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    Ford upgrades Lincoln Navigator to include spa mode, 48-inch display for videos and gaming

    Ford Motor is updating its Lincoln Navigator to include a 48-inch front display.
    The large SUV also comes with spa and gaming modes as part of the “Lincoln Rejuvenate” feature, which is meant to create a calming environment for the driver.
    The automaker said pricing for the 2025 Navigator will start under $100,000, but more detailed pricing will be released closer to the vehicle going on sale in spring 2025.

    2025 Lincoln Navigator

    Ford Motor is updating its Lincoln Navigator to include a 48-inch front display that can be used as a “sanctuary” for spa lovers and gamers alike.
    The new feature comes as the automaker has redesigned the exterior and interior of the vehicle for the 2025 model year — and as the Ford luxury brand attempts to differentiate Navigator amid declining sales of the large SUV.

    “The all-new Navigator is more than just a vehicle; it can become a home away from home and a third space that rejuvenates clients in an entirely new way on and off the road,” Lincoln president Dianne Craig said in a release.
    The “sanctuary” mode is part of the “Lincoln Rejuvenate” feature, which is meant to create a calming environment for the driver. Once initiated when parked, the driver’s seat automatically slides backward, reclines, warms slightly and makes massaging motions.

    2025 Lincoln Navigator

    The mode — in five- or 10-minute increments — also changes the vehicle’s climate, releases refreshing scents and plays relaxing videos and sounds such as a waterfall. Scent choices are mystic forest, ozonic azure and violet cashmere.
    The vehicle comes preloaded with a “waterfall meditation” experience in partnership with meditation and sleep app company Calm; two other themes — “aurora borealis” and “elements” — are included with purchase.
    “Navigator is the flagship of the Lincoln brand and represents our ultimate expression of sanctuary,” Craig said.

    The large, horizontal screen and rejuvenate modes initially debuted on the 2024 Lincoln Nautilus, but the Navigator’s bigger interior allowed for further enhancements.

    2025 Lincoln Navigator

    If a driver prefers to turn to media for relaxation instead of having a spa experience, the front display can be split to play video and gaming apps while the vehicle is parked. Games currently include Asphalt Nitro 2, Angry Birds and Beach Buggy Racing 2.
    The up-to-eight passenger SUV will continue to be powered by a twin-turbocharged 3.5-liter V6 engine with 440 horsepower and 510 pound-feet of torque. It also comes standard with the BlueCruise advanced driver-assistance system, which allows for hands-free driving on highways.
    Ford said pricing for the 2025 Navigator will start under $100,000, but more detailed pricing will be released closer to the vehicle going on sale in spring 2025. The starting pricing for current models ranges from $83,000 to more than $114,000.
    The Navigator’s current average transaction price is more than $101,300, according to Lincoln.
    Lincoln’s sales were up 23.4% year over year through July, however, sales of the Navigator were off roughly 21% during that time.
    The redesigned Navigator was revealed in connection to Monterey Car Week and the Pebble Beach Concours d’Elegance car show in California.

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    What’s next for the Biden administration’s Medicare drug price negotiations

    The Biden administration released prices or the first 10 medications subject to historic negotiations between the federal Medicare program and drugmakers.
    But the announcement is just the beginning of a controversial, multi-round process that could produce more savings for taxpayers and older Americans and put more pressure on pharmaceutical companies over time.
    It’s a key provision of President Joe Biden’s signature Inflation Reduction Act, which was signed into law two years ago. 

    U.S. President Joe Biden and Vice President Kamala Harris walk out together, at an event on Medicare drug price negotiations, in Prince George’s County, Maryland, U.S., August 15, 2024. 
    Ken Cedeno | Reuters

    The Biden administration on Thursday reached a milestone in Democrats’ decades-long quest to use Medicare to drive down prescription drug costs, releasing new prices for the first 10 medications subject to negotiations between the federal program and drugmakers.
    But the announcement is just the beginning of a controversial, multi-round process that could save more money for taxpayers and older Americans and put more pressure on pharmaceutical companies over time. It’s a key provision of President Joe Biden’s signature Inflation Reduction Act, which was signed into law almost exactly two years ago. 

