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State of Freight

West Coast ports and terminals are shutting down after union workers walked off the job after a failure in negotiations with port management.
West Coast ports have been involved in tense labor negotiations with unions, though recent progress had been cited.
The Port of Oakland shut down on Friday morning due to lack of sufficient labor, and operations in Los Angeles were reported to be closing too, including Fenix Marine, the APL terminal, and Port of Hueneme.

West Coast ports are shutting down as union workers “no show” after a breakdown in negotiations with port management.
The Port of Oakland was shut down Friday morning due to insufficient labor for terminal operations, a stoppage that is expected to last at least through Saturday. A source close to the situation told CNBC the port shutdowns are expected to spread across the West Coast as a result of lack of sufficient labor as workers protest over wage negotiations in contract talks with port management.

Two of the Oakland port marine terminals — SSA, its largest, and TraPac — were closed as of the morning shift on Friday, said Robert Bernardo, spokesman for the Port of Oakland. The majority of imports and exports are processed through those terminals, he said.
While the actions taken by workers are not a formal strike, the source told CNBC to expect stoppages at other West Coast ports as union workers refuse to report for assignments, with operations also reportedly stopping at the port hub of Los Angeles, including Fenix Marine, the APL terminal, and Port of Hueneme, which processes automobiles and perishables — bananas the largest import in that category. The situation remains fluid, with truck drivers being turned away at Los Angeles sites.
In an ILWU press release, International President Willie Adams said talks have “not broken down” and added “we aren’t going to settle for an economic package that doesn’t recognize the heroic efforts and personal sacrifices of the ILWU workforce that lifted the shipping industry to record profits.”
The stoppages come at a time when activity at West Coast ports had picked up again after losing volume to the East Coast ports due to concerns about the volatile labor situation.
At the Port of Oakland, total container volume increased for two consecutive months, with port officials optimistic about the upswing. It is the eighth-largest port in the country, importing a wide range of items, from Australian wine and meat, to aluminum from South Korea, and clothing, electronics and furniture from China.

“Given the increase we’ve seen in business over the last couple of months, we are optimistic about a stronger second half of 2023 for the amount of cargo moving through Oakland,” said Port of Oakland Maritime Director Bryan Brandes. “We also anticipate increasing the number of ocean carrier services offered at the Port of Oakland in the coming months.”
“Oakland is a big port for U.S. ag exporters,” said Peter Friedmann, executive director of the  Agriculture Transportation Coalition (AgTC). “Fridays are a big day for Ag exports.”

Webcams showing no truck activity at Port of Oakland where lack of workers closed terminal operations

The ports and unions have been involved in contract negotiations over the past year, adding tension to port operations.
On April 20, the Pacific Maritime Association, which represents the ports, and the International Longshore and Warehouse Union, announced they reached a tentative agreement on certain key issues, though they did not disclose more.
People familiar with the negotiation process told CNBC at the time that it represented “major progress.” Prior agreements included maintenance of health benefits. But known issues that still needed to be worked out included wages, as well as safety, automation and pension benefits.
PMA, which represents port management, in a statement on Twitter called the events Friday “concerted and disruptive work actions” by the ILWU.
The ILWU released a statement on Friday saying that rank-and-file workers had taken it upon themselves to “voice their displeasure” amid the ongoing “arduous fight” with port management. ILWU said cargo workers at ports “remain on the job,” but the port source told CNBC there is an insufficient number of workers overall for port operations to continue. The ILWU statement did not call out wages specifically, but cited “basic requests,” including health and safety, and the $500 billion in profits made by ocean carriers and terminal operators during the past two years.
The last work stoppage at the Oakland port came in early November, when hundreds of clerks walked off the job over a pay dispute.
Any port closure creates backups that impact both the pickup and drop off of products by truck drivers.
Truckers also had a work stoppage related to the AB 5 legislation in California covering classification of truckers as employees, a stoppage which lasted for five days, but took two months to clear up. ILWU did not cross that picket line.
At the Port of Oakland, over 2,100 trucks go through the terminals each day, but none are expected through Saturday with insufficient labor to serve the trucks. More

The U.S. Food and Drug Administration has given Qilu Pharmaceutical permission to ship cisplatin to the United States to ease a national cancer drug shortage.
The drug maker’s cisplatin injections are manufactured and marketed in China. Cisplatin is widely used in chemotherapy to treat testicular, lung, bladder, cervical and ovarian cancers.
The FDA earlier said it was considering allowing nonapproved drugs to be imported to alleviate the shortage.

Worker labors on a production line at the factory of Qilu Pharmaceutical in Haikou, Hainan province of China, February 11, 2022.
Su Bikun | VCG | Getty Images

The U.S. Food and Drug Administration has authorized the temporary importation of an unapproved chemotherapy drug from China in effort to ease an acute shortage of cancer drugs in the United States, according to an update posted to the agency’s website Friday.
Qilu Pharmaceutical, which makes and markets cisplatin injections in China, received FDA permission to export the drug to the U.S. market weeks ago, a document shows.

