Business

Of the many worries that whirl around the minds of chief executives, few are more unsettling than the question of succession. Having toiled their way to the top of the corporate ladder, many bosses struggle to imagine relinquishing control and placing their legacy in the hands of another.A growing number of America’s bosses have instead opted to defer the matter altogether. By the end of last year 101 S&P 500 CEOs had held the corner office for more than a decade, up from just 36 ten years earlier, according to figures from MyLogIQ, a data provider. Although some, like Warren Buffett, the longest-serving of the lot with 53 years on the clock, built the companies they run, most are hired hands. Jamie Dimon of JPMorgan Chase, a bank, Shantanu Narayen of Adobe, a software firm, and Chris Nassetta of Hilton, a hotel franchise, are among the many who have outlasted their predecessors. Such long-serving bosses have pushed the average tenure of S&P 500 top dogs up from six years to seven over the past decade.image: The EconomistSome bosses have become infamous for their reluctance to move on. Earlier this year Howard Schultz ended his third stint as boss of Starbucks, a coffee chain. Late last year Bob Iger took back the reins at Disney, a media giant, from his chosen successor, Bob Chapek. In July his two-year contract was extended until the end of 2026. The question of succession has long loomed over Mr Buffett’s conglomerate, Berkshire Hathaway.Of course, plenty of companies are well served by CEOs who hang around. And with populations healthier for longer, forcing bosses out once they reach an arbitrary retirement age, as many firms still do, is unnecessary. Yet the lengthening tenures of America’s bosses is a cause for concern.In 1991 Donald Hambrick and Gregory Fukutomi, then both at Columbia Business School, published an influential paper on the “seasons” of a CEO’s tenure. They suggested that, in the early years, performance improves as the boss learns the ropes, but later declines as they become more resistant to change and less engaged in the job. A paper in 2015 by Francois Brochet of Boston University and his co-authors sought to quantify that tipping-point in performance by studying the relationship between market value and CEO tenure among listed American firms. They found that CEO performance rose through roughly the first decade on the job before flattening off, then beginning to decline after around 15 years.“Eventually you lose the oomph and the creativity,” says Bill George, a former CEO of Medtronic, a medical-technology company, who now teaches at Harvard Business School. That vigour is especially crucial when a company is in need of reinvention. Microsoft’s transformation under Satya Nadella into a cloud-computing giant at the vanguard of artificial intelligence may never have happened had Steve Ballmer, who led the business through a period of stagnation from 2000 to 2014, stuck around.An extended stay carries risks even when a CEO’s long stint seems justified by stellar performance. Mr Iger delayed retirement three times during his original 15-year spell as Disney’s boss, leading a number of potential successors to try their luck elsewhere. Boards waiting to find a replacement CEO with experience comparable to the incumbent’s necessarily find it harder the longer they delay, notes Jason Baumgarten of Spencer Stuart, a headhunting firm.Ideally, succession planning should begin the day the CEO starts, says Claudia Allen of KPMG, a consultancy. That involves building a pipeline of candidates, assessing their skills and developing a plan to fill gaps. Public spectacles like the six-year saga to replace Jack Welch at GE, a once-mighty American industrial giant, are best avoided. Separating the roles of chief executive and chairman of the board can help, too (appointing a lead independent director is seldom sufficient to keep in check an almighty boss with both jobs, let alone sack one). Two in three S&P 500 CEOs who have been in the role for longer than a decade also chair the board, compared with two in five for the whole group.Perhaps the most important rule for succession is to make a clean break. Bosses that hang around after their turn has ended do their successors a disservice. The most pernicious example of this is the CEO who stays on as “executive chairman”, a loosely defined title that gives its bearer the right to meddle in big decisions while shirking operational responsibility. James Gorman of Morgan Stanley will take on the title when he steps down as the bank’s CEO in the coming months.Last year 15% of S&P 500 companies were presided over by an executive chairman. Some, like Jeff Bezos and Rupert Murdoch, are founders eager to maintain a say over the companies they built. For the rest, the role may look like a handy way to smooth a transition. But it brings dangers. Predecessors may struggle to accept shifts in strategy, and confusion may reign as to who is ultimately in charge. During Mr Iger’s stint as executive chairman of Disney, he and Mr Chapek clashed over a number of big decisions, denting the new hand’s credibility.Get an afterlifeThat CEOs find it hard to let go is unsurprising, and not only because power is seductive. Many struggle with the sense that, having reached their professional pinnacle, there is little left to do, says Mr George. Rather than retiring to a life of leisure, he counsels bosses to find ways to make use of their wisdom. Some may choose to sit on boards. Others, like him, may teach. Others still may try their hand at politics. Before his latest return to Starbucks Mr Schultz toyed with a presidential bid; Mr Dimon is being urged by some to pursue one. It is uncomfortable to accept that an organisation you lead will survive without you. But stepping down need not mean stepping into obscurity. Many of America’s bosses still have plenty to give—not least a shot for the next generation.■ More

