Business

HOW MUCH is one-party rule worth to India Inc? Judging by the market reaction to the results of the general election, the figure is around $400bn. That is the total market value lost by Mumbai-listed stocks on June 4th, when it turned out that rather than securing a big majority, as exit polls had predicted, the ruling Bharatiya Janata Party (BJP) of Narendra Modi would need coalition partners to govern.Investors’ panic proved short-lived. By June 10th the Mumbai bourse had clawed back all its losses, after Mr Modi quickly assembled a coalition perceived to be sympathetic to his pro-business economic agenda. The previous day a “Who’s Who” of corporate India applauded in the presidential palace as Mr Modi was sworn in as prime minister for a third time. Modi 3.0, as Indians refer to the new government, is looking much like the earlier versions. More

Shari Redstone’s National Amusements stopped deal talks for the proposed merger of Paramount Global and Skydance in the eleventh hour and after weeks of negotiations.
Paramount Global is now left under the direction of the so-called Office of the CEO — made up of three leaders who replaced Bob Bakish when he stepped down in April.
On top of a nearly $15 billion debt load, the media giant is facing a competitive streaming environment, a slowdown in advertising, and rapidly shrinking cable bundle. What’s next for Paramount now?

A view of Paramount Studios in Los Angeles, Sept. 26, 2023.
Mario Anzuoni | Reuters

National Amusements stopped merger discussions between Paramount Global and Skydance this week — throwing into question what’s next for the legacy media giant during a tumultuous period for the industry.
Paramount, like many of its peers, is grappling with how to make streaming a profitable business as it faces peak competition, a rapidly shrinking universe of cable-TV customers and a slowdown in the advertising market that has especially weighed on the bundle.

Now it’s up to the three leaders at the helm of Paramount to figure out the company’s best path forward.
Bob Bakish stepped down from the top post in April and was replaced by the so-called Office of the CEO: CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy and Paramount Pictures CEO Brian Robbins. The executives are trying to steer Paramount out of a rocky period while working under a structure that few companies have tried.
“It’s very difficult for a trio of CEOs to work on a long term basis. It’s almost unheard of. How will they make decisions on allocating capital and strategic priorities?” said Jessica Reif-Ehrlich, an analyst at BofA Securities.
On Wednesday, the leaders sent a memo to Paramount employees saying they would focus on their plan to turn the company around after the proposed deal didn’t move forward.
“So, what does this mean for Paramount? While the Board will always remain open to exploring strategic alternatives that create value for shareholders, we continue to focus on executing the strategic plan we unveiled last week during the Annual Shareholder Meeting, which we are confident will set the stage for growth for Paramount,” the trio said in the memo that CNBC obtained Wednesday.

No deal

After months of negotiations in a sale process that included various twists, National Amusements informed Paramount’s special committee and the buying consortium that included Skydance and private equity firms RedBird Capital and KKR minutes before a vote that it was stopping the sale process.
The move came a little more than a week after Skydance and Paramount had agreed to financial terms of a merger that would have been valued at $8 billion.
The deal had been awaiting signoff from Redstone, who owns National Amusements, the controlling shareholder of 77% of class A Paramount shares.
In a statement Tuesday, National Amusements said that while it had “agreed to the economic terms that Skydance offered, there were other outstanding terms on which they could not come to agreement.” National Amusements also voiced its support for Paramount’s current leadership.
While those near the deal have offered conflicting reasons for why it was called off, a person familiar with the matter said Redstone turned down the offer after Skydance lowered the amount of money she would receive with the altered bid in order to shift some of it to the class B shareholders.
In the last iteration of the deal, Redstone would have received $2 billion for National Amusements and Skydance would have bought out roughly 50% of class B shares at $15 apiece, or $4.5 billion, leaving the holders with equity in the new company.
In recent days, other potential bidders for National Amusements emerged, according to reports. Redstone plans to explore selling her controlling stake in Paramount Global without an associated transaction involving merging studio assets, as Skydance had proposed.
While Apollo Global Management and Sony had formally expressed interest in “a full acquisition” of the company for $26 billion, Redstone favored a deal that kept Paramount whole, which was not the plan for these bidders, CNBC previously reported.