A letter dated May 24 from Qilu’s deputy general manager notified health care professionals of the approval.
Qilu is coordinating with a Toronto-based company, Apotex, to distribute 50-milligram cisplatin vials in the U.S.
Health care providers can begin ordering the drug Tuesday through their wholesalers.
Cisplatin is a generic drug that has been available for decades in the U.S. and is distributed by several approved manufacturers. Those manufacturers have been unable to keep up with demand. Qilu’s version of cisplatin is not approved in the U.S.
Qilu, which is headquartered in the city of Jinan in Shandong province, says it is one of the 10 largest drug manufacturers in China.

The FDA told CNBC this week the agency was considering imports of unapproved chemotherapy drugs, but it did not at that time disclose the names of any manufacturers who might provide that medication.
An FDA spokesperson said the agency assesses the quality of unapproved drug imports to make sure they are safe for U.S. patients.
Doctors say some cancer patients could die if the national shortage of drugs such as cisplatin is not resolved soon. At least 13 other cancer drugs are in short supply across the U.S.

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The cancer drug shortages have forced some hospitals to ration medications by reducing the dosage to extend the supply and prioritizing patients who have a better chance of being cured.
Cisplatin is widely used to treat testicular, lung, bladder, cervical and ovarian cancers among other disease states. Up to 20% of cancer patients are treated with cisplatin and other platinum-based chemotherapy drugs, according to the National Cancer Institute.
The World Health Organization says the drug is an essential part of basic health care.
The national shortage of cisplatin began in February after a pharmaceutical company based in India temporarily halted production for the U.S. market.
Intas Pharmaceuticals decided to temporarily stop production after an FDA inspection last year found a “cascade of failure” in its quality control unit.
A spokesperson for Intas told CNBC this week the company is working with the FDA to restart production for the U.S., but no date has been set yet. More

Buy Buy Baby is drawing interest from at least two bidders as its parent company, Bed Bath & Beyond, works to auction off its assets and keep some form of its business alive, CNBC has learned. 
An unknown bidder is interested in buying the baby gear retailer as a going concern and keeping about 75% of its stores open, according to correspondence obtained by CNBC. 
Babylist, a direct-to-consumer baby registry website, wants to buy its trademark and domain.

Bed Bath & Beyond is expected to be dissolved after the failed retailer declared bankruptcy, but the company’s crown jewel — Buy Buy Baby — may live to see another day. 
The baby gear retailer is drawing interest from at least two bidders as its parent company, Bed Bath & Beyond, works to auction off its assets and keep some form of its business alive, CNBC has learned. 

The interested parties include an unknown bidder, who would purchase the banner as a going concern and keep about 75% of stores open, according to correspondence obtained by CNBC. The other interested bidder is Babylist, a direct-to-consumer baby registry website that wants to buy its trademark and domain, that company’s CEO, Natalie Gordon, confirmed to CNBC.
So far, it doesn’t appear as if there’s any interest in buying the Bed Bath banner and keeping its stores open, but some bidders are interested in buying its digital assets, a person familiar with the matter told CNBC.
It’s not clear how much the unknown bidder is offering to purchase Buy Buy Baby, but it was seeking an additional $50 million in capital to shore up its proposal, according to the correspondence. That figure offers the first clue into how much bidders are willing to pay to snap up the pieces of Bed Bath’s fallen business.
The valuation of the company and its intellectual property is unclear. In its most recent quarterly securities filing, Bed Bath noted the intangible value of trade names and trademarks was just $13.4 million. 
As of late November, Bed Bath & Beyond had about $4.4 billion in assets and $5.2 billion in debts, court filings show. 

Gordon declined to share the number Babylist offered for Buy Buy’s trademark and domain. 

Who are the bidders?

Ankura Capital Advisors, an investment banking firm, is advising the unnamed bidder and said in a May 16 email to its distribution list that the party is seeking a financial partner “to help lead the purchase of Buybuy Baby out of the BBBY bankruptcy.”
The client was seeking the additional $50 million in capital alongside its current financial sponsor to support a stalking horse bid on the asset, according to the correspondence, which was seen by CNBC. A stalking horse bid is an offer on the assets of a bankrupt company that, if accepted, sets a price floor for future bids.
The mystery bidder, who was not named in the documents seen by CNBC, is an “independent operator with several successful, complimentary retail chains in their portfolio,” according to the message.
“They are open to various structures for the investment, from equity to preferred equity and other forms of junior capital,” the message reads. “They have committed over 400 hours in extensive diligence already and have the team and experience to operate the stores as a going concern.” 
In the email, Ankura notes that Buy Buy Baby had about $90 million in inventory at the time of the bankruptcy filing and had been liquidating about $7.5 million weekly at the time the message was sent. 

