Raphael Stevens

Disney CEO Bob Iger told CNBC that “everything was on the table” with regard to Hulu’s ownership.
Disney currently owns 66% of Hulu. Comcast owns the remainder.
Comcast executives believe Hulu could supercharge its streaming efforts beyond Peacock, sources said.
Iger and Comcast CEO Brian Roberts have a strong working relationship, according to sources.

Disney CEO Bob Iger’s apparent openness to selling Hulu marks a stark reversal in strategy for the company — and an even more surprising shift if Iger sells the streaming service to Comcast.
Iger said Thursday in an exclusive CNBC interview with David Faber that “everything is on the table” with regard to Hulu’s future.

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“We are intent on reducing our debt,” Iger said. “I’ve talked about general entertainment being undifferentiated. I’m not going to speculate if we’re a buyer or a seller of it. But I’m concerned about undifferentiated general entertainment. We’re going to look at it very objectively.”
Disney currently owns 66% of Hulu, with Comcast owning the rest. The two companies struck a deal in 2019 in which Comcast can force Disney to buy (or Disney can require Comcast to sell) the remaining 33% in January 2024 at a guaranteed minimum total equity value of $27.5 billion, or about $9.2 billion for the stake.
Just five months ago, then-Disney CEO Bob Chapek said he’d like to own all of Hulu “tomorrow” if he could. Chapek’s strategy revolved around eventually tying Hulu together with Disney+ to give consumers a “hard bundle” option in which viewers could watch programming from both the family friendly Disney+ and the adult-focused Hulu. Comcast’s stake in Hulu prevented Disney from moving forward with his plans.
“I would like nothing more than to come up with that solution for an early agreement,” Chapek said in a September interview with CNBC. “But that takes two parties to come up with something that is mutually agreeable.”

Chapek held a conversation in 2021 with Comcast CEO Brian Roberts to try to escalate the sale of Hulu, according to people familiar with the matter. Roberts floated a number of possible ideas, including Disney selling ESPN to Comcast, said the people, who asked not to be named because the discussions were private. No substantive conversations have occurred since, the people said.

Despite the shrinking pay-TV subscriber base, ESPN and many cable networks still rake in a lot of profit, something Disney wasn’t willing to give up, especially as it helps to fund the streaming business, the people said. Iger said this week that while a spinout was considered in his absence, it was concluded ESPN should stay with Disney. He said discussions about a sale were not taking place.
Another proposition floated to Disney was to have Comcast buy out Hulu. Comcast executives believe Hulu could supercharge its streaming efforts beyond Peacock, the company’s flagship streaming service, according to people familiar with the matter. They remain open to a variety of possibilities with Hulu, the people said. Peacock has about 20 million paying subscribers. Hulu has about 48 million subscribers. Both services are only available in the U.S. and U.S. territories.
Spokespeople for Comcast and Disney declined to comment.
Comcast executives walked away from those discussions resigned to taking Disney’s money in 2024 rather than gaining full ownership of Hulu, as CNBC reported in September.

Iger’s shift

Those circumstances may have shifted with Iger’s return. It’s possible Iger’s comments Thursday were just posturing. Threatening to be a seller of Hulu rather than a buyer may lower the price of the streaming asset, which would behoove Disney if it were to actually buy the 33% stake from Comcast.
Iger has previously championed Hulu as part of Disney’s strategy to offer three relatively low-priced services (Disney+, Hulu and ESPN+) rather than one mega-product that would likely be the most expensive streaming service. His thinking had been that giving subscribers too much content in one product may lead to what happened with cable TV — consumers begin feeling they’re paying too much money for content they’re not watching.
Selling Hulu would unwind this strategy, and it also may lead to cancellations of Disney+ and ESPN+. Disney has pushed its bundle of the three services for $12.99 per month (with ads). That’s about a 50% discount to buying the three services separately, which would cost nearly $26.
Still, publicly acknowledging Disney could be open to selling Hulu is a bold move. It puts Hulu employees on high alert and adds uncertainty to Iger’s own company. Iger’s comments may also be meant to draw a reaction from shareholders.

