Disney Q4 profit takes hit despite more Disney+ subscribers

Walt Disney said Tuesday its marquee streaming service, Disney+, gained more subscribers than Wall Street had expected, but investment costs dragged quarterly earnings below analysts’ targets.

Shares in Disney fell 5% in after-market trading.

The entertainment company is spending billions to compete with Netflix and others for streaming television customers as traditional TV declines in popularity. Disney+ reported 164.2 million subscribers in the fiscal fourth quarter, surpassing Factset estimates of 161 million.

The cost to build Disney’s streaming business led to a $1.5 billion loss in the direct-to-consumer unit, which hurt quarterly earnings.

Net income from continuing operations rose 1% to $162 million. Excluding some items, Disney earned 30 cents per share, missing Wall Street’s target.

Revenue of $20.15 billion for the July-to-September quarter also fell short of the consensus estimate of $21.25 billion. Disney said it recognized $1 billion in lost revenue in the quarter from terminating a film and television contract early so it could use content on its own streaming services.

The cost to build Disney’s streaming business led to a $1.5 billion loss in the direct-to-consumer unit, which hurt quarterly earnings.
AP

Disney has amassed a total of 235 million subscriptions across Disney+, Hulu and ESPN+ streaming services, a gain of 14.6 million from the previous quarter. Hulu reported 47.2 million subscribers, up 8% from a year ago, and ESPN+ logged 24.3 million, a gain of 42% from a year earlier, and Disney+ is up 39% from a year ago.

The company repeated comments in August that losses from its direct-to-consumer business would peak in fiscal 2022 which ended Oct. 1.

“We expect our DTC operating losses to narrow going forward and Disney+ will still achieve profitability in fiscal 2024,” said Chief Executive Robert Chapek. “Assuming we do not see a meaningful shift in the economic climate.”

The ad-supported version of the Disney+ service will launch in the US on Dec. 8, bringing a new source of revenue to underwrite the billions the company spends creating original movies and series for the services. Macquarie Research analyst Tim Nollen estimated the ad tier could bring an additional $800 million in ad sales next year.

Disney theme parks posted robust growth despite COVID-19 related travel restrictions in China and Hurricane Ida forcing the temporary closure of Walt Disney World in Florida in September.

Disney’s parks, experiences and products group reported revenue of $7.4 billion in the quarter, beating analysts’ forecasts. Operating income reached $1.5 billion, more than double a year ago.

Nollen wrote that higher prices, and the technology Disney uses to distribute demand, have resulted in a 40% increase in spending per person since 2019.

For the fiscal year, Disney reported per-share earnings of $3.53, excluding certain items, on revenues of $82.7 billion.

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More than 200 Gannett staffers stage one-day strike over wages

More than 200 Gannett staffers are staging a day-long strike on Friday as they demand better wages and benefits — a fresh burst of unrest following recent layoffs at the newspaper giant.

The NewsGuild, which represents staffers at Gannett — which owns USA Today and a slew of local papers such as the Detroit Free Press, the Bergen Record and the Indianapolis Star — said Friday that 14 of the company’s newsrooms, won’t work at all on Friday,

Those include employees from publications in New Jersey, New York, Arizona and California. Workers in Florida, Texas and Ohio, meanwhile, will stage a lunch-time walkout.

A rep for the NewsGuild said the strikes were in response to the company laying off 400 employees and cutting another 400 open positions in August, which represented 3% of staff.” Those cuts were followed by more belt-tightening in October, which included furloughs and cuts to the 401k plan.

Employees walked out Friday after Gannett cut 400 employees and 400 open jobs this year.
AP

“These devastating cuts to local newsrooms come on the heels of Gannett announcing a $100M stock buyback program for shareholders in February, directing critical funding away from local newsrooms and to rich shareholders,” the rep said.

Gannett did not immediately return requests for comment. The company told The Wall Street Journal, which first reported the news, that the strikes won’t interfere with putting out the news to its readers.

“We continue to bargain in good faith to finalize contracts that provide equitable wages and benefits for our valued employees,” the company said.

USA Today-parent Gannett slashed hundreds of jobs and made cuts to employee 401-K plans recently.
Getty Images

The McLean, Va.-based Gannett said in a recent securities filing that as of last December, it employed roughly 4,846 journalists across local papers, USA Today and in its U.K. publications.

On Thursday, the publisher swung to a third-quarter net loss of $54 million, and said it expected to post a loss for the full year. Chief Executive Michael Reed cited inflationary pressures and macroeconomic volatility/

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Snapchat co-founder Reggie Brown accused of running amok in swanky gated community

The one-time tech visionary who invented Snapchat’s disappearing-photos feature vanished from the public eye after a nasty legal battle with his co-founders — and has since been accused of running amok in a swanky gated community, The Post has learned.

Reggie Brown, who co-founded Snapchat with Evan Spiegel and Bobby Murphy while the trio were hard-partying undergraduates at Stanford University, was pushed out of the company a decade ago. While Spiegel and Murphy became billionaires when Snap Inc. went public, Brown largely dropped off the map after winning a $157.5 million cash settlement from Snapchat in 2014 — when he was just 24 years old.