Babylist showroom floor
Courtesy: Babylist 

Babylist bills itself as a destination for all things baby. It saw $290 million in revenue in 2022, says it’s profitable and counts over a million new parent sign-ups each year. The company said it considered putting in a bid to buy the entire chain, including its stores, but it ultimately decided it didn’t fit into its overall strategic plan. 
Babylist says it started out as a destination for the modern parent who is tired of the same old pink and blue landscapes but that it’s now working to expand its audience to all members of the proverbial village, including grandparents. 
That’s where Buy Buy Baby — and its long-held name recognition — would come in. 
If Babylist’s bid to acquire the banner’s trademark and domain were to be accepted, people who search for Buy Buy Baby and try to access the website would be redirected to Babylist, Gordon explained. 
“We have tremendous trust with new and expecting parents but Buy Buy Baby is much better known with kind of that older generation,” she said. “So as we’re expanding to the whole family as an audience, we really think it can jumpstart us in that way.” 
Gordon said the company opted out of putting in an offer for Buy Buy Baby’s registry assets because of how quickly they can become stale. 
Plus, the company already appears to be taking share from Buy Buy Baby. Since Bed Bath’s bankruptcy was announced, Babylist has had nearly 200,000 new sign-ups, which is a higher number of new customers than the company usually sees in that period of time, it said. 
Following the bankruptcy of Babies ‘R’ Us and the potential liquidation of Buy Buy Baby, there are few major retailers families can turn to that cater exclusively to the infant category. For registries, their options include Target, Amazon and Babylist, among others.
Babylist doesn’t operate any traditional brick-and-mortar locations but plans to open its first showroom in Beverly Hills, California, this summer.

The crown jewel of Bed Bath & Beyond

This is not the first time Buy Buy Baby has seen sale interest. The banner reportedly drew interest from potential buyers in 2022. It also caught the attention of activist investor Ryan Cohen, co-founder of Chewy and chair of GameStop, who last March pointed to the baby gear banner as one of the most valuable pieces of the company, arguing it could be worth several billion dollars.
At the time, Cohen pushed for a spinoff or sale. 
Buy Buy Baby has remained a bright spot in Bed Bath & Beyond’s otherwise dismal earnings reports in recent years.

A Buy Buy Baby store in the Brooklyn borough of New York, US, on Monday, Feb. 6, 2023.
Stephanie Keith | Bloomberg | Getty Images

In Bed Bath’s fiscal 2021 holiday quarter, same-store sales for Bed Bath & Beyond stores declined 15% — but Buy Buy Baby’s same-store sales grew by low single digits.
And more recently, during Bed Bath’s fiscal third quarter of 2022, which ended Nov. 26, sales declines were reported across the company, but Buy Buy Baby’s revenue declines outperformed Bed Bath’s. During the quarter, comparable sales at the Bed Bath banner declined 34%, while at Buy Buy Baby, they declined in the low 20% range, the company said at the time. 
When Bed Bath & Beyond locations were shuttering across the country as part of the company’s efforts to stop the financial bleeding, it opened more Buy Buy Baby locations in the hopes the stores would boost sales. 
As of late April, 120 of the stores were still open, alongside 360 of Bed Bath’s namesake stores, the company said previously. 

Auction delays

Bed Bath & Beyond’s bankruptcy auction has been delayed twice, which could indicate the company is still trying to drum up interest for its assets. 
In the months before Bed Bath declared bankruptcy, CNBC reported the company was courting prospective buyers and lenders that would be willing to take on the company and keep its doors open. At the time, the potential buyers included private equity firm Sycamore Partners, which was particularly interested in Buy Buy Baby, and Authentic Brands, which has frequented many bankruptcy-run sales for retailers such as Forever 21.
In the end, the process proved unsuccessful and produced “limited interest in a viable proposal to acquire the Debtors’ assets,” according to court records filed in the company’s bankruptcy case in April.
Still, in those filings, the company said it was confident it could offload its names and stores and said it planned to market the business to avoid outright liquidation. 
“While the commencement of a full chain wind-down is necessitated by economic realities, Bed Bath & Beyond has and will continue to market their businesses as a going-concern, including the buybuy Baby business,” the company’s chief financial officer and chief restructuring officer Holly Etlin wrote in a declaration to New Jersey’s bankruptcy court at the time. 
In the filings, the company confirmed CNBC’s prior reporting and said more than 100 potential investors had been engaged by Bed Bath’s advisors. Prospective bidders were asked if they were interested in buying the business as a going concern or providing Chapter 11 financing. 
The company had been hoping a buyer would be willing to purchase either Bed Bath & Beyond or Buy Buy Baby as standalone businesses, buy the brands’ intellectual property and perhaps take on a few of their better performing stores.
“Bed Bath & Beyond has pulled off long shot transactions several times in the last six months, so nobody should think Bed Bath & Beyond will not be able to do so again. To the contrary, Bed Bath & Beyond and its professionals will make every effort to salvage all or a portion of operations for the benefit of all stakeholders,” Etlin added in the filings.
Further delays in the auction process could signal willingness on Bed Bath’s part to entertain the offer from the unknown bidder, provided the bidder can find more capital.
Ankura declined to comment on the matter. Bed Bath & Beyond didn’t respond to a request for comment. 
Bed Bath previously told CNBC the auction had been delayed so it could have “more time to ensure the most value-maximizing transaction is achieved.” 
Stalking horse bids are now due on June 8 at 5 p.m., and final bids are now due on June 14. An auction, if necessary, is scheduled for June 16. 
— CNBC’s Lillian Rizzo contributed to this report. More