Ernie Bot has some controversial views on science. China’s premier artificial intelligence (AI) chatbot, which was released to the public on August 31st, reckons that covid-19 originated among American vape-users in July 2019; later that year the virus was spread to the Chinese city of Wuhan, via American lobsters. On matters of politics, by contrast, the chatbot is rather quiet. Ernie is confused by questions such as “Who is China’s president?” and will tell you the name of Xi Jinping’s mother, but not those of his siblings. It draws a blank if asked about the drawbacks of socialism. It often attempts to redirect sensitive conversations by saying: “Let’s talk about something else.”Ernie’s reticence will come as no shock to Chinese users familiar with a heavily censored internet. They may be more surprised by the AI’s origins. For Ernie is the brainchild of Baidu, a Chinese tech giant that has for years been outshone by rivals. Now, thanks to ai, the firm is staging a comeback. The extent to which it succeeds will say much about the prospects for Chinese tech, which is squeezed both by America’s export controls and Mr Xi’s increasing authoritarianism.A decade ago Baidu, which operates China’s largest search engine, was at the centre of the country’s internet. Together with Alibaba and Tencent, China’s two most valuable internet businesses, it formed a triumvirate known as “BAT”. With foreign search engines banned or heavily censored in China, it faced little competition.Baidu never lost its dominance of that business; it still enjoys upwards of 90% of China’s search traffic. Yet shifts in the tech landscape have left the company a shadow of its former self. Most Chinese internet users now access the web through super-apps such as Tencent’s WeChat. Advertising dollars have shifted to the likes of Douyin, the Chinese cousin of TikTok. Meituan, a delivery platform, and Pinduoduo, an e-commerce firm, have surged past Baidu’s valuation of $50bn. In an effort at emulation, it launched its own delivery and shopping solutions, along with other services such as payments and social media. These mostly flopped. The company’s market capitalisation is now equivalent to one-eighth of Tencent’s, down from one-fifth five years ago.Baidu’s rollout of AI, however, is reigniting excitement about the company. Ernie was downloaded 1m times within 19 hours of its release (ChatGPT reached 1m downloads after five days, according to its maker, OpenAI). Baidu’s shares rallied by more than 4% on the day of release, as analysts, investors and common folk bombarded the bot with questions. Although four other firms, including SenseTime, a facial-recognition business, launched similar services on the same day, and six others have been granted approval by China’s government, Ernie is generating the most excitement.Last month Robin Li, Baidu’s chief executive and co-founder (pictured), said that the rollout of AI had been a “paradigm shift” for the company. Yet it did not happen overnight. Years of investment have turned Baidu into one of China’s most sophisticated AI companies, with a system that encompasses chip design, a deep-learning framework and proprietary models and applications. The company started building Ernie in 2019, making it one of the earliest to experiment with such generative AI.So far Baidu has shied away from giving guidance on what the technology will mean for its bottom line, but analysts believe Ernie will drive more traffic to its search engine and other services, raising ad revenues. Baidu has also cemented itself as China’s largest AI cloud provider, and has started offering bespoke solutions for companies that want AI models designed for them.Enthusiasm for Baidu’s other major foray into AI, an autonomous-taxi business, is more muted. The service has been launched in a few cities across China, allowing users to hail robotaxis via a mobile app. But trips must still be monitored remotely, and a wider rollout could be years away. Few analysts expect the unit to generate meaningful profits soon.Much of what comes next for Baidu will depend on policymaking in Beijing and Washington. The Biden administration’s restrictions on the sale of advanced chips to China are causing the company a world of pain. Almost all of those chips, which most AI builders use to train their models, are produced outside China. Using a larger quantity of lower-powered chips is possible, but expensive.In Baidu’s case, its AI efforts rely on the Kunlunxin chip. Although it designed the chip itself, production is outsourced to companies like TSMC, a Taiwanese foundry. America’s restrictions put limits on the types of chips foreign foundries can sell to Chinese firms, and no domestic supplier can produce such advanced components. Since America’s restrictions were announced, Baidu has been downplaying the importance of the Kunlunxins, which may hint that it is having problems procuring them.Closer to home, China’s government has taken a keen interest in the regulation of AI, moving faster than most other countries. That has yet to cause too much consternation among the country’s tech executives. Regulators recognise the commercial value of AI and want companies to make money from it, says one executive. They also grasp the importance of allowing Chinese firms to compete at the global level, the person says. The approval of the first batch of bots was quicker than some had feared. Long delays, such as those for video games, often hurt the share prices of their Chinese makers.Yet many AI enthusiasts still find some rules onerous, especially for a nascent industry. Companies offering generative-AI services are required to identify and report “illegal content”. They must also adhere to China’s “core socialist values”, a sweeping and ambiguous command. After netizens spotted that a prompt for a “patriotic cat” in Ernie’s drawing application produced a picture of a feline with an American flag, the words “patriotism” and “patriotic cat” were blocked in the tool. Users may be put off by what Chinese AI cannot say, or fearful of being reported for asking the wrong questions. The costs of censorship and compliance will start to add up for Baidu and other companies, warns Kai Wang of Morningstar, a research firm.Recent experience has made it clear to China’s tech executives that they operate at the pleasure of the government, and that its favour can be quickly withdrawn. Internet firms were hit with several regulatory crackdowns between 2020 and 2022. Another on AI could do great damage to the companies that have invested in the technology, not least Baidu. The company is testing the waters in a difficult environment. For that reason it is important to watch what Ernie says—and all that it doesn’t. ■ More

