Business

“The risk of under-investing is dramatically greater than the risk of over-investing,” said Sundar Pichai, the boss of Alphabet, on an earnings call last week. He, like lots of executives nowadays, was talking about artificial intelligence (AI). More specifically, he was talking about building more AI data centres to serve the customers of the tech giant’s cloud-computing arm. The sums involved are eye-popping. Alphabet’s capital spending is expected to grow by about half this year, to $48bn. Much of that will be spent on AI-related gear. More

“The risk of under-investing is dramatically greater than the risk of over-investing,” said Sundar Pichai, the boss of Alphabet, on an earnings call last week. He, like lots of executives nowadays, was talking about artificial intelligence (AI). More specifically, he was talking about building more AI data centres to serve the customers of the tech giant’s cloud-computing arm. The sums involved are eye-popping. Alphabet’s capital spending is expected to grow by about half this year, to $48bn. Much of that will be spent on AI-related gear. More

“Deadpool & Wolverine” shattered box office records this weekend, tallying $205 million in domestic ticket sales during its opening, the highest debut of 2024 and of an R-rated film ever.
The film outpaced analysts’ expectations, which called for an opening haul between $160 million and $180 million.
Internationally, the film secured $233.3 million, bringing its estimated global haul to $438.3 million for the full weekend.

Hugh Jackman and Ryan Reynolds star in Marvel’s “Deadpool and Wolverine.”

Marvel is back on top.
“Deadpool & Wolverine” shattered box office records this weekend, tallying $205 million in domestic ticket sales during its opening, the highest debut of 2024 and of an R-rated film ever.

The film outpaced analysts’ expectations, which called for an opening haul between $160 million and $180 million.
“The massive debut for ‘Deadpool & Wolverine’ should convince those who were throwing in the towel for the big screen back in May that you can never underestimate the power, allure resiliency and, yes, unpredictability of the movie theater experience,” said Paul Dergarabedian, senior media analyst at Comscore.
Internationally, the film secured $233.3 million, bringing its estimated global haul to $438.3 million for the full weekend.
“Deadpool & Wolverine” is the 34th film to be released under the MCU banner and the first of the Disney-produced installments to garner an R-rating from the Motion Picture Association. The previous two Deadpool films, both rated R, were produced and released through 20th Century Fox. Disney acquired the company in 2019, bringing the X-Men and Fantastic Four back into the larger Marvel portfolio.
Similar to previous entries in the MCU, “Deadpool & Wolverine” benefitted from fan fervor. Audiences were eager to see the flick in its opening weekend in order to avoid spoilers. Disney kept much of the film’s content secret and provided limited press screenings prior to its debut.

The strong opening of “Deadpool & Wolverine” comes after a post-pandemic box office slump for the Marvel Cinematic Universe. Disney overcrowded the market with superhero streaming content in recent years and its push for quantity at the box office led to a drop in quality.
“Marvel took a mini-break to help rejuvenate their creative direction in the wake of several divisive tentpole films and this return to the arena certainly stuck the superhero landing,” said Shawn Robbins, founder and owner of Box Office Theory.
“A record-breaking R-rated debut not only shows that Marvel and Disney can spread their wings a little bit when the content calls for it, but also that Marvel fans and casual audiences alike are still eager for the kind of entertaining and meaningful blockbuster storytelling that has defined so much of their unrivaled success,” he added.
“Deadpool and Wolverine’s” opening coincided with Marvel’s San Diego Comic Con panel which revealed an updated film slate and gave fans a sense of where the franchise will head in the coming years. That includes Sam Wilson, the newly minted Captain American, seeking to rebuild the Avengers after they disbanded in the wake of their fight with Thanos, and the pending arrival of Doctor Doom, which is set to be played by Iron Man himself Robert Downey Jr.
“Every film should be taken on a case-by-case basis, but Deadpool & Wolverine in tandem with this weekend’s Comic Con announcements mark significant steps back onto a path that could reignite enthusiasm for the broader franchise,” Robbins said. More

A slew of fast-food chains, from McDonald’s to Taco Bell, have $5 meal deals to try to win back customers.
Runaway menu prices have scared away low-income consumers, and discounts may be the only way to get them back.
But investors are skeptical that the value meals will drive meaningful sales growth without eroding profits.

