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Wednesday, April 03, 2024

Talks between Shari Redstone's Paramount Global and David Ellison's Skydance heat up, Savannah Guthrie dishes on the "unpleasant few days" at NBC News after the hiring and firing of Ronna McDaniel, the "King of Bullshit News" falls, Lachlan Cartwright reveals he was a source for the "Catch and Kill" stories that exposed the National Enquirer, Spotify gets ready to raise prices, Amazon slashes its workforce (again), Meta tests paying Threads users for their posts, Warner Bros. announces a new "Matrix" movie, the "Joker 2" gets an R rating, and so much more. But first, the A1.

THE A1

How Iger Won

CNN Photo Illustration/Valerie Macon/AFP/Getty Images

Bob Iger handed Nelson Peltz a bruising defeat on Wednesday — and he did it, in part, by shoring up perceived weaknesses within Disney that the billionaire corporate raider had sought to exploit.

While it was never quite clear what changes Peltz wanted Disney to implement, the 81-year-old had complained loudly about a few issues: corporate succession, "woke" entertainment, streaming strategy and profits, and a need to set up ESPN for a direct-to-streaming future.

But over the last several months, the Disney chief made significant moves that took the wind out of those sails. Whether the action was taken intentionally to quell the rebellion that Peltz was leading, or whether Iger would have made the moves irrespective of the proxy battle, remains a secret tucked deep within the Magic Kingdom. Regardless, the course of action taken by Iger had the same effect, pouring cold water on Peltz's public grievances.

► On the "woke" agenda: Iger repeatedly stressed that entertaining audiences must be the company's top priority. "Our primary mission needs to be to entertain and then through our entertainment to continue to have a positive impact on the world," Iger said on an earnings call last year, adding, "It should not be agenda-driven." Then, in a stunning move last week, Disney settled a major lawsuit and years-long feud the company had been engaged in with Florida Gov. Ron DeSantis over the state's so-called "Don't Say Gay" law that had made the company the target of right-wing culture warriors.

► On streaming strategy: Iger moved to take full control of Hulu in a major deal with Comcast. Last week, Disney merged the service into Disney+, putting both libraries into a single app in a move once considered unthinkable. Meanwhile, Iger oversaw the shedding of 7,000 staffers last year as he worked to cut costs and improve profits. During the most recent earnings call in February, Iger credited a surge in profits to the cost-cutting and reiterated his aim of "building streaming into a profitable growth business."

► On ESPN's future: Iger has stressed he is "focused on fortifying ESPN for the future." He announced in February that the sports network's direct-to-consumer streaming service will be available by fall 2025, finally giving shareholders a firm timeline for the service, which he touted as a "one-stop shop" for sports fans. On Wednesday, Iger said that its standalone ESPN service would also be integrated into Disney+ next year.

► On the succession question: Iger has stressed that he wants to get succession right when his contract expires in 2026, after flubbing it the last time around with Bob Chapek. The board has a special planning committee who is conducting a "diligent and thorough succession planning process." That crew now includes the recently added board member and former Morgan Stanley boss James Gorman, who has plenty of experience in the area. Reports have also started to emerge about the succession planning, including in CNBC and THR.

Under Iger's control, Disney also launched an expensive advertising campaign to ensure its wide constellation of "mom and pop" investors were hearing his message. Disney treated the campaign like a political one, launching a campaign website, taking out Google search ads, and advertising on popular podcasts like "The Town" and "Smartless." It even leaned on some of its best-known animated characters.

In other words, by the time shareholders had gathered for their annual meeting on Wednesday afternoon, Peltz had little, if anything, to stand his campaign on — and shareholders agreed. Disney investors overwhelmingly moved to elect Disney's slate of directors, rejecting Peltz and former company exec Jay Rasulo. Naturally, Peltz expressed disappointment in a statement released by his Trian Partners, but he also took credit for the recent actions Iger has taken.