Contracts between the United Auto Workers union and General Motors, Ford Motor and Stellantis expire at 11:59 p.m. on Sept 14.
Harsh rhetoric from UAW President Shawn Fain, plus the revelation of NLRB complaints against GM and Stellantis, make an auto workers’ strike increasingly likely.
Once a tentative agreement is reached between the union and the automakers, workers have to ratify the contracts, posing another hurdle.

Members of the United Auto Workers union hold a rally and practice picket near a Stellantis plant in Detroit, Aug. 23, 2023.
Michael Wayland / CNBC

DETROIT – United Auto Workers President Shawn Fain appears ready to fire up the picket lines.
The union’s bulldog new leader has repeatedly vowed to drive a hard bargain with Detroit automakers General Motors, Ford Motor and Stellantis in contract negotiations ahead of an expiration at 11:59 p.m. on Sept 14.

He’s maintained it’s a hard deadline that his leadership team does not plan to extend, like the union has in the past, and that he’s not afraid to take roughly 150,000 auto workers out of factories if necessary.
That — plus the revelation late Thursday that Fain and the union filed unfair labor practice charges against GM and Stellantis with the National Labor Relations Board, claiming the companies weren’t bargaining in good faith — makes a strike against one, if not all three of the automakers, increasingly inevitable.
Unlike prior union leaders, Fain is attempting to negotiate with all three automakers at once, refusing to select a “target” company to focus on while extending deals at the others. He’s also been far more confrontational with the automakers compared to previous union leaders, at times launching personal attacks on executives.
There’s a belief among some industry analysts and experts that a strike, or several, may be necessary to convince UAW members that the union leaders fought as hard as they could to reach the demands.
“I expect there to be a strike,” said Art Wheaton, a labor professor at the Worker Institute at Cornell University. “I think there’s a reasonable chance they strike Stellantis first and then give a couple more days for Ford and GM to give a better offer.”

Wheaton believes that a strike at Stellantis is nearly guaranteed with the sides as far apart as they are now. The union could use that work stoppage as a warning to GM and Ford to finalize their deals, he said.
“I think a strike is almost essential at Stellantis or they will never get a deal ratified,” Wheaton said. “Stellantis is picking a fight, saying, ‘Try me if you dare.'”
Strikes could take various forms, including a national strike, where all workers under the contract cease working, or targeted work stoppages at certain plants over local contract issues.

During a Facebook Live on Aug. 8, 2023, UAW President Shawn Fain
Screenshot

Prolonged strikes against all three of the automakers would be unprecedented and quickly impact the automotive supply chain, U.S. economy and domestic production.
The Biden administration has taken particular interest in the talks, including the appointment of longtime Democratic adviser Gene Sperling to monitor the situation for the White House.

Wall Street watching

Wall Street has warned of a potential work stoppage for several months, and investors have taken heed.
A brief survey of 99 investors by Morgan Stanley found 58% believe a strike is “extremely likely.” That’s followed by 24% who said it’s “somewhat likely.” Just 16% said a strike was unlikely, while 2% said it was “neither likely not unlikely.”
Industry and labor experts agree, and for good reason.
The impending contract deadline follows combative rhetoric by Fain and other union leaders; a years-long labor movement involving work stoppages, including the UAW; and ambitious demands by the union for 40% or more pay increases, retention of platinum healthcare and a 32-hour workweek.
Such demands aren’t typically made public or even fully reported until close to the end of the negotiations, in part as an effort to bargain in good faith but also to avoid setting expectations — either too high or too low — for UAW members, who need to ratify the contracts after the sides announce a tentative agreement.
“I’ve always said that the best way to reach agreements is to be negotiating with each other and not in the newspapers, TV or anywhere else,” said Dennis Devaney, senior counsel at Clark Hill who formerly served as a NLRB board member and attorney for GM and Ford. “I don’t think the public negotiation … is really going to move things along.”

