Business

The Vulcan rocket for the Cert-1 mission stands at SLC-41 during testing in Cape Canaveral, Florida, May 12, 2023.
United Launch Alliance

CNBC’s Investing in Space newsletter offers a view into the business of space exploration and privatization, delivered straight to your inbox. CNBC’s Michael Sheetz reports and curates the latest news, investor updates and exclusive interviews on the most important companies reaching new heights. Sign up to receive future editions.

Overview: Gaining acceptance

There’s a reason the saying “that’s why we test” exists. I’ve seen it a lot in my mentions the past few days. Unfortunately, and crucially, it ignores that tests happen for different reasons.

Let’s get into that, especially in light of the recently unveiled explosion of a BE-4 rocket engine during Blue Origin’s testing in Texas. The engine was bound for the second launch of its customer United Launch Alliance’s Vulcan rocket.
It’s worth understanding the three main phases of rocket engine testing: Development, qualification and acceptance. An industry specialist with over a decade of experience in this type of testing posted a helpful rundown about how these phases differ. Here’s a tl;dr version: 

Development: Prototypes and smaller scale versions of the engine. You’re pushing them hard, accepting failures as part of the process to find the limits and flaws.
Qualification: An essentially finished design. You’re now verifying the margins of the engine’s ability. Destroying an engine may happen, but it shouldn’t be common.
Acceptance: A production engine that’s being checked for a launch. You might push it slightly past what is necessary for a launch, but it’s not rough-and-tumble anymore, as you’re making sure it’s good to go.

I don’t report on every rocket engine that blows up. Most of the ones I hear about are in the first two phases. But more importantly, BE-4 is years behind schedule (the first flight engines were originally contracted for delivery in 2017), and this was the third production engine. Of course it’s better to lose an engine in testing than during a launch, especially on a rocket that can’t lose an engine to succeed, but that’s an overly dismissive way to view the loss of expensive production hardware – let alone another setback.
The downstream effects are especially why this matters. The first pair of BE-4 engines recently passed a critical test on Vulcan for the first launch. ULA CEO Tory Bruno is adamant that it’s “very unlikely” the incident will set back the timeline for Cert-1, currently scheduled for the fourth quarter. (Bruno will be sitting down with reporters Thursday for a roundtable, which was on the schedule before word got out about the BE-4 incident. I’ll be listening in – so stay tuned for any more potential details on Vulcan’s situation.)
But ULA doesn’t need just Cert-1 to fly: The company needs Vulcan to complete two launches successfully before the U.S. Space Force will sign off on it flying valuable national security missions. SpaceX is dominating the launch market and many in the industry, both competitors and customers, fear a monopoly. All six of ULA’s recently assigned Space Force missions are set to fly on Vulcan, since the company’s currently operational rockets are retiring.

So maybe this doesn’t affect Cert-1, but what about Cert-2? Bruno believes the BE-4’s failure in acceptance testing does not affect the previous qualification tests that Blue Origin has done. Even if they don’t need to re-qualify the engine, they still need to close the investigation – in which Blue Origin says it’s already found a likely cause of the explosion – check future production engines for the same flaw or flaws, and test the replacement.
As one propulsion engineer wrote on social media: “You learn a lot in development testing. You learn a little bit in qualification testing. Blessed be they who continue to learn in acceptance testing.”
Which brings us to another refrain I’ve seen in my mentions these past few days: “Space is hard.” It’s sounding a little too much like “thoughts and prayers” these days.

