Received this email from a friend? Subscribe here.

Tuesday, September 5, 2023

We have a jam-packed letter for you following the long weekend! Mark Thompson visits CNN's NYC offices, the PRESS Act gets a boost, Warner Bros. Discovery reveals cost of strikes, ADL blasts Elon Musk with fiery statement, Meta proves again it wants out of the news business, Taylor Swift's concert film is on track to be a major blockbuster, and more. Plus an exclusive excerpt from forthcoming reporting on Disney succession drama from CNBC's Alex Sherman. But first, the A1.

THE A1

The Bundle Brawl

CNN Photo Illustration/Jay L. Clendenin/Los Angeles Times/Getty Images

It's a carriage fight that could lead to the dismantling — or revolution — of the cable television bundle.

The brawl between Disney and Charter Communications, which has erupted into view at the most inopportune time for sports fans as the U.S. Open plays out and the NFL season gets underway, has laid bare the strained relations between distributors and content providers that has simmered beneath the surface for years.

The showdown resulted in ABC, ESPN, and other major Disney-owned channels being yanked off the air for Charter's 15 million Spectrum subscribers over Labor Day weekend, angering viewers and raising existential questions for the traditional cable business as it quickly became clear this is not the usual carriage battle.

The standoff boils down to Charter's demand that Disney provide its subscribers access to its alluring direct-to-consumer services at no additional charge or offer more flexibility on bundling. Charter argues that it is paying a premium for Disney content ($2.2 billion in 2023), but that much of the first-class, buzzy content is actually on platforms like Disney+, not the linear channels.

The dispute has underscored the extent to which the switch from traditional linear television to streaming has ravaged the business models of cable and satellite providers, with Charter mincing no words and stating frankly "the current video ecosystem is broken" and simply unsustainable.

"This is not a typical carriage dispute," Charter said in a statement. "It is significant for Charter, and we think it is even more significant for programmers and the broader video ecosystem."

In Charter's eyes, it is essentially being charged a top-tier rate for second-rate content while Disney simultaneously uses the money it generates from its lucrative carriage deal to build out a service that will ultimately lead to the destruction of the cable bundle as we know it. It either wants the doors to the rest of the Magic Kingdom unlocked or for the House of Mouse to offer greater flexibility in the traditional bundle, so that customers who may not want access to pricy channels like ESPN aren't on the hook to pay for it.

Disney, obviously, sees the state of affairs differently. It believes that it is still creating premium content for its linear channels and that it invests large sums of money to produce content for its DTC services, which it considers a totally separate offering. And it says it has proposed "creative ways" to make Disney's DTC offerings available to Charter subscribers. But, in Disney's eyes, why would it give away access to its expensive DTC content at no additional cost to Charter subscribers?

"Our linear channels and direct-to-consumer services are not one and the same, per Charter's assertions, but rather complementary products," Disney said in a statement. "We continue to invest in original content that premieres exclusively on our linear networks, including live sports, news and appointment viewing programming. Likewise, on our direct-to-consumer services, we make multi-billion-dollar investments in exclusive content, which is incremental to our linear networks."

How the fight between the two entertainment giants ultimately plays out could have far-reaching consequences for the entire industry, as evidenced by share prices of media titans sinking across the board following news of the extraordinary dispute last week. Shares in Warner Bros. Discovery are down 9%, shares in Paramount Global are down nearly 8%, and shares in Comcast and Fox Corporation are each respectively down 3%.

It's unclear precisely when the matter could be resolved. I am told that Disney chief Bob Iger has been personally involved in the matter (yet another industry-defining matter for him to grapple with), engaging with Charter boss Chris Winfrey about how the two parties can work to resolve the matter. But when, or if, the two sides can strike an agreement is unclear.

The fact that Disney is now directing people to switch to its Hulu + Live TV service as an alternative and Charter is urging its customers to sign up for FuboTV at a discounted rate, suggests that negotiations aren't on the brink of producing a resolution.

Charter has also staked out a hardline position: Either it will shake up and transform the economics of the television industry, or it will exit it altogether.

"The Walt Disney Company and Charter have the opportunity to work together on transforming the industry for the long-term benefit of both companies and their customers," Charter said. "Without them, we need to pivot to other models to drive value for our connectivity relationships. We are either moving forward together with a collaborative business model, or we're moving on."