United Auto Workers members on strike picket outside General Motors’ Detroit-Hamtramck Assembly plant on Sept. 25, 2019 in Detroit.
Michael Wayland / CNBC

o be clear, it’s not exclusively up to Fain to call for strikes. It’s up to the UAW’s 14-member International Executive Board (IEB), which Fain leads as president. The leaders, based on weighted votes, must approve such a work stoppage by a two-thirds majority vote.
Then there’s the question of how long a strike would last.
Of its surveyed investors, Morgan Stanley found the vast majority of respondents (96%) expected a potential strike to last longer than a week. Over a third (34%) expect the strike to last longer than a month.
A strike against GM in 2019 during the last round of contract negotiations lasted 40 days and cost the automaker $3.6 billion in earnings that year, GM reported at the time.
The UAW has more than $825 million in its strike fund, which it uses to pay eligible members who are on strike. The strike pay is $500 per week for each member.
Assuming 150,000 or so UAW members covered by the contracts, strike pay would cost the union about $75 million per week. A fund of $825 million, then, would cover about 11 weeks. One caveat: that doesn’t include health-care costs that the union would cover, such as temporary COBRA plans, that would likely drain the fund far more quickly.

Ratification

For much of the union’s history, it was largely expected that members would ultimately approve whatever deal was bargained and endorsed by UAW leaders.
However, in recent negotiations, that hasn’t been the case and the sides have needed to return to the negotiating table.
That was the situation two rounds of negotiations ago, in 2015, with then-Fiat Chrysler, now Stellantis, workers, who voted down a tentative agreement. That same year, GM skilled trade workers also voted against a tentative deal with the Detroit automaker, stalling ratification.
Typically, once a tentative deal is reached between the union and an automaker, the members of that automaker will then vote by local organization on whether to accept the tentative agreement and make it a contract. The whole ratification process can take about two weeks for each company.
“The UAW’s tentative agreement with an automaker is really a set of agreements—the main text, as well as appendixes for different aspects, such as pensions and retirement plans, health care benefits, supplemental unemployment benefits, profit sharing, personal savings plans, life and disability benefits, dependent care benefits, and salaried workers (for those who are also UAW-represented),” said Kristin Dziczek, automotive policy advisor for the Federal Reserve Bank of Chicago’s Detroit branch, in a blog post.
In 2019, it took eight additional weeks to negotiate and ratify all three agreements once the first tentative agreement was reached following GM’s strike. The negotiations and ratification voting ended in early December.
Spokespeople for the automakers declined to comment directly for this article, but reiterated that their teams continue to bargain in good faith with the union in hopes of deals that benefit both sides.
– CNBC’s Michael Bloom contributed to this report. More

U.S. Bureau of Labor Statistics data showed a monthly decrease of 17,000 jobs in the motion picture and sound recording industries, reflecting recent strikes by Hollywood writers and actors.
The report comes as other industries spur overall job growth across the country.
The monthly figure shows the effect the dual strikes, which began earlier in the summer, are having on employment as the writers and actors push for better compensation.

Actor Karen Brown walks the picket line with fellow SAG-AFTRA actors and Writers Guild of America writers in front of Paramount Studios in Los Angeles, July 17, 2023.
Mike Blake | Reuters

Hollywood’s labor pool is taking a hit as the dual strikes by actors and writers drag on.
The film, TV and music sectors shed a combined 17,000 jobs in August, “reflecting strike activity,” the U.S. Bureau of Labor Statistics said Friday morning.

In contrast, the U.S. economy added 187,000 jobs during the month, spurred by growth in the health care, leisure and construction industries. It topped the 170,000 jobs forecast, according to Dow Jones.
The job losses for the motion picture and sound recording industries underscore one effect of the Writers Guild of America and SAG-AFTRA strikes, which began in May and mid-July, respectively. In the months since, several notable films and shows halted or wrapped production early.
Hollywood’s massive work stoppage has also had a widespread effect on other sectors such as hospitality and real estate, costing California’s overall economy an estimated $3 billion so far. Hollywood’s striking writers and actors are negotiating with legacy studios for better pay as streaming and the threat of artificial intelligence affect their compensation.
Last month, writers’ union WGA said it received a new proposal from the Alliance of Motion Picture and Television Producers, the body representing major studios such as Netflix, Disney and Amazon, to resume talks.
It came after weeks of stalemate and slow progress. More

Charter Communications CEO Chris Winfrey put media companies on notice Friday with his push for a different pay-TV model as cord-cutting accelerates.
Charter is pushing for more flexible terms and to offer ad-supported streaming services to its pay-TV customers at no additional cost.
The call for changes came as Disney’s networks, including ESPN, went dark for Charter’s Spectrum TV customers.

In this photo illustration, the Charter Communications logo is displayed on a smartphone screen.
Rafael Henrique | SOPA Images | Lightrocket | Getty Images

Charter Communications CEO Chris Winfrey wants the pay-TV bundle to live.
He also thinks the industry should get on board with a new model.