The McDonald’s logo is displayed at a McDonald’s restaurant in Burbank, California, on July 22, 2024.
Mario Tama | Getty Images

Subway started phasing out its $5 footlong sandwiches a decade ago. But these days, other fast-food chains have revived the $5 price point, hoping to win over customers who have cut back their spending.
As many restaurant companies prepare to report their second-quarter results, investors are expecting to hear that diners are visiting their locations less frequently and that sales have turned sluggish, with few exceptions such as Chipotle. In the hopes of lifting their results for next quarter, chains such as McDonald’s, Taco Bell, Burger King and Wendy’s have unveiled or revived meal deals with a $5 price tag.

McDonald’s said it is seeing traffic increase as a result, although Wall Street is not expecting a big sales bump from the promotions.
Fast food typically fares better than the broader industry during economic downturns. But the last several years of price hikes have led many consumers to conclude that fast food just is not a good deal anymore. More than 60% of respondents to a recent LendingTree survey said they have cut back their fast-food spending because it is too expensive.
Runaway menu prices have scared off many fast-food customers, including those in the low-income bracket who make up a sizable chunk of the sector’s customer base. Sensing diners’ fast-food backlash, players such as Brinker International’s Chili’s have used their marketing to highlight their own value relative to the cost of a fast-food meal. Casual-dining chains have taken some market share from the fast-food sector, Darden Restaurants CEO Rick Cardenas said in June.
“It’s the war for the less affluent customer,” said Robert Byrne, senior director of consumer research for Technomic, a restaurant market research firm.
That change in consumer behavior has also scared away Wall Street. Shares of McDonald’s, Burger King parent Restaurant Brands International and Wendy’s have all slid by double digits this year. Taco Bell owner Yum Brands is down more than 1% in 2024. Meanwhile, the S&P 500 is up 14%.

“The sense among investors is that the second quarter is probably going to be one to forget — you’re going to see a lot of large chains probably miss consensus [estimates],” KeyBanc analyst Eric Gonzalez told CNBC.
McDonald’s is expected to report its second-quarter earnings on Monday, while Wendy’s is slated to announce its results on Wednesday. Restaurant Brands and Yum Brands are expected to report their quarterly earnings the following week.

Can value meals fuel bigger purchases?

A sign advertises meal deals at a McDonald’s restaurant in Burbank, California, on July 22, 2024.
Mario Tama | Getty Images

Generally, fast-food chains tend to focus their discounts and value meals on the first quarter, when consumers are trying to save their dollars after the holiday season and stick to New Year’s resolutions. As temperatures rise, so do restaurant sales, and operators usually do not need to rely on deals to bring in customers.
But this summer is different. Fast-food chains need discounts to fuel traffic — and sales growth.
“The fact is that restaurants are running out of space to take more price on their menus,” Byrne said.
 But the value meals are not only about growing traffic.
“It’s also about converting the consumer who’s coming for the deal to a higher-ticket consumer by introducing other add-ons or other things that they might do,” Byrne said. “The risk is that they don’t.”
Without convincing customers to add a milkshake or another entrée to their order, the discounts ding profits and become unsustainable in the long run. That is a big worry for investors who are already skeptical that chains will not see the traffic bump they are hoping for.
“The value menus rolled out toward the end of the quarter. There’s just a fear that it’s not going to get any better, and it’s going to be a race to the bottom,” Gonzalez said.
Subway’s $5 footlong presents its own cautionary tale. Although the deal was popular with customers, it outstayed its welcome with operators, eroding their profits and compounding other issues with the brand, such as sales cannibalization from its massive footprint. That led to restaurant closures, angry operators and years of searching for a new way to bring back customers.

