Business

Media mogul Barry Diller called the writers and actors strikes “catastrophic” to the industry.
He said the legacy studios should cut Netflix and other streamers out of the negotiations.
“The strike does one thing, and one thing only, it strengthens Netflix,” Diller said on the podcast.

Barry Diller
Mike Newberg | CNBC

Barry Diller is calling on the legacy Hollywood studios to end the dual writers and actors strikes, otherwise it’ll be “catastrophic” to the industry.
The media mogul, speaking on the podcast “On with Kara Swisher,” said the strikes would only strengthen streaming giant Netflix during a tumultuous time for legacy media.

“The strike does one thing, and one thing only, it strengthens Netflix and weakens the others,” said Diller, the chairman of IAC and Expedia, who once held top roles at Fox, Paramount and ABC Entertainment.
He also advised studios to cut Netflix and other streamers out of the negoations with the unions.
“They should certainly get out of the room with their deepest, fiercest and almost conclusive enemy, Netflix, and probably Apple and Amazon,” he said, noting their different business models. He said the legacy studios, actors and writers should be “natural allies” given their century of working together.
The remarks echo comments Diller made earlier this summer on CBS’ “Face the Nation,” in which he said the strikes could cause a domino effect that could produce “an absolute collapse of an entire industry.”
Writers Guild of America members have been striking for more than 100 days, while the actors’ union joined the picket lines in July, halting production of TV shows and movies.

In recent weeks, the Alliance of Motion Picture and Television Producers has gone public with its latest contract proposal to the writers. It was quickly apparent talks between the studios and writers remain heated.
“There was a very recent attempt to get it on track with the WGA, which I gather collapsed in the last couple of days,” Diller said on Swisher’s podcast, which was recorded in late August. He added it “looks bleak” that the strike could end by September.
Representatives for SAG, WGA, AMPTP and Netflix didn’t immediately respond to a request for comment.
Recent discussions with the writers union included a sit down with top media brass including Disney CEO Bob Iger, NBCUniversal film head Donna Langley, Netflix co-CEO Ted Sarandos and Warner Bros. Discovery CEO David Zaslav.
In recent earnings calls, Netflix and its media peers have said they hoped to come to a resolution quickly with the writers and actors.
Diller said for the “old majors” like Disney, Comcast’s NBCUniversal and Paramount Global, if the strikes last through the end of the year the lack of fresh content by the spring or summer of 2024 on their streaming services will lead to subscriber cancellations and revenue losses.
“When they have to gear up to make more programming to get back subscribers, they won’t have the revenue base to be able to produce,” Diller told Swisher. “So that is kinda catastrophic.”
He goes on to call Netflix “an evil genius” that was able to dominate and leave legacy media scrambling to notch profits on their streaming businesses.
While making streaming a profitable business has been an ongoing focus for media companies, Diller said these companies should shift back to focusing on their broadcast and pay-TV networks. While cord-cutting of traditional pay-TV bundles continues to accelerate, the business still remains profitable.
Diller said legacy media should take some of its “shows and creativity and build our networks back up. It’s there for the take.”
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. NBCUniversal is a member of the Alliance of Motion Picture and Television Producers. More

The Biden administration wants to reconsider how marijuana is treated at the federal level.
This marks the first time that a federal agency has acknowledged rescheduling marijuana to a lower level.
If approved, the move will have wide-reaching implications for the marijuana sector in the areas of taxation, interstate commerce and research.

A worker sets up Florist Farms cannabis products on the first day of legal recreational marijuana sales at the Housing Works Cannabis Co. in New York, on Thursday, Dec. 29, 2022.
Jeenah Moon | Bloomberg | Getty Images

This week, the Department of Health and Human Services asked the Drug Enforcement Agency to consider easing restrictions on marijuana upon a review of its classification under the Controlled Substances Act.
It could be a significant catalyst for an industry hemmed in by federal regulations even as legalization picks up on the state level.