Path forward

Paramount’s Office of the CEO acknowledged the company faces more uncertainty after the deal dissolved.
“We recognize that the last several months have not been easy as we manage through ongoing change and speculation,” the leadership trio said in Wednesday’s memo to employees. “And, we should all expect some of this to undoubtedly continue as the media industry and our business continue to evolve.”
Though the company reached financial terms on the proposed deal with Skydance, Paramount’s new leadership team outlined a plan at last week’s shareholder meeting in the event a transaction didn’t take place.
The strategic priorities that were highlighted included exploring streaming joint venture opportunities with other media companies, eliminating $500 million in costs through measures such as layoffs and divesting noncore assets.
The memo noted more would be discussed at a company town hall June 25. The leaders are also expected to flesh out more details of the plan during August’s earnings call.
The executives set those priorities with an eye toward lowering Paramount’s debt load and returning the company to investment grade status after it was downgraded earlier this year. Paramount has $14.6 billion in debt.
In the memo to employees Wednesday, Paramount’s leadership team said it would focus on executing this plan.
“Work is already underway, as we focus on three pillars: Transforming our streaming strategy to accelerate its path to profitability; Streamlining the organization and reducing non-content costs; Optimizing our asset mix, by divesting some of our businesses to help pay down our debt,” the leaders said in the memo.
Redstone has backed the trio of CEOs since they took over in late April, and voiced that support before introducing them during the shareholders’ meeting presentation.
In Wednesday’s memo, the leadership once again emphasized growing content and franchises while also focusing on slashing costs and lowering debt, a priority the executives outlined during their presentations.
But the unorthodox nature of the CEO office — which Redstone acknowledged during the shareholders call — has industry analysts wondering if the plan can succeed.
“The company needs to focus on a couple of things, like fixing the balance sheet so it gets flexibility back and focus on the businesses that really profits. Also, possibly selling assets or changing the asset mix,” said Reif-Ehrlich. “But this is a very difficult situation. Uncertainty is the worst thing.”
Whether it’s these CEOs putting this plan to work, or an acquirer that takes over, they have to contend with various challenges, said Robert Fishman, an analyst at MoffettNathanson, in a research note.
Among those, Paramount’s earnings are driven by its traditional TV networks, which are primarily general entertainment — possibly the most challenged content in media, as Disney’s Bob Iger said last year. A weak advertising market could also weigh on the company in the coming months. More

Sony Pictures has acquired Alamo Drafthouse, the seventh-largest movie theater chain in North America.
This is the first time in more than 75 years that a major Hollywood studio will own a movie theater chain.
The company’s 35 cinemas will continue to be operated by Alamo Drafthouse and its headquarters will remain in Austin, Texas.

Interior of an Alamo Drafthouse Cinema theater.
Alamo Drafthouse

For the first time in more than 75 years, a major Hollywood studio will own a movie theater chain.
Sony Pictures has acquired Alamo Drafthouse, the seventh-largest movie theater chain in North America, the company announced Wednesday. The cinema company was purchased from owners Altamont Capital Partners, Fortress Investment Group and founder Tim League.

Between 1948 and 2020, film distributors were prohibited from owning an exhibition company under what was known as the Paramount Consent Decrees. While studios were permitted to own individual theater locations — Disney owns the El Capitan Theatre and Netflix owns The Egyptian Theatre and New York’s Paris Theater, for example — the U.S. Department of Justice disallowed ownership of a chain of cinemas.
The decrees were abolished in 2020. Now, some four years later, Sony is the first to invest in a theatrical company.
Alamo Drafthouse CEO Michael Kustermann will remain at the helm of the dine-in movie theater chain and will report to Ravi Ahuja, president and CEO of the newly formed Sony Pictures Experiences division.
The company’s 35 cinemas will continue to be operated by Alamo Drafthouse and its headquarters will remain in Austin, Texas.
“We look forward to building upon the innovations that have made Alamo Drafthouse successful and will, of course, continue to welcome content from all studios and distributors,” Ahuja said in a statement.

