Raphael Stevens

Key investors are urging Bally’s special committee to turn down an offer from Chairman Soo Kim to buy the company at $15 per share.
Dan Fetters and Edward King, well-known venture capitalists in the gambling industry, blame Bally’s stock price and market share decline on Kim’s focus on “moon shot” projects.
Bally’s has announced plans to build Chicago’s first casino and a resort to replace the historic Tropicana on the Las Vegas Strip, as well as an effort to win a gambling license for a former Trump golf course in New York City.

An exterior view shows the Tropicana Las Vegas at dusk on March 29, 2024 in Las Vegas, Nevada. 
David Becker | Getty Images

As the famous Tropicana in Las Vegas closes its doors Tuesday, its operator Bally’s Corporation is facing its own existential battle. At stake: ownership, its status as a publicly traded company and its highest-profile projects.
Bally’s Chairman Soo Kim and Standard General, the private equity fund he founded, last month made a bid to take the company private at $15 per share. Prior to his offer, the stock was trading at around $10 per share. Standard General owns about 23% of Bally’s stock, it said last month.

But some high-profile investors argue Kim is undervaluing the company — and so is the market, they say, because it’s lost confidence in the strategy and financial stability of the company.
Dan Fetters and Edward King of asset management fund K&F Growth Capital sent a letter Tuesday to the special committee formed to review Kim’s proposal. The letter urged members to reject the proposal.
Instead, Fetters and King propose a strategy that sends Bally’s back to its casino roots.
Bally’s owns 16 casinos in 10 states plus an interactive business in sports betting, internet gaming and free-to-play games. It’s announced plans to build Chicago’s first casino and a resort to replace the historic Tropicana on the Las Vegas Strip, as well as an effort to win a gambling license for a former Trump golf course in New York City.

The entrance to Bally’s Hotel & Casino, located adjacent to the Tahoe Blue Sports & Event Center, is viewed on February 12, 2024, in Stateline, Nevada. 
George Rose | Getty Images

Fetters and King contend that Bally’s should stay in its lane and quit wasting money on efforts that aren’t core to its business. They insist the company doesn’t know how to build or operate high-end casinos or online sports betting and internet gaming businesses, saying that spending on those projects is what has driven down the share price and market cap.

The company’s stock is down almost 30% in the past 12 months.
Kim “proposes to exploit this weakness and acquire Bally’s at a fraction of its fair value,” Fetters and King argue in the letter.
“Moon shot bets on huge, unfunded development projects, failed U.S. online execution, casino resort properties underperforming its regional peers, an overlevered balance sheet with little near-term prospects for de-levering and irresponsible capital allocation decisions have driven the stock and bonds to a point of disinterest from the investing community,” the letter reads.
The shareholders also take issue with Bally’s $69 million in shares repurchases during the fourth quarter.
Standard General, for its part, said last month the proposed take-private deal “would allow the Company’s stockholders to immediately realize a premium price, in cash, for their investment and provides stockholders certainty of value for their shares, especially when viewed against the operational risks inherent in the Company’s business and the market risks inherent in remaining a publicly-listed company.”

Divestment plan

The letter from Fetters and King proposes bringing on a better-equipped partner for the Chicago casino. Hard Rock International, owned by the Seminole tribe in Florida, had also bid for a casino license there. But Bally’s won with a $1.7 billion commitment, which has since been trimmed to a $1.1 billion development. In March, Bally’s chief financial officer told Nevada regulators the company was looking for $800 million in financing for the project.
Fetters and King also write that Bally’s would benefit from partnering on or selling altogether its Tropicana operations on the strip. The property, which opened in 1957, is closing its doors Tuesday and is headed for demolition. An integrated resort will be built adjacent to a new baseball stadium for Major League Baseball’s Athletics, set to move from Oakland to Las Vegas. Gaming real estate investment trust Gaming and Leisure Properties owns the site.

