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Fox Corp. Chairman Rupert Murdoch said some anchors of the company’s TV networks parroted false fraud claims in the months following the 2020 election.
In new filings as part of Dominion Voting Systems’ $1.6 billion defamation lawsuit against Fox and its networks, Murdoch said he doubted the claims being aired on Fox News and Fox Business Network.
Monday’s court filings show Murdoch and other Fox executives remained close to Fox News CEO Suzanne Scott during the election coverage.

Members of Rise and Resist participate in their weekly “Truth Tuesday” protest at News Corp headquarters on February 21, 2023 in New York City.
Michael M. Santiago | Getty Images News | Getty Images

Fox Corp. Chairman Rupert Murdoch said some anchors of the company’s TV networks parroted false fraud claims in the months following the 2020 election, according to new court papers out Monday.
In new filings as part of Dominion Voting Systems’ $1.6 billion defamation lawsuit against Fox and its networks, Murdoch said he doubted the election fraud claims being aired on Fox News and Fox Business Network.

Murdoch also acknowledged that Fox’s TV hosts endorsed the false election fraud claims. In unveiled question and answers from Murdoch’s deposition, when Murdoch was asked if he was “now aware that Fox endorsed at times this false notion of a stolen election,” Murdoch responded, “Not Fox, no. Not Fox. But maybe Lou Dobbs, maybe Maria [Bartiromo] as commentators.”
“Some of our commentators were endorsing it,” Murdoch said in his responses during the deposition. “They endorsed.”
Dominion sued Fox and its right-wing cable networks, Fox News and Fox Business, arguing the networks and its personalities made false claims that its voting machines rigged the results of the 2020 election. Fox News has consistently denied that it knowingly made false claims about the election, and has said “the core of this case remains about freedom of the press and freedom of speech.”
In earlier court papers, Fox said that the past year of discovery has shown the company played “no role in the creation and publication of the challenged statements — all of which aired on either Fox Business Network or Fox News Channel.”
Murdoch and his son, Fox CEO Lachlan Murdoch, as well as Fox’s chief legal and policy officer Viet Dinh, were questioned in connection with the lawsuit in recent months. Earlier in February court papers were released that showed snippets of the evidence Dominion gathered through the months-long process of discovery and depositions, which also included Fox TV personalities.

Text messages and testimony have shown Fox executives and Fox’s TV anchors were skeptical about claims that the election between Joe Biden, a Democrat, and Trump, a Republican, was rigged.
Dominion said in court papers filed Monday that Fox’s defense that the statements made were opinion “goes nowhere.”
“Even if some of Fox’s hosts’ statements could qualify as ‘opinions,’ they are still actionable if—as here—they are based on false or undisclosed facts,” Dominion said.
A representative for Fox News reiterated in a statement on Monday that Dominion mischaracterized the facts by cherry-picking soundbites: “When Dominion is not mischaracterizing the law, it is mischaracterizing the facts.”
Fox has also targeted Dominion’s private-equity owner in court papers regarding Dominion’s request for $1.6 billion in damages, saying the firm “paid a small fraction of that amount” to buy Dominion. Fox has also said in court papers the $1.6 billion figure has no connection to Dominion’s financial value.
“Dominion’s lawsuit has always been more about what will generate headlines than what can withstand legal and factual scrutiny, as illustrated by them now being forced to slash their fanciful damages demand by more than half a billion dollars after their own expert debunked its implausible claims,” said a Fox spokesperson in a statement Monday. “Their summary judgment motion took an extreme, unsupported view of defamation law that would prevent journalists from basic reporting and their efforts to publicly smear FOX for covering and commenting on allegations by a sitting President of the United States should be recognized for what it is: a blatant violation of the First Amendment.”
A Dominion spokesperson said Monday, “The damages claim remains. As Fox well knows, our damages exceed $1.6 billion.”
Dominion brought its lawsuit not only against the TV networks, but parent company Fox Corp., arguing the parent company and its top executives played a role in the spread of misinformation about voter fraud by Fox’s personalities. A Delaware judge had ruled Dominion’s case could be expanded beyond the networks to include Fox Corp.
Monday’s court filings show Murdoch and other Fox executives remained closed to Fox News CEO Suzanne Scott during the election coverage.
“I’m a journalist at heart. I like to be involved in these things,” Murdoch said during his deposition testimony, according to court papers.