The acquisition comes after Alamo Drafthouse filed for Chapter 11 bankruptcy protection in 2021 due to Covid-19 pandemic disruptions. It was rescued by a private equity firm. However, just last week, five North Texas locations closed after a franchisee filed for bankruptcy.
“We are excited to make history with Sony Pictures Entertainment and have found the right home and partner for Alamo Drafthouse Cinema,” said Kustermann. “We were created by film lovers for film lovers. We know how important this is to Sony, and it serves as further evidence of their commitment to the theatrical experience. Together we will continue to innovate and bring exciting new opportunities for our teammates and moviegoers alike.”

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One satisfaction of buying a new car is the distinctive aroma within. The smell that emanates from the Chinese electric vehicles (evs) that are increasingly common on Europe’s roads is, for the European Commission, that of a rat. On June 12th, after an eight-month probe, the EU’s executive arm accused China of unfairly subsidising its industry with the likes of tax breaks and cheap loans. It fears that cut-price imports pose a “clearly foreseeable and imminent injury” to European carmakers. Provisional tariffs of between 26% and 48%, compared with 10% for other imported cars, will be imposed from July on Chinese evs. The precise duty will depend on each firm’s willingness to assist the investigation.In the short term, it is hard to sniff out a winner. Car buyers hoping to inhale the intoxicating new-car odour will certainly suffer if the prices of imported cars rise and competitive pressures on European firms ease. But Europe’s carmakers are not taking a victory lap, either. They did not ask for the probe, which was launched under pressure from France’s government. German companies such as Volkswagen and BMW, which make lots of cars in China and export plenty there, have been particularly vocal opponents. Now they fear retaliation from Beijing, which looks inevitable. More

EV maker Fisker issued voluntary recalls for its Ocean SUV due to software-related issues.
The company plans to fix these software issues through an over-the-air update process.
The recall was announced amid three open NHTSA investigations into Fisker.

The Fisker Ocean electric sports utility vehicle (SUV) during AutoMobility LA ahead of the Los Angeles Auto Show in Los Angeles, California, U.S., on Wednesday, Nov. 17, 2021. 
Kyle Grillot | Bloomberg | Getty Images

Electric vehicle startup Fisker announced on Wednesday that it is recalling thousands of Ocean SUVs in North America and Europe due to issues with vehicle software and will roll out an over-the-air software update.
The company recalled 11,201 Oceans across the U.S., Canada, and Europe due to safety issues. The affected vehicles potentially had issues with the Motor Control Unit and Vehicle Control Unit software, which could make the vehicle lose motor power, the company said in a press release.

Fisker also recalled 6,864 Oceans in the U.S. and 281 in Canada for compliance reasons. The company said the vehicles do not currently comply with federal vehicle safety standards related to gauges and telltale icons in the cluster display.
Fisker said that vehicles updated to OS 2.1 are not impacted by the recall. Fisker anticipates completing the software update process by June 30, 2024. 
The recalls come after months of setbacks for Fisker. Reuters reported in February that the company may not be able to continue as a going concern due to high interest rates causing a slowdown in demand. 
Fisker’s struggles continued into March as talks for a potential deal with an unnamed large automaker collapsed, and the New York Stock Exchange announced plans to delist the startup’s shares due to “abnormally low” price levels. 
In April, Reuters reported that the U.S. auto safety regulator opened an investigation into the 2023 Ocean due to complaints over the vehicles’ doors failing to open. This marked the National Highway Traffic Safety Administration’s third probe into Fisker — additional investigations are open due to issues with the 2023 Ocean’s brakes and unintended vehicle movement.