"We are proud of the impact we have had in refocusing this Company on value creation and good governance," Trian said. "Since we re-engaged with the Company in late 2023, Disney has announced a host of new operating initiatives and capital improvement plans. The Board has been refreshed with two new directors. Over the last six months, Disney's stock is up approximately 50% and is the Dow Jones Industrial Average's best performer year-to-date."

Iger, for his part, thanked shareholders for putting their "trust and confidence" in his leadership, the board, and the "ambitious strategy" the company is "implementing across our businesses to build for the future." How much of that strategy was a result of Peltz's proxy war will forever be unclear.

It's certainly likely that Iger and the board had independently identified many of these issues and sought to plan remedies to fix them. After all, it does not take a media savant to realize ESPN needs a direct-to-consumer home. Or that finding a worthy successor to Iger must be a top priority for the company. Those issues have been plainly obvious for all to see.

That said, it does stretch credulity to believe that Peltz's ruthless proxy war carried with it zero influence in the decisions Disney has taken over the last several months. If nothing else, it served as an added catalyst for change. After all, sometimes the best tactic to defeat a corporate opponent is simply to address their concerns, thereby clipping their wings and robbing them of their stated disagreements.

KEEPING THE KINGDOM

Allison Morrow on Bob Iger's challengers: "They embodied a kind of Make Disney Great Again mantra that envisioned the company dominating the box office and raking in fat profits. And honestly, what investor wouldn't want that? Of course, the agitators were scant on details for, like, how to do it. Or how their plan would differ from what Iger and Co. were already doing." (NightCap)
To that end, Nelson Peltz saw last-minute support from none other than Bill Ackman and noted Iger-foe Elon Musk. (WSJ)
"Having fended off Peltz and Trian, at least for now, Iger likely has some runway to focus on the growth phase of his plan, at least until his contract runs out in 2026," Morrow and Hadas Gold write. (CNN)
"The outcome of the vote leaves control of the boardroom firmly in the hands of Iger-friendly directors—all but one of whom were appointed on his watch," Robbie Whelan and Lauren Thomas note. (WSJ)
"But the victory did not leave [Iger] without bruises," Brooks Barnes writes. (NYT)
"With Disney shares up nearly 50% since Peltz's campaign first began, Trian and [Ike] Perlmutter gained a lot despite their board defeat," Alex Sherman points out. (CNBC)
Iger attempted to turn the corner at the shareholder meeting, providing the first glimpse of Moana from the sequel to the animated movie, a sneak peek at the third season of "The Bear," an image of young Mufasa, and the first concept art for Disneyland's big "Avatar" project.
Iger also said that ESPN's streamer will be available on Disney+ for bundle subscribers. (LAT)
Disney's shares ended the day down about 3%.

——— BELOW THE FOLD ———

CNN Photo Illustration/Evan Agostini/Invision/AP

Shari Gets Serious With Skydance: Shares in Paramount Global boarded a rocket ship on Wednesday and headed for the stratosphere, ending the day up 15% on news that the entertainment conglomerate and David Ellison's Skydance Media had crept even closer to a possible deal. Shari Redstone recently reached a tentative agreement to sell her controlling stake to Skydance, I'm told by a source, confirming a market-moving report from Bloomberg's Lucas Shaw. Shaw's story came after another report from The WSJ's Jessica Toonkel and Miriam Gottfried said Paramount's board had agreed to enter exclusive merger discussions with Skydance. Reps for Paramount, Skydance, and Redstone declined to comment. But the news does suggest Apollo is out of the running, even after making a new $26 billion deal for Paramount, as Toonkel and Gottfried reported Wednesday, in addition to the $11 billion offer the firm made for the company's studios division.

THE INDUSTRY

Savannah Says: "Today" co-anchor Savannah Guthrie dished about NBC News' disastrous hiring of Ronna McDaniel. Speaking to Stephen Colbert, Guthrie described last week's trainwreck as "an unpleasant few days" at 30 Rock as high-profile personalities took to the air to voice displeasure with management for hiring the former Republican National Committee chair. Guthrie made it clear that opposition to McDaniel did not stem from the fact she is a Republican, but that McDaniel was an election denier who played a role in helping Donald Trump try to subvert the 2020 vote. As Guthrie put it: "I feel that, particularly in mainstream media, we need to include an array of voices. But there's a line, and the line is truth, the line is facts, and the line is you have to be someone upholding our democracy." The Daily Beast's Justin Baragona has more here.