Marijuana stocks were higher Wednesday on the news. Aurora Cannabis, Canopy Growth and Tilray Brands were among those to see jumps. They all jumped again Thursday.
Since the 1970s, marijuana has been listed alongside heroin and LSD as Schedule I drugs, or substances that authorities say have no accepted medical use and a high potential for abuse. Today, marijuana has remained in this category – ranking higher than fentanyl, cocaine and methamphetamine – despite there being favorable momentum for pot in scientific research and state laws.
The DEA will consider moving marijuana down to a Schedule III drug, alongside ketamine, anabolic steroids and testosterone as a substance that has moderate to low potential for physical or psychological dependence. The recommendation, however, will not de-schedule marijuana.
Cultivation, production and sales would still be in violation of federal law. Marijuana is legal in 39 states medically and 23 states recreationally.

What’s next for marijuana policy?

As part of the recommendation process, HHS conducted a scientific and medical evaluation that will help authorities come to a final decision on the matter.

A decision is likely to come before the 2024 presidential election, Roth MKM analyst Scott Fortune wrote in a Thursday note to clients.
“Historically, the DEA has never gone against a scheduling recommendation from the HHS,” Fortune added.
The DEA will consider marijuana’s reclassification under three criteria: Its potential for abuse, its potential for medical use, and the extent to which its unsafe or addictive.
Regulators have previously used the second criterion to uphold marijuana’s Schedule I classification, but doing so now may prove difficult, said Fortune, with medical marijuana programs existing in nearly 40 states across the nation.
Once the DEA comes to it decision, it will submit its own recommendation in the form of a proposal to the attorney general, who will then make his final ruling.

What does it mean for the weed industry?

If marijuana moves down to a Schedule III substance, this will effectively ease a number of restrictions holding the sector back.
The biggest boon will come in the form of new tax opportunities. Currently, enterprises dealing in Schedule I substances aren’t allowed to write expenses off their federal tax returns under an Internal Revenue Service code known as 280E.
This has been a hindrance for many cultivators, processors and retailers struggling to remain profitable as the industry sees a slowdown in sales.
“The removal of 280E will have a widespread material impact on the financial performance of every company in the industry, large and small, public and private,” said Jeff Schultz, a marijuana attorney at Foley Hoag.

What’s more, the potential rescheduling will allow for interstate commerce. While many states have legal markets within their borders, transporting Schedule I substances across state lines in illegal, resulting in a glut of marijuana in some states.
The move will furthermore expand potential for research in the sector, entice investors back amid a capital crunch, and possibly return value to publicly traded marijuana stocks.
The rescheduling, however, will not free up banking services for the industry, which has been kept out of traditional banking and loans due to marijuana’s federal standing. Schedule III drugs still present a risk for banking institutions so long as federal laws remain unchanged.
A bill called the Secure and Fair Enforcement Banking Act, or SAFE, will remove this burden and is making its way through Congress.

Is federal pot legalization on the horizon?

Senate Majority Leader Chuck Schumer, D-New York, said while this is an important step forward for the industry, the end goal is ending federal prohibition.
“HHS has done the right thing and DEA should now quickly follow through on this important step to greatly reduce the harm caused by draconian marijuana laws,” Schumer said in a statement Thursday. “There is still much more that needs to be done legislatively to end the federal prohibition on cannabis and roll back the War on Drugs.”
Industry executives echoed Schumer’s feelings.
“Federal cannabis reform is long overdue, and today’s news brings us closer to the Biden administration declaring an end to the U.S. government’s failed war on cannabis,” said David Goubert, CEO of multi-state dispensary operator Ayr Wellness. More

Ozempic, the blockbuster diabetes treatment from Novo Nordisk, could be next in line to face price negotiations between manufacturers and Medicare. 
The Biden administration released the first 10 drugs that will be subject to those talks, a process that aims to lower the prices of medications that Medicare Part D spends the most on by 2026. 
Several Wall Street analysts expect Ozempic to be a top choice in 2025 due to the amount of money Medicare Part D already spends on the weekly injection.