Fisker delivered 4,929 Oceans in 2023, the company said in February when announcing its full-year financial results, the most recent report available. The company said it expected to deliver between 20,000 and 22,000 vehicles in 2024.
The company said it informed its dealers of the recalls on May 30 and will notify owners by June 30.

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Southwest Airlines CEO Bob Jordan said the company is ready to adapt to changing customer trends like premium seating as demand shifts.
Jordan’s comments came days after hedge fund Elliott Management disclosed a nearly $2 billion stake in Southwest and said it wants to replace the carrier’s CEO and chairman.
Southwest said in April that it was weighing changes to its longtime business model while rivals capitalize on travelers willing to pay more to fly.

A Southwest commercial airliner takes off from Las Vegas on Feb. 8, 2024.
Mike Blake | Reuters

Southwest Airlines CEO Bob Jordan said the company is ready to adapt to changing customer trends like premium seating as pressure from an activist investor mounts.
“We will adapt as our customers’ needs adapt,” Jordan said at an industry event hosted by Politico on Wednesday.

Jordan’s comments came two days after hedge fund Elliott Management disclosed a $1.9 billion stake in Southwest and said the carrier needs a new CEO and new chairman.
In April, Jordan told investors that the airline is considering major changes to its product, potentially ditching its system of unassigned seating that has made the Dallas-based carrier a standout among airlines, and even reevaluating its single class of service.
Jordan reiterated those considerations Wednesday, saying that the airline, which started flying in 1971 and now carries more passengers in the United States than any other, is in its “third generation.” He said the airline’s leaders are open to big shifts to increase revenue, while rivals like Delta and United capitalize on customers willing to pay up for a seat with more space or other perks.
Elliott didn’t immediately respond to a request for comment about Jordan’s remarks on Wednesday.
Southwest on Monday said in response to the activist campaign that its board backed the company’s leaders and the airline’s strategy, while it will also “look forward to further conversations with Elliott.”

Southwest has struggled with weaker margins than some of its competitors as it faces increased airline capacity in the U.S., shifting post-pandemic travel patterns and a spiraling problem that is out of its control: delays of new planes from Boeing, its sole aircraft provider, as that company grapples with several manufacturing and safety crises. The airline expects to receive just 20 Max jets from Boeing this year, down from an earlier forecast for close to 80 new planes.
Southwest had also taken months to find its footing after a year-end holiday meltdown in 2022 cost it more than $1 billion. The company later acknowledged its technology couldn’t handle the hundreds of flight and crew changes triggered by a winter storm, prompting it to quickly upgrade its system.
Meanwhile, Jordan said Southwest has continued to work toward improving the customer experience. It’s upgraded its inflight Wi-Fi and added power outlets on its fleet of Boeing 737s in recent years.
“I think customer preference is going beyond that,” Jordan said Wednesday. The carrier has spent months surveying customers to figure out what changes are needed, he added.
“It’s been several years since we last studied this in-depth, and customer preferences and expectations change over time,” an airline spokeswoman told CNBC. “We are also studying the operational and financial benefits of any potential change.”
— CNBC’s Rohan Goswami contributed to this article.

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Stellantis CEO Carlos Tavares and other executives are expected to address Chinese competition, capital discipline, forthcoming products, software initiatives, and potentially, further cost reductions
The parent of brands like Ram and Jeep has set ambitious financial targets for 2030.
Stellantis has aggressively cut operations under Tavares, with some executives describing the measures as difficult or grueling.

Stellantis CEO Carlos Tavares holds a news conference after meeting with unions, in Turin, Italy, March 31, 2022.
Massimo Pinca | Reuters

DETROIT – Since spearheading a merger to create Stellantis in 2021, CEO Carlos Tavares has been on a cost-cutting mission. That’s beginning to pay dividends for the company and investors.
How the trans-Atlantic automaker expects to keep that momentum amid uncertainty surrounding all-electric vehicles and increasing competition from Chinese automakers is expected to be in focus this week as Tavares leads the automaker’s investor day Thursday.