Tucker Carlson, host of “Tucker Carlson Tonight,” poses for photos in a Fox News Channel studio, in New York.
Richard Drew | AP

Earlier court papers have shown top anchors including Sean Hannity, Tucker Carlson and Laura Ingraham expressed disbelief in Sidney Powell, a pro-Trump attorney who aggressively promoted claims of election fraud, at the time.
Paul Ryan, the former Republican speaker of the House and a Fox board member, also sat for questioning as part of the lawsuit. Court papers out Monday show Ryan said that “these conspiracy theories were baseless,” and that the network “should labor to dispel conspiracy theories if and when they pop up.”
Ryan also told both Rupert and Lachlan Murdoch “that Fox News should not be spreading conspiracy theories,” according to the filings.
Dominion alleges that Fox News anchors were feeling pressure from the audience and related to rival right-wing networks like Newsmax, fueling on-air fraud claims.
The court papers have also shown other glimpses of the network’s internal response to the events that occurred on Jan. 6, 2021, the day a violent mob breached the U.S. Capitol in support of then-President Donald Trump.
Fox executives shut down Trump’s attempt to appear on the network’s air that evening, after he dialed into on-air personality Lou Dobbs’ show in the afternoon, court filings show.
That same evening, Carlson texted his producer calling Trump “a demonic force. A destroyer. But he’s not going to destroy us,” referring to Fox’s network and its audience, court papers show.
Meanwhile, the night before Jan. 6, court papers showed, Murdoch told Fox News CEO Suzanne Scott, “it’s been suggested our prime time three should independently or together say something like ‘the election is over and Joe Biden won.'”
The lawsuit is being closely monitored by First Amendment watchdogs and experts. Libel lawsuits are typically focused on one falsehood, but in this case Dominion cites a lengthy list of examples of Fox TV hosts making false claims even after they were proven to be untrue. Media companies are often broadly protected by the First Amendment.
A status conference in the case is slated for next week, and the trial is set to begin in mid-April.

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Electric vehicle startup Fisker said Monday it remains on track to begin deliveries of its Ocean SUV this spring and to build more than 40,000 vehicles in 2023.
It also spent less in 2022 than it had expected.
Fisker had “approximately 65,000” reservations for the Ocean, up slightly from “over 62,000” as of its prior earnings report.

Henrik Fisker stands with the Fisker Ocean electric vehicle after it was unveiled at the Manhattan Beach Pier ahead of the Los Angeles Auto Show and AutoMobilityLA on November 16, 2021 in Manhattan Beach, California.
Patrick T. Fallon | AFP | Getty Images

Electric vehicle startup Fisker said Monday that it spent less money in 2022 than it had expected, and that it remains on track to begin deliveries of its Ocean SUV this spring and to build more than 40,000 vehicles in 2023.
Fisker’s shares closed up over 30% on Monday.

Fisker said that to date, 56 Oceans have been built at manufacturing partner Magna International’s contract-manufacturing facility in Austria. Fifteen of those were completed before year-end and are being used for testing by both Fisker and Magna, as the two companies refine the manufacturing process, test additional features, and work through regulatory approval processes in the U.S., Canada and Europe.
The report comes less than a week after EV startups Lucid and Nikola underwhelmed with their production and delivery results.
Fisker said previously that the Ocean would have about 350 miles of range in top trims, but CEO Henrik Fisker said Monday that early testing has shown the Ocean has more range than expected.
“These results reinforce our expectation that, at the time of launch, the Fisker Ocean will have the longest range of any SUV/Crossover priced below $70,000,” he said.

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In base trim, the Ocean has about 250 miles of range and a starting price of $37,499; longer-range versions start at about $50,000.

Fisker expects to complete the testing needed for regulatory approval of the Ocean next month, and to ramp up production — and begin deliveries — in the second quarter. The company reiterated its previous production guidance — “up to” 42,400 vehicles in 2023 — “provided the supply chain delivers per our forecast and we receive [regulatory approval] in a timely manner.”
Fisker had “approximately 65,000” reservations for the Ocean as of Feb. 24, up slightly from “over 62,000” as of its third-quarter earnings report in early November. Because it will be built in Austria, the Ocean won’t qualify for the new U.S. government EV incentives.
Fisker spent a total of $702 million in 2022, a bit below its guidance range of $715 million to $790 million. The company had $736.5 million in cash remaining at year-end, including $57 million raised from its ongoing at-the-market share offering in the fourth quarter of 2022. It currently expects to spend between $535 million and $610 million in 2023.
Fisker is targeting a positive gross profit margin of between 8% and 12% for the year and said that it may have positive earnings before interest, tax, depreciation, and amortization, or EBITDA, for the full year as well.
Fisker’s fourth-quarter net loss was $170.1 million, or 54 cents per share, on revenue of about $306,000. Both were short of estimates: Wall Street analysts polled by Refinitiv had expected a loss of 42 cents per share on revenue of $2.5 million.
Fisker also said it has made progress on its upcoming second model, a lower-cost small EV called the Pear, and it remains on track to go into production next year.
The company said it now has “over 5,600” reservations for the Pear, up from “over 5,000” reservations in early November. The Pear, which is expected to start at $29,900, will be built by Foxconn Technology Group in the former Lordstown Motors factory in Ohio starting in 2024.