Maine recently joined a growing list of states suing chemical manufacturers over toxic “forever chemicals,” or PFAS, claiming significant harm to residents and natural resources.
An estimated 64 million people across the U.S. are affected by drinking water contaminated with the chemicals.
3M faces a bellwether trial over PFAS, set to begin Monday, that could set the tone for future lawsuits.

Just outside of Bangor, Maine — the hometown of renowned horror author Stephen King — more than 500 students, faculty and staff arrive at Hermon High School each day. 
But since November, they can no longer drink the water. All the fountains are taped off with plastic bags. Bottles of water are stacked nearby. A water filtration system is set to be installed over the summer. 

A fountain at Hermon High School in Maine is taped shut after the water tested over the state’s safety limit for PFAS chemicals.

“We’re very concerned,” Hermon School District Superintendent Micah Grant told CNBC. 
The reason? The school’s water recently tested above the state’s safety limit for PFAS, or per- and polyfluoroalkyl substances, often referred to as “forever chemicals.” 
According to the Environmental Protection Agency, even tiny exposure to PFAS in drinking water could pose a serious health risk. 
“We’re not fully understanding why it’s in our water and it’s at the level we’re at,” Grant said.
Hermon High School is just one example of PFAS contamination currently affecting the community, according to Maine’s attorney general, Aaron Frey. The chemicals have also been identified in groundwater in towns and municipalities throughout the state including several military facilities and farms, according to Frey.

“There are farmers who had to euthanize their livestock because of the chemical contamination,” Frey told CNBC. 

Farmer Adam Nordell looks at the remnants of his once-thriving Songbird Farm, now shut down after its soil and crops tested positive for toxic “forever chemicals.”

Maine recently joined a growing list of states — which now includes New Mexico, Maryland, and Rhode Island — in filing litigation against several chemical manufacturers claiming they have caused significant harm to the state’s residents and natural resources.
“We’re alleging that 3M and DuPont [and other manufacturers] created these chemicals … had the science that showed just how dangerous they were, how toxic they were, how they were going to last forever,” Frey said. “It is my responsibility to do whatever I can to hold accountable those companies that profited off of this chemical.”
More than a dozen other states — including Alaska, California, Colorado, Delaware, Florida, Illinois, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Ohio, Vermont and Wisconsin — have filed litigation against PFAS manufacturers over the years.
Some have already reached settlements. Minnesota, for example, settled with 3M for $850 million, and Delaware settled with DuPont and its spinoffs for $50 million, resolving the companies’ responsibility for damage in those states.
Wall Street is now awaiting a bellwether trial in federal court, set to begin Monday, in which the city of Stuart, Florida, alleges that firefighting foam chemicals manufactured by 3M contaminated its water supply.

What are PFAS?

According to the Centers for Disease Control and Prevention, PFAS are a group of chemicals used to make coatings and products that resist heat, oil, stains, grease and water.
The human-made substances date back to the 1940s, and over the decades, they’ve been used in a wide range of applications, including nonstick cookware, waterproof fabrics, carpeting, food packaging and cosmetics in addition to firefighting foam like that at the center of the lawsuit in Stuart.
But over time, concerns began to rise. CDC officials say the synthetic chemicals do not break down in the environment and are tied to serious health risks.
“We’ve seen correlations with thyroid disease, certain kinds of cancer, kidney disease, liver dysfunction, it becomes concentrated in the liver … they’re called ‘forever chemicals’ because they stay in your body,” former FDA Commissioner Dr. Scott Gottlieb told CNBC. “I think what the government needs to do is step up testing, make sure that we have a better picture of where these chemicals are getting into food sources [and] in the water supply.”
While testing of PFAS is expected to become more prevalent in the years to come, Gottlieb said there are steps consumers can take now to assess their exposure. Residents who live close to a military base or an industrial plant that is known for making these chemicals should ask their local water utility if it has tested PFAS levels, he said.
“There was a big analysis done a number of years ago of different water municipalities that found that about 1% of all municipal water sources did contain some level of PFAS,” Gottlieb said.
More than 64 million people are affected by drinking water contaminated with PFAS — represented by a reading of 4 parts per trillion or above — according to an EPA report released in March.