——— BELOW THE FOLD ———

CNN Photo Illustration/Michael Nigro/Sipa USA

Warner's Warning: The ongoing dual-strikes paralyzing Hollywood are coming at a stiff cost. Warner Bros. Discovery, which had previously advised investors it believed the work stoppage would be resolved by early September, said Tuesday in an SEC filing that it can't estimate when agreements will be struck and that its 2023 earnings "will be negatively impacted by approximately $300 to $500 million, predominantly due to the impact of the strikes." The media conglomerate, which is also CNN's parent, said the adjusted guidance was "due to the strikes' impact on timing and performance of the remainder of the 2023 film slate, as well as the Company's ability to produce and deliver content." Meanwhile, WBD upped its free cash flow expectations to $5 billion. CNN's Chris Isidore has details here.

HOLLYWOOD HELL

Marvel Studios released a revised schedule for its slate of television content — including "What If … ?," "Echo," and "Agatha: Darkhold Diaries." (THR)
"Breaking this loggerjam looks like it's going to take some help, and it won't be pretty if we don't sew this up in the next two weeks or so as a chain reaction of cataclysmic events begins," Richard Rushfield writes, saying it is "time for the relief pitchers" to enter the game. (Ankler)
Kevin Bacon urged studios to "make a deal" and "get it done" on his podcast, "Six Degrees with Kevin Bacon." (Deadline)
Director Richard Linklater hopes production of his musical comedy "Merrily We Roll Along" will soon resume, saying "I'm hopeful like everyone that the strikes will be resolved by then." (Variety)
Studios have a lot to learn from Netflix's E.U. payout structure, Jesse Whittock and Max Goldbart write. (Deadline)

THE INDUSTRY

Thompson's Tour: Incoming CNN boss Mark Thompson might not officially take the helm of the cable news network until next month, but he is already getting started touring the global outlet's bureaus. Thompson on Tuesday visited CNN's New York offices in Hudson Yards, where he met with the network's four-person interim leadership team made up of Amy Entelis, Virginia Moseley, Eric Sherling, and David Leavy. I'm told that Thompson met individually with each member of "The Quad" and that they then had lunch together. Thompson, who arrived early in the morning, also met with senior leaders and toured the offices. He stayed well into the evening, dropping by the prime time show teams and observing staffers at work. After New York, I'm told, Thompson is expected to visit several of CNN's other bureaus in the weeks ahead.

► Speaking of CNN: Anderson Cooper opened up to The NYT's David Marchese about ex-CNN boss Chris Licht's vision for the network: "I don't know what Chris Licht's analysis was," Cooper said. "I don't have much confidence that I actually know what he was thinking."

First in the Reliable | The PRESS Act is getting a big boost. I'm told that Sen. Lindsey Graham is being added as a co-sponsor to the legislation, meaning that both Senate Judiciary Chair Dick Durbin and the ranking member, Graham, support the bill. The legislation, supported by both Republicans and Democrats in Congress, is aimed at protecting journalists from being forced to reveal their sources.

THE FOURTH ESTATE

John Lansing, the chief executive who led NPR through the pandemic, will retire by the end of the year just months after the radio network announced a significant budget shortfall and layoffs. (CNN)
The NewsGuild of New York filed an unfair labor practices complaint against Fortune Media over its return-to-office mandate.
The WaPo will expand Washington Post TV to Allen Media Group's Local Now. (WaPo)
The Messenger launched a sports vertical as the company aims to expand its coverage. (X)

THE MARKET

Spotify's billion-dollar podcast bet has turned "into a serial drama," Anne Steele and Sarah Krouse write, reporting that "most of its shows aren't profitable" despite heavy investments. (WSJ)
Margaritaville "aims to hang on" after Jimmy Buffett's death, Jordyn Holman and Tiffany Hsu report. (NYT)
Digital World Acquisition extended its merger deadline with Truth Social's parent. (WaPo)
A fund controlled by Steven Mnuchin has purchased a stake in Lionsgate, Alex Weprin reports. (THR)