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McDonald’s is expanding its test with Krispy Kreme to approximately 160 restaurants in Louisville and Lexington, Kentucky.
Last October, nine McDonald’s restaurants started selling Krispy Kreme doughnuts to test how the menu experiment affected their operations.
The burger chain has also been leaning into coffee — a common pairing with doughnuts — to encourage diners to visit more frequently.

In this photo illustration, a Krispy Kreme glazed doughnut is shown on May 12, 2022 in Daly City, California. 
Justin Sullivan | Getty Images

McDonald’s will sell Krispy Kreme doughnuts at approximately 160 Kentucky locations starting next month, for a limited time.
It’s an expansion of the fast-food giant’s initial test with the sweet treats. In October, nine McDonald’s restaurants in Louisville started selling Krispy Kreme doughnuts. The larger test is meant to assess customer demand and to understand how a larger-scale launch would affect restaurant operations.

Starting March 21, McDonald’s customers at select locations in the Louisville and Lexington areas will be able to purchase Krispy Kreme’s glazed, chocolate iced with sprinkles and chocolate cream-filled doughnuts. The treats will be available all day and can be ordered in the drive-thru lane, in the restaurant, through the McDonald’s app and for delivery.
McDonald’s has already made small tweaks from the earlier test, which didn’t allow customers to order the doughnuts for delivery and included raspberry-filled doughnuts in place of the chocolate cream-filled. But the expansion suggests the initial experiment was at least somewhat successful in driving traffic despite macroeconomic challenges.
Consumers have been pulling back on restaurant spending as inflation puts pressure on their budgets. But both Krispy Kreme and McDonald’s have reported strong sales in recent quarters.
McDonald’s saw its U.S. traffic increase in the second half of the year, bucking the industry trend thanks to its cheap deals. The burger chain has also been leaning into coffee — a common pairing with doughnuts —to encourage diners to visit more frequently. And Krispy Kreme has been able to raise prices without hurting its sales because consumers are willing to splurge on affordable treats, such as fresh doughnuts.
Krispy Kreme uses a “hub and spoke” model that lets it make and distribute its treats efficiently. Production hubs, which are either stores or doughnut factories, send off freshly made doughnuts every day to retail locations such as grocery stores and gas stations.
Krispy Kreme Chief Operating Officer Josh Charlesworth said in January at the ICR Conference that the McDonald’s test showed the doughnut chain can execute its daily fresh deliveries to restaurant locations. Beyond that, however, the company’s executives have declined to share more details on the progress of the test.

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A sharp drop in mortgage interest rates brought homebuyers out in force in January.
Signed contracts on existing homes jumped 8.1% last month compared with December, according to the National Association of Realtors.
It’s the second straight month of gains, but growth may be short-lived.

Saul Loeb | AFP | Getty Images

A sharp drop in mortgage interest rates brought homebuyers out in force in January, but rates have bounced back higher again, so the gains may be short-lived.
Signed contracts on existing homes jumped 8.1% last month compared with December, according to the National Association of Realtors. That’s the second straight month of gains. Sales, however, were still 24% lower compared with January 2022.

The so-called “pending sales” are the most current indicator of housing demand, as it can take up to two months to close on a signed sale. Closed sales in January were lower because they were based on contracts signed in November and December, when mortgage rates were higher.
And January’s jump is all about mortgage rates. After hitting a high of just over 7.3% in October, which caused sales to plummet, the average rate on the popular 30-year fixed mortgage dropped back close to 6% in January, according to Mortgage News Daily.
“Buyers responded to better affordability from falling mortgage rates in December and January,” said NAR chief economist Lawrence Yun.
But mortgage rates moved higher again in February, and the average rate stood at 6.88% as of Friday. Sales activity is likely already slowing. Mortgage applications to buy a home, which are a weekly indicator of buyer demand, have been falling for much of February.
The mortgage rate effect was also seen in sales of newly built homes in January, as those numbers from the U.S. Census Bureau are based on signed contracts as well, not closings. Builder sales jumped just over 7% compared with January. Some of that was due to incentives offered by big builders, but lower rates improved affordability, especially for buyers of entry-level homes.

Going forward, with rates higher and the supply of homes for sale still historically low, sales may not be able to continue this type of growth.
“Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur,” Yun said. “But an annual gain in home sales will not occur until 2024. Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price.”