The CEO of one of the largest cable companies in the U.S. on Friday put media content companies on notice that negotiations would look different after Disney-owned networks went dark on Charter’s Spectrum service.
The so-called blackouts have gone on for decades and usually stem from a battle over rising fees — when programmers like Disney want higher rates and pay-TV distributors like Charter balk at paying up. Usually, the demand for sports events like the U.S. Open, which is in full swing, or the upcoming NFL season, help to prevent channels going dark for customers.
But this time it’s different, Winfrey said on a Friday call with investors.
The pay-TV model is broken, said Winfrey, the CEO of a company that has 14.7 million customers subscribed to its bundle but sees that number drop every year.
For Charter, a company that doesn’t produce content itself, the TV bundle is still a big part of its business, even as broadband grows. Charter is pushing to keep the bundle alive with new options — flexible packages and improved technology to tie streaming and traditional TV together — as high prices and streaming have driven customers to cut the cord.

Pay-TV bundle as we know it is dead

Streaming has upended the economics of television, as cheap memberships offer boatloads of content — a lot of which is already featured on pay-TV channels. Consumers are cutting pay-TV bundles and opting for streaming options at a rate that’s only intensified over the last five years.
And while companies like Disney, Warner Bros. Discovery, Paramount Global and Comcast’s NBCUniversal are trying to make streaming businesses profitable, they still rely on their TV networks for not only the lucrative fees they reap from pay-TV providers, but also for the content produced for the channels themselves, which often carries over to streaming.
Media mogul Barry Diller said recently the legacy media companies should revert back to focusing on their broadcast and pay-TV networks, which are profitable, unlike streaming.
Winfrey, as well as his predecessor Tom Rutledge, have often spoken publicly of the high fees pay-TV providers have to send the networks, which get passed down to customers as price increases. Those in turn often accelerate cord-cutting.
The growth of streaming has made it less fruitful for Charter to pay those costs, even as the company loses fewer pay-TV customers than its peers each quarter.
Often, series and movies that air on cable channels run on streaming services shortly after — sometimes just a day. Meanwhile, more and more live sports are making their way onto streaming.
NBCUniversal airs Sunday Night Football, one of the top-rated programs on live TV, simultaneously on its streaming service Peacock. Paramount follows suit with its Sunday package of football games on Paramount+, while Disney offers some, but not all, Monday Night Football games on ESPN+.
Charter said Friday it was willing to pay the rate increase that Disney was asking for in exchange for a lower minimum penetration term — meaning Charter guarantees fewer customers to stem costs. Some of Disney’s networks fetch the highest prices in the bundle, such as ESPN, which receives $9.42 per subscriber a month, according to data from S&P Global Market Intelligence.
The company is also pushing to offer Disney’s ad-supported streaming services — Disney+, ESPN+ and Hulu — at no additional cost so its customers don’t have to pay twice for similar content.
On Friday, Disney said in a statement that it had proposed “creative ways” to make Disney streaming services available to Spectrum customers without giving it away for free. It did not provide further details.
Disney said on Friday its traditional TV channels and streaming services “are not one and the same, per Charter’s assertions, but rather complementary products.” It noted its investment in “original content that premieres exclusively” on traditional TV, such as live sports, news and other programming. Disney also noted its multi-billion dollar investments in exclusive content for Disney+, ESPN+ and Hulu.
Charter also said it would be willing to market Disney streaming apps to its broadband-only customers, something it views as a way to help Disney move toward making ESPN’s live feed a direct-to-consumer streaming service. Disney has said it’s a matter of time before it offers ESPN outside of the pay-TV bundle. ESPN+ offers only limited content from the network.
On a Friday call with investors, Winfrey said the talks with Disney are what negotiations with content providers would look like moving forward — a stark change for the pay-TV provider.

Long live pay-TV

During Charter’s second-quarter earnings call in July, Winfrey said that the company was “committed to trying to find a path forward” for traditional TV bundles.
“And if we can have the flexibility to package and price it in the right way, we think it’s good for customers and it’s good for us. And ultimately, it’s much better for programmers over time as opposed to having the cord cutting continue to accelerate at the pace it’s going,” Winfrey said.
Charter’s recent negotiations aren’t the only example of the company trying to find a new path for pay-TV.
In July, the company announced it would soon offer a cheaper, sports-lite bundle option.
Live sports often carry the highest ratings but come with the most costs for pay-TV companies. The sports-lite offering will remove regional sports networks from the equation, giving customers who don’t watch their local teams a cheaper option rather than cutting the bundle altogether.
The pivotal move happened as the regional sports networks business has declined a faster speed. Diamond Sports Group, the largest owner of these channels, filed for bankruptcy protection this year. Other networks are offering streaming options, too.
Still, major national sports networks like ESPN remained in both bundles. While Winfrey said he would “love” to put ESPN in a sports-only bundle, he knew it was “a stretch too far” for Disney.
In another step to revamp the pay-TV model and stem losses, Charter entered into a joint venture with Comcast, the largest pay-TV provider in the U.S.
The venture launches later this year and will give customers the option to take the pay-TV bundle without a cable box. Winfrey noted in July that two-thirds of Charter’s pay-TV sales come without a clunky cable box, meaning customers are using the Spectrum TV app on their own devices, like Roku or Apple’s Apple TV.
Branded with Comcast’s Xumo, the product will mean Charter can provide a smaller streaming device that integrates the traditional TV bundle with streaming apps in one place, making it a more seamless transition between the two for consumers.
The company is betting that service, plus cheaper and more flexible bundle rates, will keep pay-TV alive and kicking.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. More