Tavares and other executive are expected to address Chinese competition, capital discipline, forthcoming products, software initiatives, and potentially, further cost reductions as the company aims to achieve ambitious financial targets by 2030.
When Tavares’ PSA Groupe merged with Fiat Chrysler in January 2021, the freshly combined company set out to reduce spending by 5 billion euros, or about $5.4 billion, annually. It’s a target the company says it will achieve in 2024, a year ahead of schedule.

More recently, Tavares has said the parent of brands like Ram and Jeep needs to remove 40% of its costs to be able to profitably produce and sell EVs to mass-market consumers, citing the need for affordable models despite higher costs to manufacture the vehicles.
“We are not in the race to transition to EVs, but in a race to cut cost on EVs,” Tavares said in late May during a Bernstein investor conference.
The cuts are part of Stellantis’ strategic plan to increase profits and double revenue to 300 billion euros by 2030. The plan also includes targets such as achieving adjusted operating profit of more than 12% and industrial free cash flow of more than 20 billion euros.

The cost-saving measures have included reshaping the company’s supply chain and operations as well as headcount reductions.
Several Stellantis executives described the cuts to CNBC as difficult but effective. Others, who spoke on the condition of anonymity due to potential repercussions, described them as grueling to the point of excessiveness.
Since the merger was agreed to in December 2019, Stellantis has reduced headcount by 15.5%, or roughly 47,500 employees, through 2023, according to public filings. Additional job cuts this year involving thousands of plant workers the U.S. and Italy have drawn the ire of unions in both countries.
Meanwhile the associated billions in operational savings have helped to increase the automaker’s adjusted operating income by 31% from 2021 through last year. Its adjusted profit margin is also up, rising 0.4 percentage point during that time frame to 12.8%.

Stellantis Chief Technology Officer Ned Curic said the company is operating far more efficiently than before, including “proper system engineering” to ensure it’s optimizing design and function for its new vehicles.
Curic, who joined the company from Amazon in 2021, said headcount reductions, including laying off about 400 U.S. engineers in March, come after the company completed many of its systems for the next decade.
“We’ve been cutting headcounts, but we really don’t need that many,” he said during an interview last month, adding the company still employs 50,000 or so engineers. “To engineer the systems for our 10-year road map, it’s already done.”

Tavares, when asked last month whether additional cuts would be needed in the U.S., said “we’ll see.” He said officials “still have work to do” when it comes to getting EVs to be as profitable as traditional internal combustion engine, or ICE, vehicles.
“There is no silver bullet here. You need to throw 40% of additional cost because the middle class in the U.S. as much as the middle class of Europe, they need to buy EVs at the price of ICEs,” he said during a media roundtable in May. “This is no surprise. You can check my comments for the last five years. I’ve been running the same stuff for five years.”

Wall Street expectations

Future cost-saving efforts could be part of the company’s Thursday capital markets day.
Executives on Thursday will outline developments across Stellantis’ regions and businesses, including its capital and operational disciplines, according to Stellantis CFO Natalie Knight.
“We want to help you better understand how we see the industry evolving, how we’re leveraging standout technology, our leading operational discipline, and other competitive advantages that distinguish ourselves further,” she told investors in April. “And how we’re building a powerful and productive capital discipline that help us maintain and maximize sustainable returns.”
Stellantis declined to disclose any specifics ahead of the event, which is taking place at its North American headquarters in Auburn Hills, Michigan.

Carlos Tavares, CEO of Stellantis, poses during a presentation at the New York International Auto Show in Manhattan, New York, on April 5, 2023.
David Dee Delgado | Reuters

Wall Street will be looking for executives to address the company’s growing U.S. vehicle inventory levels, upcoming product launches and plans for China.
At the start of May, Cox Automotive reported days’ supply of vehicles at Stellantis’ Jeep and Ram brands were more than twice the industry average of 76 days.
Meanwhile the threat of cheaper, Chinese-made EVs looms in the background.
Tavares has called Chinese automakers his “No. 1 competitor” and said the company is taking an “asset-light” strategy. That includes plans to quickly grow vehicle exports from the country through a Stellantis-controlled joint venture with China’s Leapmotor.
“The share price reaction to the [capital markets day] will likely be driven by how these short-term concerns are addressed. We don’t expect any new financial targets to be announced,” UBS analyst Patrick Hummel wrote in a Thursday investor note.

