Raphael Stevens

Warner Bros. Discovery has renamed its flagship streaming service Max, eliminating HBO from the name.
Executives explained Wednesday the decision was to protect the HBO brand and to highlight the service’s extended reach beyond prestige adult programming.
Calling the service Max sets up Warner Bros. Discovery to challenge Netflix and Disney for global streaming dominance, but that hasn’t been the company’s messaging for the past year.

JB Perrette, President and CEO of Warner Bros. Discovery Global Streaming and Games, speaks onstage during a Warner Bros. Discovery Streaming Press Event on April 12, 2023 in Burbank, California.
Jeff Kravitz | Getty Images

Humble as he may be, Warner Bros. Discovery CEO David Zaslav proved this week he’s definitely a name dropper.
Warner Bros. Discovery unveiled its new streaming service Wednesday, featuring a combination of programming from HBO Max and Discovery+. It will launch May 23 in the U.S., later this year in Latin America, and in the rest of the world in 2024. And it’ll be named “Max” — sans “HBO.”

At surface level, Warner Bros. Discovery’s decision to do away with the name HBO Max is a logical marketing choice. Look deeper, and it starts to resemble a microcosm of an existential tension that lies at the heart of the company — and the media industry more broadly.
The company is trying to compete with Netflix and Disney to be a winner in streaming, while at the same time pushing a message of financial discipline that deprioritizes streaming subscriber additions. It’s a question of quality versus quantity, and Warner Bros. Discovery is trying to play both sides.
“Max is where consumers can finally say, ‘Here’s a service that not only has something for everybody in my household, but something great for everybody in my household,” said JB Perrette, the company’s head of streaming, during a presentation introducing Max on Wednesday in Burbank, California.

HBO Max no more

Perrette explained Wednesday why Warner Bros. Discovery removed the HBO part of the name from the new service. HBO is synonymous with adult entertainment, and Max will lean into offering programming for kids and families, he said.
“We all love HBO,” said Perrette. “It’s a brand that’s been built over five decades to be the edgy, ground-breaking trend-setter for entertainment for adults. But it’s not exactly where parents would most easily drop off their kids. Not surprisingly, the category hasn’t met its true potential on HBO Max.”

In this photo illustration, the Warner Bros. Discovery logo is displayed on a smartphone screen and in the background, the HBO Max and Discovery Plus logos.
Rafael Henrique | Lightrocket | Getty Images

Warner Bros. Discovery executives felt the name HBO actually limited the audience for the streaming service because it scared away potential audiences. They also felt the HBO brand could be diluted by the flood of Discovery’s reality TV programming set to join the platform, such as “Dr. Pimple Popper,” “90 Day Fiance” and various HGTV shows that more readily serve as background TV than fare for office water-cooler conversation.
“HBO is not TV. HBO is HBO. It needs to stay that way,” Perrette said at the event. “We will not push it to the breaking point by forcing it to take on the full breadth of this new content proposition had we kept the name in the service brand. By doing so, we’ll better elevate and showcase our unparalleled array of other content and brands that will be key to broadening the appeal to this enhanced product.”
The company’s reasoning is rational. HBO appeals to a certain audience, but also doesn’t appeal to a certain audience. HBO fans won’t unsubscribe from the service in response to the name Max, but some people who were scared off by HBO may now sign up once the adult brand has been obscured by the deluge of distinctly un-HBO content coming to the service.

Evolution of streaming

When HBO Max initially launched, AT&T and WarnerMedia executives emphasized to subscribers that this new app was, first and foremost, the home of HBO. Now, about 80 million subscribers later, that point is less important. Those who want HBO already know where to find it, and HBO Max will simply morph into Max on most platforms.
Streaming is entering its “teenage” years, Perrette said, and Max as a name makes more sense to keep adding subscribers globally in a lower-growth world.
This would be the end of the story if Warner Bros. Discovery’s stated goal was to maximize (no pun intended) the number of subscribers who sign up for Max.
That was every media company’s goal when Zaslav agreed to merge Discovery with WarnerMedia in 2021. But according to Zaslav, that’s no longer the priority.
“I’d rather have 100 million subscribers or 150 million subscribers and have it be really profitable than try and stretch for some big number, and in the end, lose money,” Zaslav told CNBC’s Julia Boorstin after the presentation Wednesday. “We take a look at what people watch on Max and we can see exactly what they like and exactly what they don’t. And some of the stuff they’re not watching, we can put it on a free AVOD [advertising-supported video on demand] platform, and some of the stuff that they’re not watching, we can keep it nonexclusively on Max, but we could also sell it to others.”
“We are relentlessly focused on creating great content and monetizing in every way possible,” he said.