Franchisee skepticism

Investors are not the only ones skeptical about the promotions — so are franchisees, who often push back against discounts because they hurt their profits.
Franchisees have also gained more power to resist parent companies’ deal strategies in recent years. Many franchisees are larger these days, with more restaurants and sometimes even private equity money.
At McDonald’s, franchisees banded together to form the National Owners Association in 2018, rebelling against the burger giant’s unpopular discounts and plans for store renovations. Since then, the chain’s operators have fought back more against management’s plans.
An initial proposal of McDonald’s $5 value meal did not pass muster, so Coca-Cola chipped in marketing funds to make the deal more attractive to operators. Coke CEO James Quincey said on Tuesday’s earnings call that the beverage giant has seen weaker away-from-home sales in the U.S. as quick-service restaurants struggle. To boost demand, Coke is partnering with food-service customers to market food and drink combo meals, according to Quincey.
McDonald’s on Monday extended its value meal past its initial four-week window. Ninety-three percent of its restaurants voted in favor of the extension, executives wrote in a memo to the U.S. system viewed by CNBC.
The promotion is bringing customers back to its restaurants, according to both executives and foot traffic data. June 25, the launch day of McDonald’s $5 meal, drew 8% more visits than the average Tuesday in 2024 so far, according to a report from Placer.ai. The pattern repeated in the following days as the chain exceeded year-to-date daily visit averages. Placer.ai also found that discounts helped drive traffic to Buffalo Wild Wings, Starbucks and Chili’s.
In his quarterly survey of more than 20 McDonald’s franchisees, analyst Mark Kalinowski of Kalinowski Equity Research asked respondents what percentage of their sales were helped incrementally by the $5 meal deal. The average response was 1.3%.
“These responses may suggest that the $5 Meal Deal should be viewed as an initiative that may help prevent some customers from going elsewhere, as opposed to a big sales builder,” Kalinowski wrote Wednesday in a research note about the survey results.

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Between the service fee, delivery fee and tip added up at checkout, the price of a meal on third-party delivery apps can be far higher than many consumers expect.
Frustrations from both sides of the table have hit names like DoorDash, Grubhub and Uber Eats, which have introduced reduced-fee options for premium service users.
Restaurant owners are often left to raise menu prices to cover service commission fees, or risk losing out on convenience-minded customers.

A food delivery messenger is seen in Manhattan. 
Luiz C. Ribeiro | New York Daily News | Tribune News Service | Getty Images

Food from the restaurant of your choosing, delivered right to your door — at what cost?
Third-party food delivery is becoming the norm for American consumers, as delivery apps like Grubhub, DoorDash and Uber Eats take hold in day-to-day dining. It’s also presenting customers and restaurants with an increasingly complicated equation of service fees, delivery costs and worker tips.

Frustrations from both sides of the table have hit the services, which have worked to protect (or achieve) profits and prop up orders while cash-strapped Americans scrutinize the checkout screen — and order totals that often add up to more than expected.
Compared to orders made directly through restaurant sites, consumers reported higher yearly increases in their total checks on third-party apps between 2022 and 2024, according to Technomic. Though Uber Eats, DoorDash and Grubhub each promote paid memberships to reduce fees, consumers still claim to pay more on average for third-party orders, according to the food service industry research firm.
The rising costs come as more Americans watch their wallets during a period of persistent inflation.
San Francisco resident Zainab Batool, who said she orders delivery from either Uber Eats or DoorDash weekly, called the added fees “insane.”
“I feel like I remember a time when they used to not be as high, maybe four years ago, but it just seems like it keeps increasing,” Batool said.