    The agreed-upon prices, which go into effect in 2026, set the precedent for the future rounds of negotiations that will kick off next year. Those talks will likely affect prices in the coming years for dozens more widely used drugs made by the largest pharmaceutical companies in the world.
    “I think the expectation that people should have is that this is just the start. These are just the first ten drugs,” said Leigh Purvis, a prescription drug policy principal with AARP Public Policy Institute, an arm of the influential lobbying group that represents people older than 50, which has advocated for Medicare’s negotiation powers.
    “Sometimes people get caught up in the fact that their drug isn’t on the list, but it will be on the list at some point in the future if they’re taking a drug that’s resulting in high costs,” Purvis added.
    It’s unclear how much lower the negotiated prices are than the current net prices of the first 10 drugs, which are heavily rebated by Medicare Part D plans. Those net prices aren’t publicly available, making it difficult to know how much a Medicare plan and a patient would actually save on a given drug when the negotiated prices start in 2026. Copays could also differ depending on the Part D plan a patient has.
    “It’s hard to know the starting point, because … those numbers are not publicly available,” said Tricia Neuman, executive director for the Program on Medicare Policy at health policy research organization KFF, referring to net prices after rebates.

    Still, the Biden administration estimates that the new negotiated prices for the medications will lead to around $6 billion in net savings for the Medicare program and $1.5 billion in out-of-pocket savings for beneficiaries in 2026 alone. 
    The negotiations “seemed to go relatively smoothly – the aggregate savings are fairly impressive,” Neuman said. She added as prices of more drugs are hashed out during future rounds, it will “increase the level of savings over time.” 
    The price talks could also put more pressure on drugmakers in the coming years. Many of the medications in the first round of negotiations are already nearing patent expirations that will open the market to competition from cheaper generics, which will take a bite out of revenue. 
    For example, Bristol Myers Squibb’s blood thinner Eliquis is slated to lose patent exclusivity in the U.S. starting on April 1, 2028. The blockbuster drug also faces patent expirations in certain EU markets in 2026.

    George Frey | Reuters

    But over time, drugs much further from losing market exclusivity could be selected for future rounds of negotiations, Leerink Partners analyst David Risinger said in a research note Thursday. 
    By February 2025, the Biden administration will select up to 15 more drugs that will be subject to the next round of price talks, with new prices going into effect in 2027. Manufacturers will have until the end of February to decide whether to participate in the program — a no-brainer for companies as they face steep excise taxes or the loss of access to the federal Medicare and Medicaid programs if they do not. 
    “It will start to get more painful over time,” Jeff Jonas, a portfolio manager at Gabelli Funds, said in a statement Thursday. He noted, for instance, that the next round of price talks will likely include Novo Nordisk’s top-selling diabetes drug Ozempic. 
    Jonas added that there was “some speculation that the government went easy on the pharma companies this year given that it is both an election year and the first time they’re doing this.” 
    After the second round, the Centers for Medicare and Medicaid Services can negotiate prices for another 15 drugs that will go into effect in 2028. The number rises to 20 a year starting in 2029.
    CMS will only select Medicare Part D drugs for the medicines covered by the first two years of negotiations. It will add more specialized drugs covered by Medicare Part B, which are typically administered by doctors, for the round that takes effect in 2028.
    That could be a bigger threat to the pharmaceutical industry, as Medicare Part B drugs aren’t discounted as steeply as medicine covered by Part D. 
    “My assumption, since rebates are limited, is they have farther to fall versus Part D drugs that are heavily rebated,” Risinger told CNBC in an interview, referring to medications covered by Part B. 
    Jonas noted that negotiations for 2028 price changes could include some big cancer drugs, such as Merck’s blockbuster chemotherapy Keytruda. 
    Vice President Kamala Harris, the Democratic presidential nominee, would likely try to expand the scope of negotiations if elected and “likely be more aggressive on the discounts,” Jonas said.
    But Neuman said that whether she can pass a law to bolster the policy will depend on which party controls the House and Senate. Harris herself had to cast a tiebreaking vote in the Democratic-held Senate to pass the original law.
    “There’s some interest among Democrats in Congress in doing that, but obviously the law will depend on which party is in control,” Neuman said.
    The pharmaceutical industry has argued that the negotiations could cut into their revenue, profits and innovation in the long term. 
    For example, Steve Ubl, the CEO of the pharmaceutical industry’s biggest lobbying group, PhRMA, said in a statement Thursday that the price talks could result in fewer treatments for cancer, mental health, rare diseases and other conditions because it “fundamentally alters” the incentives for drug development.
    Medicare can start negotiating prices on small-molecule drugs as early as nine years after they receive U.S. Food and Drug Administration approval, compared with 13 years for biologics. Small molecule drugs are made of chemicals that have low molecular weight, while biologic medicines are derived from living sources such as animals or humans.
    The industry has argued that the distinction is going to deter companies from investing in small-molecule drugs.
    — CNBC’s Angelica Peebles contributed to this report More

