There may still be some cracks in Netflix’s strong Strikes defense

How immune is Netflix from Hollywood attacks?

There was plenty to impress shareholders in Netflix’s latest financial report yesterday, including expectations for renewed subscriber growth and improved cash flow, thanks to strike-enabled cuts in content spending.

But its shares fell in after-market trading and are still down this morning. That’s partly because Wall Street was expecting better numbers. But there is also concern that, despite being better insulated from the Hollywood shutdown than most of its rivals, the streaming giant could eventually be hurt by a near-complete blackout of US film and TV production.

The company claimed some notable victories. Its global crackdown on password sharing helped it add 5.9 million customers in the second quarter, bringing its total to 238 million and reversing a decline in customers during the same time a year earlier. Revenue grew year-on-year, although it was lower than expected.

And, as predicted by many analysts, Netflix said it expects free cash flow to increase from $3.5 billion to at least $5 billion this year due to lower spending on content due to the writers’ and actors’ strike effectively shutting down Hollywood productions.

Netflix is ​​the best positioned media player for the strike. In addition to making a tremendous headway in streaming, the company also has a vast network of international studios, which is not affected by the Hollywood halt. For example, its investments in Korean productions have boosted its business in that country — and some of that content has found audiences around the world.

Netflix’s focus on streaming has also helped it avoid some of the other problems plaguing its peers, including weaker-than-expected box office results from expensive blockbuster movies. ,It was also evident in Chinawhich some in Hollywood hoped might make up for the poor performance domestically.)

But a long strike can cause some damage. While the company will save on content spending in 2023, it will have to pay for US productions at some point. Netflix itself has said this.some lumps may arise“In free cash flow in 2024. And investors may fear that streaming costs for media companies will soar if writers and actors are given a larger share of the economic pie to resolve the impasse.

Netflix executives may have been wary after their company singled out for criticism By (and drawing inspiration from) striking writers and actors. bad comments reception by Disney’s Robert Iger), largely stuck to rough commentary about the labor dispute. Company co-CEO Ted Sarandos said, “This strike is not the result we wanted.” told analysts Tomorrow. (He also said that his father was a union electrician.)

What’s going on over here

Tesla’s declining profits spooked investors. Shares of the electric vehicle maker fell nearly 3 percent in after-hours trading after the company Price wars with rivals continued to impact profit margins. But Tesla Chief Executive Elon Musk said the company would invest over $1 billion On a supercomputer it aims to further its autonomous driving offerings.

The threat of a Russian blockade lifted wheat prices. Chicago wheat futures jumped as much as 9 percent after Moscow suggested it would act hostile to any shipping from the Black Sea to Ukraine. The prospect of wheat shortages raised fears of renewed inflation, just as food prices finally appeared to be easing in many countries.

China has rejected John Kerry’s pleas to move faster on climate efforts. President Biden’s climate envoy left Beijing empty-handed after three days of talks on new ways their countries could work together to reduce carbon emissions; Instead, President Xi Jinping said China would continue its efforts at its own pace. Meanwhile, Earth has possibly set a global temperature record.

The Feds fined Deutsche Bank $186 million. Central bank officials cited “insufficient remedial progress” by the German lender in strengthening its money-laundering controls. It is the latest black eye for Deutsche Bank, which has paid billions in fines in recent years for failing to crack down on illegal activities by customers.

Wesleyan is the latest university to end legacy admissions. Weeks after the Supreme Court struck down affirmative action in higher education, a Connecticut institution said it would no longer give priority to the children of alumni. Both Democratic and Republican critics of legacy admissions policies say they disproportionately favor wealthy white applicants; Defenders say the practice helps schools raise more money.

Policing AI

Like almost everyone else, lawmakers are talking a lot about artificial intelligence. But as industry leaders descend on Washington and politicians closely monitoring developments broadcast their plans, don’t expect legislation any time soon.

Instead, keep an eye on regulators and the courts, where high-profile authors, actors and other creative people have presented a number of legal cases that could shape the contours of AI before they reach lawmakers.