Manufacturers respond

Several manufacturers have announced plans to reduce or discontinue the production of PFAS in the coming years. 
“As the science and technology of PFAS, societal and regulatory expectations, and our expectations of ourselves have evolved, so has how we manage PFAS,” a 3M spokesperson said in a statement to CNBC, adding the company plans to end production of the chemicals by 2025.
The company also expressed a commitment to remediate PFAS contamination, invest in water treatment and collaborate with communities. 
DuPont, on the other hand, said it has “never manufactured” the harmful chemicals and believes the legal complaints are “without merit.”
The company, formerly E.I. du Pont de Nemours, separated its chemical businesses in 2015, forming Chemours Company. It then merged with Dow in 2017 to create DowDuPont, and then subsequently split into three separate entities in 2019: Corteva Agriscience, Dow and the new DuPont.
All these companies, along with others, are named as defendants in Maine’s lawsuit. DuPont and Chemours have been severed from the bellwether trial where the city of Stuart, Florida is the main plaintiff.
On Friday, DuPont, Chemours and Corteva announced a $1.19 billion fund that will be used to resolve “PFAS-related drinking water claims.” However an addendum to a joint statement announcing the fund adds that it “does not include claims of personal injury due to alleged exposure to PFAS or claims by State Attorneys General that alleged PFAS contamination has damaged the State’s natural resources.”
Chemours pledged in 2018 to reduce PFAS emissions at its manufacturing sites by at least 99% by 2030. A spokesperson said in a statement it has made significant progress in implementing advanced technologies to minimize emissions of fluorinated organic compounds.
Dow denied manufacturing PFAS and said it is not accused of causing any environmental contamination.
A Corteva spokesperson told CNBC it “does not comment on ongoing legal matters.”

Mounting liabilities for 3M

RBC Capital Markets Managing Director Deane Dray sees the lawsuits as a particular financial risk to 3M.
“At this stage, given valuation and what we know about the PFAS litigation, we do consider 3M to be uninvestable at this point,” Dray told CNBC.

3M Global Headquarters in Maplewood, Minnesota, US, on Thursday, Jan. 26, 2023.
Ben Brewer | Bloomberg | Getty Images

Shares of 3M have been under pressure this year, down 20% over the last six months, trading at their lowest level in over 10 years.
“I expect PFAS to be a front-page news item for the next couple of years,” Dray said, adding that the substances are used right now in many semiconductor applications and military weapons systems.
According to RBC Capital, 3M’s PFAS liability risk amounts to an estimated $20 billion to $25 billion. 
3M is showing signs it may be feeling the pressure: In its latest earnings report it revealed a restructuring plan that included layoffs affecting 6,000 employees around the world that the company says will save up to $900 million a year. It’s also planning to spin off its health-care business in early 2024, which analysts say will generate billions of dollars in capital.
The industrial giant is already facing separate lawsuits over its military Combat Arms earplugs. Those suits are being brought by more than 200,000 military service members and veterans who claim 3M’s earplugs were defective and failed to protect them from hearing loss during combat and training.

3M’s Combat Arms CAEv2 earplugs

3M attorney Eric Rucker told CNBC in March that the earplugs worked when used according to their instructions and that any liabilities estimate was “purely speculative.”

PFAS and politics

Last year, the Biden administration announced that $10 billion from the Bipartisan Infrastructure Law would be used toward addressing PFAS contamination.
That same month, the EPA introduced for the first time new standards on drinking water that address the amount of PFAS allowable for consumption.
The industry is awaiting word on whether the EPA will move forward with designating PFAS compounds as hazardous chemicals, which experts say could open the door to further litigation and push water utilities to make necessary upgrades to their filtration systems.
While the agency has publicly acknowledged its intent to do so, experts including Capstone energy analyst Gianna Kinsman says a formal designation could come by the end of this year. 
Kinsman added that the 2024 presidential election could also influence the timeline: “I think it is likely that if a Republican takes office we could see a slowdown in PFAS regulation, whereas if Biden wins a second term I believe his PFAS regulatory agenda will be even more ambitious, potentially tackling PFAS by larger categories rather than individually.”
RBC’s Dray added that there is national security interest in extending the use of PFAS due to a lack of alternative options on the market.
“[It will take] a decade to develop another molecule and then have all the testing done,” he said.
In the meantime, scientists and industrial experts are in an arms race to develop a safer substitute to PFAS. Others are researching technologies that use electrification and heat to break down synthetic chemicals as well as treatment options for exposed areas.