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    Here’s the deflation breakdown for July 2024 — in one chart

    The inflation rate has throttled back significantly from its pandemic-era highs.
    Some areas of the U.S. economy have experienced deflation. Their prices have declined.
    They include prices for physical goods such as cars and trucks, clothing and furniture, as well as other categories, such as airline fares and some food items.

    Fotostorm | E+ | Getty Images

    Inflation cooled below 3% in July 2024, the first time it dropped beneath that level in more than three years.
    While many areas of the U.S. economy are disinflating — meaning their prices are still rising, though at a slower rate — some have been outright deflating. That means their prices have actually declined.

    Deflation has largely occurred for physical goods, though it has also appeared in categories such as airline fares, gasoline and various food items, according to the consumer price index.
    These are “micro pockets” of deflation, said Joe Seydl, senior markets economist at J.P. Morgan Private Bank.

    But the deflationary dynamic is less widespread than it was earlier in the pandemic, when the unwinding of contorted supply-and-demand dynamics made it more pronounced, economists said.
    “Broadly speaking, deflation for various items is increasingly less broad-based,” said Mark Zandi, chief economist at Moody’s.
    Consumers shouldn’t expect a broad and sustained fall in prices across the U.S. economy. That generally doesn’t happen unless there’s a recession, economists said.

    Why goods prices have fallen

    “Core” goods — commodity prices excluding those related to food and energy — have declined by about 2% since July 2023, on average, according to CPI data.
    They fell 0.3% during the month, from June to July 2024.
    Demand for physical goods soared in the early days of the Covid-19 pandemic as consumers were confined to their homes and couldn’t spend on things such as concerts, travel or dining out.
    The health crisis also snarled global supply chains, meaning goods weren’t hitting the shelves as quickly as consumers wanted them.
    Such supply-and-demand dynamics drove up prices.

    The environment has changed, however.
    To that point, the initial pandemic-era craze of consumers fixing up their homes and upgrading their home offices has diminished, cooling prices. Supply-chain issues have also largely unwound, economists said.
    Furniture and bedding prices are down more than 5% since July 2023, according to CPI data. Prices have also fallen over the past year for dishes and flatware (down about 8%), laundry equipment (-6%), nonelectric cookware (-10%), toys (-3%), and tools and hardware (-1%), according to the CPI.
    Apparel prices are also down, for men’s and women’s outerwear (-12% and -4%, respectively), and infants and toddlers’ apparel (-4%), for example.
    More from Personal Finance:Social Security cost-of-living adjustment may be 2.6% in 2025Here’s the inflation breakdown for July 2024A U.S. construction boom is sending rents lower
    Prices for new and used vehicles have fallen by 1% and 11%, respectively, since July 2023. Car and truck rental prices have deflated about 6%.
    Car prices were among the first to surge when the economy reopened broadly early in 2021, amid a shortage of semiconductor chips essential for manufacturing.
    “Vehicle prices remain under pressure from improved inventory and elevated financing costs,” Sarah House and Aubrey George, economists at Wells Fargo Economics, wrote in a note in July.

    Higher financing costs are the result of the Federal Reserve raising interest rates to tame high inflation. Economists expect central bank officials to start cutting rates at their next policy meeting in September.
    Outside of supply-demand dynamics, the U.S. dollar’s strength relative to other global currencies has also helped rein in prices for goods, economists said. This makes it less expensive for U.S. companies to import items from overseas, since the dollar can buy more.
    Long-term forces such as globalization have also helped, by increasing imports of more lower-priced goods from China, economists said.