What’s up

Astranis signs deal for the Philippines’ first dedicated internet satellite: The company will provide capacity to a local Filipino internet service provider HTechCorp through a long-term deal with Orbits Corp. Astranis expects to launch the satellite as a part of a batch of five next year, and estimates the service will help connect up to two million people. – CNBC
China’s Landspace first to orbit with a methane-fueled rocket: The “private” venture launched its Zhuque-2 rocket and announced it successfully reached orbit, an achievement verified by U.S. Space Force tracking data. – SpaceNews
Saudi and Chinese representatives meet to discuss space cooperation: The chairman of the Saudi Space Agency hosted meetings with the top Chinese space officials in Riyadh, as part of an effort to boost political and economic ties between the nations. – Arab News
Maxar rolls out new satellite imagery platform, in an effort to broaden access to the company’s Earth observation capabilities. The “Maxar Geospatial Platform” (MGP) includes imagery, 3D-models, change detection, and more. – Via Satellite
Virgin Galactic announces schedule target for second commercial mission, with a window opening Aug. 10 for “Galactic 02,” carrying three private passengers. – Virgin Galactic
NASA cancels Janus small satellite asteroid mission, which would have flown on the delayed Psyche asteroid mission. The agency plans to put the spacecraft into long-term storage. – SpaceNews
Astra carves out spacecraft business, establishing Astra Spacecraft Engines as a subsidiary. The move reportedly will allow Astra greater flexibility in hiring and financing for the unit. – TechCrunch
Redwire to build microgravity payload development facility in Indiana, with construction of the 30,000 square foot facility to begin in the fourth quarter. – Redwire
U.K. rocket builder Orbex announces expansion: The company is further building out its facilities in Scotland and Denmark, to increase its rocket production and propulsion manufacturing capacity. – Orbex

Industry maneuvers

Dish and EchoStar reportedly analyzing a potential merger, a move that would see Charlie Ergen re-combine the companies after the latter was spun out 15 years ago. – Semafor
Private equity and defense firms in the mix to buy Ball Aerospace, which CNBC previously reported is up for sale from parent company Ball. According to a report, firms Blackstone and Veritas Capital are competing against defense companies BAE Systems, General Dynamics, and Textron to acquire Ball Aerospace. – Reuters
Satellite intelligence venture HawkEye 360 raises $58 million from BlackRock, as well as Manhattan Venture Partners, Insight Partners, NightDragon, Strategic Development Fund (SDF), Razor’s Edge, Alumni Ventures, and Adage Capital. The company plans to use the funds to develop new systems and its expand its analytics capabilities, especially to “support high-value defense missions.” The company currently has 21 satellites in orbit. – HawkEye 360
Satellite propulsion startup Benchmark Space Systems raises $33 million, in from unnamed investors. CEO Ryan McDevitt said the raise was “not directly related” to layoffs the Vermont-based company made recently. – SpaceNews
Axiom and Collins each given $5 million NASA spacesuit contracts that come under previously awarded deals from the agency. The new awards are intended to fund Axiom’s development of a spacesuit for use in low Earth orbit, and Collins’ development of a spacesuit for use on the surface of the moon. – NASA
HawkEye 360 awarded Australian contract to monitor fishing, for an undisclosed amount. The contract is part of Australia’s pilot program to improve maritime awareness around the country and surrounding islands. – HawkEye 360

Market movers

Viasat stock heads toward worst trading day ever after disclosing a malfunction with deployment of the large reflector on its recently-launched ViaSat-3 Americas satellite. The company said it’s working with the reflector’s manufacturer to try to resolve the problem, but said the issue “may materially impact” performance of the satellite. Northrop Grumman appears to be the manufacturer. Viasat’s stock on Thursday headed toward its worst drop for a single trading day since the company’s IPO in December 1996. – CNBC
Astra board approves 1-to-15 reverse stock split, with the company having previously outlined the move as part of its plan to avoid delisting by the Nasdaq exchange. Astra also seeks to raise up to $65 million through an “at the market” offering of common stock through Roth Capital, and ended a prior agreement with B. Riley to sell up to $100 million in common stock that the company signed in August. – CNBC

Boldly going

Garrett Reisman joins Vast as a human spaceflight advisor: The retired astronaut and former SpaceX director comes to Vast as the company looks to build out its human spaceflight and space habitat capabilities. – Vast
Mike Kerrigan hired as Chief Commercial Officer of Myriota, an Australian satellite IoT company. Kerrigan previously was VP of strategy for Palo Alto Networks. – Myriota

On the horizon

July 14: India’s LVM-3 launches the Chandrayaan-3 lunar mission from Sriharikota.
July 14: Rocket Lab’s Electron launches satellites from New Zealand, carrying Telesat’s LEO 3, two Spire satellites, and NASA’s four Starling satellites.
July 14: SpaceX’s Falcon 9 launches Starlink satellites from Florida.
July 18: SpaceX’s Falcon 9 launches Starlink satellites from California. More

Disney CEO Bob Iger said there will be a pullback in content spending and creation for the Star Wars and Marvel franchises.
Earlier this year Disney said it would slash $5.5 billion in costs, including $3 billion in non-sports content costs.
Iger said the explosion in Marvel TV shows in recent years “diluted focus and attention” for the brand.