Competitive dynamics

Iger’s Hulu commentary also challenges one of his long-held edicts: don’t strengthen Comcast at Disney’s behest.
When Iger acquired the majority of Fox’s assets for $71 billion in 2019, one of his primary motivating factors was to make sure Comcast didn’t acquire a majority stake in Hulu. Activist investor Nelson Peltz, who Thursday dropped his proxy fight to get a Disney board seat, had been arguing that Iger dramatically overpaid for Fox. Iger’s defense of that deal was passing on it would have strengthened Comcast and weakened Disney in the streaming wars, according to people familiar with his thinking.
Competitive tension between Comcast and Disney isn’t new. Roberts made a hostile bid to acquire Disney for $54 billion in 2004. Previous NBCUniversal CEO Steve Burke left Disney to come work for Roberts in 1998. In a streaming environment, Disney’s products take eyeballs and subscription revenue away from Peacock, and vice versa.
Still, Iger and Roberts have a strong working relationship, according to people familiar with the matter. Iger even spoke at an internal NBCUniversal event last year.
Both companies will need to work closely together to agree on any conclusion for Hulu. Even if Disney buys the remaining stake of Hulu, the sides must agree on fair market value. Iger’s comments Thursday may be the starting gun on what could be months of negotiations to follow.
WATCH: Watch CNBC’s full interview with Disney CEO Bob Iger

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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Vita Coco is launching a canned cocktail with Diageo and teaming up with DoorDash in a bid to market its coconut water as a mixer and hangover cure.
It’s also developed a non-dairy milk for coffee in a partnership with Alfred Coffee.
Coca-Cola’s and PepsiCo’s exits from the coconut water category in 2021 have opened up new opportunities for Vita Coco.

Vita Coco water.
Tim P. Whitby | Getty Images

For nearly two decades, Vita Coco has sold its coconut water to health-conscious consumers as a fresh way to hydrate. This year, it’s changing the pitch.
The beverage company is pushing its namesake brand into new use cases and occasions, partnering with Diageo on a canned cocktail and marketing the drink as a hangover aid.

Co-founder Mike Kirban compared Vita Coco’s transformation to that of Ocean Spray, the agricultural cooperative that sells cranberry products.
“Ocean Spray is a brand that’s four times our size, that’s all based on one ingredient,” the company’s executive chairman told CNBC. “And we should be bigger than Ocean Spray pretty quickly, because I think the coconut is cooler than the cranberry.”
Founded in 2004, Vita Coco started as a coconut water brand but has since expanded into other beverage categories, like energy drinks and water. Its namesake brand still accounts for three-quarters of the company’s revenue, which reached $335.8 million in the first nine months of 2022.
The company went public in October 2021, just before the market for initial public offerings dried up as inflation, the war in Ukraine and economic uncertainty weighed on investors.
Vita Coco’s stock is up less than 1% since its IPO, but it’s fared better than many other consumer companies that went public around the same time, like Sweetgreen and Allbirds.

In May, Kirban transitioned from co-CEO at the company to his current role, leaving Boston Beer veteran Martin Roper as the sole chief executive — another step of Vita Coco’s evolution.

Coke and Pepsi’s loss, Vita Coco’s gain

Just months before Vita Coco’s IPO, both Coca-Cola and PepsiCo exited coconut water. Coke sold Zico back to its founder as it slimmed down its portfolio, and Pepsi offloaded O.N.E. as part of the $3.3 billion sale of its juice business.
Despite the beverage giants’ size, they had been unable to compete with Vita Coco, which is credited with bringing coconut water to the U.S. and still holds 50% share of the market, excluding its private-label business.
Their exits from the segment opened a new distribution avenue for Vita Coca. As long as Coke and Pepsi were in the coconut water business, their contracts with venues ranging from stadiums to college campuses shut Vita Coco out.
With the momentum of new growth opportunities, Vita Coco is now pushing into bars and restaurants. Step one of the plan is teaming up with Diageo for three canned cocktails mixing Captain Morgan rum and Vita Coco coconut water: a mojito, a piña colada and a strawberry daiquiri.
“If you go to Brazil or Southeast Asia, coconut water is what you mix with cocktails,” Kirban said. “The idea is to start getting consumers used to drinking coconut water cocktails with the ready to drink with Diageo partnership.”
Kirban said Vita Coco would be partnering with a spirits company for its broader on-premise expansion plans, but declined to name the partner.
Over the last few years, alcohol and nonalcoholic beverage companies have been teaming up, leaning on each others’ brand equity and expertise to gain so-called “share of throat.” For example, Captain Morgan can introduce itself to Vita Coco’s health-conscious, younger consumers, while Vita Coco benefits from the rum’s mass market appeal.