    Deflation for airfare, food and electronics

    Daniel Garrido | Moment | Getty Images

    Airline fares have declined about 3% over the past year, according to CPI data.
    The drop is partly attributable to a decline in jet fuel prices, said Stephen Brown, deputy chief North America economist at Capital Economics. Average aviation jet fuel prices are down about 17% from last year, according to the International Air Transport Association.
    Airlines have also increased the volume of seats available on domestic routes, largely by flying bigger planes, Hayley Berg, lead economist at travel site Hopper, wrote in April.
    This summer, “we’ve repeatedly seen airlines slash prices on many routes for travel in the next few months,” wrote Gunnar Olson, flight deal analyst at Thrifty Traveler. “It’s led us to declare that this is the best summer ever for travel.”

    Grocery prices have fallen for items such as cereal, rice, bread, ham, fish, cheese, ice cream, potatoes, apples, bananas, margarine and snacks, according to CPI data.
    Each grocery item has its own supply-and-demand dynamics that can influence pricing, economists said. For example, apple prices have deflated almost 15% in the past year due to a supply glut.
    Additionally, there have been more price promotions lately at grocery stores, with a few “major retailers recently announcing price cuts that are likely to pressure competitors’ pricing,” wrote House and George of Wells Fargo.

    Other categories’ deflationary dynamics may be happening only on paper.
    For example, in the CPI data, the Bureau of Labor Statistics controls for quality improvements over time. Electronics such as televisions, cellphones and computers continually get better, meaning consumers generally get more for the same amount of money.
    That shows up as a price decline in the CPI data. More

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    United CEO expresses ‘renewed confidence’ in Boeing after meeting with new leader Ortberg

    United Airlines CEO Scott Kirby had been critical of Boeing as his company, a major buyer of Boeing planes, faced a series of delays from manufacturing flaws.
    Robert “Kelly” Ortberg took the reins at Boeing last week promising to win back trust.
    Kirby and Ortberg had lunch in the Dallas area this week.

    United Airlines CEO Scott Kirby celebrates the opening of a new addition to its Flight Training Center in Denver, Colorado, on Feb. 22, 2024.
    Hyoung Chang | Denver Post | Getty Images

    United Airlines CEO Scott Kirby says he is optimistic about Boeing’s recovery after meeting with the manufacturer’s new chief executive.
    It’s an upbeat change of tune from the head of United, a top Boeing customer that has been among the most publicly frustrated about the plane maker’s problems, which have led to delayed deliveries of dozens of aircraft.

    Kirby and Boeing’s new CEO, Robert “Kelly” Ortberg, had lunch earlier this week in the Dallas area. Kirby said in a LinkedIn post on Thursday that he “was not only encouraged by what I heard, but I also came away with a renewed confidence that Boeing is on the right path and will recover faster than most expect.”
    United has 484 unfilled orders with Boeing, according to the manufacturer’s website.
    Ortberg also met with American Airlines CEO Robert Isom earlier this week, according to a person familiar with the matter who wasn’t authorized to speak with the media.

    Read more CNBC airline news

    Ortberg, who previously ran commercial and defense supplier Rockwell Collins and has more than three decades of experience in the aerospace industry, took the reins at Boeing a week ago, spending part of his first day at Boeing’s 737 factory floor in Renton, Washington. Ortberg will be based in Seattle, a shift from previous leaders.
    “His engineering background at Rockwell Collins, combined with an instinct to be close to his frontline teams in Seattle, makes for a winning combination,” Kirby wrote on Thursday. “It was clear from our discussion that he’s 100% engaged, understands the cultural changes needed to turn things around and is committed to listening to his employees and customers.”

    United and other major customers such as Southwest Airlines have been grappling with delayed jetliners as Boeing tries to recover from its latest safety crisis in the wake of a door plug blowout on an Alaska Airlines 737 Max 9 earlier this year.
    No one was seriously injured in the accident — which occurred after bolts that hold the door plug in place weren’t installed before the airline received the plane — but it came after a host of other manufacturing defects on Boeing planes.
    “In speaking with our customers and industry partners leading up to today, I can tell you that without exception, everyone wants us to succeed,” Ortberg said in a note to staff on his first day last Thursday. “In many cases, they NEED us to succeed.”

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    Warren Buffett did something curious with his Apple stock holding

    Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 4, 2024. 