Cassie Lang (Kathryn Newton) and Scott Lang (Paul Rudd) in “Ant-Man and the Wasp in Quantumania.”

Disney is slowing down when it comes to making movies and TV series for its Marvel Studios and Lucasfilm franchises, CEO Bob Iger said on CNBC Thursday.
The move comes as the company is looking to cut costs during a time when its recent films, from Marvel to animation, have underwhelmed at the box office.

“You pull back not just to focus, but also as part of our cost containment initiative. Spending less on what we make, and making less,” Iger said Thursday.
Earlier this year, Disney rolled out a broad reorganization of the business that included $5.5 billion in cutting close, of which $3 billion would be slashed from content excluding sports.
Iger said Thursday that a lot of decisions were made to prop up the company’s flagship streaming service, Disney+, and beckon more customers.
While also noting that Disney had some Pixar animation misses in recent months, he called out Marvel as being a particular example of the company’s “zeal” to pump up its original content on streaming.
“Marvel is a great example of that. It had not been in the television business at any significant level, and not only did they increase their movie output, but they ended up making a number of TV series,” said Iger. “Frankly, it diluted focus and attention.”

Earlier this year, “Ant-Man and the Wasp: Quantumania” debuted as the 31st film in the Marvel Cinematic Universe, kicking off the fifth phase of the 15-year old franchise. The film had seen the sharpest decline in ticket sales from its opening weekend to second weekend in franchise history. The Marvel installment also raked in mixed to negative reviews.
Meanwhile, Marvel’s “Guardians of the Galaxy Vol. 3” has done much better, grossing over $800 million globally.
On the Lucasfilm front, there hasn’t been a Star Wars film in theaters since 2019, and the company has focused primarily on series, such as Emmy nominees “Andor” and “Obi-Wan Kenobi” for Disney+. Lucasfilm’s “Indiana Jones and the Dial of Destiny,” the fifth film in that franchise, has underwhelmed at the box office despite a plum release date around the Fourth of July.
For Disney, and most of its streaming competitors, original content has lived solely on its flagship streaming services rather than being licensed to other platforms – a revenue driver that has stood up the traditional TV and movie business for sometime.
On Thursday, Iger said it was “a possibility” that could happen for Disney’s streaming content.
“It’s a possibility. I won’t rule it out,” Iger said. He added that licensing had been part of a collection of models that formed the traditional TV business, and holding back content for their own platform in the early days of streaming was the right move.
Recently, Warner Bros. Discovery has reportedly been in talks about licensing HBO content to other platforms, including Netflix. The company also has removed content from its Max service and licensed it to free, ad-supported streaming platforms such as Fox Corp.’s Tubi.
Disney has also followed suit in taking down content from its streaming platform. More

Disney has held early conversations to find a new strategic partner for ESPN.
Disney is also open to selling or spinning out its legacy cable networks and ABC, its broadcast network, Iger suggested.
Disney CEO Bob Iger said he has a good idea when ESPN will transition to a direct-to-consumer business but declined to say when.

Disney is open to potentially selling an equity stake in ESPN and is looking for a strategic partner in the business as it prepares to transition the sports network to streaming, CEO Bob Iger said Thursday.
The linear TV business has degraded over the past year more than Iger expected, the Disney CEO told CNBC’s David Faber Thursday in an interview at Sun Valley, Idaho. Disney announced yesterday Iger has extended his contract to 2026 as CEO. He returned to run Disney last year after stepping down as CEO in 2020.