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We invite promising journalists and would-be journalists to apply for an internship supported by the Marjorie Deane Foundation. Successful candidates will spend three months with The Economist in London writing about business. Applicants are asked to send a covering letter and an original article of no more than 500 words that would be suitable for publication in the Business section. Applications should be sent to [email protected] by April 1st. More

Venture capitalists are not known for their humility. But the world’s biggest investors in innovation have been striking a more humble tone of late. In a recent letter to investors Tiger Global, a hedge fund turned venture-capital (VC) investor, reportedly admitted that it had “underestimated” inflation and “overestimated” the boost the pandemic would give to the tech startups in its portfolio. In November Sequoia, a Silicon Valley VC blue blood, apologised to investors in its funds after the spectacular blow-up of FTX, a now defunct crypto-trading platform that it had backed. Speaking in January, Jeffrey Pichet Jaensubhakij, the chief investment officer of GIC, one of Singapore’s sovereign-wealth funds, said that he was “thinking much more soberly” about startup investing. The VC giants’ newfound contrition comes on the back of a gigantic tech crash. The tech-heavy NASDAQ index fell by a third in 2022, making it one of the worst years on record and drawing comparisons with the dotcom bust of 2000-01. According to the Silicon Valley Bank, a tech-focused lender, between the fourth quarters of 2021 and 2022, the average value of recently listed tech stocks in America dropped by 63%. And the plunging public valuations dragged down private ones (see chart 1). The value of older, larger private firms (“late-stage” in the lingo) fell by 56% after funds marked down their assets or the firms raised new capital at lower valuations.This has, predictably, had a chilling effect on the business of investing in startups. Soaring inflation and rising interest rates made companies whose promised profits lie primarily in the distant future look less attractive today. Scandals like FTX did not help. After a decade-long bull run, the amount of money flowing into startups globally declined by a third in 2022, calculates CB Insights, a data provider (see chart 2). In the final three months of 2022 it fell to $66bn, two-thirds lower than a year earlier; the number of mega-rounds, in which startups raise more than $100m, fell by 71%. Unicorns, the supposedly uncommon private firms valued at more than $1bn, became rarer again: the number of new ones contracted by 86%.This turmoil is forcing the biggest venture investors—call them the VC whales—to shift their strategies. For Silicon Valley, it signals a reversion to a forgotten style of venture capitalism, with fewer deep-pocketed tourists splashing the cash and more bets on young companies by Silicon Valley stalwarts.Misadventure capitalTo understand the scale of VC’s reversal of fortune, consider its earlier bonanza. Between 2012 and 2021 annual global investments grew roughly ten-fold, to $638bn. Conventional VC firms faced competition from a new breed of investor from beyond Silicon Valley. These included hedge funds, the venture arms of multinational companies, from Shell to Samsung, and the world’s sovereign-wealth funds, some of which began investing in startups directly. Dealmaking turned frenetic. In 2021 Tiger Global inked almost one new deal a day. Across VC-dom activity “was a bit unhinged”, says Roelof Botha, boss of Sequoia Capital, “but rational”, given that low interest rates meant that money was virtually free. And “if you weren’t doing it, your competitor was.”What passed for rationality in the boom times now looks somewhat insane. The downturn has spooked the VC funds’ main sources of capital—their limited partners (LPs). This group, which includes everyone from family offices and university endowments to industrial firms and pension funds, is growing more nervous. And stingier: lower returns from their current investments leaves LPs with less capital to redeploy, and collapsing stockmarkets have left many of them overallocated to private firms, whose valuations take longer to adjust and whose share of some LPs’ portfolios thus suddenly exceeds their quotas. Preqin, a data firm, finds that in the last quarter of 2022 new money flowing into VC funds fell to $21bn, its lowest level since 2015. What new VC funding there is increasingly flows into mega-funds. Data from PitchBook, a research firm, show that in America in 2022 funds worth more than $1bn accounted for 57% of all capital, up from 20% in 2018. How the VC whales behind these outsize pools of capital adapt to the VC winter will determine the shape of the industry in the years to come. The venture cetaceans can be divided into three big subspecies, each typified by big-name investors. The startups they finance range from the newly founded in need of “seed” funding, to the somewhat older, later stage firms that are looking to rapidly grow. First there is the conventional Silicon Valley royalty, such as Sequoia and Andreessen Horowitz. The second group comprises the private tourists, such as Tiger and its New York hedge-fund rival, Coatue, as well as SoftBank, a gung-ho Japanese investment house. Then there are the sovereign-wealth funds, such as Singapore’s GIC and Temasek, Saudi Arabia’s Public Investment Fund (PIF) and Mubadala of the United Arab Emirates. As well as investing directly, these entities are LPs in other VC funds; PIF, for example, is a large backer of SoftBank’s Vision Fund. Together these nine institutions ploughed more than $200bn into startups in 2021 alone, or roughly a third of the global total (not counting the state funds’ indirect investments as LPs). All nine have been badly damaged by last year’s crash. Sequoia’s crossover fund, which invested in both public and private firms, reportedly lost two-fifths of its value in 2022. Temasek’s listed holdings on American exchanges shrank by about the same. SoftBank’s mammoth Vision Funds, which together raised around $150bn, lost more than $60bn, wiping out their previous gains. In a sign that things were terrible, its typically garrulous boss, Son Masayoshi, sat out its latest earnings call on February 7th. Tiger reportedly lost over half of the value of its flagship hedge fund and marked down its private investments by about a quarter, torching $42bn in value and leading one VC grandee to speculate that the hedge fund might turn itself into a family office. All three groups have reined in their investments. But each has responded to the downturn in distinct ways. That is in part because