A pharmacist displays boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes made by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023. 
George Frey | Reuters

Ozempic, the blockbuster diabetes treatment from Novo Nordisk, could be next in line in the price negotiations between manufacturers and Medicare. 
The Biden administration this week released the first 10 drugs that will be subject to those talks, a process that aims to lower the prices of medications that Medicare Part D spends the most on. The changes will take effect by 2026. 

Ozempic will likely be eligible for negotiations by the time the next round of drugs is selected in 2025, for price changes that will go into effect in 2027.
Several analysts expect the weekly injection to be a top choice because Medicare Part D already spent more than $2 billion on the drug in 2021 — an amount close to some of the medicines chosen for price talks this week. Total Part D spending in 2021 was $98 billion.
They assume that Medicare will spend a great deal on Ozempic in the coming years, given the fervent demand for the drug and similar treatments that can help patients shed unwanted pounds. 
“Ozempic is going to be the biggest one that people are going to watch really closely in the second round of negotiations,” Cantor Fitzgerald analyst Louise Chen told CNBC. 
Novo Nordisk’s Rybelsus, a diabetes drug taken orally, could also be on the list because it contains the same active ingredient as Ozempic. Most Part D plans cover both for patients with Type 2 diabetes, but do not cover the drugs for off-label uses such as weight loss.

Meanwhile, Novo Nordisk’s obesity injection Wegovy, which uses that same ingredient, likely won’t be targeted for negotiations in the near term because Medicare doesn’t cover weight loss drugs. 
A spokesperson for Novo Nordisk didn’t directly comment on the potential for Ozempic to be included in the next round of talks. The spokesperson said the company “supports policies to ensure patients can afford their medicines,” but criticized the negotiation process, which is conducted by the federal Centers for Medicare and Medicaid Services, or CMS.
“Unfortunately, we have seen CMS take aggressive steps to carry out unilateral price setting without consideration for the impact on patients living with chronic disease or the overall healthcare system,” the spokesperson said.
Ozempic, Wegovy and Rybelsus are part of a class of drugs called GLP-1s, which mimic a hormone produced in the gut to suppress a person’s appetite. 
Wegovy and Ozempic sparked a weight loss industry gold rush last year, with high-profile names such as billionaire tech mogul Elon Musk among recent users. But the injections are costly, as prices range from around $900 to more than $1,300 per month. 
Medicare and private insurers typically secure discounts and rebates on the drugs they cover, but it’s unclear how large they are.

Why Ozempic wasn’t eligible this year

The Medicare program spent $2.6 billion on Ozempic in 2021, according to AARP research. Based on that number, AARP said Ozempic was the 10th costliest drug covered by Medicare Part D. 
But Ozempic was excluded in the first round of negotiations due to the federal government’s guidelines for selection. 
The guidelines require drugs to have been on the market for at least seven years after their initial approval or licensing in the U.S., as of the date that the Biden administration publishes the list of products selected. 
The Food and Drug Administration approved Ozempic for diabetes in December 2017, making it ineligible for the initial round of drugs unveiled this week. But Ozempic will likely be eligible for the next list of medications, which will be published in February 2025, Evercore ISI analyst Umer Raffat said in a research note. 
“This means Novo’s Ozempic (along with Rybelsus) could be on next year’s list,” he wrote. 

Several analysts agree, citing the amount Medicare spent on Ozempic in 2021. That places the drug at the very top of prediction lists for the second round of negotiations.
Slashing the price of Ozempic through negotiations could lead to significant savings for the Medicare program. 
Medicare would save an estimated $1.3 billion if the price of Ozempic was reduced by 40%, according to research from Leerink Partners analyst David Risinger. Meanwhile, the program would save only around $342 million if Rybelsus was cut by the same amount. 
It’s unclear how much patients pay out of pocket for Ozempic, which has a list price of $936 per month in the U.S. But a lower negotiated price of Ozempic will likely benefit the roughly 28% of Medicare beneficiaries who have diabetes. 