The morning after

Vita Coco has also been leaning into its reputation as a hangover “cure.”
Since late 2019, the brand has used New Year’s Day as way to pitch hangover recovery kits and subscriptions that feature its products in collaborations with Postmates, Lyft and Reef Kitchens.
This year it’s partnering with DoorDash for a promotion Monday morning following the Super Bowl.
The marketing strategy is something of a reversal, after years of resisting the association.
“With our board, there was always a discussion,” Kirban said. “When you talk marketing, do we want to talk about hangovers? Is that OK for us to talk about?”
And it’s not done there. After the hangover subsides, Vita Coco wants to be the non-dairy milk in your coffee.
In late January, the brand announced it’s partnered with Alfred Coffee, a high-end chain with locations in California and Texas, to create a non-dairy coconut milk for its baristas to use.
Vita Coco plans to expand the product designed specifically for coffee — separate from the coconut milk it sells in supermarkets nationwide — to other coffee shops and eventually to store shelves.

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The FTSE 100 has smashed through three intraday records over the last week.
The make-up of the index kept it resilient through recent global market turmoil and bumper profits reported by energy, financial and commodities firms have taken it to new heights.
This is despite a host of gloomy predictions on the U.K. economy; and with warnings that millions are facing dire circumstances due to inflation.

The sun rises over the city on Feb. 6, 2023 in London, United Kingdom.
Leon Neal | Getty Images News | Getty Images

LONDON — The U.K. is facing the weakest growth prospects in the G-7 and a catalogue of cost-of-living pressures that are pushing the poorest into crisis and intensely squeezing the budgets of middle-income households.
At the same time, more investor money has never been pumped into the U.K.’s biggest companies. The FTSE 100 index has smashed through three intraday records over the last week, starting last Friday and hitting new heights in Wednesday’s and Thursday’s sessions.

That’s also coming off the back of a year in markets that was dominated by doom and gloom, with risk assets selling off and indexes from the pan-European Stoxx 600 to the U.S. S&P 500 to Shanghai’s SSE Composite emerging bruised.
The most recent uptick for the FTSE 100 shows that, as well as occurring despite harsh cost-of-living pressures, they are also linked to them.
Energy firms such as Shell and BP have reported record profits and promised higher shareholder dividends, boosting their share prices (with calls for higher windfall taxes to support consumers struggling with higher bills doing little to dampen their appeal).
Thursday’s FTSE climb to an all-time high of 7,944 points at midday in London was boosted by gains at Standard Chartered, one of many banks that have seen profits jump as a result of higher interest rates.
Meanwhile, the strong performance of commodity stocks has also lifted the index higher as they have been boosted by a rise in prices, supply constraints and, recently, the prospect of China’s Covid-19 reopening.

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FTSE 100 chart.

“The U.K. FTSE 100 is not about the U.K. domestic economy,” said Janet Mui, head of market analysis at RBC Brewin Dolphin, noting over 80% of firms’ corporate revenue exposure is derived from overseas.
Mui told CNBC a confluence of factors had taken the index to a record high, including the plunge in sterling helping those overseas revenues (collected in dollars); its heavy weighting in energy, commodities and financials; and the relatively strong performance too of defensive staples in consumer products — such as Unilever — and health care — such as AstraZeneca.

What the U.K. stock market has frequently been criticized for — a lack of new, buzzy tech firms and preponderance of stalwarts of the “old economy” — has been a boon as monetary and financial cycles have turned.
The wider FTSE 250 does have stronger domestic links but still has 50% of revenue exposed to overseas, Mui added.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said that among other factors, the FTSE’s rise could be explained by glimmers of hope in the economic picture, such as housebuilder Barratt reporting a “modest uplift” in reservations of new homes. She also pointed to forward-looking signals of Europe avoiding a recession and an abating of the energy crisis.
Banks would perform even better if their net income margins improve but bad loans don’t come through, she noted.

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Shell share price.