The share of consumers choosing third-party delivery services over direct restaurant delivery is rising, up from 15% in 2020 to 21% in 2024, according to Technomic’s 2024 Delivery & Takeout Consumer Trend Report. The research firm found that superior order tracking, access to deals and promotions, and the ability to discover new restaurants has kept app customers coming back.
But the cost of added fees could be driving some of them away.
Among consumers who report ordering less delivery, 41% said it was because of high delivery fees, while 48% point to inflated menu prices, according to the report. The premium that restaurants were charging for third-party delivery service menus increased between 2022 and 2023 — and has nearly doubled since 2020, according to a study by Gordon Haskett Research Advisors.
Companies facilitating the delivery say they aim to keep fees down — at the same time they’re trying to stay afloat.
Grubhub said in a statement it aims to keep fees as low as possible, while maintaining its business: “As the costs associated with handling deliveries — including managing logistics and paying delivery partners — have risen, we’ve adjusted our fees accordingly,” a Grubhub spokesperson said.
The company is owned by Just Eat Takeaway, an online food ordering and delivery company based in Amsterdam, which has said it’s actively looking to sell some or all of Grubhub.
DoorDash said it’s lowered fees for consumers over the last two years of historic inflation, at the same time seeing an all-time high of active users and an increase in order frequency last year.
That company, which went public in 2020, has yet to post an annual profit. The delivery service reported a single quarter of profit — net income of $23 million — for the three months ended June 30, 2020, at the very beginning of Covid lockdowns in the U.S.
Mobility giant Uber, on the other hand, earned nearly $1.9 billion last year, driven in part by major gains in its delivery business. Uber’s delivery segment, which includes Uber Eats and Uber Direct, reported adjusted EBITDA of $1.51 billion for 2023, an improvement of more than $955 million from 2022.
A spokesperson for Uber said Uber Eats users are paying for a service that allows them to browse merchants and order efficiently with on-demand delivery.
“The fees for orders on Uber Eats help pay delivery people and cover platform costs — like safety programs, 24/7 support, background checks, product development, and more — so that orders can arrive reliably,” the spokesperson said in a statement.

Adding up the fees

For diners, doing the math across platforms is getting trickier.
On both Uber and DoorDash, order totals can vary by region because of additional fees applied to offset local laws and regulations, according to their respective websites. In California, for example, customers on Uber Eats pay a CA Driver Benefits fee, introduced to fund mandatory benefits for drivers following Prop 22, according to Uber.

An app-based delivery worker waits outside of a restaurant that uses app deliveries on July 07, 2023 in New York City.
Spencer Platt | Getty Images

Even before local variances, the add-ons can be daunting.
Uber collects a delivery fee, which varies depending on demand, location and driver availability, according to its website. DoorDash applies a similar delivery fee that it said is dependent on multiple factors. Both apps say this fee is paid directly to them to cover delivery costs, rather than the drivers or restaurants. Grubhub also includes a delivery fee on orders that increases with distance, up to a maximum price.
All three apps also charge a separate service fee, which isn’t much simpler to calculate.
Grubhub and DoorDash say the fee covers the cost of operating their platforms, Uber says all but 10 cents of its service fee goes directly to the delivery driver, though the driver is then expected to pay Uber an undisclosed amount for various support services.
Both DoorDash and Uber say the fee can change based on the order subtotal.
After all of those variations, and factoring in possible discounts or promotions, many customers won’t know the total cost of their order until they’ve selected their items and made it all the way through to checkout.
“You see something listed as 15 bucks and then you go to checkout and it adds up to, like, 25, but you’ve already kind of in your head committed to getting that thing or you’re looking forward to it,” app user Batool said. “It adds an extra friction between backing out of ordering.”
Both Uber and Grubhub said their fees are clearly disclosed before checkout, while DoorDash said the total applicable fees are consistently available to view in the cart.

Weighing the economics

For restaurants, part of the value proposition of third-party delivery services is the potential for more exposure and customers, according to Bentley University assistant professor of marketing Shelle Santana.
More than 1 million merchants partner with Uber Eats, and over 375,000 work with Grubhub, according to the companies. DoorDash said in 2023 it had over 100,000 new merchants join its marketplace, generating nearly $50 billion in sales for the businesses. Uber Eats merchants in the U.S. and Canada brought in more than $15 billion in sales last year through the app, according to Uber.
For restaurants to be listed on their respective marketplaces, Uber Eats and DoorDash each offer a tiered pricing structure with commission charges ranging from 15% to 30% of the order total, according to their websites. Restaurants joining Grubhub Marketplace pay a “marketing commission” between 5% and 10% of each order, as well as an order processing fee and 10% delivery fee, according to its website.