THE FOURTH ESTATE

Chicago Public Media laid off 14 staffers and scaled back its podcasting team, citing financial troubles. The union called it "devastating." (WBEZ)
The number of pink slime outlets is now equal to that of legitimate news outlets, Hannah Murphy reports. (FT)
But this could help: ProPublica "announced on Wednesday a commitment to publishing accountability journalism in every state over the next five years." (ProPublica)
Congratulations to Brian Stelter, who is the recipient this year of the Bart Richards Award for Media Criticism. (Penn State)
Total Eclipse of the Newsroom: Staffers at the Rochester Democrat & Chronicle, which is owned by Gannett, will walk off the job in an open-ended strike slated to begin on Saturday should management fail to agree on a contract before then — coinciding with the solar eclipse's arrival in the city. (WXXI)

IN THE MARKET

💰 It's raining money over in Silver Lake! The private equity firm is launching a media company with Endeavor chair Patrick Whitesell, investing $250 million into the venture. (THR)
The NBA and Roku are partnering to launch the league's first FAST Channel. (SPJ)

MEDIA MOVES

Fortune tapped Benjamin Snyder as managing editor. (TBN)
The WaPo named Amanda Finnegan deputy features editor. (WaPo)
340B Report hired Shannon Young as an associate editor and reporter,

THE INFO WARS

CNN Photo Illustration/Central European News

The 'King of Bullshit' News Falls: You've probably never heard of Central European News before. But you've likely come across some of its stories. For years, the outlet has sold sensationalized stories to major tabloids across the world. The problem, however, is that often such stories have been void of truth. In fact, back in 2015, BuzzFeed News dubbed the Michael Leidig-led outlet as "the king of bullshit news," noting that the British news agency was responsible for filling social media feeds "with stories that are wonderful, wacky – and often wrong." But Leidig and CEN have, apparently, fallen on hard times. Leidig told the Press Gazette's Dominic Ponsford that CEN has ceased publication and laid off its staff. "One of the biggest problems is that many publications don't want to pay for the story, only for the pictures or video," he explained, adding that with A.I., news outlets could simply generate content around the images. Ponsford has more here.

IN THE BATTLEFIELD

Remember all those "Catch and Kill" stories about Donald Trump and the National Enquirer? In a lengthy piece, Lachlan Cartwright, who previously held a top job at the tabloid, revealed that he was a key source for several news outlets. Cartwright wrote that he regretted his work at the Enquirer and wanted to set the public record right. Cartwright said he has faced lawsuit threats from A.M.I. (now A360 Media), David Pecker, and Dylan Howard for allegedly breaching his contract. But none of the parties have ever filed a lawsuit. I asked Cartwright on Wednesday, after publication of his piece, whether he had been threatened with a suit again. He said that he had not. (NYT)
Newsmax "deleted a post on the social media platform X about former President Donald Trump after it incurred the wrath of readers and sparked an internal panic at the conservative cable network," Diana Falzone reports. Host Rob Schmitt later said, "We had a low level social media staffer mindlessly post a headline and story" straight from Reuters. "It's been addressed." (Mediaite)
Matt Walsh: "The people that are destroying the planet, the worst offenders at destroying the planet, are non-whites." (MMFA)
Walsh also claimed Beyoncé is only successful because she's "an attractive woman." (Mediaite)
Meanwhile, Charlie Kirk declared that birth control is "terrible" and that it "crates very angry and bitter young ladies." But he didn't stop there. Kirk went on to say, "Then that bitterness manifests into a political party that is the bitter party. I mean, the Democrat Party." (Mediaite)

THE VALLEY

CNN Photo Illustration/Josh Edelson/AFP/Getty Images

Apple's Robot Aspirations: Robots by Apple? It could just maybe become a reality, Bloomberg's Mark Gurman reported Wednesday. Gurman, citing sources, reported that the Silicon Valley titan "has teams investigating a push into personal robotics." According to Gurman, "Engineers at Apple have been exploring a mobile robot that can follow users around their homes." Another possibility, per Gurman, is "an advanced table-top home device that uses robotics to move a display around." The news of the company's interest in robotics comes on the heels of Apple abandoning its expensive push into self-driving electric cars and as Vision Pro fails to arrest the public attention in the way its other devices have. Gurman has more here.