it has affected them to different degrees. The private outsiders have been hardest hit. The combined number of startup investments by the three firms in our sample fell by 76% between the second half of 2021 and the same period in 2022. Tiger has lowered the target for its latest fund from $6bn to $5bn; its previous one raised $13bn. In October Phillipe Laffont, Coatue’s boss, said that the hedge fund was holding 70-80% of its assets in cash. The firm has also raised $2bn for its “tactical solutions fund”, designed to give mature startups access to debt and other resources, as an alternative to raising equity at diminished valuations during a market downturn. SoftBank has all but stopped investing in new startups. Instead, in the second half of 2022 most of its capital went to well-performing portfolio firms, says Lydia Jett, a partner at the Vision Fund. The other two groups are also retrenching, but not as drastically. According to data from PitchBook, in the second half of 2022 the number of deals struck by Sequoia and Andreessen Horowitz fell by a combined 47%. Direct investments by the four sovereign funds in our sample slowed by a more modest 31% in the same period, no doubt thanks to their governments’ deep pockets and longer time horizons. Taken together, venture capitalists’ slowing pace of investment has left them with a record amount of capital that LPs had already pledged to stump up but that has yet to be put to use. Last year the amount of this “dry powder” was just shy of $300bn in America alone (see chart 3). According to data from PitchBook, our five private whales are sitting on a combined $50bn or so; the sovereign investors hold their numbers close to their chest but are likely to be of a similar order of magnitude, all told. Some of it may wait a long while to be deployed, if it ever is. But some will find grateful recipients. Who those recipients are also depends on which group of whales you look at.Conventional VCs and the hedge funds are focusing on younger “early-stage” firms. in part because volatility in the public markets makes it harder to value more mature companies that hope to list in the near future. Mr Botha says that Sequoia has doubled the number of “seed” deals with the youngest companies in 2022, compared with 2021. In January the firm launched its fifth seed fund, worth $195m. Last April Andreessen Horowitz launched an “accelerator” programme to nurture startups. About half the startups Tiger backed in 2022 were worth $50m or less, compared with just a fifth in 2021, according to PitchBook.Early-stage firms are unlikely to be the only recipient of VC cash. David DiPietro, head of private equity at T. Rowe Price, a fund-management group, thinks that startups selling “must-have” products, such as cyber-security services, or cost-cutting tools, such as budgeting software, should fare well. Money will also keep flowing to well-managed businesses with strong balance-sheets., expects Kelly Rodriques, chief executive of Forge, a marketplace for private securities. Firms with buzzy new technologies, such as artificial-intelligence chatbots and other forms of whizzy “generative AI”, are also likely to attract investments—especially if those technologies already work in practice and underpin a viable business model. Another category of startups likely to gain favour comprises those involved in industries that governments deem strategic. In America, that means climate-friendly technology and advanced manufacturing, on which Uncle Sam is showering subsidies and government contracts. Some 8% of the deals all our whales made in the second half of 2022 involved firms working on technologies to combat climate change, for example, up from 2% in the same period of 2021. Last year Andreessen Horowitz launched an “American Dynamism” fund, which partly invests in firms that rely on government procurement, such as Anduril, a defence-tech startup.Sovereign-wealth funds are likely to be looking elsewhere. Seed deals are simply too small for them: whereas the typical early-stage American company is worth about $50m, in 2021 the median value of startups backed by the sovereign funds was a whopping $650m. And to them, what counts as “must-have” startups is somewhat different, determined less by the market or other states’ strategic imperatives, and more by their own governments’ nation-building plans.On February 16th PIF said it would take a stake in VSPO, a Chinese platform for video-game tournaments. This is part of a plan dreamed up by Muhammad bin Salman, the Saudi crown prince, to invest $38bn in “e-sports” by 2030 and make Saudi Arabia a gamer’s mecca. Temasek invests heavily in firms that develop technology to boost food production. In the past year it backed Upside Foods, a startup selling lab-grown meat, and InnovaFeed, a maker of insect-based protein. This is motivated by Singapore’s goal of locally producing 30% of the city-state’s nutritional needs by 2030, up from about 10% in 2020. Rohit Sipahimalani, chief investment officer of Temasek, thinks that over the next few years his focus will shift towards “breakthrough innovation rather than incremental innovation”, on the back of government support of strategic tech. One group of firms is likely to see less investment from our whales, however: those in China. The Communist Party’s harsh two-year crackdown on consumer technology may be easing but the VC titans remain wary of what was until recently one of the world’s hottest startup scenes. An executive at a big venture fund says that in the past, foreign investors in China knew that the government would be respectful of their capital. Now, he sighs, it feels like the government “has pulled the rug out from underneath us”.Tiger has said that there is a “high bar” for new investments in China. GIC has reportedly scaled back its investments in China-focused private funds. Mr Sipahimalani of Temasek says diplomatically that he is trying to avoid investing in “areas caught in the cross-hairs of US-China tension”. Sequoia is reportedly asking external experts to screen new investments made by its Chinese arm into quantum computing and semiconductors, two such contentious areas. All told, the number of our whales’ deals with Chinese startups fell from 22% of the total in 2021 to 16% in 2022. After the dotcom crunch VC investments needed nearly two decades to return to their previous peak. Today’s tech industry is more mature, startups’ balance-sheets are stronger and, according to the Silicon Valley Bank, their peak valuations relative to sales are lower than in 2000-01. This time the whales of VC are unlikely to need 20 years to nurse their wounds. But the experience will have lasting effects on the sort of businesses they back. ■ More