We Deliver, Doordash, Grubhub and Uber Eats signs on restaurant door, New York City.
Lindsey Nicholson | UCG | Universal Images Group | Getty Images

All three platforms say restaurants can choose from a variety of pricing plans, based on the rate and level of marketing support they want, including commission-free online ordering services.
Tony Scardino, the owner of Illinois-based Professor Pizza, said he uses multiple third-party delivery services at his two Chicago locations, including Grubhub, DoorDash and Uber Eats. He’s used the services for almost four years and said the apps’ pricing is “predatory” and “way too much.”
But using their delivery services instead of paying for in-house delivery is worth it for a business on the smaller side, he said. It all adds up to what he called a “difficult balance.”
“You fight with whether or not you should get on them in the first place,” Scardino said. “But, you have such an overwhelming audience of people on them that it’s hard not to.”
The cost can in turn force restaurants to raise their menu prices.
In a study of the menu pricing premiums for 25 popular restaurants on third-party delivery services, the average cost was 20% higher than dining in, according to Gordon Haskett Research Advisors.
“Restaurants have sort of said, ‘We’re not footing the bill for DoorDash and Uber and Grubhub. The consumer, if they value that convenience and wants to use that service, can foot that bill,'” said Empower Delivery CEO Meredith Sandland.
Empower Delivery aims to rival the major delivery services, connecting restaurants with a pool of delivery workers at what it claims is a lower cost for business, according to its website.
Ann Arbor, Michigan, restaurant owner Phillis Engelbert has resisted DoorDash and other third-party delivery services since before the pandemic. She said her Detroit Street Filling Station relies on dine-in orders and a limited delivery option with a flat $7 fee.
Even if they led to higher sales, Engelbert said she is not convinced third-party delivery apps would improve her bottom line or benefit her employees.
“It feels like another way that corporations can come in and take a chunk out of the fruits of our labor,” Engelbert said.

Flexing savings

As more restaurant owners pass the delivery app costs over to consumers, the third-party services have all ramped up monthly membership options to help alleviate some of the pressure.
All three major services offer free delivery on every order with their premium memberships — Grubhub+, DashPass and Uber One — at $9.99 a month, according to their respective websites.

Grubhub struck a deal with Amazon for the e-commerce giant to offer Prime users in the US a one-year membership to its food delivery service. Photographer: Gabby Jones/Bloomberg via Getty Images
Gabby Jones | Bloomberg | Getty Images

In May, Grubhub partnered with Amazon to include Grubhub+ in the e-commerce giant’s Prime subscription. DoorDash offers a free yearlong membership for users with a DoorDash Rewards Mastercard, and Uber offers membership benefits for certain Capital One credit cardholders for a limited time.
They also all offer incentives for students: DashPass and Uber One are half-priced, and Grubhub+ is free for students at partner universities, according to their respective websites.
The benefit of the subscriptions is twofold: With the promise of lower all-in order costs, more customers may make it to checkout, and more often; and with a curated list of power users, the services can tailor future discounts to their most loyal customers, according to Steve Tadelis, a professor of economics at UC Berkeley.
Though the subscriptions all eliminate delivery charges, the service fee — and any local variations — still applies. The service fee is lowered for DashPass members, according to the company.
And if you’ve made it this far, that leaves just one cost left: a tip for the delivery driver.
When consumers are surprised by the total price tag, tipping can be “the only lever they have left” to manage their budget, according to Empower’s Sandland.
Batool said that she always tips, but that doesn’t mean she feels good about it given the other fees applied. She said that because she can’t be sure whether the service fee and other charges are actually going to the drivers, tipping is necessary to be sure that they’re compensated.
“It makes me mad, because I feel like the service fees should be going towards the people who are servicing us,” she said. “But it doesn’t seem like it is.”

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Sales of $100 million homes are on track to double this year, as surging financial markets and hopes for rate cuts fuel a recovery in the ultra-luxury real estate market, according to new reports.
The comeback marks a stark contrast with the national housing market, which is still feeling the pressure of high mortgage rates and lack of supply. 
Manhattan, Palm Beach and San Francisco are all seeing ultra-luxury real estate deals.

A view of the Central Park Tower at 217 West 57th St. in New York City.
Source: Cody Boone, SERHANT Studios

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high net worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Sales of $100 million homes are on track to double this year, as surging financial markets and hopes for rate cuts fuel a recovery in the ultra-luxury real estate market, according to new reports.