Grassroots action

Nearly 30 miles away from Hermon High School, in the rural farming town of Unity, Maine, sits the remnants of the once-thriving Songbird Farm. 
Nine years ago, Adam Nordell — who’s now an advocate for nonprofit Defend Our Health — and his wife, Johanna Davis, came to this property to grow healthy and fresh produce to sell to their community. 
At the time, Songbird was thriving and lush, and over the years the couple grew a mix of grains and vegetables, including tomatoes, peppers, garlic, onions, sweet potatoes and cantaloupe. 
But that all changed two years ago when Nordell and Davis had their soil tested after a customer called about a local news report she saw detailing a farm contaminated with PFAS. 
When the test results came back, their worst fears were realized.
“We learned our land was severely contaminated with forever chemicals,” Nordell said. “As soon as we learned, we shut down.”
The family has since learned the land was spread with municipal wastewater treatment sludge in the early 1990s. Nordell said at the time it was marketed to farmers as a free or cheap source of fertilization.
“The farmers were told they were fertilizing their crops. Unfortunately, that wastewater is laden with all sorts of industrial chemicals that are leaching out of consumer products,” he said.
The mission of the nonprofit he now works for is to reduce people’s exposure to toxic chemicals, to raise awareness among farmers across the country and to hold chemical manufacturers accountable.
“They need to step up to the plate and pay for the impact that they’ve had on the world,” Nordell said. More

A bankruptcy judge ordered Diamond Sports, the owner of a portfolio of regional sports networks, to make full payments to four MLB teams to keep carrying their games.
Diamond must pay the Diamondbacks, Guardians, Rangers and Twins in full, or the teams can walk away from their contract with the network owner.
Earlier this week, Diamond stopped making payments to the San Diego Padres. MLB has since began airing the Padres’ games.

The Ohio Cup Trophy on top of a Bally Sports logo prior to a game between the Cincinnati Reds and Cleveland Guardians at Progressive Field in Cleveland, May 17, 2022.
George Kubas | Diamond Images | Getty Images

Diamond Sports, the owner of regional sports networks, was ordered this week by a bankruptcy judge to make full media rights payments to four Major League Baseball teams.
Diamond, which runs a portfolio of 19 networks under the Bally Sports brand, filed for bankruptcy in March, seeking to not only restructure its debt load, but also reset some of its media rights deals with teams to reflect so-called market rates in the wake of rampant cord cutting.

The company had been looking to cut down the payments owed to four MLB teams — the Arizona Diamondbacks, Cleveland Guardians, Texas Rangers and Minnesota Twins — which caused it to go toe-to-toe with MLB officials in bankruptcy court this week. Diamond had already paid the teams up to 75% of the payments owed earlier in its bankruptcy, court papers show.
If Diamond doesn’t make the remainder of the payments owed to the teams, those teams can walk away from their contracts with the company, a judge ruled.
The decision comes after MLB earlier this week announced it would begin producing and distributing San Diego Padres games on pay-TV bundles and its MLB.TV streaming service after Diamond stopped making payments to the team. The in-court matter didn’t affect the status of the Padres situation.
“MLB appreciates the ruling from the Federal Bankruptcy Court in Houston requiring Diamond to pay the full contractual rate to Clubs,” an MLB spokesperson said in a statement Friday. “As always, we hope Diamond will continue to broadcast games and meet its contractual obligations to Clubs. As with the Padres, MLB will stand ready to make games available to fans if Diamond fails to meet its obligations.”
The judge’s ruling came after a two-day hearing that included testimony from MLB Commissioner Rob Manfred and showcased the tensions between the league and Diamond Sports.

A Diamond spokesperson said in a statement Friday that in keeping with the bankruptcy judge’s orders, “we look forward to engaging with MLB and our team partners to negotiate a go-forward rights package that works for all parties and positions Diamond for long-term success.”
In particular, Diamond has been pushing to hold the direct-to-consumer streaming rights to all MLB teams that air on its networks. Currently, Diamond has deals with all its NBA and NHL teams, plus a handful of MLB teams for the streaming rights.
The proliferation of consumers cutting their traditional pay-TV bundles in favor of streaming services has weighed on the regional sports network business. Last year, Diamond launched its streaming response with Bally Sports+.
Diamond pays fees to 42 teams across the MLB, NBA and NHL to broadcast the bulk of the local games in their markets.
During the hearing, a Diamond executive said Bally Sports+ had 203,00 subscribers, representing 55% of the subscriber goal for the company, The Athletic reported.
Diamond is also facing a more than $8 billion debt load, stemming from Sinclair Broadcast Group’s $10.6 billion acquisition of regional sports networks in 2019.
Diamond is now an unconsolidated and independently run subsidiary of Sinclair. More

Inflation is hitting the beer industry hard as brewers grapple with increased costs for packaging and transportation
Beer makers such as Anheuser-Busch and Molson Coors have raised prices on many of their popular beers.
Beer prices rose 5.9% in the 12 months through April 2023, and are up 72% since the year 2000.