The media hedge

With its new streaming strategy — and Max at the center — Warner Bros. Discovery is hedging its bets.
The company is keeping Discovery+ around for customers who are happy to pay $5 or $7 for just Discovery’s programming. Perrette said the company doesn’t “want to leave any of its profitable subscribers behind.”
Zaslav also alluded to Warner Bros. Discovery’s free ad-supported service, which the company has said is coming later this year.
Warner Bros. Discovery could have kept HBO Max around, too. For those customers who wanted both Discovery+ and HBO Max, it could have offered a bundle for a discounted price. That’s been Disney’s strategy, which offers bundled ways to mix and match Hulu, ESPN+ and Disney+.
Instead, the company loaded up one service with everything it has, which may also eventually include some news from CNN and sports such as NBA or NHL games. Zaslav said Wednesday he’d have more details on that “in the coming months.” Don’t forget, Zaslav killed off CNN+ as a standalone streaming option last year just about a month into its existence.
Warner Bros. Discovery is building Max as a one-size-fits-all option so that it has the scale to stick around in a post-cable world that’s coming increasingly quickly.
But Zaslav is also telling investors he’s fine with limiting Max’s growth. It’s more important for him to make money than to compete with Disney and Netflix to become the world’s largest streamer.
It’s a delicate balance: Disney, Paramount Global, Comcast’s NBCUniversal and even Netflix are all battling the same forces. Investors turned on the narrative of pursuing streaming growth at all costs last year, cutting the valuations of many media and entertainment companies in half.
What’s happening now is, at its core, a hedge. The media industry knows streaming is the future but growth has slowed. Zaslav has championed the value of the traditional pay-TV bundle while criticizing the previous WarnerMedia regime’s profligate spending on streaming. He’s trying to give investors a new reason to get excited about Warner Bros. Discovery. That message, Zaslav hopes, is free cash flow generation.

David Zaslav, President and CEO of Warner Bros. Discovery talks to the media as he arrives at the Sun Valley Resort for the Allen & Company Sun Valley Conference on July 05, 2022 in Sun Valley, Idaho.
Kevin Dietsch | Getty Images

“Ultimately, I’m a free cash flow guy,” Zaslav said Wednesday. “We want great talent, but ultimately, if we’re not making money on subs, if we don’t have any ARPU [average revenue per user], we’re not helping ourselves and we’re not helping shareholders.”
There are some indications he could be on to something. Warner Bros. Discovery shares are up nearly 50% this year after falling about 60% last year.
But when you take a two-part name — HBO and Max — and keep just the Max, the implication is “big” over “quality.”
That was AT&T’s message. It hasn’t been Zaslav’s message until now.
WATCH: CNBC’s full interview with Warner Bros. Discovery CEO David Zaslav

Disclosure: CNBC’s parent company Comcast owns NBCUniversal and co-owns Hulu. More

The Federal Aviation Administration issued a Starship launch license to Elon Musk’s SpaceX.
SpaceX aims to launch Starship as soon as Monday from its private facility in Texas along the Gulf Coast.
Starship is designed to carry cargo and people beyond Earth and is critical to NASA’s plan to return astronauts to the moon.

A Starship prototype is seen stacked on top of a Super Heavy booster at the company’s launch facility near Brownsville, Texas.

The Federal Aviation Administration issued a Starship launch license to Elon Musk’s SpaceX, a crucial final regulatory step that clears the company to attempt an orbital launch of its towering rocket for the first time.
“After a comprehensive license evaluation process, the FAA determined SpaceX met all safety, environmental, policy, payload, airspace integration and financial responsibility requirements. The license is valid for five years,” FAA said in a statement.

SpaceX, with the FAA license now in hand, aims to launch Starship as soon as Monday from its private facility in Texas along the Gulf Coast.
“SpaceX is targeting as soon as Monday, April 17 for the first flight test of a fully integrated Starship and Super Heavy rocket from Starbase in Texas. The 150-minute test window will open at 7:00 a.m. CT,” SpaceX said in a statement.