    A coincidence or master plan? Warren Buffett now owns the exact same number of shares of Apple as he does Coca-Cola after slashing the tech holding by half.
    Many Buffett followers made the curious observation after a regulatory “13-F” filing Wednesday night revealed Berkshire Hathaway’s equity holdings at the end of the second quarter. It showed an identical 400 million share count in Apple and Coca-Cola, Buffett’s oldest and longest stock position.

    It’s prompted some to believe that the “Oracle of Omaha” is done selling down his stake in the iPhone maker.
    “If Buffett likes round numbers, he may not be planning to sell any additional shares of Apple,” said David Kass, a finance professor at the University of Maryland’s Robert H. Smith School of Business. “Just as Coca-Cola is a ‘permanent’ holding for Buffett, so may be Apple.”

    Arrows pointing outwards

    The 93-year-old legendary investor first bought 14,172,500 shares of Coca-Cola in 1988 and increased his stake over the next few years to 100 million shares by 1994. So the investor has kept his Coca-Cola stake steady at essentially the same round-number share count for 30 years.
    Due to two rounds of 2-for-1 stock splits in 2006 and 2012, Berkshire’s Coca-Cola holding became 400 million shares.
    Buffett said he discovered the iconic soft drink when he was only 6 years old. In 1936, Buffett started buying Cokes six at a time for 25 cents each from his family grocery store to sell around the neighborhood for five cents more. Buffett said it was then he realized the “extraordinary consumer attractiveness and commercial possibilities of the product.”

    Slashing Apple stake
    Investing in tech high flyers such as Apple appears to defy Buffett’s long-held value investing principles, but the famed investor has treated it as a consumer products company like Coca-Cola rather than a technology investment.
    Buffett has touted the loyal customer base of the iPhone, saying people would give up their cars before they give up their smartphones. He even called Apple the second-most important business after Berkshire’s cluster of insurers.
    So it was shocking to some when it was revealed that Berkshire dumped more than 49% of its stake in the iPhone maker in the second quarter.
    Many suspected that it was part of portfolio management or a bigger overall market view, and not a judgement on the future prospects of Apple. The sale brought down Apple’s weighting in Berkshire’s portfolio to about 30% from almost 50% at the end of last year.
    And with it settled at this round number, it appears to be in a spot that Buffett favors for his most cherished and longest-held equities.
    Still, some said it could just be a pure coincidence.
    “I don’t think Buffett thinks that way,” said Bill Stone, chief investment officer at Glenview Trust Co. and a Berkshire shareholder.
    But at Berkshire’s annual meeting in May, Buffett did compare the two and referenced the holding period for both was unlimited.
    “We own Coca-Cola, which is a wonderful business,” Buffett said. “And we own Apple, which is an even better business, and we will own, unless something really extraordinary happens, we will own Apple and American Express and Coca-Cola.”

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    Walmart says prices are coming down — except in one key area

    Walmart said inflation was flat in its latest quarter, and revenue growth came from selling more items and drawing more visits to its stores and website, rather than higher prices.
    Yet prices have remained high in some parts of the store, such as dry groceries and processed foods.
    Prices at consumer brands, including Walmart, have faced more scrutiny from both consumers and politicians.

    A customer pushes her shopping cart through the aisles at a Walmart store in the Porter Ranch section of Los Angeles.
    Kevork Djansezian | Reuters

    Prices of many groceries and other items have fallen at Walmart, according to CEO Doug McMillon.
    Yet the leader of the nation’s largest retailer said Thursday that inflation “has been more stubborn” in one particular part of the store: The aisles that carry dry groceries and processed foods. Those include items like carbonated soft drinks.

    On a call after the discounter posted second-quarter earnings, he said Walmart has pressured suppliers that stock its shelves to cut prices. But he called on those companies to do more.
    “We have less upward pressure, but there are some that are still talking about cost increases, and we’re fighting back on that aggressively because we think prices need to come down,” he said.
    Walmart’s overall inflation was flat for the quarter, and revenue growth came from selling more units, not charging higher prices, Chief Financial Officer John David Rainey told CNBC. But price dynamics weren’t consistent across products: prices continued to go up for dairy, eggs, sugar and meat, and leveled off or dropped for items including pet food, apples, potatoes, strawberries, sporting goods and lawn and garden items.
    Walmart’s quarterly results sparked a rally of other retail stocks, including Target, Best Buy and Macy’s on Thursday. Both the big-box discounter’s results and better-than-expected retail sales numbers defied concerns of a consumer slowdown.
    Walmart beat on the top and bottom line and raised its forecast to reflect a stronger first half of the year. Rainey told CNBC consumers have continued to be “choiceful, discerning [and] value-seeking,” but the company’s leaders “don’t see any additional fraying of consumer health.”