Millions of Charter Communications’ pay-TV customers lost Disney networks, including ESPN, amid a battle over contract fees.
The blackout comes during the U.S. Open and a week ahead of the kickoff of the NFL season. ESPN, and sometimes ABC, air “Monday Night Football” games.
Charter is calling the pay-tv model “broken,” saying programmers like Disney have helped to accelerate the rate of cord-cutting.

Cable giant Charter Communications and Disney are in a battle over contract fees that has left millions of people without access to U.S. Open, college football and potentially “Monday Night Football,” with the NFL’s season starting in just days.
On Thursday, Disney said that the two companies have been in ongoing negotiations but yet to agree to a new deal. That resulted in Charter’s customers losing access to its networks, including broadcaster ABC and pay-TV channels such as ESPN and FX. Charter and Disney’s stocks were each down more than 2% on Friday.

Charter’s Spectrum TV service has roughly 14.7 million customers across 41 states, with some of its top TV markets being New York, Los Angeles, Dallas-Fort Worth and Atlanta.
These sorts of battles, which can lead to so-called blackouts for pay-TV customers, are common in the industry. But, in the age of streaming, this one is different.
“This is not a typical carriage dispute,” Charter CEO Chris Winfrey said Friday on a call with investors.
Early Friday, Charter executives called the pay-TV ecosystem “broken.” They said they pushed for a revamped deal with Disney that would see Charter cable customers receive access to Disney’s ad-supported streaming services like Disney+ and ESPN+ at no additional cost.
This seemed to be the sticking point as Charter said it accepted Disney’s request for higher fees, although Charter executives didn’t provide specifics on the negotiations as they remain hopeful to get a deal done.

Disney shot back in a statement Friday that Charter refused to enter into a deal after it offered favorable terms and proposed “creative ways” to make Disney streaming services available to Spectrum customers, including “opportunities for new and flexible packages where those services become a focal point.” The company didn’t elaborate on specifics.
ESPN is said to reap high fees. ESPN receives $9.42 per subscriber a month, while other Disney networks like ESPN2, FX and Disney Channel gets $1.21, $0.93 and $1.25, respectively, according to data from S&P Global Market Intelligence. A Disney representative didn’t immediately comment on the fees. The media giant has more than 20 networks.
Winfrey noted that in the last five years the entire pay-TV ecosystem has lost nearly 25 million customers, or almost 25% of total industry customers. “It’s staggering,” he said.
Between the high cost of the traditional bundle and the option to switch to more affordable streaming options – most of which are provided by the same companies behind the networks on pay-TV – the speed at which cord-cutting is only accelerating.
Disney’s traditional TV channels and streaming services “are not one and the same, per Charter’s assertions, but rather complementary products,” the company said Friday, adding it has exclusive content on each platform, and Charter is “demanding these services for free” without anything in exchange.
Disney said in its Friday statement that Charter rejected their offer to extend the contract amid the U.S. Open, and called it a disservice to customers also ahead of college football season on ABC and ESPN.
In response, a Charter spokesperson said Friday, “Disney knows this is not the case. But we’ll leave it at that so we can get back to more productive conversations for the benefit of our mutual customers.”
Live sports, particularly those shown on ESPN, have long been considered the glue holding the pay-TV bundle together, especially as customers flee for streaming services.
The two companies renewed their contract in 2019, which also included Charter integrating Disney+ and ESPN+, as well as Hulu, into its set-top boxes to give customers more seamless access to those apps, CNBC previously reported.
Charter, which also provides broadband and mobile services but is not in the content business, has said it values its pay-TV business and wants to see it thrive, even if it takes on a different form than the past.
The company took a step toward that earlier this summer when it announced it will offer a sports-lite package – without regional sports networks, but would still include ESPN – to customers at a cheaper rate.
Winfrey said on Friday that was not an option it presented to Disney, although he “would love that,” but believed it was “a stretch too far” for Disney.
Instead, Winfrey said the company sees the option it presented to Disney as a “glidepath” forward to a new business model that keeps the cost of the traditional bundle down for customers who still want it, and puts more eyeballs on Disney’s ad-supported streaming services.
Disney CEO Bob Iger recently said on CNBC that assessing its traditional TV business is at the top of his list, and opened the door to potentially unloading these assets in a sale. The CEO, who returned to the helm late last year, said he realized the company is facing a lot of challenges, many of which are “self-inflicted.”
Iger did note that ESPN is in a different bucket and Disney was instead open to selling a stake in the network while also moving toward a direct-to-consumer streaming service of its live feed.
Still, ESPN Chairman Jimmy Pitaro said at a CNBC event this summer that while this is the future for ESPN, it wouldn’t be in a way that would leave pay-TV distributors behind and nix the traditional pay-TV model that has supported the business for so long.
“The [traditional TV] model has been very good to Disney,” Pitaro said at CNBC x Boardroom’s inaugural Game Plan sports business summit.
Despite the public feud, Disney said in a statement on Friday it was “ready to get back to the negotiation table to restore access to our unrivaled content to their customers as quickly as possible.” More