Disney has held early conversations with potential partners that could improve an ESPN streaming service by extending its distribution and adding content, Iger said. He declined to name specific partners. Disney currently owns 80% of ESPN. Hearst Communications owns the other 20%.
Disney has held off from putting its prime ESPN content on its ESPN+ streaming service as it continues to make billions of dollars in revenue each year through traditional cable TV. Still, millions of Americans cancel their cable subscriptions each year, and that number has accelerated in recent years.
“The challenges are greater than I had anticipated,” Iger said. “The disruption of the traditional TV business is most notable. If anything, the disruption of that business has happened to a greater extent than even I was aware.”
Iger said he had become more certain in his thinking about when ESPN will launch its complete direct-to-consumer offering. He declined to say when that will happen.
In addition to finding a strategic partner for ESPN, Iger said he was open to selling or spinning off Disney’s legacy cable networks, including FX and NatGeo, and its broadcast group, ABC Networks. Iger said Disney would be “expansive” in its thinking about the legacy cable and broadcast assets, outside of ESPN.

Iger also said Disney plans to acquire Comcast’s minority stake in Hulu as planned. The two companies struck a deal in 2019 that would give Disney the option to buy Comcast’s minority stake at a fair market value.
CNBC reported earlier this year that Comcast CEO Brian Roberts had floated the idea of Disney selling it ESPN as part of Hulu negotiations when prior Disney CEO Bob Chapek was still running the company. Disney declined those overtures at the time.
Other potential partners for Disney could theoretically include Apple, Google or Amazon, three companies with large balance sheets that have global streaming aspirations and already own sports content. Amazon owns the exclusive rights to the National Football League’s “Thursday Night Football.” Google’s YouTube TV will be the new home for the NFL’s “Sunday Ticket” beginning this season. Apple currently owns the streaming rights to “Friday Night Baseball” and all Major League Soccer games.
Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC. More

Disney CEO Bob Iger sat down with CNBC’s David Faber at Allen & Co.’s annual conference in Sun Valley on Thursday.
Disney announced on Wednesday that it was extending Iger’s contract by two years through 2026.
Iger returned to the helm of Disney late last year. The company has since undergone thousands of layoffs and cut billions of dollars in spending, including from content.

Disney CEO Bob Iger opened the door to selling the company’s linear TV assets as the business struggles during the media industry’s transition to streaming and digital offerings.
Iger appeared on CNBC on Thursday, the morning after the company announced it would extend his contract by two years through 2026. He returned to the helm of the company in November after Disney’s board ousted Bob Chapek with a two-year contract through 2024 and plans to find a next successor.

“After coming back, I realized the company is facing a lot of challenges, some of them self inflicted,” Iger told CNBC’s Faber on Thursday, noting he’s accomplished a lot of work in seven months but there’s more to be done.
At the top of the list is assessing the traditional TV business, Iger said on Thursday. Disney owns a portfolio of TV networks, from broadcast station ABC to cable-TV channels like ESPN. 
Disney is going to be “expansive” in its thinking about the traditional TV business, leaving the door open to a possible sale of the networks. “They may not be core to Disney,” Iger said, adding the creativity that has come from those networks has been key for Disney. 
Cable-TV channel ESPN is in a different bucket, however. On that front, Iger said Disney is open to finding a strategic partner, which could take the form of a joint venture or offloading an ownership stake. 
Iger said when he had left the company he had predicted the future of traditional TV and had been “very pessimistic,” and has found since his return that he was right in his thinking, adding it’s worse than he expected. 