MEDIA MOVES

NBCU tapped Liz Jenkins as the chief business officer for Studio Group. (Variety)
NBC News Now named Sean Reis the executive producer of "Morning News Now." (Adweek)
The NYT promoted Krista Mahr to senior editor for international, where she will also lead Opinion's global coverage; promoted Sara Barrett to senior photo editor; promoted Glyn Peterson to senior staff editor; promoted Phoebe Lett to senior producer on the Opinion Audio team; and promoted Anna Marks to staff editor on the Opinion team. (NYT)

SNEAK PEEK

Deep Dive Into Disney: Get ready for an in-depth piece offering never-before-reported details into the succession drama that unfolded at Disney between Bob Iger and Bob Chapek. CNBC's Alex Sherman has an 11,000-word story publishing online Wednesday at 6am ET. The story, I'm told, is based on months of reporting in which Sherman chatted with dozens of insiders. Below is an exclusive excerpt from the piece.

On March 10, 2020, about two weeks after the handoff, Chapek, Iger, Chief Financial Officer Christine McCarthy and a small handful of other Disney executives flew from Los Angeles to Raleigh, North Carolina, for Disney's annual meeting.

At the front of the plane, Iger and Chapek were going over logistics and fretting about coronavirus. Iger caught Chapek off guard with some news. Chapek, not Iger, would lead the question-and-answer portion of the meeting, an annual ritual Iger called "stump the CEO."

During his 27 years at the company, Chapek had only attended one annual meeting — as a guest in the audience.

Since Chapek's background at Disney had been in parks, consumer products and distribution, he knew little about the inner workings of ABC, ESPN or the movie studio. He'd been given a large binder of background material by the investor relations team, but now he had to be ready to answer questions on any topic, which could range from Disney's stance on the environment to the future of ABC News.

After a couple of hours of general preparation, Chapek retreated to a private area in the back of the plane and closed the door to study. Iger was perplexed and expressed his confusion to McCarthy. He assumed the men would run through possible questions and answers throughout the flight. Iger walked to the back of the plane to see if Chapek needed help preparing.

"Isn't it all in here?" Chapek asked, holding up the binder, according to a person on the plane.

The basics, yes; but not the nuances, Iger replied. Chapek, who prefers to learn by reading and memorizing material — and thought he'd already spent the first hour or two prepping with Iger — said he'd rather stay in back and study. (The first question Chapek would receive was whether he thought there was bias within ABC News — a topic about which he knew little but had prepared for on the plane, according to people familiar with the matter.)

Iger would later relay this fleeting exchange to friends as one of the first moments it occurred to him that he may have made a mistake.

THE INFO WARS

CNN Photo Illustration/Gonzalo Fuentes/Reuters

Musk's Madness: Elon Musk on Tuesday continued his odious war with the Anti-Defamation League, smearing the renowned Jewish organization because it had the audacity to raise concerns about the surge in hate content on his troubled platform. It's not worth repeating the specific attacks and threats that Musk has bombarded the ADL with over the last 24 hours, which is likely exactly what he wants. And at this point, I'm not sure it's worth focusing on Musk's own behavior. We've known for some time that he is an unhinged billionaire who elevates conspiracy theories and seeks to smear any person or entity that holds him accountable.

It is, perhaps, worth focusing on the entities that continue to do business with Musk, despite his reprehensible public behavior since acquiring the company formerly known as Twitter. Major companies continue to fork over advertising dollars to Musk, including McDonald's, Coca-Cola, and Pfizer. But, perhaps more astonishing, news organizations also continue to line Musk's pockets, sending him ad dollars despite their own reporting on his appalling behavior. Over the last day, I've spotted ads from The Washington Post, The New York Times (for The Athletic), The Wall Street Journal, Puck, Axios, and Bloomberg. Do these outlets have no standards for whom they do business with? As Casey Newton put it, "This is so embarrassing for these publications." Indeed, it says a lot about the values they claim to uphold.