As of July 15, six homes in the U.S. have sold for more than $100 million, according to data from Miller Samuel and Douglas Elliman. If the sales pace continues, it would more than double last year’s total and likely eclipse the record of nine homes sold for over $100 million in 2021.
Granted, the nine-figure club is a tiny group. But sales of homes priced at $50 million, $20 million and even $10 million are all signaling a strong rebound for the ultra-luxury real estate market after its decline in 2023. The comeback marks a stark contrast with the national housing market, which is still feeling the pressure of high mortgage rates and a lack of supply. 
“It’s a substantial uptick it the pace of sales, something we’re not seeing at all in the broader housing market,” said Jonathan Miller, CEO of Miller Samuel, the appraisal and research firm. 
Manhattan saw two blockbuster deals in roughly the past month. A penthouse at Central Park Tower — the tallest residential building in the world — closed for $115 million to an unknown buyer. And the penthouse of the Aman New York sold for a reported $135 million to Russian-born billionaire Vladislav Doronin, who founded the development company that built the building — effectively buying it from his own company.
Palm Beach, Florida’s only private island, Tarpon Island, sold for $150 million in May, and Oakley founder James Jannard just sold his Malibu mansion for $210 million, making it the most expensive home ever sold in California.

Tarpon Isle, a private island in Palm Beach, Florida, is on sale for $218 million.

Even San Francisco is getting in on the ultra-lux boom. Laurene Powell Jobs, the billionaire widow of Steve Jobs, just bought the most expensive home ever sold in San Francisco. She paid $70 million for a 17,000-square-foot manse in Pacific Heights, wedged between neighbor Larry Ellison on one side and Apple design guru Jony Ive on the other.
Signs of strength are also showing up further down the luxury ladder. According to Redfin, sales of homes priced at $5 million or more through June topped 4,000, up 13% compared with the same period last year. 
“It was a much stronger and more robust start to the year than anyone expected,” said Mike Golden, co-founder of Chicago-based @properties and of Christie’s International Real Estate.  

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According to the 2024 Mid-Year Luxury Outlook from Christie’s, high-end markets around the country are seeing strong demand. In Naples, Florida, home sales over $10 million jumped 14% in the first quarter, according to the report. In Montana, sales over $4 million surged 50% through early May, according to PureWest Christie’s International Real Estate.
The artificial intelligence boom has sparked a resurgence in sales in the San Francisco Bay area.
“My biggest surprise thus far in 2024 has been just how many qualified buyers have the capacity and willingness to pay premium prices for ultra-elite properties, which speaks to the tremendous liquidity at the highest ends of the market,” said Nathalie de Saint Andrieu, a broker in the Bay Area.
The diverging paths of ultra-luxury and the broader housing market highlight the vastly different forces driving the high-end economy from the rest of the country. The national real estate market rises and falls with mortgage rates, with affordability at all-time lows and many Americans locked in their homes with low-rate mortgages. The ultra-wealthy can use cash to buy their homes, especially when rates are high. In Manhattan, two-thirds of deals this spring were in cash, with the share even higher for the luxury segment, according to Miller Samuel.
What’s more, the confidence (and cash) of wealthy homebuyers is largely driven by the stock market, which continues to shatter records this summer. With trillions of dollars in stock wealth being created, the ultra-wealthy are now looking to buy.
“The ultra-luxury segment is almost entirely disconnected from the typical housing market,” Miller said. “It’s a more global than local market. And it’s more of a barometer for the health of global financial markets.”

The surge in inheritances from the $80 trillion Great Wealth Transfer is also helping sales. Daniel de la Vega, president of One Sotheby’s International Realty, said he’s seeing a big surge in South Florida of millennial and Gen Z buyers who are purchasing condos with family trusts.
“They want new development, and some of them are coming in and buying sight unseen,” he said. “They especially like branded residences.”
De la Vega said another trend driving up ultra-luxury sales is demand for ever-larger homes. After Covid, he said, wealthy buyers want all their favorite lifestyle amenities in their homes — from gyms and spas to offices, entertainment spaces, and displays for their art and car collections.
The price per square foot for luxury condos in South Florida is up 33% this year, to $3,451. Per-square-foot prices for single-family homes are up 11% to $2,485. 
“It used to be that price per square foot went down as the property got bigger,” de la Vega said. “Now it’s the opposite. We’ve never seen numbers like this. It’s astronomical.”
Typically, the high-end real estate market takes a pause before presidential elections, as buyers wait for more certainty. So far, strong financial markets are outweighing any election concerns. Yet that’s far from a done deal in the second half.
“At least by the actions we’re seeing this year, the election doesn’t seem to be weighing heavy on the super-luxury landscape,” Miller said. 