    All consumer brands, including Walmart, have been under more scrutiny from shoppers and even politicians as frustration with pricier goods persists — and McMillon’s comments about Walmart’s suppliers underscore how much pressure grocers have faced. Walmart drew criticism on TikTok for rolling out electronic price labels for store shelves, with some users contending the company will use the technology to hike prices when demand spikes. (Walmart, for its part, has said it has no plans to change its approach to pricing and added the new price tags to save store workers’ time.)
    Many brands have taken pains to emphasize value or roll out new deals, particularly as consumers get more selective about where they spend their dollars.
    McDonald’s, for example, launched a $5 value meal in late June and decided to extend the offer in most markets. Target in late May said it would cut prices on about 5,000 frequently shopped items throughout the summer, such as peanut butter, milk and meat.
    Walmart is also touting discounts. The retailer said it had 7,200 “rollbacks,” its term for short-term deals, across categories in the quarter that ended July 31. That number included a 35% year-over-year increase in the number of rollbacks for food.
    While Walmart’s profits are growing faster than sales, McMillon said that’s because of growth outside of retail in higher-margin businesses like advertising — not higher prices on goods.
    “We’re not raising prices. We’re lowering prices,” McMillon said. “We don’t want product margins to go up. When we talk about margin improvement in our company, it’s business mix.” More

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    TikTok and fast-food rivalry fuel Chili’s sales as parent Brinker says turnaround is taking hold

    Chili’s reported same-store sales growth of 14.8% in its latest quarter, fueled by the popularity of its Triple Dipper and its $10.99 Big Smasher meal.
    Brinker International has been trying to turn around the chain for the last two years, and its results this quarter showed the efforts are bearing fruit, CEO Kevin Hochman said.
    But Brinker disappointed investors with its outlook as the company waits to see if the economy worsens.

    Chili’s Grill & Bar and restaurant entrance in Orlando, FL.
    Jeff Greenberg | Universal Images Group | Getty Images

    An ad campaign targeting fast-food chains and a TikTok-viral appetizer helped Chili’s same-store sales climb nearly 15% in its latest quarter.
    But Kevin Hochman, CEO of parent company Brinker International, told CNBC that the chain’s strong performance is just a sign that customers are finally catching onto the chain’s two-year turnaround.

    Shares of Brinker have climbed 53% this year, bringing its market value up to $2.99 billion. However, the stock closed 10.7% lower Wednesday after the company disappointed analysts with weaker-than-expected earnings and a conservative outlook for its fiscal 2025.
    Shares were up 7% in afternoon trading on Thursday, rebounding from what BMO Capital Markets called an “overreaction” from investors. KeyBanc Capital Markets also upgraded the stock on Thursday, saying that its quarterly results were misunderstood.
    Forecast aside, Chili’s made even StreetAccount’s same-store sales estimates of 8.6% growth look cautious. Its 14.8% same-store sales growth puts it in rare company, joining Chipotle and Wingstop as the few public restaurants reporting strong traffic and same-store sales growth at a time when many consumers are pulling back their spending, putting pressure on the industry. Chili’s casual-dining rivals like Applebee’s, owned by Dine Brands, and Bloomin’ Brands’ Outback Steakhouse, reported same-store sales declines for their latest quarters.
    “This is just a whole ‘nother step change in the business,” Hochman said. “I think sky’s the limit for this brand.”
    About 60% of Chili’s growth in its latest quarter came from its $10.99 Big Smasher meal, according to Hochman. The chain promoted the deal by taking aim at fast-food rivals in TV ads.