When Iger last spoke with Faber in February, soon after announcing a major restructuring at the company, he said he felt “a sense of obligation” to return to Disney and that his preference was to stay for his two-year contract.
“We’ve gotten a lot done very quickly, significant cost reductions and significant realignment of the company,” Iger said. “But dealing head on with some of our biggest challenges.”
The appearance in February came shortly after Disney announced a sweeping restructuring that included thousands of layoffs and billions of dollars cut in spending.
The reorganization warded off a potential proxy fight with activist investor Nelson Peltz.
Disney reorganized into three segments: Disney Entertainment, which includes most of its streaming and media operations; an ESPN division; and a parks, experiences and product unit.
These were some of Iger’s most significant actions in the months after his return. Disney revealed it would cut $5.5 billion in costs, consisting of $3 billion from content, excluding sports, and the remaining amount from non-content costs. The company earmarked 7,000 layoffs.
In addition to looking for his next successor, Iger has been tasked with bringing Disney’s streaming business to profitability. In the last year, media executives across all companies have focused on how to make streaming profitable, particularly after streaming behemoth Netflix lost subscribers early last year and since instituted ad-supported streaming and a crackdown on password sharing to drive revenue.
While the company posted revenue and profit in line with Wall Street estimates last quarter, it saw a loss of 4 million subscribers at its flagship streamer Disney+.
Those subscriber losses were offset by price increases, which Iger said in May weren’t to blame for the lower numbers. Instead, he said it showed room for further increases when it comes to streaming, and pushing customers toward the ad-supported tier, with the aim of reaching profitability.
In an effort to bulk up Disney+ and attract more subscribers to its cheaper, ad-supported tier – which it launched last year – the company announced last quarter it would add Hulu content to Disney+.
In May, Iger had attributed the move toward a one-app location for both Disney+ and Hulu content to the increased advertising potential of a combined platform.
Disney has been weighing whether it should buy all of Hulu, as it owns 66% and Comcast owns the rest. It’s likely Comcast will sell its Hulu stake to Disney at the beginning of 2024, CNBC previously reported.
Disney will report its fiscal third quarter earnings after the market closes Aug. 9.
Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC. More

IN A DOCUMENTARY from 2004, “Metallica: Some Kind of Monster”, members of the titular heavy-metal band hire a “performance-enhancement coach” to help them resolve their disagreements. The musicians cannot stand him and end up bonding over their decision to get rid of him. When an ex-banker, after years of working at Lehman Brothers and UBS, hired a coach to discuss his next steps, the nugget of wisdom he acquired in the course of half a dozen 40-minute sessions setting him back almost $8,000 was that he should seek a role where he would be “paid for his experience”. It is tempting to paint executive coaching as one more status symbol inflating a sense of high-powered managers’ already-ample sense of self-importance. Yet the practice—which combines management advice with therapy—does not have to be an expensive exercise in platitudes. Few executives remain static in their careers, and many need guidance at moments of transition, when relying on an internal monologue is not enough. The covid-19 pandemic, which heightened the anxiety felt by high-performers, increased the need for skilled coaching. A study from 2019 by Angel Advisors, a professional training service, found that coaching in America is now a $2bn industry—large for what might seem like a niche business. The existence of such demand strongly suggests that professional grooming has its uses.Many executives, especially CEOs, find it difficult to discuss the challenges they face. Hierarchy makes it tricky to share problems with employees as it can undermine the boss’s authority. At the same time, confidentiality forbids executives from discussing company problems with random outsiders. Robert Pickering, former boss of Cazenove, an investment bank since swallowed by JPMorgan Chase, wrote about his experience in his memoir, “Blue Blood”. “Running a firm is largely command and control, and there are very few insiders with whom you can share gripes and frustrations,” he explains. Working with a coach helped him develop coping strategies, as well as command the boardroom. Coaches can understand the executive mindset better if they were once executives themselves. Herminia Ibarra of London Business School notes that many professionals with industry expertise and people skills eventually tire of operational roles. Some find coaching to be a meaningful second act. Take Ana Lueneburger, who left the corporate world to coach company founders and the C-suite. Her approach, outlined in “Unfiltered: The CEO and the Coach”, a book she co-wrote with one of her clients, focuses on maximising strengths rather than fixing weaknesses. Your columnist, a guest Bartleby, decided to consider her own game plan by going to a private club in Mayfair for an ad hoc coaching session with Ms Lueneburger. Preparation consisted of filling extensive questionnaires, including the Hogan Leadership Forecast (a psychometric assessment of “derailers and personality-based performance risks”, since you ask).The coach customarily asks the client to describe impediments to happiness and development (from difficult peer relationships and a tough inner critic to withered motivation and drive). Given the time constraints, Bartleby discussed a personal issue which troubles her at work. Two hours sipping tea and sparkling water passed in a flash and then the session was over. Coaching is not a scientific operation, jargon du jour notwithstanding. But if you strip away all the talk of circling back to 360-degree change from your comfort zone, you do end up with an intuitive, collaborative process, the success of which depends on chemistry between the coach and the client. Ms Lueneburger neither appealed to the siren song of self-care nor merely told Bartleby what she wanted to hear. Instead she shifted the angle of the problem, which is not easy to do unaided for most clients themselves, many of whom operate on autopilot at work and elsewhere. According to the VIA character questionnaire (filled out alongside the Hogan), Bartleby scores poorly in leadership but highly in speaking the truth. With these new credentials, her message is: if you are a member of a C-suite, get yourself a coach. It does not have to revolve around a crisis or a fork in your career path. At its best, it can illuminate snags executives face. The worst that can happen is spending time with a well-meaning, and typically intelligent, interlocutor, who can help consolidate common sense. If you can put the fee on your expense account, what’s not to like?■Read more from Bartleby, our columnist on management and work:How white-collar warriors gear up for the day (Jul 6th)The potential and the plight of the middle manager (Jun 29th)“Scaling People” is a textbook piece of management writing (Jun 22nd)Also: How the Bartleby column got its name More