An exterior view shows the Tropicana Las Vegas on March 29, 2024, in Las Vegas, Nevada. 
David Becker | Getty Images

Fetters and King say Bally’s should divest the New York City golf course and various tech businesses acquired to pursue sports betting and instead focus only on digital casino.  
Bally’s market cap stands at little more than half a billion dollars. It has not been able to wage a competitive threat in any space except regional casinos, despite the power of its legacy brand. 
Though K&F Growth Capital owns less than 1% of Bally’s stock, Fetters and King are well-known venture capitalists in the gaming industry and co-founders of blank check firm Acies Acquisition Corp. with Chris Grove and former MGM Resorts International CEO Jim Murren.
This is the second time Kim has offered to take Bally’s private. In January 2022, he offered $38 per share when the stock was trading at $26.
“We want to buy, and we disagree with the market,” he told CNBC at the time. “We think it’s gonna be worth a lot more in the near future.”
— CNBC’s Jess Golden contributed to this report.

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In the face of profit pressures and growing competition for users, streamers have taken to removing content to avoid the residual payments and licensing fees.
Narrowing content libraries naturally means a need for differentiation.
Data from Fandom, which hosts more than 50 million wiki pages on entertainment properties, suggests where the major streaming platforms are best poised to specialize based on current viewership.

Getty Images

Every day the streaming landscape is looking more and more like the beast it sought to slay — cable.
Looming talks of platform bundles come as major streamers push ad-supported plans, limit password sharing and lean into live sports coverage. The goal of exponential subscriber growth, fueled by pandemic lockdowns, has shifted. Wall Street wants profits.

The key to that may be depth, not breadth.
Last year many streaming services began shrinking their once-robust content libraries in order to pay smaller licensing fees. (Streamers must pay to license even their own film and TV shows, like when NBC forked over $500 million to buy back the rights to “The Office,” an NBC show, in 2019.)
In the face of profit pressures and growing competition for viewers, streamers have taken to removing content to avoid the residual payments and licensing fees. That dynamic has split the major streaming companies into two camps: buyers and sellers.
On one side is Netflix, Amazon and Apple — companies that agnostically license content from other studios to bolster their streaming libraries. Then there’s Disney, Universal, Warner Bros. Discovery and Paramount, which rely on decades worth of legacy content to build out their own services and also generate capital by auctioning it off to the highest bidder.
“The brands that are acquiring those titles are thinking about how to operate more cost effectively by not creating things but by buying licenses,” said Stephanie Fried, chief marketing officer at Fandom, the world’s largest platform for entertainment fans.

The sellers get cash, while the buyers get content that has a track record of reliability and consumer value. That’s especially important for Netflix, which is a newer entrant in Hollywood, and as a result has fewer long-running, binge-able series. Just look at how NBC’s “Suits” took off on the service last year.
Notably, Netflix is already profitable. Amazon and Apple have said they see streaming as additive to their overall businesses, not core to them. The rest of the major streaming players are still working toward profitability.
Narrowing content libraries naturally means a need for differentiation.
The initial bloom of new platforms over the last 15 years saw most entrants take an “everything to everyone” approach, attempting to become the only streaming service you’d need. That meant, besides the user interface, most streaming services began to look alike over time.
Fried said this lack of distinction could ultimately be a negative as the landscape gets stretched thin. She suggested streamers look at the type of content their subscribers are consuming and pick up complementary shows and films that have not yet been licensed.
That model has worked well for smaller streaming services like BritBox, which has a wide swath of British dramas, mysteries and period pieces; and Shudder, which centers on the horror genre.
Netflix, for example, which has seen success from nostalgic sitcoms like “Friends” and “The Office,” could add on similar shows like Nickelodeon and Paramount’s “Fairly Odd Parents” and “Hey Arnold,” Disney’s “Boy Meets World” and “American Dad” as well as the NBC-owned “Saved by the Bell,” according to data from Fandom.
Fandom, which hosts more than 50 million wiki pages on entertainment properties across television, film, gaming, comics and more, has a “really good sense of the overlap between all of these walled gardens,” Fried said.
Original shows on Apple TV+ like “Severance,” “Defending Jacob,” “Home Before Dark” and “Servant” have enthralled and spooked viewers. That type of dark investigative thriller centered on character-driven narrative would pair well with the likes of Warner Bros. Discovery’s “The Leftovers,” Netflix’s “Haunting of Hill House” and the Disney-owned early seasons of “Twin Peaks,” Fried said.
Over at Amazon Prime Video, subscribers have opted for action-packed shows like “The Boys,” “Jack Ryan,” “Reacher” and “Invincible” as well as high fantasy series “The Rings of Power” and “Wheel of Time.” Fandom’s data suggests shows like Netflix’s “Jupiter’s Legacy,” Warner Bros. Discovery’s “My Adventures with Superman,” Paramount’s “Mayor of Kingstown” and Disney’s “The Americans” would further engage the streamer’s audience.
Similarly, Fandom’s data could tell streamers what types of shows they should invest in when looking to create new product.
On Disney+, family entertainment is everything. Fried noted that Disney’s best opportunity to differentiate itself is to double down on being the leader in kids and family-friendly content. Disney-owned Hulu, meanwhile, has seen success with “feel good” 30-minute sitcoms and prestige dramas, Fandom’s data shows. NBC’s “Parks and Recreation” and the ’90s version of “Fresh Prince of Bel-Air” alongside Paramount’s “The Nanny” could serve Hulu audiences well, according to Fandom, along with Netflix’s “Queen’s Gambit” and “Black Mirror” and the BBC show “Orphan Black.”
Universal’s Peacock is all about crime dramas and medical series, and Paramount+ is the place for viewers to get their sci-fi fix. At Warner Bros.’ Max, high-quality prestige shows have long been the bread and butter of HBO, and high fantasy entrants like “Game of Thrones” and “The Last of Us” have enticed younger audiences.
Doing well and doubling down in certain segments means keeping your viewers for longer, Fried said: “When they’re thinking about cutting your service it’s like, ‘I can’t, because they have all of my X type shows.”
Disclosure: Peacock is the streaming service of NBCUniversal, the parent company of CNBC.