    “We had tapped into this insight that we were seeing in social media months prior, that customers were upset about where fast-food prices were going,” Hochman said. “The advertising clearly touched a nerve on that.”
    Another successful menu item for Chili’s this quarter was its Triple Dipper, which lets diners select three appetizers and dips. The item went viral on TikTok in May. Hochman estimates that the Triple Dipper accounted for about 40% of the chain’s sales growth.
    But the popularity of both the Triple Dipper and the Big Smasher created new problems for Chili’s. Its restaurants have to be prepared to serve the influx of customers, many of whom were trying Chili’s for the first time or returning after a long time away. Hochman said Chili’s has been investing in labor for the last two years — from hiring bussers to adding more cooks — but those steps pressured its bottom line this quarter.
    Chili’s turnaround has touched more than just its workforce, according to Hochman.
    Under his leadership, the company has spent the last two years trying to grow sales profitably. Chili’s has culled its menu, shedding about 22% of items.
    Brinker has also ended some less profitable strategies to attract customers. Chili’s doesn’t offer as many coupons as it once did, and Brinker pulled the plug on its Maggiano’s Italian Classics virtual brand.
    At the same time, Chili’s also leaned into value ahead of the competition, who are now rolling out their own deals. But Hochman is confident that Chili’s can hold onto its lead — and the new customers that TikTok and TV ads have brought.
    “We’ve been advertising our value for almost 18 months, and a lot of folks are coming late to the game, and sometimes it’s more aggressive value, and they just don’t have the awareness that we have, because we’ve been at it a while,” he said.
    But as Brinker heads into a new fiscal year, holding onto its new customers could prove to be difficult. A plethora of restaurants, from McDonald’s to Outback Steakhouse, have unveiled value meals meant to appeal to diners seeking discounts. And customers could keep cutting back their restaurant visits to save money. Prices for food away from home, which have risen 4.1% over the last 12 months, have stayed relatively sticky.
    For Brinker’s fiscal 2025, which kicked off in July, the company is anticipating earnings per share of $4.35 to $4.75 and revenue growth of 3% to 4.6%. Investors were expecting a stronger outlook for growth, given Chili’s recent success. But Brinker is playing it safe in case the economy worsens.
    “It’s important for our team to set goals that we think are achievable,” Hochman said.
    “[The economy] certainly has taken a turn for the worse in the past three to four months,” he added. More

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    NBCUniversal is pinning Peacock’s streaming success on its $2.45 billion per year NBA deal

    NBCUniversal signed a $2.45 billion per year deal with the NBA to broadcast games for 11 years, beginning with the 2025-26 season.
    Research showed that people who signed up for NBC’s Peacock streaming service for January’s NFL Wild Card game not only stayed but also watched non-sports content, helping to convince NBC Sports to bid aggressively for the NBA.
    Bank of America estimates the NBA deal will be quickly be profitable for NBCUniversal.

    The NBA logo is seen outside an NBA fan store in New York on July 8, 2024. 
    Angela Weiss | AFP | Getty Images

    Executives at Comcast’s NBC Sports targeted the NBA’s media rights renewal on their calendars for years. They wanted the NBA back after losing the games to Disney in 2002. But it wasn’t until this January that NBC Sports President Rick Cordella became confident the company could go big on a bid.
    On Jan. 13, NBCUniversal’s subscription streaming service Peacock showed its first-ever exclusive NFL playoff game — a 26-7 victory by the eventual Super Bowl-winning Kansas City Chiefs over the Miami Dolphins. There was little doubt the game would be popular. It reached 27.6 million total viewers, according to Nielsen, the biggest live-streamed event in U.S. history.

    What happened after the game made NBCUniversal comfortable with shelling out a whopping $2.45 billion per year to distribute NBA games starting in the 2025 season — a bet on making Peacock profitable as the pay-TV model erodes.
    Research firm Antenna estimates Peacock added 3 million new subscribers from getting the rights to that one NFL game, which cost $110 million. More than 70% of those subscribers stayed with Peacock about two months later, Antenna said in March.
    That gave Cordella confidence NBA fans would stick with Peacock even after the season concluded. But it wasn’t just the lack of churn that convinced him of the value of popular sports. It was what those new subscribers watched once they signed up.
    NBC Sports executives assumed the millions of new Peacock subscribers might engage with other live sports on the service, which include the NFL’s “Sunday Night Football,” golf, Premier League, WWE, and IndyCar. What they didn’t expect was how much subscribers watched the platform’s non-sports entertainment, such as movies and episodes of “The Office,” “30 Rock” and “Parks and Recreation.”