Wegovy fate is uncertain

There’s still a chance that negotiations could affect Wegovy, particularly if Medicare decides to start covering the injection and other weight loss treatments before the second round. 
Analysts from Citigroup, in a note last week, said that’s likely because recent research demonstrated Wegovy’s heart health benefits. 

Weight loss drugs are being assessed for their ability to treat conditions like dementia and addiction after a landmark study showed that Wegovy helped reduce the risk of heart attacks and strokes.
Bloomberg | Bloomberg | Getty Images

Earlier this month, Novo Nordisk released late-stage trial data showing that Wegovy slashed the risk of serious heart-related problems such as heart attacks or strokes by 20%.
The results suggest Wegovy has significant health benefits beyond helping patients lose weight, which could potentially lead to expanded use of the drug and increased coverage by insurers. 
Other analysts say that savings from the first round of drugs could help pave the way for Medicare to cover Wegovy. 
Four of the 10 drugs selected for negotiations cost Medicare more than $17 billion a year before any discounts or rebates. Lowering prices for those drugs could potentially “free up” Medicare’s budget and make it easier for the program to cover popular GLP-1s like Wegovy, according to a note from Wells Fargo analyst Mohit Bansal. More

Polestar lost $304 million in the second quarter, on revenue of $685 million.
EV deliveries were up 36% from a year ago.
The company is still on track to build 60,000 to 70,000 EVs in 2023, with two new models coming in the next several months.

The Polestar 3 SUV, originally expected late this year, has been pushed into early 2024 because of delays with its Volvo-developed software.
Courtesy: Polestar

Swedish electric vehicle maker Polestar on Thursday reiterated that it still expects to deliver at least 60,000 EVs in 2023, with a positive gross margin – and confirmed that its next two new models are still on track to go into production as expected.
The news came as part of Polestar’s second-quarter earnings report. The company’s net loss for the period was $304.1 million, or 14 cents per share. On an adjusted basis, it had a loss of $334.4 million.

A year ago, Polestar’s net loss was $228.2 million, or 12 cents per share. Its adjusted loss was $296.2 million for that period.  
Revenue for the second quarter jumped to $685.2 million from $589.1 million during the same quarter last year.
Polestar delivered 15,765 vehicles in the second quarter, up 36% from a year earlier, and a total of 27,841 vehicles in the first half of 2023.
The company reiterated the guidance it provided in May, saying that it still expects to produce between 60,000 and 70,000 vehicles in 2023, with a gross margin of 4% for the year. Polestar’s gross margin was 1.4% in the first half of 2023 and 4.9% in 2022.
The automaker delivered 51,491 vehicles in 2022.

Polestar had $1.06 billion in cash and equivalents as of the end of the second quarter, versus $884.3 million as of March 31.
The company’s shares were down more than 4% in premarket trading following the news. Polestar’s stock has fallen almost 28% this year through Wednesday’s close.
“We achieved record volume growth during the second quarter,” CEO Thomas Ingenlath said in a statement. “Deliveries of our significantly upgraded Polestar 2 are now ramping up. With Polestar 4 expected to start production in November and Polestar 3 in the first quarter of next year, we are entering an exciting phase of higher volumes and value from our expanded model range.”
The upcoming Polestar 3, a large electric SUV, is based on a new platform developed by (and shared with) Volvo Cars. It was originally expected before the end of 2023, but delays with the platform’s software will push it into early 2024, Polestar said in May.
The Polestar 4, a smaller crossover SUV, will be built on a different platform and is still on track to go into production in November as originally planned. Deliveries are expected to begin in China before the end of 2023, and elsewhere in early 2024. More

Listen to this story. Enjoy more audio and podcasts on More

Listen to this story. Enjoy more audio and podcasts on More

Listen to this story. Enjoy more audio and podcasts on More

Listen to this story. Enjoy more audio and podcasts on More