IN THE BATTLEFIELD

ADL head Jonathan Greenblatt ripped Musk in a lengthy statement Tuesday night: "Musk is engaging with and elevating these antisemites at a time when ADL is tracking a surge of bomb threats and swatting attacks of synagogues and Jewish institutions, dramatic levels of antisemitic propaganda being littered throughout Jewish and non-Jewish residential communities, and extremists marching openly through the streets in Nazi gear. All of this is happening in a context of the highest number of antisemitic incidents that ADL has tracked in more than 40 years -- and just two weeks away from the Jewish holidays of Rosh Hashanah and Yom Kippur. And so, this behavior is not just alarming nor reckless. It is flat out dangerous and deeply irresponsible. " (ADL)
Walt Mossberg deactivated his Twitter/X account, describing the platform as a "cesspool" under Musk and arguing that it is "steadily approaching the level of Truth Social." (Threads)
Musk claims that advertising revenue is down a staggering 60%, which of course runs counter to the claims Linda Yaccarino, who holds the chief executive title on paper, made in an interview last month. (CNN)
Ananya Bhattacharya notes Musk's feud with the ADL "has been brewing" since he purchased the platform. (QZ)
A worthwhile read from Elizabeth Lopatto: "Musk paid for our attention, but the price to keep it is getting higher." (The Verge)
Switching gears: Right-wing conspiracy channel One America Network settled its 2020 election defamation lawsuit with Eric Coomer, a former Dominion Voting Systems executive. (CNN)

THE VALLEY

CNN Photo Illustration/Meta

News They Will Lose: Meta is once again making it very clear that it is no longer interested in being in the news business. The Mark Zuckerberg-led tech giant announced Tuesday that it will ditch its Facebook news tab in three major European countries: the U.K., Germany, and France. "We know that people don't come to Facebook for news and political content – they come to connect with people and discover new opportunities, passions and interests," the company said. It's a noteworthy about-face for Meta, which once promised the world to publishers and launched the dedicated news tab for outlets. Bloomberg's Mark Bergen has more here.

🔍 Zooming in: It's not just in Canada and Europe where Meta is moving to shove aside the news. As we reported last month, U.S. publishers have seen dramatic drops in referral traffic from Meta, indicating that the company is quietly exiting the news business here at home.

TOO MANY TABS

Meta's return-to-office mandate has taken effect, meaning employees are now expected to be in the office three days a week. (CNBC)
TikTok has begun moving E.U. user data to an Ireland-based data center in a bid to appease the bloc's regulators. (The Verge)
Sara Fischer reports TikTok is hiring more people as it eyes adding new social network features. (Axios)
TikTok Music continues to encroach on the turf of music streaming giants the likes of Spotify and Apple Music, Heidi Chung writes. (Variety)
"Reddit's replacement mods may be putting its communities at risk," Wes Davis writes, arguing that "with institutional knowledge seeping out of the site, poor moderation could have real-world impacts as more misinformation is allowed to stay up on the site." (The Verge)

CURTAIN CALL

CNN Photo Illustration/Allen J. Schaben/Los Angeles Times/Getty Images

Taylor's Theater Triumph: How big of a blockbuster will Taylor Swift's concert film be? That's what box office analysts are trying to get their arms around. Distributor AMC Theatres has not released updated sales figures since last week, but THR's Pamela McClintock reported Tuesday that several exhibition sources told her they believe the film could break the $100 million barrier on opening weekend, which would put it atop Christopher Nolan's "Oppenheimer." Shawn Robbins, chief analyst for Box Office Pro, told me that he believes "it's definitely trending toward a nine-figure opening as long as capacity and showtimes continue to rise." Robbins added, "Fans are likely creating a frontloaded aspect for such a unique event, so it's just a matter of monitoring those trends in the coming weeks to see what the ceiling might be."

OFF STAGE

"The Equalizer 3" took the No. 1 spot at the box office, earning $34.5 million in the domestic box office during its opening weekend. (CNN)
Sean "Diddy" Combs will be awarded the Global Icon Award at the 2023 VMAs, scheduled for September 12. (TheWrap)
Nirvana will reissue its acclaimed album "In Utero" to celebrate its 30th anniversary — and will include two unreleased live albums. (Pitchfork)
Hulu canceled "How I Met Your Father" after the show's second season. (THR)
Eddie Murphy's upcoming film "Candy Cane Lane" will hit Prime Video on Dec. 1. (THR)
Alejandro Monteverde, the director behind the summer's divisive release "Sound of Freedom," will release his next feature film, a religious film titled "Cabrini," in March 2024. (Variety)
Netflix released its first teaser trailer for "May December," starring Natalie Portman and Julianne Moore. (YouTube)

Thank you for reading! This newsletter was edited by Jon Passantino and produced with the assistance of Liam Reilly. Have feedback? Send us an email here. You can follow us on Instagram and Threads. We will see you back in your inbox tomorrow.