Stock chart icon

Stellantis, GM and Ford shares

Hummel and other analysts have noted a divergence in Stellantis’ stock performance compared with that of General Motors and Ford Motor.
Stellantis’ U.S.-traded shares are down more than 6% this year and off roughly 30% from an all-time high of more than $29.50 per share in March. GM shares in contrast are up more than 30% this year, and Ford shares are essentially flat.
RBC Capital Markets analyst Tom Narayan notes Stellantis, which has a roughly $68 billion market cap, should return 7.7 billion euros to shareholders in 2024 — 4.7 billion euros in dividends and 3 billion euros in buybacks.
Redburn Atlantis analyst Adrian Yanoshik last week in a note said largely muted expectations raise the potential for Stellantis to outperform expectations.
— CNBC’s Michael Bloom contributed to this report. More

YouTube influencer and boxer Jake Paul is launching a personal skin-care line for men.
The line, which will be called W, looks to tap into the growing market for men’s grooming products.
The launch precedes Paul’s anticipated boxing event against Mike Tyson.

Jake Paul is launching a personal care brand geared toward men.
Courtesy: W

Jake Paul is entering a new arena: skin care.
The YouTube influencer-turned-boxer announced on Wednesday the launch of “W,” a skin-care company targeted toward men.

The personal care line will feature products priced at less than $10 and will be available at Walmart. Later this summer, an expanded product line will be available on Amazon.
“We saw this old and outdated category where the competitors have been on the shelves in the exact same way for the past 20 years,” Paul told CNBC. “We just believed we had a better vision, better product and could disrupt this entire space.”
W, a reference to “winning,” will launch with three products: a body wash, body spray and antiperspirant deodorant. Paul said the company hopes to expand with a shampoo and conditioner, face wash and hair gel in the coming months.

W retails for under $10 and will be available at Walmart and Amazon.
Courtesy: W

“It’s a super underserved market,” he said. “I believe now that more men are caring about how they look and what they are putting into their body,” he added.
As men have prioritized skin care and other beauty products in recent years, the men’s grooming category has seen strong growth. From 2018 to 2023, men’s grooming was a $28 billion business globally, with an annual compound growth rate of more than 5%, according to market research company Euromonitor.

And it’s expected to keep seeing gains. Men’s personal care is expected to grow to more than $100 billion over the next four years, with an annual compound growth rate of nearly 10%, The Business Research Company projects.
Paul isn’t alone in trying to tap into the market. Other celebrities, including Dwayne “The Rock” Johnson, John Legend, Idris Elba and Pharrell, have recently launched skin-care lines targeting less traditional markets.
Young men are increasingly turning to social media and influencers for their sources of information. A Euromonitor report said that 50% of Gen Z male respondents found information about a brand, company or product through TikTok in 2023, an increase from 36% in 2022.

Boxer Jake Paul visits the factory of his new personal care line W.
Courtesy: W

Paul said he’s taking a page from his brother Logan Paul’s success with Prime, a sports drink that’s popular with boys and young men, though the caffeinated energy drink version of Prime has drawn scrutiny in the past.
“Me and my brother are like the testosterone Kardashians,” Jake Paul said, with a nod to the success that the Kardashian sisters have had launching their own skin care lines. But Paul thinks the Kardashians and other celebrities have overlooked the opportunity for young men.
“There’s a big open market for creator-led products focused on boys,” he added.
He’s also hoping that his upcoming Netflix fight, in which he’ll face famed boxer Mike Tyson, will help create some momentum for the brand, though it was recently postponed.
“It’s still gonna be a brawl and we both plan on ripping each other’s heads off,” he added. More