Michael B. Jordan’s directorial debut, Warner Bros.’ “Creed III,” releases March 3.
The Creed film franchise has flipped the script on the Rocky series, highlighting Black talent behind and in front of the camera, while paying homage to Sylvester Stallone’s iconic movies.
The first two Creed movies have been successful at the box office, each generating more than $100 million in ticket sales domestically.

Michael B. Jordan stars in “Creed III.”
Warner Bros.

LOS ANGELES — It’s an underdog story for the 21st century.
The Creed series is a Hollywood miracle in many ways. It’s a lucrative spinoff of the beloved, decades-old Rocky series, but it has its own modern style and sensibility.

And, while paying homage to the star and the stories that gave it a foundation, it has flipped the script on an enduring white working-class mythos by highlighting Black talent on both sides of the camera.
Warner Bros.’ upcoming “Creed III,” due in theaters March 3, also sees its lead actor take the helm as director, a move also made by Sylvester Stallone in 1979 with the release of “Rocky II.” The film will be Michael B. Jordan’s directorial debut.
“Michael B. Jordan has worked on some amazing television series and films and I’ve always said that the best film school is being on set,” said Shawn Edwards, a film critic who sits on the board of the Critics Choice Association and co-founded the African American Film Critics Association. “I think it was only a matter of time before [he] jumped behind the camera.”
Jordan’s road to the director’s chair was paved by Ryan Coogler, who wrote and directed the first Creed film, as well as Steven Caple Jr., who directed the second. Coogler, who hadn’t yet released his debut film “Fruitvale Station,” which also starred Jordan, approached Stallone about a Creed spinoff.
Several years later, he finally won him over. Stallone co-starred in the first two movies and co-wrote the “Creed II” screenplay. Stallone was not involved with the third Creed film and declined CNBC’s request for comment.

The first film, 2015’s “Creed,” followed Adonis, the son of Rocky’s longtime rival and later friend, Apollo Creed. The story examined the life of an orphaned boy living in the shadow of a boxing legend and dealing with his own underdog story as he sought to follow in his father’s footsteps and enter the ring.
“Creed” echoed much of the narrative cues of the original Rocky movies, which focused on a so-called “ham-and-egger” from Philly’s white working-class mean streets who becomes a heavyweight contender and, eventually, world champion.
But the new franchise also addressed issues regarding the Black experience and Black masculinity.
“It’s refreshing to see this focus, not on our traditional ways of thinking about Black representation in terms of the past and historical struggles against discrimination and oppression,” said Brandy Monk-Payton, a professor at Fordham University who specializes in Black media representation. “I think they’re embedded in the way in which [the film’s characters] move about the world … but at the same time, it’s not the centerpiece of the story. The focus of the story is this everyman who winds up going through a struggle and triumph.”

Michael B. Jordan and Jonathan Majors star in Warner Bros.’ “Creed III.”
Warner Bros.

That kind of story can only be told when Black artists are part of the production process and possess leadership roles within studios, industry insiders and experts say.
Sheldon Epps, one of the preeminent Black directors across television and theater, said it is only in the last decade or so that he saw a change in the diversity of Hollywood.
“I’ve been around long enough that in certain situations, I’ve been one of the few, or one of the only, Black directors or Black leaders of an arts institution,” he said. “In certain years, the only one on some of the television shows that I’ve done, like ‘Friends’ and ‘Frasier.’ And that was sadly true for many, many years.”
Epps said that slowly changed as more Black directors were hired to helm hourlong dramatic television shows, including Paris Barclay (“Cold Case,” “The West Wing”) and Eric Laneuville (“Lost”). He also pointed to Black auteurs such as Ava DuVernay as people who have risen to positions of power and used that position to uplift others. DuVernay’s series “Queen Sugar” had a policy that only female directors would be hired to work on the show.
“Participation by more artists of color in the process of creating the stories, not just making them, but the writing of them, is essential, because it it broadens the canvas,” Epps said. “Instead of getting a narrow view of Black people, or Latino people or Asian people, because the stories are being written from inside of those worlds we’re getting a much, much broader view of all of the varied communities of our nation.”