In less than 24 hours on the market, ticket sales for Taylor Swift’s Eras Tour concert film have already broken records.
The singer’s film ranks in the top 10 all-time best first-day presellers for online ticket seller Fandango.
Swift’s concert film also broke records at AMC, topping the highest single-day ticket sales record for a single film.

Taylor Swift performs in Denver during her Eras Tour, July 14, 2023.
Tom Cooper/tas23 | Getty Images Entertainment | Getty Images

… Ready for it?
In less than 24 hours on the market, ticket sales for Taylor Swift’s Eras Tour concert film have already broken records.

Fandango reported Friday that the singer’s film ranks in the top 10 all-time best first-day presellers, joining the likes of “Avengers: Endgame,” “Star Wars: The Force Awakens” and “Spider-Man: No Way Home.”
“Taylor Swift is giving moviegoing fans and the entire industry the ultimate gift by bringing [the] Taylor Swift Eras Tour concert film to the big screen,” said Jerramy Hainline, senior vice president at Fandango Ticketing.
AMC Entertainment reported that Thursday ticket sales for Swift’s film reached $26 million, a new record for the century-old company. Previously, the highest single-day ticket sales record was held by “Spider-Man: No Way Home” with $16.9 million.
IMAX has already sold out more than 250 screenings and is over indexing on presales. The company told CNBC that it is pulling in the same percentage of presales that it would for a blockbuster tentpole feature.
“Instead of launching an event through streaming, it’s being launched directly through the theatrical window,” IMAX CEO Richard Gelfond told CNBC’s “Squawk on the Street” on Friday. “It confirms what most of the studios have been saying … that a theatrical release enhances the value of later windows like streaming.”

“While it’s fantastic, I don’t think there is going to be a lot of cookie cutters, because there’s just one Taylor Swift,” he said.
Swift’s concert film documents the wildly popular tour that raked in millions and was on its way to hit a record-breaking $1 billion in sales earlier this summer.
It displaced Universal’s “The Exorcist: Believer,” which announced it would move its release date a week earlier just hours after news broke of the pop star’s drop.
Swift’s concert film was originally slated for just the nation’s largest theater chains, such as AMC, Regal and Cinemark.
AMC, the largest movie chain in the world, has added additional domestic showtimes to increase capacity in response to demand. The nearly three-hour-long film, which arrives in theaters Oct. 13, will play at least four showtimes per day at AMC theaters on Thursdays, Fridays, Saturdays and Sundays through early November.
Wanda Gierhart Fearing, Cinemark chief marketing and content officer, said in a statement that the film drove “frenzied traffic to our website and app the moment tickets went on sale.”
“We are ready for Swifties to be enchanted by this concert film in the unprecedented number of auditoriums we have booked to meet demand for the shared, musical experience,” she said.
Smaller theater chains quickly requested access to the film, which is set to run through Nov. 5. Before the end of Thursday, most domestic theater chains were offering showtimes in their premium format theaters such as IMAX and Dolby.
Cinema chains told CNBC that most of the Thursday ticket sales were for showings during the concert film’s opening weekend. Box office analysts speculate that Swift’s Eras Tour concert film could capture more than $100 million over its debut.
The film release comes at a time when Hollywood is grappling with dual labor strikes and the departure of films such as Warner Bros. and Legendary Entertainment’s “Dune: Part Two” from the 2023 film slate.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal owns Fandango. More

An uptick in Covid cases and hospitalizations in the U.S., and the emergence of new variants of the virus, are prompting questions about whether it’s time for Americans to start masking up again. 
People infected with Covid should wear masks around others to prevent the spread of the virus.
For those not infected, the decision to mask depends on a few things. That includes your personal risk level, Covid rates in your region and who you might make contact with, experts said.   