“Congress must join the AI ​​revolution,” Majority Leader Senator Chuck Schumer said this week at an event with IBM in New York, where he discussed a range of AI.insight platformHe plans to do so this fall with businesses, experts and tech critics. The meetings, which aim to help politicians get up to speed on the technology, will focus on national security, privacy, impact on the workforce, high-risk applications and bias. Some lawmakers are already issuing AI proposals, but Schumer is doing so emphasis on patience Given the complexity.

“We don’t have to treat AI as an impending disaster,” Dario Gil, director of research at IBM, told DealBook. He was one of dozens of company representatives who met with congressional staff members in Washington yesterday. He said the “exaggerated rhetoric” about technology destroying humanity or replacing jobs failed to recognize its limits. He also argued that the existing rules were sufficient to regulate AI.

Regulators say they are looking into the matter. Gary Gensler, chairman of the Securities and Exchange Commission, has said that A.I. poses a threat to financial stability, and will probably require new regulations to protect the system. He said, the agency is already keeping an eye on fraud, conflict of interest and bias.

Last week, the Federal Trade Commission announced the first major investigation into OpenAI, the maker of ChatGPT, over the potential consumer harms of chatbots. And last month, the Consumer Financial Protection Bureau highlighted the “widespread adoption and use of chatbots by financial institutions”. breaking the rules,

The most urgent action can be taken in the courts, Creators, including comedian Sarah Silverman and writers such as James Patterson and Margaret Atwood Demand for compensation from companies and suing over the use of its intellectual property in the larger language model. Similarly, a growing number of Internet users want to know how their data is being used and are suing. This flurry of activity beyond Congress signals that regulators and judges, not lawmakers, may be finished leading the way In defining the limits of AI

In other AI news:

• is apple Developing a Chatbot Rival ChatGPT and Google’s Bard have been told that some engineers are calling it “Apple GPT” internally.

• Google has introduced a new AI tool capable of writing news articles for media organizations including News Corp, owner of The New York Times and The Wall Street Journal. As The Times’ Benjamin Mullin and Nico Grant reported, some officials watching the pitch described the technique as “shaky”.

• The researchers found that ChatGPT performed poorly on select tasksThe previous month compared to March, including solving math problems.

21,000

– Estimated reductions in staff by Wall Street’s largest banks in the first six months of the year, either through layoffs or layoffs, according to bloomberg, The major culprits are the decline in deal making and capital market activity.

Is the ‘She-Session’ over?

During the coronavirus pandemic, economists and pundits theorized about its lasting effects on the labor market. But some of those trends — whether “quitting quietly” or early retirement — have persisted, and the labor market has fully recovered, write Jenna Smialek and Ben Castleman for The Times.

Women are returning to the workplace empowered. At the start of the pandemic, women experienced massive job losses, a phenomenon known as the “she-session”, which led to fears that women would be permanently pushed back into the labor market. But employment data has recently shown a faster recovery among women than men.

As of June, the employment rate for women in their prime working years was the highest on record.

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deal

• Microsoft and Activision Blizzard have extended the deadline for completing their $69 billion deal to October, a sign that they believe a major British regulator will sign off on the transaction. (NYT).

• Alleged activist investor Elliott Investment Management took a significant stake in Catalent, a large contract drug manufacturing company. (WSJ)

• named warburg pincus Jeffrey Perlman is its chairmanHe will replace former Treasury Secretary Tim Geithner in the role and replace him as the investment firm’s next CEO (WSJ).

Policy

• New York City Comptroller, Brad Lander, blackrock criticized To quote the CEO of Saudi Aramco, who was named to its board: “Actions speak louder than words.” (Bloomberg)

• Senator Ed Markey, a Democrat from Massachusetts, introduced a bill Increase duty on private jet fuel To offset the lower taxes paid by private aircraft customers. (insider)

• A group of Chinese billionaires, including Tencent founder Pony Ma, issued Rare Public Statements EndorsedPresident Xi Jinping’s controversial way of handling the economy. (ft)

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