Jonathan Majors and Michael B. Jordan star in Warner Bros. “Creed III.”
Warner Bros.

And stories about Black protagonists sell tickets.
“The Woman King” snared nearly $100 million worldwide during its run in theaters last year, and Coogler’s two “Black Panther” films, under the Marvel banner, together generated more than $2 billion at the global box office.
Both “Creed” and “Creed II” generated more than $100 million at the domestic box office, according to data from Comscore. And the third film is expected to generate between $25 million and $35 million during its opening weekend.
“It’s broadened the audience,” said Rolando Rodriguez, chairman of the National Association of Theatre Owners. “There’s a specific additional energy that’s brought out within the Hispanic and African American community.”
Rodriguez posits that while Black people make up 13% of the population, Black moviegoers will represent around 20% to 22% of total ticket sales for “Creed III.” Similarly, the Hispanic community equates to around 19% of the population, but represents 25% to 28% of movie tickets sold.
“That really helps the overall movie, because it’s not taking away from other audiences,” he said, noting that other demographic groups will still turn up for the film, so it’s not a replacement of those audiences.
“I get excited about it because it’s nice to see some of these diverse movies where these young men and women can actually see themselves on the screen being represented as leading actors and actresses,” Rodriguez added. “That you can be somebody that can become, hopefully, a CEO or a movie star, producer or director … I think it sends a very important social message.”

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The movie theater industry is consolidating in the wake of the pandemic. Since 2019, the number of total screens in the U.S. have decreased by around 3,000.
Surviving theaters have been forced to innovate, even as Hollywood production returns to normal and studios have more content to offer.
As the space contracts, cinema operators are improving technology and seating, while also bolstering their food and beverage offerings.

Girl watching a comedy movie at the cinema with her friend.
Rgstudio | E+ | Getty Images

LOS ANGELES — The movies are still big. It’s the multiplexes that are getting smaller.
Since 2019, the number of total screens in the U.S. have decreased by around 3,000 to just under 40,000.

This consolidation was a direct result of the Covid pandemic, which shut down theaters for a time and triggered a surge in streaming subscriptions. A number of regional chains have shuttered for good, while others were left to reevaluate their financial footing. For many, that meant closing locations or selling off leases.
“Think about retail out there in general, it’s repositioning itself, you don’t have as many of the same branded stores in the marketplace,” said Rolando Rodriguez, chairman of the National Association of Theatre Owners. “Consumers are a lot more selective, and I think that for the economics that are necessary, you’re not going to see these 30-plexes anymore.”
Rodriguez said that most newly built locations will range between 12 and 16 screens and those with larger, preexisting footprints will look to repurpose some space for supplementary activities for moviegoers, like arcades, bowling alleys or bars.
Theaters have been forced to innovate, even as Hollywood production returns to normal and studios offer more movies for release than they were able to during the earlier stages of the pandemic.
As the space contracts, cinema operators are investing in the basics, improving sounds, picture quality and seating as well as in bolstering its food and beverage offerings, events and alternative programming. The aim is to improve the baseline experience for moviegoers regardless of the type of ticket they purchase.

“We do better when people get in the habit of seeing,” said Larry Etter, senior vice president at family-owned regional chain Malco Theatres. “And I think that’s what’s going to happen. I think we’re going to recreate the habitual effect that on Friday nights or Saturday nights or whatever it is, we’re gonna go to the movies.”

The premium push

Already, the industry is seeing improvements in ticket sales. Through Monday, the 2023 box office has tallied $958.5 million in ticket sales, up nearly 50% compared to last year and down just 25% from 2019, according to data from Comscore.
This is a marked improvement from the meager $98.7 million box office tally during the same period in 2021.
Foot traffic has also improved, but continues to linger behind pre-pandemic levels. In the two decades before the pandemic, the industry sold an average of 1.1 billion tickets per year, according to data from EntTelligence. Even as Covid restrictions were lifted in 2022, just more than half that number of tickets were sold for the year. And ticket sales should rise in 2023 as studios release more films.
While cinema operators are pleased that studio production has increased, they are no longer taking audiences for granted.
To that end, operators have started with upgrading projectors. Over the last few years, movie theater operators have been removing traditional digital projectors and installing laser units, citing cost savings over time and a better picture quality for moviegoers.
“It’s a little bit expensive, but it will produce a better product on the screen,” Malco’s Etter said. “The more light you have the clearer everything is and the easier it is to see. And it will be much more economical. It’s sustainable because you are going to use about 60% of the utilities that you did before.”
Etter explained that traditional digital bulbs need to be replaced after around 2,000 hours and produce so much heat that theaters have to pay more to air-condition the projector rooms. And laser components last for 20,000 hours so they can go years without being replaced.
Many theater operators told CNBC they are planning similar upgrades to sound systems, saying they have partnered with companies like Dolby to bring quality speakers into their auditoriums.
“We’ve invest in Dolby Atmos, we’ve invested in new screens, we’ve invested in laser projection,” said Rich Daughtridge, president and CEO of Warehouse Cinemas. “To me, that’s baseline. I feel like you have to create the best sound and picture experience you can create to get people motivated to spend money to come out to the cinema.”