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Steven Miron and Steven Newhouse resigned from the Warner Bros. Discovery board, effective immediately, the company said Monday.
The resignation follows a U.S. Department of Justice investigation into whether the pair violated an antitrust clause that prohibits directors from serving simultaneously on the boards of competitors.
Neither director admitted any violation and chose to resign, the company said.

The exterior of the Warner Bros. Discovery Atlanta campus is pictured after the Writers Guild of America began its strike against the Alliance of Motion Pictures and Television Producers, in Atlanta, Georgia, on May 2, 2023.
Alyssa Pointer | Reuters

Two Warner Bros. Discovery directors, Steven Miron and Steven Newhouse, are resigning following a U.S. Department of Justice investigation into a potential antitrust violation, according to a company release Monday.
The company said Miron and Newhouse, who were both appointed as directors in April 2022 as part of the WarnerMedia and Discovery merger, were being investigated as to whether their participation on the board was in violation of Section 8 of the Clayton Antitrust Act, which largely prohibits the same directors or companies from serving simultaneously on the boards of competitors.

Miron is the CEO of privately held media company Advance/Newhouse Partnership and a senior executive officer at Advance, which invests in media and technology companies, according to the release. Newhouse is co-president of Advance.
Both of their terms on the Warner Bros. board were set to expire in 2025.
Rather than contesting the DOJ matter, the company said both Miron and Newhouse voluntarily elected to resign from their positions, effective immediately. Neither director admitted any violation.
“We are proud to have played a role in the building of this great company and remain a large stockholder. We are disappointed to leave the Board, but wish to do the right thing for WBD,” Newhouse said in a statement.
In a Monday evening statement, the DOJ said the conflicting company is Charter, a Connecticut-based media company which, similar to Warner Bros.’ streaming platform Max, provides video distribution services. According to the DOJ, Advance representatives held seats on both Warner Bros.’ board and Charter’s board.
“Today’s announcement is a win for consumers,” Deputy Assistant Attorney General Michael Kades of the Justice Department’s Antitrust Division said in a statement. “In enacting Section 8 of the Clayton Act, Congress was concerned that competitors who shared directors would compete less vigorously to provide better services and lower prices. We will continue to vigorously enforce the antitrust laws when necessary to address overreach by corporations and their designated agents.”

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Macy’s is closing about 150 of its namesake stores across the country.
It could put up to $2 billion in annual sales up for grabs for other retailers.
Off-price chain T.J. Maxx and Kohl’s could benefit because they already count many Macy’s shoppers as their customers, according to Jefferies and Earnest Analytics.