Michael Nason, 29, left, and Donna Nason, 25, right, both of Bakersfield are wearing a face mask in Union Station on Thursday, Aug. 31, 2023, in Los Angeles, CA. COVID-19 making a comeback in California.
Francine Orr | Los Angeles Times | Getty Images

An uptick in Covid cases and hospitalizations in the U.S., and the emergence of new variants of the virus, are prompting questions about whether Americans should start masking up again. 
One thing’s for sure: People infected with Covid should wear masks around others to prevent the spread of the virus. 

For those not infected, the decision to mask depends on a few things. That includes your personal risk level, Covid rates in your region and who you might make contact with, public health experts said.  
First and foremost, people at high risk of serious illness or death from Covid should consider wearing masks in crowded and public spaces, especially in poorly ventilated areas.
That applies to elderly adults and people with diabetes, cancer, HIV, a history of heart disease or stroke or other immunocompromising conditions, according to the Centers for Disease Control and Prevention. 
“Anytime we’re seeing an uptick in cases, we should start with telling highly vulnerable populations that they should prepare for this and be a little bit more cognizant of the things they can do to protect themselves. And I think masking is one of them,” Andrew Pekosz, a professor at the Johns Hopkins Bloomberg School of Public Health, told CNBC. 
That’s because Covid infections in people 65 and above and other high-risk groups are driving the increase in hospitalizations and deaths right now, according to Pekosz. 

The CDC said weekly new Covid hospitalizations in the U.S. jumped nearly 19% last week, a sixth straight week of increasing admissions. Newer Covid variants like the now-dominant EG.5, or “Eris,” and a handful of XBB strains have fueled the rise. All of those strains are descendants of the omicron variant.
New Covid shots from Pfizer, Moderna and Novavax are slated to roll out in mid-September, and will likely provide robust protection against those variants. But until then, experts say masking is an important tool people can use to protect themselves as Covid starts to spread at a higher level nationwide. 
That also applies to Americans with normal risk levels, who should also consider masking depending on where they are or who they make contact with. 
“If we have learned something from the pandemic it’s that masking works to protect from transmission,” said Dr. Francesca Torriani, professor of clinical medicine at the University of California, San Diego. 
And implementing institution-level mask mandates in certain health-care settings and businesses can “really reduce the risk of running into large outbreaks,” according to Pavitra Roychoudhury, a professor of laboratory medicine at the University of Washington School of Medicine.
However, it’s unclear how many Americans will choose to mask up.
Many people don’t appear to be worried enough about the recent rise in cases to change their behavior: Covid was at the bottom of respondents’ list of key public health threats, according to a poll released last month by Axios and Ipsos.
The percentage of people who wear a mask some or all of the time has dropped to 15%, the poll added.

When to mask

All people, regardless of risk level, should consider masking if certain Covid metrics in their region are high. 
The CDC recommends masking based on the number of Covid hospital admissions in a county – data that can be accessed on the agency’s website. 
The CDC recommends that everyone wear a mask in jurisdictions that have 20 or more people with Covid in local hospitals per 100,000 people. That currently applies to seven counties across the U.S. 
The agency also recommends masking for high-risk people in counties where 10 to 19.9 people per 100,000 are hospitalized from the virus. The threshold applies to 117 counties nationwide, including 22 in Florida alone. 
People should continue to monitor hospitalization levels in their counties heading into the fall and winter, when the virus typically spreads more widely. 

Kilito Chan | Getty Images

Masking decisions should also depend on who people see.
“We need to know when it’s safer to mask for our protection, but also for the protection of others,” said UC San Diego’s Torriani. 
For example, it might be a good idea for someone to wear a mask if they’re visiting locations with many high-risk individuals, such as retirement homes, nursing homes, care facilities and hospitals.
People should also consider masking if they’re caring for a family member or friend who is at high risk of severe Covid, according Roychoudhury.
Those at normal risk levels might also want to consider what may happen if they choose not wear a mask.
“For most people who are healthy, they could think about it in the case of actually catching Covid,” Roychoudhury said. “They might miss a week’s worth of work or feel miserable, so they should ask themselves if they want to take that chance.”
She noted, however, that several widely available tools can make Covid infections far less severe, such as antiviral medications and vaccines. 

Mask mandates making a comeback

Nationwide and state-level mask mandates aren’t in place anymore, and Roychoudhury said she would be “very surprised” if universal masking requirements are reinstated. 
But she said businesses, schools and health-care systems could implement institution-level mask mandates again, especially if cases and hospitalizations rise even more across the U.S. 
A handful are already doing that: Morris Brown College, a historically Black college in Atlanta, announced earlier this month that it would restrict gatherings and implement a mask mandate for two weeks due to reports of positive cases among students. 
Health-care company Kaiser Permanente reissued a mask mandate at its Santa Rosa, California, facilities after seeing an increase in patients testing positive for Covid.
So did several hospital systems in New York state, including Auburn Community Hospital and United Health Services. 
Even Hollywood studio Lionsgate temporarily required employees to wear masks on two floors of its five-story office building due to a Covid outbreak earlier this month.   More