    Patrick Mahomes #15 of the Kansas City Chiefs
    Jamie Squire | Getty Images Sport | Getty Images

    “Our highest video-on-demand usage was the week after the Wild Card game,” Cordella said in an interview. “Churn rates among those new subscribers have been lower than the average. Sports fans are not monolithic. You’re getting a whole household to watch other entertainment around what NBCU has.”

    Media executives broadly understand the traditional pay-TV ecosystem will continue to shrink in the coming decade, and their companies will need to rely on streaming to survive and flourish. For NBCUniversal, obtaining NBA rights helps guarantee sustainability in a fight for eyeballs against streaming behemoths such as Netflix, Amazon Prime Video and Disney+.
    Sports fans may subscribe to a streaming service to watch a particular game, but evidence suggests they’ll stick around and watch other content once they’ve made the commitment to spending money.
    “We know based on Paramount+, having multiple genres of content on the same platform is very beneficial,” said David Berson, the head of CBS Sports, in an interview. “We know that when a fan comes in to Paramount+ for sports, they spend 90% of their time in the service on entertainment programing, on non-sports content.”

    Staying power

    The streaming wars have increasingly become a fight for engagement. Companies invest in algorithms and user interface technology to keep viewers tied to their particular service. With the future of Paramount+ hazy as Paramount Global looks to merge with Skydance Media, and with Warner Bros. Discovery actively looking for mergers or partnerships, Comcast wants Peacock to have staying power for years — and even decades — to come.
    That’s why it was so important for NBCUniversal to have games that consumers can only see on Peacock. Beginning with the 2025-26 season, Peacock will have about 50 exclusive national regular-season and postseason NBA games, including national Monday night games and doubleheaders. 
    “The NBA is a must-have for the sports fan,” Cordella said. “We need to build Peacock for the future. Having exclusive NBA games is really important for that mission.”
    Peacock, which is thus far a U.S.-only service, has 33 million subscribers — far fewer than platforms with international reach such as Netflix (about 278 million) or even Paramount+ (68 million). While Netflix has been profitable for years and Disney’s collection of streaming services turned a profit for the first time last quarter, Peacock remains unprofitable, losing $348 million in the second quarter and $639 million in the first quarter.
    That makes spending $2.45 billion per year a major risk. Cordella hopes a steady stream of live sports content will help make the service an essential for sports fans no matter the season. The NBA, including the playoffs, runs from October to June.

    Making the math work

    Comcast has a number of levers to pull to make its investment profitable — a feat Bank of America analyst Jessica Reif Ehrlich acknowledged was plausible.
    “We see a path to profitability for Comcast under the new agreement,” Ehrlich wrote in a note to clients earlier this month.
    While consistent Peacock subscriber growth will help, NBCUniversal will also rely on the NBA to help drive higher retransmission fees for NBC among pay TV operators and generate higher advertising revenue.
    The NBA can also help market other NBC ventures, including TV series, movies and theme parks — though the league’s viewership pales in comparison to the NFL. This was one of the reasons Warner Bros. Discovery decided not to compete with NBCUniversal for NBA rights once the price tag ballooned past $2 billion per year. While “Sunday Night Football” averaged 21.4 million viewers per game last year across NBC and Peacock, NBA regular reason games averaged 1.6 million viewers last season across TNT, ABC and ESPN. 
    Ehrlich noted that Comcast cable may also benefit from the NBA by driving broadband usage by shifting more people to Peacock. Comcast may also be able to save on future affiliate fee payments to Warner Bros. Discovery if the rival media company loses its NBA media rights.
    There are other competitive advantages NBC gains by taking away the package of games from Warner Bros. Discovery, which is suing the NBA in an attempt to hold on to some live rights. NBCUniversal can use the NBA as a show of strength, relative to other media companies, when it next negotiates with other sports leagues selling rights or even with Hollywood creators looking for the best streaming service for their next project.
    Even without factoring in potential cost savings from lowering Warner Bros. Discovery affiliate payments, Ehrlich anticipates the NBA deal will be profitable for Comcast by its second year. She estimates the company will see $192 million in incremental Peacock revenue attributed to new subscribers in the deal’s first year, increasing to $420 million by year four. She models $850 million in additional year one advertising revenue for NBC from the NBA and $160 million for Peacock’s advertising tiers.
    Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
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