile, and designed to become the dependable pieces you reach for day after day. Pieces you can count on over and over like my everyday cotton solid quarter socks. Find your next fall favorites at quince.com/brew or download the quince app for app exclusive offers. That's quince.com/brew. Filling your house with mid-century modern furniture, used to signal taste in an appreciation of a vintage aesthetic. But now it signals you're a millennial who loves madman and lives close to a whesselm, and that transformation is one I want to talk about on today's edition of Toby's Trends. Wall Street Journal reporter Misty White Sidel wrote a piece called "How mid-century modern design went from cool to cringey, documenting the rise and fall of America's defining post-world war 2 design language, geometric side tables, tapered wooden legs, orange toned lamps, all were cool at some point but have since been ruined by a fatal association with millennial cringey according to Sidel. It's not that the pieces themselves have lost their inherent design appeal, it's just that they've both been overproduced and forced into environs where they look like a fish out of water. Even an eating chair loses some of its aura if it's a knockoff source from home depot and stuck in the middle of a millennial gray starter home. The mid-century modern craze is showing signs of slowing with sales on the high and resale site for stibs, down 4% compared to last year. Other vintage furniture stores say pieces that used to fly off the floor are sitting unsold for longer. Neil, everyone wanted to be Don Draper drinking an old-fashioned while lounging on and saring in, but instead we got millennials sipping pumpkin spice lattes lounging on Amazon basics. It is remarkable how much they have an impact. madmen had. And I'm not just saying that because I love the show, but Herman Miller, which makes the Eames chair in other mid-century modern pieces, said that its business jumped 60% in North America over madmen's seven season run from 2007 to 2015. Now, most design trends style people would tell you, just come and go within five years. That's the general timeline for these things where a generation may be embraces something and then something new comes along, or they revert back to an old one like this particular thing. But this cycle for mid-century modern has gone on for 25 years. So it's been, it's had remarkable longevity. Yes, it was probably boosted by all these pop culture elements like madmen, but it seems like finally the steam has been running out. And because it's become so popular that it's become cliche. And you know, some, some experts have said that these pieces that people are trying to put in their house come across more like props than something that has a coherent design. The issue is its popularity. Because if you are a West L, if you are a home deep of you are an Amazon, you see everyone liking this from vintage stores and say, wait, I can make that look pretty close to what an Eames chair looks like, but for a fraction of the cost. So the fact that just this flood of doops hit the market, that inherently makes the design language look a little bit more cheap, a little bit more cringey. Also, they were just being put in the wrong places. I mean, you walk into a coffee shop, you walk into an Airbnb. And it is like sometimes is cavernous starter home with an Eames chair knock off there. You're like, that doesn't look cool in any sense of the world. What is next? That's the big thing. Tell me what's next. If mid-century modern is out, what is coming in? And apparently it's controlled chaos and aesthetic that anything goes and you want to be seen as more eclectic, but somehow it all has to fit together. That's sort of the big shift beyond like the sort of minimalism of mid-century modern. Now people are intentionally mixing eras and aesthetics to make them seem like a cool eclectic person. I also have seen that we're seeing a resurgence in art deco. So we were going from the 1950s to the 1920s and the jazz age. Both Pinterest and firstives reported a huge spike in searches for art deco elements last year. So we're definitely moving away from the more traditional and more minimalist stuff to more geometric shapes to more modern materials. That's as far as much as I know about art deco besides the Chrysler building, a fire state building. But if you want to look hip now, you're going to maybe ditch your mid-century modern. Unless you've got this, unless you have like a Frank Lloyd Wright house, then you probably probably keep your mid-century modern furniture. Otherwise, maybe think about something like chunky styles like this maximalist thing or go even further back in time to a art deco. Let's bring to the finish was some final headlines. Sam Altman probably wants a do over in an interview with Politico released yesterday. Altman said that people should be willing to tolerate bad things from AI because on net, it will be positive for society. Altman was responding to a question about how open AI's response to safety was different from anthropics, a hot bun issue right now. He replied, "One of the differences between us and some of the stricter AI safety people is that we believe that the world should accept some bad things happening for the benefits of this technology. I do think the lighter touch regulatory stance we advocate for comes with an accepting of the fact that some bad things are going to happen as society figures out the resilience." This did not go over well with a lot of people. AI researcher Gary Marcus at Altman was quote, "Saying the quiet part out loud, suck it up so you can make us rich and powerful." Dude, it was been on a media tour saying all the wrong things, apparently, in a separate interview, Altman told fortune that