TOO MANY TABS

Spotify will raise prices in some major markets and create a new plan that excludes audiobooks, Lucas Shaw and Ashley Carman report. Spotify shares ended the day up more than 8% on the news. (Bloomberg)
Charging for A.I. search? Google is apparently considering it. (FT)
Dan Gallagher points out that Microsoft infusing its Bing search engine with ChatGPT "hasn't exactly been fatal for Google," which has barely seen usage impacted by the move. (WSJ)
✂️ More job cuts in the Amazon: Amazon Web Services cut several hundred employees, the company said Wednesday. (Reuters)
🚨 Meta "is testing paying out cash bonuses to creators who make engaging content" for Threads, the company confirmed to Sydney Bradley and Dan Whateley. (Business Insider)
Facebook changed the way videos look on the platform, rolling out a new player. (USA Today)
Amrita Khalid pointed out, though, that the new player "looks a lot like TikTok." (The Verge)

CURTAIN CALL

CNN Photo Illustration/Warner Bros. Pictures

Follow The White Rabbit: Get ready to head back to the Matrix! Warner Bros. Pictures on Wednesday announced that it will release a fifth film in the hit franchise. The new film will be directed by Drew Goddard and executive produced by Lana Wachowski. "The entire team at Warner Bros. Discovery is thrilled for Drew to be making this new Matrix film, adding his vision to the cinematic canon the Wachowskis' spent a quarter of a century building here at the studio," Warner Bros. Pictures boss Jesse Ehrman said. It is, however, not clear whether Keanu Reeves and Carrie-Anne Moss will be returning for the film. Variety's Rebecca Rubin has more.

OFF STAGE

Not a paid promotion: I'm not sure why there hasn't been more press around Showtime's "A Gentleman in Moscow," which is based on the bestseller by Amor Towles (if you haven't read the book, you must put it on your list). But I watched the first episode after sending yesterday's newsletter and found it to be quite good! Check it out on Paramount+.
No joke! The "Joker 2" has received an R rating for "strong violence" and "brief full nudity." (Variety)
Kirsten Dunst sat down with Tatiana Siegel to promote "Civil War" and attacked the press in the process, saying the media "really stokes" division "big time" and is constantly "forcing us to choose a side." (Variety)
Law enforcement raided Sean "Diddy" Combs' homes over concerns he might destroy incriminating video evidence, Emily Smith reported, citing a source. Combs has denied all wrongdoing. (The Wrap)
Jonathan Majors' conviction in the actor's assault and harassment case will stand, a judge ruled. (CNN)
Craig Gillespie is in talks to direct DC Studios' "Supergirl," Anthony D'Alessandro and Justin Kroll reported. (Deadline)
Jennifer Garner will star in Netflix's "Mrs. Claus." (Deadline)
Julia Garner will play the Silver Surfer in "Fantastic Four." (Deadline)
James Corden joked to Jimmy Kimmel that "no one believes I wasn't fired" from "Late Late Show." (THR)
Netflix's "3 Body Problem" has raked in 15.6 million viewers as of its second week, topping the streamer's most-watched list. (The Wrap)
The finale of "The Bachelor" season 28 pulled in 6.31 million viewers, the show's biggest audience in over two years. (The Wrap)
Maria Sherman cobbled together a playlist for the upcoming solar eclipse. But we'll just be listening to Hans Zimmer's "Dune: Part Two" soundtrack on repeat. (AP)

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. You can follow us on Instagram, Threads, and LinkedIn. We will see you back in your inbox tomorrow.

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