Banks Discover Social Media

Plus: Slouching toward streaming at Disney. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

May 19, 2023

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TOGETHER WITH

Good morning and happy Friday.

Is it us, or do those passengers curled up in First Class recliners look annoyingly comfier than ever?

Some hard-hitting investigative journalism out of The New York Times on Thursday confirmed our suspicions: major US airlines are going all-in on premium seating, with some expanding the section by as much as 75%. Airlines say the pivot is to keep up with post-pandemic demand for luxury travel, though perhaps it doubles as a response to another (much more worrying) post-covid trend: air rage. We’d like to point out that a little extra legroom in economy class would also go a long way toward soothing all those angry, disruptive, soon-to-go-viral passengers.

Morning Brief

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Disney takes one more leap into streaming.

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Banks want a social media detox.

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Can’t sell here, Xi Jinping says.

Media

ESPN Will Soon be a Full-Blown Streaming Service

(Photo credit: Tech Daily/Unsplash)

The shot clock may be rapidly counting down for cable TV, and ESPN isn’t waiting around to hear the final buzzer.

The worldwide leader in sports is planning to offer its flagship cable channel — a.k.a. the last thing tethering sports fans to an $80-a-month relationship with Comcast or Spectrum — as an à la carte streaming service, according to a Wall Street Journal report on Thursday. But is the move actually a bunny shot?

Disney Goes Digital

Wait, can’t ESPN already be streamed? And what the heck is ESPN+? The answer is yes, and it’s complicated. Sports fans can already watch a streaming simulcast of the ESPN cable channel, but only via cable company logins. ESPN+, meanwhile, is a separate standalone service that runs $9.99 a month and gives subscribers access to paywalled articles on ESPN.com as well as livestreams of some sports, like golf events and overflow college athletics, with major leagues such as the NBA and NFL mostly keeping their games siloed to the cable network. The new service, internally dubbed project “Flagship” according to the WSJ, would deliver those primetime goods.

The pivot seems well-timed, if not overdue. The cable network has steadily lost steam since peaking with roughly 100 million subscribers in 2011. That’s down to just 74 million as of last September. It’s no wonder Bob Iger has long prepared the company for an inevitable full migration to streaming; while the cable network would still exist, project Flagship would be a major step on that journey.

In recent days Iger’s been laser-focused on both monetization and costs. Disney’s streaming push thus far has been defined more by the latter than the former — the House of Mouse has sunk some $4 billion into streaming costs in the last year alone — and live sports, and the hefty rights fees associated with them, aren’t exactly guaranteed to make those books look any better:

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Apple, Amazon, and Google (via YouTube) have struck multi-billion dollar deals with the MLB and NFL to stream their games. But Big Tech is “not part of the traditional media ecosystem,” Jamie Lumley, sector analyst at Third Bridge Group, told The Daily Upside — these companies don’t have to perform Disney’s balancing act of future-proofing without “cannibalizing an existing revenue base.”

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“This model is hard. Sports rights are expensive,” Lumley said. “The seasonality of what leagues people are interested in leads to higher degrees of churn.”

Slam Dunk: The news adds an interesting wrinkle to the network’s looming rights negotiations with the NBA. The league has been aiming for a rights package north of $70 billion, according to CNBC, for a deal that would begin in the 2025-2026 season. And now the NBA may have even more leverage. Its playoffs are currently underway, and have thus far delivered some of the league’s best ratings in over a decade. Iger better lace up.

– Brian Boyle

Banking

Banks Make Social Media Gameplans

Looks like America’s banks have finally figured out that social media’s network effect applies to bank runs, too.

Reuters reported that US banks, shooketh by the fate that befell Silicon Valley Bank, are getting serious about social media strategy. The SVB saga showed how social media can turbo-charge a bank run, so now banks are planning how they can stop grumpy complaints on Twitter from cascading into something more sinister.