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Warner Bros. Discovery is suing the NBA to keep distributing the league’s games.
The company is attempting to use matching rights on a package of games earmarked for Amazon Prime Video, which the NBA chose as a media partner along with Walt Disney and NBCUniversal.
The NBA sent Warner Bros. Discovery a letter Wednesday informing it that the league doesn’t believe its matching rights are valid for a streaming-only package of games.

NBA Commissioner Adam Silver addresses media at the Thomas & Mack Center on July 16, 2024, in Las Vegas.
Mick Akers | Las Vegas Review-journal | Tribune News Service | Getty Images

Warner Bros. Discovery sued the NBA on Friday as it tries to maintain broadcast rights for a package of live games.
“Given the NBA’s unjustified rejection of our matching of a third-party offer, we have taken legal action to enforce our rights,” the company’s TNT Sports unit said in a statement. “We strongly believe this is not just our contractual right, but also in the best interest of fans who want to keep watching our industry-leading NBA content with the choice and flexibility we offer them through our widely distributed WBD video-first distribution platforms — including TNT and Max.”

The media company seeks to prevent the NBA from awarding the rights to Amazon, whose games package Warner Bros. Discovery tried to match, or aims to win monetary damages.
The NBA said Wednesday it had reached agreements with Disney, Comcast’s NBCUniversal and Amazon on three different packages of games, ending its nearly 40-year relationship with Warner Bros. Discovery’s Turner Sports. The 11-year media rights deal is worth roughly $77 billion — a massive increase over the previous agreement as the value of live sports booms.
In response to the suit, NBA spokesman Mike Bass said “Warner Bros. Discovery’s claims are without merit and our lawyers will address them.”
Warner Bros. Discovery said earlier this week it submitted paperwork to the league to match one of the packages, which people familiar with the matter identified as the $1.8 billion-per-year group of games earmarked for Amazon. The tech giant’s deal includes regular-season games, the in-season tournament and some playoff games.
The NBA granted Warner Bros. Discovery matching rights when it signed its previous media deal in 2014. The provision is meant to give an incumbent company the right of last refusal to maintain its position as a media partner.

But Warner Bros. Discovery’s decision to match the Amazon package, rather than the $2.5 billion-per-year NBCUniversal agreement, caused the league to say Wednesday that the matching rights are invalid. Warner Bros. Discovery’s offer for that package involves airing the NBA games on its cable network TNT and simulcasting them on its streaming service, Max. That’s not an apples-to-apples comparison to Amazon Prime Video, which is a streaming-only service, the league argued.
Warner Bros. Discovery argued in a court filing Friday that its matching rights should still apply to the Amazon package because many of the games in that package previously aired on cable TV.
“The MRE (Matching Rights Exhibit) further provides that, “[i]n the event that TBS Matches a Third Party Offer that includes Cable Rights” and no other Incumbent matches, then TBS shall have the exclusive right and obligation to exercise the Cable Rights provided for (and on the same terms set forth) in the Third Party Offer,” Warner Bros. Discovery wrote in its court filing. “That is exactly what happened here: Amazon made an offer for Cable Rights as defined in the MRE, and TBS matched it. But, in breach of the Agreement, the NBA has refused to honor TBS’s match.” TBS is a cable TV network owned by Warner Bros. Discovery.
In a letter the NBA sent to Warner Bros. Discovery on Wednesday, the league pointed to the contractual language of the 2014 matching rights as its reason for rejecting the offer.
The NBA cited the clause: “In the event that an incumbent matches a third party offer that provides for the exercise of game rights via any specific form of combined audio and video distribution, such incumbent shall have the right and obligation to exercise such game rights only via the specified form of combined audio and video distribution (e.g. if the specific form of combined audio and video distribution is internet distribution, a matching incumbent may not exercise such games rights via television distribution).”
CNBC’s David Faber on Thursday reported Warner Bros. Discovery had moved to sue the NBA.