General atmosphere during the IMAX private screening for the movie: “First Man” at the IMAX AMC Theater on October 10, 2018 in New York City.
Lars Niki | Getty Images Entertainment | Getty Images

Across the industry, theater chains big and small are also replacing outdated stadium seating with recliners in a bid to improve the overall cinema experience.
“[We are] really looking at our theaters and making sure all of them are amazing,” said Shelli Taylor, CEO of Alamo Drafthouse. “So if they don’t have recliners, we’re going in and we’re upgrading. We’re giving face-lifts where needed and just really refreshing and making sure that we continue to deliver that premium experience which people grow to love and expect from Alamo.”
These improvements are part of a wider trend that started prior to the pandemic. Consumers have begun to opt for more premium theatrical experiences for blockbuster features, choosing to pay more money to see films on bigger screens or in specialized theaters.
In 2022, 15% of all domestic tickets sold were for premium screenings, with the average ticket costing $15.92, according to EntTelligence data. A standard ticket costs an average of $11.29.
So far in 2023, that premium ticket average is higher — $17.33 each — because so many moviegoers saw Disney’s “Avatar: The Way of Water” in premium formats and 3D.

Event cinema, niche programming

Big blockbusters have always been a driving force of ticket sales for cinemas. Before the pandemic, theater owners relied predominantly on studio advertising — trailers, TV spots and posters — to promote content and drive moviegoers to cinemas. Now, they are putting more in that mix.
Loyalty programs, direct marketing and special events are some of the recent tactics operators have employed to bring in audiences. AMC launched its first-ever advertising campaign in 2021 featuring Nicole Kidman with the tagline “We make movies better.” The company invested around $25 million in the campaign.
Budget-conscious smaller chains have to be a little more creative.
“I’ve had lots of conversations with distributors just talking about better and more efficient ways to market their films,” Warehouse’s Daughtridge said. “Often, that is data marketing and paid social, better trailer placements and [putting] tickets on sale at the right time.”
“I think there’s a lot of low-hanging fruit,” he said of email lists, loyalty programs and social media for personalized marketing.
Warehouse, which will soon open its third location, has also run promotions that range from offering margaritas with movie tickets to special “daddy-daughter” date night showings. Mid-pandemic, Warehouse Cinemas capitalized on the release of Solstice Studio’s “Unhinged” by hosting a car smash event during the film’s fifth week in theaters.
More recently, the chain held “pajamas and popcorn,” a promotion that entitled customers who wore PJs to the cinema a free popcorn. During that promotion, the company showed an Indiana Jones film and the classic animated dinosaur film “The Land Before Time.” Tickets were $5 each.
“The Land Before Time” showings sold 1,400 tickets, Daughtridge said.
“It was one of those events that just popped off,” he said. “We didn’t expect it to do that much business.”
For big chains like AMC, Regal and Cinemark, alternative programming has come in the form of live events, with cinemas setting up streams for concerts, sports and even Dungeons & Dragons campaigns.
Mid-sized chains like Alamo Drafthouse are even delving into the whimsical. When Oscar favorite “Everything Everywhere All at Once” played in cinemas, the theater chain passed out hot dogs to ticket buyers who went to its “feast” event to mark the famous hot dog fingers scene in the film.

Still from A24’s “Everything Everywhere All at Once.”

The company also worked with the Lincoln Zoo ahead of the opening of its new location in the Chicago neighborhood of Wrigleyville to do an outdoor screening of “The Lion King” in the lions’ den at the zoo.
Alamo isn’t the only chain innovating with food and beverages. Concessions have long been a staple at the cinema, but in recent years theater owners have expanded on the traditional popcorn and soda fare.
Cinepolis, which operates more than two dozen cinemas in eight states, is a luxury dine-in theater chain that offers a wide variety of food and beverages, ranging from chicken wings to lobster tacos. Cinepolis hosts “movie and a meal,” a specialized dinner that is catered to a specific new film release.
“For us, the food is crucial for local experience,” Cinepolis CEO Luis Olloqui said, noting how more people have big high-definition TVs at home, coupled with the ability to order out from top notch restaurants.
This trend isn’t likely to slow down, and industry insiders are optimistic about the future of the movie theater business.
“I think we, unfortunately, had some very bad public relation aspects through the course of Covid,” said Rodriguez of the National Association of Theatre Owners. “And now we have to kind of rebuild that muscle with the consumers and remind them, ‘Hey, you know, that’s behind us. Theaters are fine.'”

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