Your Money’s in Elon’s House

To be clear, chattering Twitter users were not the only thing that brought down SVB. Its internal organs were already in critical condition, and bank runs have drained banks of their funds for centuries before the advent of social media. But social media can grant outsized influence to niche corners of the internet, allowing ripples to fan out at incredible speed — especially when most of your depositors are tech nerds. Some have even hypothesized the true origin of the panic stems from the newsletter The Diff, which is widely read in VC circles and flagged SVB as “technically insolvent” in February.

Former CEO SVB Greg Becker insisted before a senate hearing this week that even the healthiest bank would have succumbed to a bank run of the “velocity and magnitude” that SVB suffered.

The upshot of SVB’s downfall, according to Reuters, is that banks are now pouring resources into monitoring and even parachuting into social media:

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Seven banking executives and analysts told Reuters that banks all over the US are strategizing on how to contain rumors on social media, a notoriously difficult task. Risk departments are reportedly being asked to come up with ways of both measuring and responding to social media stampedes.

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One unnamed banking executive told Reuters banks are planning to respond more actively to customer complaints on social media, saying “we want to nip it in the bud.” So next time your bank’s customer service hotline is sending you in circles, you know what to do.

Of course, there’s no guarantee banks will be able to successfully hold back the tide of online rumor-mongering. “There are so many social media monitoring tools today, but the use of those tools is often delegated to threadbare marketing teams or third-party vendors,” Jim Perry, a senior strategist at Market Insights, told Reuters.

As Your Affluence Expands: Becker and execs from fellow banking casualty Signature Bank were pressed during their Senate hearing on whether they would hand back their paychecks. Becker demurred, and former Signature exec Scott Shay said he was “not planning to do so.” Something tells us no amount of outraged tweets could sway them.

– Isobel Asher Hamilton

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Policy

Should I Stay or Should I Go: China’s Street Stall Economy

When Westerners imagine Chinese cities, they likely picture bustling streets lined with an array of pop-up food, retail, and tchotchke vendors — not unlike New York City’s iconic churro ladies or all the hustlers hawking knockoff Gucci bags on Canal Street.

But much like New York, China is constantly fighting with itself over how it approaches the street stall economy. One side sees it as a way to support the unemployed and underemployed, while the other finds it damaging to China’s goal of a stylish and modern aesthetic. Thanks to recent comments from President Xi Jinping, vendors are finding themselves at the center of a public debate.

Do You Have a Permit?

Over the past few decades, major Chinese cities started cracking down on street stalls. Many Chinese Communist Party officials and citizens viewed them as unhygienic and classless. They said stalls bring garbage, contaminated food, and knock-off goods into their communities. There were even cases of officers beating up vendors to run them out of town.

But then COVID hit, decimating entire economies. China’s youth unemployment rate sits at a record high of more than 20%. To circumvent a lack of opportunities in the short term, many cities have started welcoming vendors back with open-ish arms:

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Beijing and Lanzhou have relaxed restrictions, and starting in September, Shenzhen will allow street vendors to set up stalls within designated areas, Nikkei reported. Shanghai is still mulling whether it should allow stalls at night markets and pedestrian-only zones for certain hours.

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Shortly after the pandemic began in 2020, the city of Chengdu lifted its street stall ban, resulting in new income streams for more than 100,000 people, according to Eater. Former Premier Li Keqiang backed the success and said, “The street-stall economy is an important source of jobs.”

Not In My Town: Others aren’t as open to vendors as Li is, particularly his old boss. During a recent tour of Xiongan New Area, a city roughly 60 miles south of Beijing, President Xi Jinping told the state-owned news agency Xinhua he opposes street stalls. “The capital is first and foremost a political center, not a hodgepodge. It cannot run factories in alleys or engage in a street-stall economy,” he said. “The Xiong’an New Area was born to relieve Beijing’s non-capital functions, not to simply build a new area or a new city, and this positioning must be clarified.” That sounds like bad news for anyone stumbling out of the bar at 2 a.m. looking to get some grindage.

– Griffin Kelly

Extra Upside

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Dude, where’s my check: Hyundai and Kia to pay $200 million settlement in car theft lawsuit.

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The cluck stops here: Chick-fil-A to close its original location.

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Just For Fun

Train on the water.

That’s a big tree.

Have a great weekend!

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