IN A DOCUMENTARY from 2004, “Metallica: Some Kind of Monster”, members of the titular heavy-metal band hire a “performance-enhancement coach” to help them resolve their disagreements. The musicians cannot stand him and end up bonding over their decision to get rid of him. When an ex-banker, after years of working at Lehman Brothers and UBS, hired a coach to discuss his next steps, the nugget of wisdom he acquired in the course of half a dozen 40-minute sessions setting him back almost $8,000 was that he should seek a role where he would be “paid for his experience”. Listen to this story. Enjoy more audio and podcasts on More

Merging companies have long seen Britain’s Competition and Markets Authority as something of an end-of-level boss. For two years running the CMA has blocked more deals than any other regulator, scotching ones like Meta’s acquisition of Giphy, a blameless meme-generator. This year it has been busy again, in April blocking Microsoft’s $69bn acquisition of Activision Blizzard, a video-game maker, which had looked on track for approval elsewhere.Is the fearsome trustbuster preparing to fold? On July 11th an American court cleared the Microsoft-Activision transaction, leaving Britain as the holdout. Within hours the CMA said it was prepared to examine a “modified” version of the transaction. Activision’s share price shot up: investors think it is game on. Some see the CMA’s recent activism as a show of post-Brexit independence. A blander explanation is that companies are unused to British antitrust regulators (who before Brexit took a back seat to Brussels), increasing the risk of confusion and surprises. Tech firms find the CMA’s processes rigid, with little scope for negotiation. Microsoft was blindsided by its April ruling on Activision.Another reason for Britain’s new vim lies in America. The Federal Trade Commission (FTC) used to approve more vertical mergers, like Microsoft and Activision, with strings attached. But these conditions proved hard to enforce, so regulators now prefer to block vertical deals outright. In America, where the legal basis for doing so is thin, courts overturn such decisions. In Britain, where trustbusters have wide discretion, the CMA’s veto stands. Britain thus finds itself in lonely opposition to global deals.That is uncomfortable, especially when the parties are not British. In May Britain’s government urged its regulators to “understand their wider responsibilities for economic growth”. As the FTC continues its unsuccessful opposition to any big deal, the responsibility to compromise increasingly falls elsewhere.■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More

PAUL HUDSON, boss of Sanofi, is brandishing an iPhone. He is keen to show off the French drugmaker’s new artificial-intelligence (AI) app, plai. It draws on more than 1bn data points to provide “snackable” information, from warnings about low stocks of a drug to questions for a meeting with an ad agency or suggestions to set up clinical-trial sites that could expedite drug approvals. Like Netflix recommendations, plai delivers “nudges”, as Mr Hudson calls them, that are useful at that moment in time. He jokes that plai broke even in about four hours, and says the cost is “peanuts” compared with the $300m-400m that big consultancies charge for a project to curate a big company’s data. One in ten of Sanofi’s 80,000 staff uses it every day. AI is not new in drugmaking. Biotech firms have been tinkering with it for years. Now interest from big pharma is growing. Last year Emma Walmsley, chief executive of GSK, said it could improve the productivity of research and development, the industry’s most profound challenge. Moderna recently described itself as “laser-focused” on AI. Sanofi is More