Macy’s hasn’t yet shut the approximately 150 stores it plans to close. But retail competitors already smell opportunity.
In recent interviews with CNBC, Target CEO Brian Cornell and Kohl’s CEO Tom Kingsbury said the department store’s decision to shrink its footprint gives them a chance to increase their own sales.

Off-price chain T.J. Maxx could pick up more business, too, since it carries similar merchandise and has stores near Macy’s locations that might shut, according to Jefferies.
And many other retail names, including off-price chain Ross and department store rivals like Nordstrom could benefit from the closures, too. Those companies already count many of Macy’s shoppers as their customers, according to an analysis of credit card data by Earnest Analytics.
Facing lackluster sales and pressure to improve its business, Macy’s announced in late February that it would close more than a quarter of its an approximately 500 namesake stores. With the wave of closures, the department store will join a list of retailers that have shrunk in size and created a void for other brands to swoop in. Those include Bed Bath & Beyond, which closed all of its stores after filing for bankruptcy, or others like J.C. Penney, a department store that is a fraction of its former size.
Macy’s closures could put as much as $2 billion of market share up for grabs. The department store’s net sales were $23.1 billion in the most recent fiscal year, and it said the 150 stores that it’s closing account for less than 10% of sales.
Yet Macy’s, for its part, has said closing the underperforming stores will help it focus on driving higher sales at other locations. Macy’s CEO Tony Spring said the company will open more locations of its higher-end department store Bloomingdale’s and beauty chain Bluemercury, which have both outperformed the company’s namesake chain. The closures will also free up capital to invest in its better-performing namesake stores.

Macy’s has not yet said which locations will close and when exactly they will shutter, but said 50 stores will close by early 2025. The move will have implications for shopping malls, too, since Macy’s will close giant stores that are mall anchors.

An opportunity for off-price chains

Department stores have been losing market share for years as shoppers have chosen to shop at strip malls or online instead, said Corey Tarlowe, a retail analyst at equity research firm Jefferies. Beneficiaries have ranged widely from big-box stores like Target to specialty players like Abercrombie & Fitch, which has opened stores in major cities like New York.
In an interview with CNBC in March, Target CEO Cornell said the retailer has gotten a leg up from other closures before. For example, he said, some of its stores are in former Toys R Us locations.
Off-price retailers, in particular, have posed a major competitive threat to department stores — and been the big winners from their struggles, Tarlowe said. They sell a lot of discretionary merchandise like clothes, handbags and shoes, too, but often in more convenient locations and for a better price.
“It’s kind of like the new department store in effect, but it’s much smaller,” he said. “They sell similar brands and similar products, but for 40% to 70% of the cost.”

Signs are posted at the entrance to a Macy’s store that is set to close at Bay Fair Mall on February 27, 2024 in San Leandro, California. Macy’s announced plans to shutter 150 underperforming stores across the United States. 
Justin Sullivan | Getty Images News | Getty Images

With Macy’s broad closures, TJX Cos.-owned T.J. Maxx, which includes its namesake stores, Marshalls and Home Goods, is especially well positioned. About 63% of Macy’s stores have a T.J. Maxx or Marshalls within a one-mile radius, according to an analysis by Jefferies.
Off-price stores also draw a similar customer, which tends to be more affluent. About 47% of Macy’s shoppers have an annual household income of more than $100,000, compared with about 50% of shoppers who go to TJX-owned stores, Jefferies found. Only about 30% of Burlington shoppers and about 34% of Ross customers have an annual household income of more than $100,000, which may mean they have less overlap with Macy’s shoppers.
“I used to see Toyota Camrys in parking lots at a T.J. Maxx and now I see BMWs, I see Mercedes, I’ll see Porsches,” Tarlowe said.
He added that TJX stores are easier for shoppers to get to, with roughly 2,500 locations in the U.S. That is a much larger footprint than Macy’s, which will have approximately 350 namesake stores after the closures.