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The company recently stacked Starship prototype 24 on Super Heavy booster prototype 7 in preparation for the launch. Together they stand nearly 400 feet high. SpaceX in February completed a test firing of the Super Heavy booster, which has 33 Raptor engines at its base, in one of the final technical steps toward the launch.
SpaceX for several years has been building up to the first orbital flight test of its Starship rocket, with company leadership stressing the experimental nature of the launch. While SpaceX had hoped to conduct the first orbital Starship launch as early as summer 2021, delays in progress and regulatory approval have pushed back that timeline.
The rocket is set to lift off from SpaceX’s development facility near Brownsville, Texas, before heading east across the Gulf of Mexico, according to 2021 filings that revealed the flight plan. The ultimate goal of the mission is to reach orbit, with the rocket aiming to travel most of the way around the Earth and splash down in the Pacific Ocean off the coast of Kauai, Hawaii.
Starship is designed to carry cargo and people beyond Earth and is critical to NASA’s plan to return astronauts to the moon. SpaceX won a nearly $3 billion contract from the space agency in 2021 to use Starship as a crewed lunar lander. More

Best Buy is laying off hundreds of store workers as more of its shoppers buy online and sales of consumer electronics weaken.
Retailers, including Best Buy, have struck a cautious tone as shoppers pull back in some categories like consumer electronics.
Best Buy said in a statement it is “evolving our stores and the experiences we offer to better reflect the changes in customer shopping behavior.”

Best Buy logos and store in South Edmonton Common. Friday, May 20, 2022, in Edmonton, Alberta, Canada.
Artur Widak | Nurphoto | Getty Images

Best Buy said Friday that it is laying off hundreds of store workers across the country as more of its shoppers buy online and sales of consumer electronics weaken.
A spokesperson for the company confirmed the layoffs, but declined to share the specific number. The news was first reported by The Wall Street Journal.

In a statement, Best Buy said it is “evolving our stores and the experiences we offer to better reflect the changes in customer shopping behavior, as well as how we organize our teams to ensure we continue to provide our expertise, products and services in the best way possible.”
The retailer framed the job cuts as a shift in its priorities, saying Best Buy plans to add thousands of customer-facing employees and invest in growing areas, such as its Totaltech membership program and its health business.
As of the end of January, Best Buy had more than 90,000 employees in the U.S. and Canada. That’s a drop from the nearly 125,000 workers that it had in early 2020, according to company financial filings.
The jobs market in the U.S. remains strong and labor market continues to be tight. The unemployment rate was 3.5% as more people got back to work after the Covid pandemic, according to the recent jobs report from the Labor Department.
Yet retailers, including Best Buy, have struck a cautious tone as shoppers pull back in some categories like consumer electronics. Retailers have seen softer sales of discretionary merchandise as consumers pay more for necessities because of inflation and spend more on services again, such as booking flights or dining at restaurants.

Best Buy is also following a period when many of its customers sprang for new laptops, kitchen appliances and home theater systems during the early years of the pandemic. Much of what it sells are big-ticket items that people don’t replace frequently.
Digital sales have become a more meaningful part of its business, too. About a third of Best Buy’s U.S. sales came from its online business in the fiscal year that ended in late January compared to 19% in the fiscal year that ended in late January 2020, the company’s CEO Corie Barry shared on its fourth-quarter earnings call. Sales made by phone, through chat or virtually have also grown, she said.
Still, Best Buy’s roughly 900 stores in the U.S. remain an important part of shift: Barry said more than 40% of online sales are picked up in stores. More

Today’s homebuyers are exceptionally sensitive to mortgage rates with home prices so high.
The majority of potential homebuyers say they will not accept a 30-year fixed mortgage rate over 5.5%, according to a new survey. The current rate, however, is around 6.4%.
Potential home sellers, likewise, find the current rates to be unacceptable, contributing to the severe lack of supply on the market.

Today’s homebuyers are exceptionally sensitive to mortgage rates with house prices so high — and they’ve found their tipping point.
After years of government intervention following the great recession and the first years of the Covid-19 pandemic that kept mortgage rates artificially low, today’s buyers have a skewed view of what “normal” mortgage rates are.

The majority of potential homebuyers, 71%, say they will not accept a 30-year fixed mortgage rate over 5.5%, according to a survey done in March by John Burns Research and Consulting. The current rate, however, is around 6.4%.
In addition, 62% of buyers said they believed that a “historically normal mortgage rate” was below 5.5%. The average going back to 1971 is 7.75%, according to Freddie Mac.

Homes in Centreville, Maryland, US, on Tuesday, April 4, 2023. 
Nathan Howard | Bloomberg | Getty Images

“Our consulting team has witnessed this across the country, noting that home builders who choose to subsidize buyers’ mortgage rates, bringing the overall rate down below 5.5%, have been achieving the most success. Many of the largest builders in the country have been buying mortgage rates down below 5.0%,” said CEO John Burns and Maegan Sherlock, a senior research analyst, in the report.
For most buyers, the mortgage rate determines what they can afford, because generally they are focused less on the home price and more on the monthly payment; that monthly payment is all about the rate.
If so many potential buyers, however, are saying they won’t buy unless they get a rate below 5.5%, they may be sitting on the sidelines for a while. Mortgage rates have been over 6% for nearly a year and are not expected to move much lower this year.