open AI has not solved alignment, which is kind of a big deal where you want the AI to do the bidding of its creator in the way that its creator wants it to do. That also coincided with a open AI safety team leader quitting due to safety concerns, so you have that as the backdrop, all these hacks as the backdrop, and then here he comes out and says, "Yeah, actually everyone just accept all these bad things, did not come over very well, came over as a little tone deaf." Moving on, Russia may have a problem on its hands that we haven't encountered since the 14th century. The plague. A 28-year-old researcher at an anti-plague institute in Siberia has died from what Russian authorities are calling pneumonia of unknown origin. Local reports suggest she may have been exposed to the pneumonic plague, a rare form of the disease that can spread through airborne respiratory droplets. After she allegedly broke a test tube containing the bacteria, the same bacteria that can cause a bubonic plague. Sounds exceedingly scary, but authorities aren't worried yet. It's actually very hard for pneumonic plague to spread from person to person, Dr. Ashish Zha, who served as the White House COVID-19 Response Coordinator, told NBC News. The chance that this becomes a larger outbreak, let alone a global pandemic is exceedingly low. Still, Neil, the U.S. State Department is monitoring reported cases, and I hope this clip isn't played as part of a newscaster montage documenting the rise of a global pandemic. Especially with the mullet. I mean, that's how people will remember you. If this is the start of something big, Russian authorities are saying this is not the start of something big. Just this morning, the governor of Yerku said that we did extensive lab testing of the women's body and quote, "their results show that no microorganisms connected to a professional activities were found." However, Russian authorities have not done a lot to earn the trust of the global health community. They have been accused of being secretive and mysterious around total COVID-19 pandemic counts. So that's why you have global health bodies saying, "Just be transparent with us." We're, as the U.S. said, we're keeping an eye on it, but it's just hard to keep an eye. It's like you're wearing foggy glasses when something happens in Russia, especially in Eastern Russia, where they're not particularly transparent. So, yes, this headline was shared a lot because whenever there's the word plague in the headline, especially when they're working at an anti-plague institute, is certainly something you're going to click on. The people who are closer to the situation are saying, "No, there's no problem here, but we'll definitely keep an eye." Finally, Nobel Prize week has kicked off with the first award in physiology and medicine, including two three scientists who showed how you can use light to help explain the inner workings of the brain, a field known as optogenetics. Carl D. Swarth, Peter Hegman, and Georg Nagel, the winning trio, pioneered a technique where you use pulses of light to activate neurons, helping scientists get to the bottom of memories, behaviors, feelings, and psychiatric diseases like OCD and schizophrenia. The tool is showing special promise in blindness therapy, but the Nobel Committee said it laid the foundation for an entirely new era of neuroscience. More prizes will be handed out to some very smart people every day this week. I think it's funny how different news outlets frame the Nobel Prize being handed out. BBC said, "Nobel Prize Award for revealing inner workings of the brain, CNN framed it as helping decode the mysteries of the brain while financial times went a little bit more on the nose," and she said, "Nobel Prize and medicine awarded for light-based brain mapping. Toby's framing is that they basically found a way to make specific brain cells respond to light, and that's important because before scientists could see where activity was going on in the brain, but now they can actually flip specific brain cells on and off and see what changes. So maybe you flip one on and see if someone gets hungry, see if they feel fear. It just allows you to dial in which sections of the brain are responsible to what. We need to find the switch that makes you an Eagles fan meal. Switch that off. Switch on a more exciting team. Sirion is switching it off already. You don't have to worry about that. I will say, if you want to warm your heart a little bit, watch the video of Carl D'Srath, who's at Stanford telling his family that he won the Nobel Prize. They're just in a living room, and he walks out, and his kids are just sitting there in their PJs, and he goes, "I just won the Nobel Prize," and they all go hug him really closely. It was just amazing because you just look at this guy. You won the Nobel Prize for doing some remarkable things. He's just looks like a regular dad. He has four kids, and he was like, "Yeah, well, the first thing I did after I won the Nobel Prize was make my kids lunch for school. So these in some ways are normal people, and in many ways, they are not normal people. The physics prize is coming this morning." That is all the time we have. Thanks for starting your morning with us and have a wonderful Tuesday to share your thoughts on the episode or anything else. Send an email to [email protected] or DM us on Instagram @MBDailyShow. Let's roll the credits. Emily Mill iron is our supervising producer. Raymond Lou is our senior producer. Our producer is Olivia Graham and our associate producer is Olivia Lake. Technical Direction by Nina Miller. Her makeup is thinking about getting a kitty, and our show is a production of MorningBird. Great show, Daniel. Let's run it back tomorrow. 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