Department store, big-box rivals see an opening

Other rivals also have a high overlap with Macy’s customer base, which could position them well.
About a third of Macy’s customers also shopped at Kohl’s during the prior 12 months, according to a late March credit card data analysis by Earnest Analytics. That was only surpassed by T.J. Maxx, which had 37% of Macy’s customers shop at its brands over the same period.
In a recent interview with CNBC, Kohl’s CEO Kingsbury described Macy’s closures as a chance for the company to grow. He also said Kohl’s is the largest department store in the country with 1,174 stores, but has quality locations.
“The beauty of Kohl’s is the fact that our stores are located in strip centers,” he said in an interview at Shoptalk, a retail conference in Las Vegas, in March. “It’s really a big deal. So we can bring the department store concept to the strip centers where you know a lot of the successful companies are located overall.”
Yet Kohl’s faces similar struggles as Macy’s, as it grapples with softer discretionary spending and challenges with attracting a younger customer. Like Macy’s, it also projected that comparable sales, which takes out the impact of stores openings and closures, may not grow or will only rise modestly in the year ahead.
Macy’s has also been trying to take a page from its competitors’ books. It’s opening up to 30 smaller stores in strip centers. And at many of its department store locations, it has added Backstage, an off-price shop inside of the bigger store.
But in the places where Macy’s is leaving a void, Target may also be poised to open stores or gain customers. The Minneapolis-based company said last month that it plans to build more than 300 new stores over the next decade. It already has more than 1,950 stores across the U.S.
Speaking to CNBC, Cornell did not say if the big-box retailer will open more stores near shuttered Macy’s. But, he added, it’s watching closely.
“We’re always looking at the local market, the opportunities and we think there’s still going to be displacement within retail for years to come,” he said. “And with our capability and financial position, we can be one of the players that continues to lean in and take share and growth.”

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United is offering pilots unpaid time off in May and potentially through the summer, the pilots’ union said.
The airline’s pilots’ union cited delayed Boeing deliveries for the update.
United’s CEO is among airline leaders who have expressed frustration at Boeing, whose chief executive last week said he would step down.

Boeing 787-10 Dreamliner, from United Airlines company, taking off from Barcelona airport, in Barcelona on 28th March 2023. 
JanValls | Nurphoto | Getty Images

United Airlines is asking pilots to take unpaid time off next month, citing late-arriving aircraft from Boeing, according to a note sent to pilots.
It’s another example of how Boeing’s customers say the manufacturer’s production problems and safety crisis are impacting their growth plans. The offer comes after United and other airlines in recent years have clamored for more pilots when the Covid-19 pandemic travel slump ended and demand surged.

“Due to recent changes to our Boeing deliveries, the remaining 2024 forecast block hours for United have been significantly reduced,” the United chapter of the Air Line Pilots Association, the pilots’ union, said in a note to members Friday. “While the delivery issues surround our 787 and 737 fleets, the impact will affect other fleets as well.”
United confirmed the request for voluntary, unpaid time off. The airline previously said it would pause pilot hiring this spring because of aircraft arriving late from Boeing, CNBC reported last month.
The union said it expects United to offer more time off “for the summer bid periods and potentially into the fall.”
United was contracted to receive 43 Boeing 737 Max 8 planes and 34 Max 9 models this year, but now expects to receive 37 and 19, respectively, according to a company filing in February. It had expected Boeing would also hand over 80 Max 10s this year and 71 next year. That model hasn’t yet been certified by the Federal Aviation Administration, and the airline removed them from the delivery schedule because it is “unable to accurately forecast the expected delivery period,” it said in the filing.
United CEO Scott Kirby has been among the most vocal about the production problems and delivery delays at Boeing, including most recently the crisis stemming from a door plug that blew out of a nearly new Boeing 737 Max 9 operated by an Alaska Airlines flight that was at about 16,000 feet.

Other airlines bosses have also grown frustrated with the delivery delays resulting from Boeing’s manufacturing issues.
Southwest Airlines last month said it was reevaluating its 2024 financial guidance, citing fewer Boeing deliveries, and has paused pilot and flight attendant hiring, while Alaska Airlines said its 2024 capacity estimates are “in flux due to uncertainty around the timing of aircraft deliveries as a result of increased Federal Aviation Administration and Department of Justice scrutiny on Boeing and its operations.”
Boeing declined to comment.
Boeing CEO Dave Calhoun last week announced he would leave at the end of the year as part of a broad leadership shake-up, which included the departures of the board chairman and the head of Boeing’s commercial airplanes unit.

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