An April survey from U.S. News and World Report seems to corroborate these findings: It found that 66% of Americans who plan to buy a home this year said they are waiting until rates fall. 
“Mortgage rates are about twice as high now as they were a little over a year ago, which has exacerbated housing affordability challenges ahead of the spring 2023 homebuying season,” wrote Erika Giovanetti, loans expert at U.S. News, in a column discussing the survey’s findings. “Today’s homebuyers are extremely sensitive to fluctuating interest rates, and a significant drop in mortgage rates would likely make the market more competitive.”
The U.S. News survey also found that 25% of homebuyers who are holding out for lower rates are waiting until they drop below 5%. Nearly two-thirds of respondents said they’ve had to reduce their housing budgets due to the current level of mortgage rates.
While some buyers can’t afford the home they might want at today’s rates, others are choosing not to buy simply because they don’t like the idea of a higher rate, even if they can afford it. Older consumers aren’t necessarily more willing to accept higher rates just because they may have experienced them in the past, according to the John Burns report.
Potential home sellers, likewise, find the current rates to be unacceptable, contributing to the severe lack of supply on the market. New listings in the four weeks ended April 9 were 25% lower than the same week the year before, according to Redfin, a real estate brokerage. That continues an eight-month streak of double-digit declines.
“Even if the Fed chooses not to hike interest rates next month, which would likely bring down mortgage rates, the limited supply of homes for sale would remain a major obstacle for would-be buyers,” wrote Daryl Fairweather, chief economist at Redfin, in the report. “Rates dipping below 6% would probably pique the interest of more buyers, but enough homeowners have rates in the 3% or 4% range that we’re unlikely to see a big uptick in new listings.” More

Boeing disclosed a production problem with two fittings in the aft fuselage.
The manufacturer and the FAA said it doesn’t affect flight safety but it will delay deliveries of the best-selling plane.
Southwest Airlines and American Airlines are among the airlines expecting new Max aircraft.

An aerial view of the engines and fuselage of an unpainted Boeing 737 MAX airplane parked in storage at King County International Airport-Boeing Field in Seattle, Washington, June 1, 2022.
Lindsey Wasson | Reuters

Boeing’s warning that a production quality problem will delay deliveries of its best-selling 737 Max is another headache for airlines clamoring for new planes to handle a rebound in air travel, just ahead of the peak season.
The problem is related to two of several brackets in the aft fuselage of some 737 Max planes, including the most popular model, the Max 8.

Boeing has a backlog of 4,196 Max planes, according to a tally on its website. Boeing disclosed the production issue on Thursday but has not said how many planes are affected or how long deliveries could be delayed. The current delivery schedule of the planes stretches to the second half of the decade.
The fuselage supplier, Spirit Aerosystems, Boeing and the FAA said the problem doesn’t affect flight safety. But addressing the issue could mean time-consuming additional work. The two brackets in question are on the interior of the plane and are not as simple to reach as a concern on the outside of the fuselage would be, according to a person familiar with the matter.
Boeing CEO Dave Calhoun will likely comment on the issue during the company’s annual shareholder meeting on Tuesday. Boeing disclosed the issue just weeks after an executive said it was gearing up to increase output of the jets from the current rate of 31 a month.
Lengthy delays would be bad news for airlines already hamstrung by a global shortage of new aircraft. They could also hurt Boeing’s plan to improve cash flow, since airlines pay the bulk of a plane’s price upon delivery.
“It doesn’t sound like it is going to be a terribly invasive fix, but on the other hand I think everyone’s a bit spooked because of recent experience,” said Richard Aboulafia, managing director of AeroDynamics Advisory.

Southwest Airlines, which operates an all-Boeing 737 fleet, said it discussing the affects of the problem with the manufacturer.
“Boeing contacted us regarding an issue with a supplier’s manufacturing process that will affect the delivery of Boeing 737 MAX planes to Southwest,” the company said in a statement Thursday. “We expect this to impact our current delivery schedule; we are in discussions with Boeing to understand what that impact will be in 2023 and beyond.”
CEO Bob Jordan said on an earnings call in January that the airline expects roughly 90 Max planes this year, lowering its forecast from 100 “in light of recent discussions with Boeing and continued challenges in supply chain.”
American Airlines said it is also discussing the problem with Boeing. The airline has 88 Max aircraft on order, according to its 2022 report.
Both carriers plan to report results on April 27, when they will likely face questions about the issue.
United Airlines, which reports on Tuesday said: “Boeing is keeping us informed about this issue, and at this time we do not expect any significant impact on our capacity plans for this summer or the rest of the year.”
The problem is the latest in a string of quality problems and aircraft delays at Boeing that has also included its 787 Dreamliner planes.
A worldwide grounding and production pause of the 737 Max followed two fatal crashes of the Max. After the planes were cleared to fly again and production resumed, the pandemic threw the industry into disarray as it hemorrhaged cash and lost thousands of skilled workers. More

Seven months ago, Restaurant Brands International unveiled a strategy to revive Burger King’s U.S. business.
Early steps to improve operations and jazz up its marketing are already boosting sales and customer satisfaction.
Restaurant Brands is scheduled to report its first-quarter earnings before the bell on May 2.