Among the factors weighing on the U.K. public are interest rate rises increasing borrowing costs, grocery price inflation at a record high of 16.7% and overall inflation above 10%.
A report published Wednesday by the National Institute of Economic and Social Research argued the U.K. was likely to avoid a technical recession this year — though growth would be near zero — but that one in four households will be unable to fully pay their energy and food bills, and middle-income households will face up to a £4,000 ($4,873) drop in disposable income.
And the disjunct between stock market gains and the dire outlook still facing many households jars for many.
“It is a cruel paradox that on the day that the FTSE 100 index hit a record high, campaigners on behalf of up to 7 million people on lower incomes in the UK were calling for the government to extend the support provided to them with regard to their energy bills,” Richard Murphy, professor of accounting practice at Sheffield University Management School, told CNBC.
In March, the U.K. government is set to end a broad household energy bill compensation program that has run through the winter. It comes as many governments attempt to wind down fiscal support to rein in public spending, with the European Central Bank recently arguing that maintaining support packages risks maintaining inflation.
But Murphy said that without the support, and with bills still elevated, “many will not be able to make ends meet and will go hungry, cold or even homeless as a result.”
“The picture that this provides of a country enormously divided by differing incomes and wealth is almost Victorian in its starkness,” said Murphy.

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“Consumers appear more willing to increase spending on hotel accommodation for their trips vs. pre-Covid, with 20% citing it as their top travel expense compared to 17% each in 2017 and 2020,” Morgan Stanley analysts said.
Their report cited a proprietary survey from Jan. 29 to 31 of about 2,000 consumers across China’s larger cities in 19 provinces.
Back in September, UBS analyst Xin Chen and a team said they expected that after Covid passed, people in China would pay up for hotels.

Consumers in China plan to pay up when it comes to hotels, a Morgan Stanley survey found in late January.
The research points to growing demand for high-end and luxury hotels in China now that the country has ended domestic travel restrictions — and a Covid wave has passed.

“Consumers appear more willing to increase spending on hotel accommodation for their trips vs. pre-Covid, with 20% citing it as their top travel expense compared to 17% each in 2017 and 2020,” Morgan Stanley analysts said.
The report released Tuesday cited a proprietary survey from Jan. 29 to 31 of about 2,000 consumers across China’s larger cities in 19 provinces.

The report said that “37% of the consumers prefer higher star-rated hotels, up from 18% in 2020, with higher-income consumers showing even stronger appetites for luxury hotel stays (47% vs. 31% in 2020).”
“Mentions of budget hotels and mid-range hotels fell universally.”

Savings soared

Consumers’ penchant to save soared to record highs during the pandemic. Retail sales lagged overall economic growth in China in the face of uncertainty about future income.

Morgan Stanley said the survey found a similarly muted appetite for shopping, despite it ranking as the top expense for travelers. The shopping budget for travelers was 9,405 yuan ($1,387), slightly higher than in 2020 but still well below the 2017 level of 13,782 yuan, according to surveys over the past few years.
“The majority of the consumers expect to keep their overall spending unchanged in the next six months (70% vs. 73% last month),” the report said.
But 24% of respondents said they planned to spend more to “upgrade their lifestyles” — an attitude that typically results in buying higher quality products. That’s up from 20% a month ago, the report said.
“The increase in the number of consumers looking to upgrade their lifestyle with higher spend is universal.”

On leisure spending in China: “We don’t see them slowing down.”

Christopher J. Nassetta
CEO, Hilton Worldwide

Per capita disposable income in China grew by 2.9% in 2022 to 36,883 ($5,439) when excluding price factors, according to the National Bureau of Statistics. For urban households, disposable incomes rose more than $1,000 above the national level, the data showed.

An opportunity for international brands

Back in September, UBS analyst Xin Chen and a team said they expected that after Covid passed, people in China would pay up for hotels.
“The growing mid-/high-income population in China will fuel continued growth in demand for upscale hotels,” the UBS report said. “At present, the number of upscale and luxury hotel guest room contribution and brand penetration rate in China are both lower than in North America.”
It may be an opportunity for international brands.
“We believe it will be challenging for China hotel groups to enter the upscale market,” UBS said.
“China’s hotel groups are still exploring the upscale hotel market, and we think acquisition of established overseas upscale brands may be their best option, and that founding joint ventures with real estate developers could provide property management resources for expansion into the upscale hotel market.”
InterContinental Hotels Group announced this week it signed two hotel deals in Shanghai, including the first hotel in Greater China under its luxury Vignette Collection brand. The hotels are set to open in the first half of 2024, according to a release.
InterContinental, Marriott International and Wyndham Hotels & Resorts are due to release earnings later this month.
Hilton Worldwide Holdings said in its fourth-quarter earnings report overnight that an industry measure of revenue for China showed business was still down by 37% compared to 2019 levels. China’s Covid controls also prevented the company from expanding as much as it had planned in the fourth quarter.