Beer isn’t as much of a bargain as it used to be.
Americans are drinking fewer brews, and the sector is steadily losing market share to spirits. Beer companies, faced with rising operating costs in areas like packaging and transportation, have raised prices and seen bigger profits, with consumers footing the bill.

The price of beer bought at retail locations such as grocery stores rose 5.9% for the 12 months through April 2023 compared with the prior year, according to data from the Bureau of Labor Statistics. The rate topped the overall 4.9% inflation for the same period.
Since 2000, retail beer consumed at home has increased more than 72%. The cost of beer has climbed even more for people drinking outside the home, jumping 102% during that time.

Read more of CNBC’s coverage on inflation

While beer lovers have felt inflation in their wallets, price increases in the last year helped to drive strong performances for some of the world’s largest beer makers.
In its latest quarterly earnings report, Anheuser-Busch InBev, the world’s largest brewer and the maker of Bud Light, reported a jump in profit driven by price increases and getting consumers to spend more on premium offerings. As a result, the brewing giant saw its core profit increase by 13.6% year over year to $4.76 billion. At the same time, beer sales increased only 0.4% from a year ago.
Other beer makers such as Molson Coors and Heineken are also reporting better-than-expected profits as consumers absorb higher prices.

Danelle Kosmal, vice president of research at the Beer Institute, said beer is still a staple product in many American households and remains an “affordable luxury.” She notes that other beverage categories, such as juice and carbonated drinks, have seen double-digit increases far above the overall rate of inflation.
Meanwhile, drinkers of distilled liquor and wine beverages are faring much better amid the nation’s soaring inflation. Prices for both categories have seen only moderate increases of about 1% to 2.5% year over year. More

Consumers are more likely to cut back on their restaurant visits instead of trading down to preserve their budgets, according to a report from AlixPartners.
In April, prices for food away from home rose 8.6% compared with the year-earlier period, according to the Bureau of Labor Statistics.
That same month, traffic at restaurants open at least a year fell 3.5% compared with a year earlier, according to Black Box Intelligence data.

People sit outdoors at the Petite Crevette Restaurant on June 05, 2021 in the Brooklyn borough of New York City.
Robert Nickelsberg | Getty Images

During the Great Recession, consumers hunted for bargains, trading down to cheaper restaurants or picking the least expensive menu options.
But today, as inflation puts pressure on their wallets, consumers are more likely to cut back on their restaurant visits instead to preserve their budgets, according to a report from AlixPartners.

The cost of eating out has been rising for more than a year. In March, for the first time since inflation began accelerating in mid-2021, prices for meals eaten away from home rose faster than prices at grocery stores.
In April, prices for food away from home rose 8.6% compared with the year-earlier period, according to the Bureau of Labor Statistics. Prices for food at home climbed 7.1% during the same period.
In response, diners have been visiting restaurants less frequently. In April, traffic at restaurants open at least a year fell 3.5% compared with a year earlier, according to Black Box Intelligence data.
In a survey conducted by AlixPartners in December, 74% of respondents said they planned to reduce dining out. Just 39% said they would choose less expensive restaurants. Those surveyed could choose more than one option.
Back in January 2009, just 12% of respondents said they would eliminate or reduce visits to cut back on their restaurant spending.

“History would tell you that people just trade down but continue to eat out as much,” said AlixPartners Managing Director Andrew Sharpee.

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But in the decade and a half since the financial crisis, consumers have changed. The pandemic made many people more comfortable cooking at home. Sharpee said he thinks that consumers will budget their restaurant spending for experiences that can’t be replicated at home, rather than trading down from casual dining to fast food.
“What you’re going to see now is winners and losers across the board,” he said.
Young consumers, in particular, are cutting back their takeout and food-delivery orders but still plan to dine in person, according to the report. Delivery orders are usually more expensive because of the associated fees and sometimes higher prices for the food itself, to offset the commission fees that the restaurants have to pay.
“Delivery has just gotten too expensive,” Sharpee said.
First Watch Restaurant Group said in early May that its customers haven’t been ordering their meals as often through third-party delivery services.
For its part, DoorDash is starting to push back against inflated delivery prices by giving eateries with the same delivery and in-store pricing more favorable placement in its app.
The shifts in consumer spending showed up in other restaurant companies’ quarterly earnings. El Pollo Loco, Domino’s Pizza and Outback Steakhouse owner Bloomin’ Brands were among the companies that reported declining traffic in the U.S., even though they faced easy comparisons to last year’s metrics, when the Covid omicron outbreak hurt industry sales.
But some restaurants have insisted they haven’t seen any significant changes. Starbucks said its customers haven’t been trading down or spending less at its cafes. And Josh Kobza, chief executive of Burger King owner Restaurant Brands International, said Tuesday the company hasn’t seen a major shift in its business.
“You can have some folks who are existing customers who trade down, but we also probably benefit from a certain trade down into the category. It’s hard to pull these two dynamics apart too much, but we haven’t seen a huge shift in the business that we could attribute directly to inflation,” Kobza said at Bernstein’s Annual Strategic Decisions Conference.
The companies that have seen changes to consumer behavior are switching up their strategies. Chipotle Mexican Grill, for example, plans to pause price hikes unless inflation heats up again.
Elsewhere, Chili’s parent Brinker International is phasing out its Maggiano’s Italian virtual brand, which was only available for delivery orders. And Noodles & Company is leaning into its value offerings. More

