Episode 458: Neal and Toby chat about Comcast dropping $7B worth of its cable networks damaged by the streaming business. Then, the Justice Department asks a judge to order Google to divest its Chrome business. Next, Target shares plummet double-digits from its latest earnings report, failing to attract enough spending on its private-label goods. Meanwhile, Neal shares his favorite numbers from a single banana, Milan, and dogs’ favorite toy, Lamb Chop. Lastly, the biggest headlines to end your day. Download the Yahoo! Finance App (on the Play and App store) for real-time alerts on news and insights tailored to your portfolio and stock watchlists. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Get your Morning Brew Book of Crosswords HERE: shop.morningbrew.com Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - McRib Returns 02:30 - Comcast Cable Breakup 07:10 - Google Asked to Sell Chrome 11:00 - Target Earnings Fall 15:30 - Neal’s Numbers 22:00 - Other Headlines Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Why is Comcast dropping its cable networks?
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, you'll never believe how much a banana duct taped to a wall just sold for.
Then Bullseye the Bull Terrier might be out of a job soon after Target reported some shaky Q3 earnings. It's Thursday, November 21st. Let's ride.
The McRib is coming back. McDonald's semi-mythical sandwich containing boneless pork, barbecue sauce, onions, and pickles is returning to participating stores nationwide on December 3rd for a limited time. The McRib wasn't around in 2023 at all, and was supposed to be on its farewell tour in 2022. So let's hope its comeback goes better than Mike Tyson's.
But Toby, apparently there's something called the McRib effect that says during periods when the McRib is available, the stock market posts higher returns. Is this true at all?
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Chapter 2: What are the implications of Google being asked to sell Chrome?
Yeah, this is big news, not just for your taste buds, but potentially your brokerage account. According to analysis from the finance blog of Dollars and Data, when the McRib is available, the S&P 500 has a higher average daily return than days when it's not available. When you annualize this, when you add it all up, the difference amounts to 19%. And now a word from our sponsor, Yahoo Finance.
Neil, yesterday and really the last month has been a wild time for news.
Corporate breakups, cabinet appointments, crypto going to the moon. It has been a lot.
And it's easy to get lost in endless push notifications or your social media feeds where you're just inundated with headline after headline.
Chapter 3: What caused Target's stock to plummet?
That's where Yahoo Finance can step in to help cut through the noise. Instead of bopping all around the internet to stay up to date with financial news, it brings it to you all in one place. Market data, analyst insights, news sources you can trust. It's all there.
It's one of our regular stops as we prep for the show every morning. We don't call it our purple prince for nothing. If you want to check out the best hub for financial news on the internet, head to yahoofinance.com. That's yahoofinance.com.
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The times, they are a-changin' in the media business. The media conglomerate Comcast is cutting loose most of its cable television networks and re-conglomerating them into a new publicly traded entity it is for now calling SpinCo. On the chopping block are channels including
Chapter 4: What are Neal’s favorite numbers related to bananas?
MSNBC, CNBC, and USA, as well as some of Comcast's digital properties like Fandango and the review aggregator Rotten Tomatoes. Other parts of its media business are staying put, though, including the golden child streaming service Peacock still basking in some post-Olympics glow, as well as its NBC broadcast network and Universal properties.
Oddly enough, Bravo was one of the only channels to avoid the spinoff Don't Sleep on Real Housewives, I guess.
And even though Comcast is separating these channels from the mothership, it probably thinks the castaways can still be successful in their own right. Look, cable TV is a dying business, but even in a shrinking industry, scale matters.
And analysts have predicted that Comcast could be eyeing other companies' cable networks to fold into the new entity, especially under a more M&A-friendly administration. But at the end of the day, Comcast is shedding its cable networks for exactly the reason you'd expect. drops every year, $4 million in the first six months of this year.
So it is looking ahead to what can be by unburdening itself by what has been.
Right. If Comcast really wanted these channels, it probably wouldn't be spitting them off. I do think you can look at this in two ways, though. Comcast is dumping some problem assets, some of these non-growth assets because cable is dying. Or this is an opportunity for
for some pretty strong media names and media franchises to finally get their time in the sun after so much time and so much money was focused into streaming. MSNBC, CNBC, these are pretty big-name media properties, well-established brands that maybe haven't gotten a ton of investment recently. But I do think it's probably a little hard to avoid the first interpretation.
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Chapter 5: What are the latest headlines impacting the market?
Cleaving off a whole business unit usually says... indicates about that business that you don't really want it around anymore. Yes, these channels and cable are going to still be around for a long time, but it's probably just not a growth business.
Like a zombie business a little bit. And they're still very profitable. Cable TV is very profitable for these companies, but they just see no growth trajectory. And it is also a win for shareholders.
Remember, a couple weeks ago, we were talking about an activist investor wanting to break up Honeywell because it's a big conglomerate that contains all these constituent parts that don't trade at a value of the sum of its parts. They think it trades at what's called this conglomerate discount. And Comcast thinks it's getting this conglomerate discount.
And by shedding what has been known as a financial albatross, which are these cable TV channels, it thinks that shareholders will pump the stock. And the big question now is, What does this mean for the broader media business? What are these other companies going to do now that Comcast has essentially rang the starting bell on potentially a big cable TV purge? What is Disney going to do?
What is Warner Brothers Discovery going to do? What is Paramount going to do? Those questions are going to be asked a lot over the next few months and years.
Paramount and Warner Bros. Discovery, you just mentioned, took a combined $15 billion in write-offs earlier this year related to its cable business. Disney also took one as well, although it was a little bit smaller. They were basically telling investors that we are less valuable than we used to be. So Comcast's peers have definitely thought about offloading some of its media businesses.
But part of the issue with offloading these properties is who is going to buy them? It was a Like we said, it is not a growth business. Yes, they are cash flowing. So these companies are said, yes, these businesses are getting less valuable, but we don't mind the cash flow. They still bring in money. But now Comcast has, I mean, you said rung the starting bell. Someone had to do it first.
Maybe this is going to be, the Spinko is going to be kind of buying those properties or saying, hey, we'll take your dead weight. We want to scale this thing up. Or maybe they'll sell off some of these properties in Spinko to these other companies. We're not knowing for sure, but it does seem to be this is just the start of some M&A activity in the future.
It does seem like there's going to be a ton of consolidation. Already, SpinCo seems to be eyeing documentaries and food TV channels to bundle together into a more compelling product there. So this is very big changes in the cable TV business and the media business overall. So very exciting, honestly.
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