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“You’re already starting to see significant travel within China in terms of uptick,” Hilton Worldwide CEO Christopher J. Nassetta said in an earnings call.
“And we expect, particularly in the second half of the year, you’re going to have a big tailwind from that,” he said, according to a StreetAccount transcript.
“There continues to be broader pent-up demand across all segments. I mean, you could argue in the leisure side … people have been doing a lot of it, but we don’t see them slowing down.”
— CNBC’s Michael Bloom contributed to this report. More

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CNBC’s Jim Cramer said that he’s bullish on Disney stock after the company announced a robust restructuring and cost-cutting plan. 
Disney announced a plan to lay off 7,000 employees, restructure the company and cut $5.5 billion in costs.
Activist investor Nelson Peltz told CNBC on Thursday that Trian Fund Management’s proxy fight with the media giant is over.

CNBC’s Jim Cramer on Thursday said that he’s bullish on Disney after the company announced a robust restructuring and cost-cutting plan. 
“Disney finally feels like it’s back on track. While the stock’s already had a monster move since the beginning of the year, I’m betting it can have a lot more upside now that [CEO Bob] Iger’s turning things around,” he said.

Disney announced a plan to lay off 7,000 employees, restructure the company and cut $5.5 billion in costs on Wednesday during its first-quarter earnings conference call.
Activist investor Nelson Peltz told CNBC on Thursday that he’s satisfied with Iger’s turnaround moves and that Trian Fund Management’s proxy fight with the media giant is over.
Shares of Disney closed down 1.27% at $110.36 on Thursday, after climbing as high as $118.18 during the trading session. The stock is up about 27% this year.
Cramer, who has harshly criticized former CEO Bob Chapek’s performance, said Iger has changed the company’s narrative into one that can execute its goals.
“[Disney] could never unlock their value under the old regime, because management seemed incapable of articulating a clear narrative for the whole company,” he said. “But Iger is just such a better storyteller.”

He also applauded Iger for pushing to reinstate Disney’s dividend by the end of 2023. The company suspended the dividend in early 2020 due to the Covid pandemic.
“That’s a huge sign of confidence from management,” Cramer said.
Disclaimer: Cramer’s Charitable Trust owns shares of Disney.

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It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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Okta Inc: “[CEO Todd McKinnon has] got to pivot first. We mean pivot, going from loss and high growth to a little less growth and profit.”

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EMCOR Group Inc: “That’s my kind of stock. … That’s exactly what I’m looking for.”

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CNBC’s Jim Cramer on Thursday said the Federal Reserve is closer to winning its battle against inflation than Wall Street might believe.
He explained that there’s confusion about whether the Fed has tamped down inflation enough due to a bifurcation in the economy.

CNBC’s Jim Cramer on Thursday said the Federal Reserve is closer to winning its battle against inflation than Wall Street might believe.
“Price stability … is right around the corner,” he said, adding that the Fed “just needs to be aware there’s really only one area of strength left in this entire economy.”

Stocks slipped on Thursday, reversing earlier gains as Wall Street’s concerns about the central bank’s interest rate hikes overshadowed strong corporate earnings.
Cramer explained that there’s confusion about whether the Fed has tamped down inflation enough due to a bifurcation in the economy between the services side, which is booming, and the goods side, which is in a bust. 
There’s the added factor that it’s largely wealthy people who haven’t seen a dent in spending power, which has allowed them to continue to spend on both travel and retail, he added.
“The Bed Bath & Beyonds of the world most likely won’t come back. But the high ends like Tiffany, purchased by LVMH, they are crushing it,” he said. “But that doesn’t represent the real economy.”
In other words, disproportionately high spending from people with large incomes is likely clouding the true state of inflation, according to Cramer. 

“Maybe [Fed Chair] Jay Powell’s made more progress fighting inflation than [his] colleagues want to believe, except for this one area,” he said.

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