Inflation has strained some household budgets, yet consumers continue to shell out on vacations.
Domestic airfare has moderated but international flights are up sharply from 2019 and last year.
International travel has been especially strong since the end of pandemic-entry restrictions.

Francesco Riccardo Iacomino | Moment | Getty Images

Persistent inflation and higher interest rates have strained many household budgets, and consumers are shying away from some purchases such as home improvement projects or apparel. But millions of U.S. consumers aren’t giving up their vacations.
A Deloitte survey from last month found that 50% of respondents planned to take a vacation that includes paid lodging during the summer, up from 46% last year. In a sign of strong demand, the Transportation Security Administration screened close to 10 million people over Memorial Day weekend, slightly more than the same period in pre-pandemic 2019. And American Airlines this week raised its adjusted earnings forecast for this quarter, thanks to strong demand and cheaper fuel.

Many travelers are seeing some relief when they book airline tickets or fill up the tank before a road trip, at least compared with last year.
Prices for airline tickets, for example, were down 0.9% in April from a year ago, according to the latest federal inflation read.

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And yet, consumer spending has begun moderating overall but “the categories that are holding up the strongest are the travel categories,” said Jason Gaughan, head of consumer credit card products at Bank of America.

Location is everything

Prices vary wildly depending where travelers are planning to go. A round-trip domestic flight is averaging $306 this summer, down 19% from last year, though still 6% higher than in 2019, according to travel site Hopper.
Capacity constraints due to shortages of aircraft and pilots have affected airline growth and kept fares elevated for months.

International travel has roared back this year as countries around the world lift pandemic restrictions. But there’s still plenty of demand for domestic destinations that dominated travel during the pandemic. That’s especially true because airlines have ramped up capacity to Europe and other international destinations, but bargains are hard to find during the peak late spring and summer months.
Airfare to Europe is averaging $1,167 round trip this summer, up 36% from last year, Hopper data showed.
Lodging also has been more expensive this year, even within the U.S. Hotel occupancy averaged 60.6% from January though April, with per-night average rates of $152.68, according to hotel data firm STR. That’s up from 63% occupancy and average nightly rates of $130.05 during the same period in 2019, and up from 58.4% occupancy and average rates of $141 a night last year.
But there are vast differences between some destinations because of changing travel patterns. Nightly hotel rates for Maui, Hawaii, have increased more than 53% since 2019 to $535.90, the biggest percentage increase in the U.S., according to STR. Meanwhile, hotel rates in the San Jose and Santa Cruz areas of California are down nearly 17% from 2019 to $171.52 as business travel in tech and other sectors still hasn’t recovered to pre-pandemic levels.

Arrows pointing outwards

Money-saving strategies

Consumers looking to save money on travel need to be flexible. Travel experts suggest booking outside of traditional peak periods, like during shoulder season in the fall, though there are trade-offs, such as the possibility for worse weather.
Kobe Guerrero, a Caribbean travel specialist at Raleigh, North Carolina-based agency Trip and Sip Travel, said some customers could find cheaper rates and fares booking in September or October for the northern Caribbean, but that it comes with a risk.
“But then you might have a hurricane ruin your whole vacation,” Guerrero said. She said she would require the buyers to get travel insurance. 
Some travelers are also trying to prepare by booking far ahead.
“Luxury resorts are getting booked two years in advance,” Guerrero said.
Others are giving up some spending elsewhere to pay for trips.
Pervez Virani, an IT project manager, said he and his wife, Zoha Karmali, a property manager, used American Airlines frequent flyer miles to visit New York City over Memorial Day weekend but that they saved money by returning on Wednesday instead of at the end of the weekend.
Virani said the couple had been cooking dinner at home to save on dining out before their trip with their 10-year-old Yorkie, Jordan.
“We’re cutting costs at home,” he said. More