In this photo illustration, a Burger King Whopper hamburger is displayed on April 05, 2022 in San Anselmo, California.
Justin Sullivan | Getty Images

Seven months after Burger King unveiled a strategy to revive its U.S. business, the chain is selling more Whoppers than ever before.
Burger King U.S. President Tom Curtis told CNBC that preliminary improvements to restaurant operations and new marketing campaigns are already boosting sales and customer satisfaction, although it’s still early innings.

Parent company Restaurant Brands International is scheduled to report its first-quarter earnings and sales results for its divisions, including Burger King U.S., before the bell on May 2. Last quarter, Burger King’s U.S. same-store sales rose 5% on the back of implementing early steps in the turnaround plan.
The $400 million plan to rejuvenate Burger King’s domestic sales was developed in partnership with franchisees and focuses on revamping its restaurants and investing in advertising.
“What’s happened in the last six months is that sense of ‘We’re in this together’ that we have with our franchisees. I think it’s unique in the business, and I think that differs from what you see from some of the competition as well,” Curtis said.
Burger rival McDonald’s has had much-publicized spats with its operators over the years. Recently, tension has been boiling over changes to its franchise policies.
Before Burger King announced its official turnaround strategy, the company spent roughly a year simplifying operations with a goal to improve efficiency and order accuracy, Curtis said. For example, Burger King reformulated and renamed its chicken sandwich. The now-retired Ch’King sandwich involved 21 steps to prepare the final menu item. The Royal Crispy Chicken sandwich takes just five.

After announcing its “Reclaim the Flame” strategy at a franchisee convention in September, Burger King turned its attention to an in-store training program for all of its restaurants that instructed workers to greet customers, make Whoppers properly and give out Burger King’s iconic crowns. Curtis said it was “the most important thing that we did coming out of the convention.”
Burger King also held roundtables for general managers in 45 cities. Those roundtables included training general managers on how to execute a five-week-long deep clean of their restaurants.
“I think those things are foundationally important, and they resulted in a 20% uplift in guest satisfaction,” Curtis said.
Additionally, Burger King launched its “You Rule” marketing campaign in the fall. The chain’s mascot, the Burger King, is nowhere to be seen in the ads. Instead, customers are royalty.
And despite Curtis’ own initial misgivings about the “Whopper Whopper” jingle used in the campaign (he was underwhelmed by the lyrics and asked the marketing team to rethink it), the song went viral and spawned memes across Twitter and TikTok. The company officially released the song in response to the popularity, and it has nearly 3.3 million streams on Spotify as of Friday.
“We’re selling more Whoppers than we ever have. It’s had a really positive impact that we didn’t pay for or foresee on the business … it’s really exceeded my expectations,” Curtis said, adding that he’s excited for Restaurant Brands to release its earnings.

Since the company announced its “Reclaim the Flame” strategy, former Domino’s Pizza CEO Patrick Doyle has joined Restaurant Brands as its executive chair. Doyle oversaw the pizza chain’s transformation into a digital powerhouse in the restaurant industry. Curtis, who started as a Domino’s franchisee, worked alongside Doyle during his long career at Domino’s as an operations executive before joining Burger King in 2021.
One of Doyle’s priorities for Burger King has been improving franchisee profitability. Two Burger King franchisees have filed for bankruptcy so far in 2023. The first franchisee to file for bankruptcy, Toms King Holdings, sold most of its locations at auction for $33 million earlier in April.
“I don’t want to say that it’s welcome, because it’s not, but I do think that if managed correctly, the outcome can be better than where you were before,” Curtis said.
While early signs point to the turnaround taking hold, Curtis is deferring the victory lap for now, emphasizing that “Reclaim the Flame” is meant to be a multiyear growth strategy.
For example, of the $50 million that Restaurant Brands earmarked to improve restaurants’ appearances in conjunction with franchisees’ own investment, Burger King spent just $15 million in 2022.
“We’re not even halfway, and these things just take time,” Curtis said. More