NBA’s value to Turner

In 2022, Warner Bros. Discovery CEO David Zaslav said that his company did not “have to have the NBA” if the economics weren’t sound.
 “With sport, we’re a renter,” Zaslav said at a November 2022 investor conference. “That’s not as good of a business.”
Still, Friday’s lawsuit expounded on the value of the NBA to Turner Sports. Owning NBA rights is valuable to the health of Warner Bros. Discovery’s cable TV business, which has suffered in recent years as millions of Americans cancel traditional pay TV in favor of a bundle of streaming services.
“NBA games drive significant viewership and ratings, as consumers are more likely to watch games live, in real time. This, in turn, affects the price TBS and WBD can charge to their advertisers and downstream distributors that license TNT for transmission to their customers,” the company wrote in the complaint. “NBA distribution rights thus give both TBS and WBD the ability to grow their brands and reach a larger group of consumers that only NBA games bring. NBA telecast rights also give TBS and WBD a competitive advantage over other programmers, particularly when negotiating with other leagues for sports rights.”
Warner Bros. Discovery argued the NBA brings “intangible and incalculable benefits” to the company’s business and asked for “preliminary and permanent injunctive relief to prohibit the NBA from licensing these unique and irreplaceable rights [to Amazon],” while adding that if “equitable relief is not granted,” it expects “monetary damages” from the NBA.
Disclosure: NBCUniversal is the parent company of CNBC.
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The Federal Aviation Administration has approved SpaceX to resume flights of its mainstay Falcon 9 rocket after being grounded about two weeks ago following a rare inflight failure.
Elon Musk’s company plans to launch its next mission carrying satellites as soon as Saturday.
SpaceX cited the rocket’s brief hiatus as due to its rapid launch pace and “unprecedented levels of flight data” from nearly a decade of more than 300 consecutive successful orbital launches.

A Falcon 9 rocket launches a Starlink mission from Vandenberg Space Force Base in California on Jan. 31, 2023.

The Federal Aviation Administration has approved SpaceX to resume flights of its mainstay Falcon 9 rocket after a brief grounding, with Elon Musk’s company planning to launch its next mission carrying satellites as soon as Saturday.
The FAA clearance came just 15 days after the rocket suffered a rare inflight failure while in orbit during a launch of Starlink satellites.

“The FAA determined no public safety issues were involved” in the July 11 mishap, the regulator said in a statement to CNBC late Thursday, allowing the rocket to “return to flight operations while the overall investigation remains open.”
The hiatus was unusually brief following a flight failure, but SpaceX argued the rocket’s rapid launch pace — on average every two to three days this year — and “unprecedented levels of flight data” from nearly a decade of more than 300 consecutive successful orbital launches supported a quicker return to service.
“Safety and reliability are at the core of SpaceX’s operations. It would not have been possible to achieve our current cadence without this focus,” the company wrote in a statement on its website on Thursday.

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During the July 11 launch, the rocket’s lower first stage, or booster — powered by nine engines — operated as expected before returning to land. But the rocket’s upper second stage, which has a single engine, failed to reignite as planned and was unable to complete its mission.
SpaceX traced the cause of the midflight failure to a tube known as a “sense line,” a part of the rocket’s system for liquid oxygen, one of the propellants used to power the engine of the second stage. A loose clamp for that tube and the intense vibration of the rocket’s engine led to cracking, the company said. That cracked sense line resulted in a leak of liquid oxygen, causing damage to the rocket’s engine when it attempted to restart in space.

The company said it would remove the tube and its related pressure sensor from the rocket’s upper stage engine “for near term” launches, noting that it is not a critical component for safety. The company plans to rely on alternative sensors in the meantime as it is currently testing a longer-term design change under the FAA’s oversight.
“An additional qualification review, inspection, and scrub of all sense lines and clamps on the active booster fleet led to a proactive replacement in select locations,” SpaceX added.

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