Now, a series of police reports, exclusively obtained by The Post through the Freedom of Information Act, shed light on the rejected inventor’s allegedly troubled life since he was ousted from Snapchat — despite his key role in creating the wildly popular social network — and returned to his native South Carolina.

The documents include allegations that Brown “swatted” a police officer after recklessly driving a Bentley luxury sedan during a reported music video shoot. He later became locked in an increasingly bizarre feud with his elderly next-door neighbors, who accused Brown of damaging their lawn with his car, using his large dog to intimidate them and even grabbing his crotch in front of their grandchildren, according to Columbia Police Department reports.

Brown had a series of run-ins with Columbia, SC police, records show.
AP

The Snapchat co-founder’s alleged behavior sparked outrage among residents of his close-knit neighborhood in Columbia. When police officers prepared to arrest Brown, they found out that he had left the state.

Brown and his family could not be reached directly for comment. Two attorneys who represented him in his litigation against Snapchat — James Lee and K. Luan Tran — did not respond to repeated requests for comment. A third attorney who previously worked for Brown, Ray Mandlekar, declined to comment.

Brown reportedly crashed a black Rolls Royce SUV into his subdivision’s security gate.
Google Maps

‘Filming a music video’

Brown’s first documented run-in with South Carolina cops was in December 2020 in the Kings Grant gated community, where he had lived since at least 2018 when he paid $890,000 for a five-bedroom, 6,900-square-foot mansion, according to property records.

On Dec. 10, a Kings Grant security guard told local cops that day that Brown had crashed a black Rolls Royce SUV into the subdivision’s security gate, according to police records. Police responded but left the scene without speaking to Brown.

The following day, police responded again after a neighbor complained about Brown allegedly recklessly driving another car — this time a four-door Bentley sedan. The neighbor also griped that Brown and his friends were “filming a music video” at the community center, which features a pool, playground and clubhouse.

Brown held a raucous music video shoot at the Kings Grant community center, according to police records.
Facebook/King’s Grant on the Ash

When an officer arrived, Brown was sitting in his Bentley outside the clubhouse and refused to roll down the window, according to the police report.

“I observed Mr. Brown to have a glassed over look upon his face and to have dilated pupils,” the officer wrote.

A man who was participating in the shoot then approached the police officer and explained that Brown had invited him there to film a music video, according to the police report. As the cop was speaking with the man, the Snapchat co-founder’s mother arrived, according to the report.

A section of the Columbia Police Department report on Brown’s alleged music video shoot.

Brown then stepped out of his Bentley and “aggressively lunged” at the neighbor who had originally called the police, according to the report. When the police officer tried to separate the pair, Brown allegedly “swatted” the cop’s arm away, leading the cop to put him in handcuffs.

Brown’s father and more neighbors then showed up, the police wrote, adding that “the scene quickly escalated and the [responding officer] requested additional units to maintain control.”

The officer then asked Brown to perform a field sobriety test. Brown agreed, according to the report, and passed the test. The police officer took off his handcuffs and released him. It would be nearly a year before his next run-in with the law.

Brown (left), with fellow Snapchat co-founders Bobby Murphy (center) and Evan Spiegel (right).
LA County Superior Court

‘A million-dollar idea’

Brown’s Snapchat story began in 2011, when he was smoking marijuana with his Stanford University fraternity brothers, according to the book “How to Turn Down a Billion Dollars,” by Billy Gallagher.

Brown, then a junior in college, mused that a disappearing images app would make sexting with girls easier — then rushed down the hall to see his friend Evan Spiegel, with whom he often threw Red Bull and vodka-fueled parties, according to the book.

“That’s a million-dollar idea!” Spiegel responded.

Brown and Spiegel then brought in Bobby Murphy, who wrote the code for a basic version of the app. In the summer of 2011, the trio moved into Spiegel’s father’s house in Los Angeles to work on the app.

But Brown’s relentless partying reportedly alienated Spiegel and Murphy, who were concerned he was more focused on going out than working, according to the book.

Following a series of arguments, Spiegel and Murphy locked Brown out of the startup’s accounts just months after Snapchat had launched.

While Snapchat soared in popularity, Brown sued Spiegel and Murphy in 2013, claiming that he rightfully owned 20% of the company. Spiegel’s response was brutal.

Evan Spiegel and Bobby Murphy ousted Reggie Brown from Snapchat in 2011, leading to a costly legal battle.
AFP/Getty Images

“I regret inviting him into my house,” Spiegel said of Brown during his deposition in the suit, which was leaked to Business Insider. “I regret spending that time with him at my house. I regret giving him so many chances. He exploited my attempts at generosity . . . the generosity was giving Reggie an opportunity to work on something like this.”

Still, Spiegel conceded, “Reggie may deserve something for some of his contributions.”

At the same time Brown was fighting Spiegel and Murphy in court, he completed a 10-month master’s degree program in management studies at Duke University’s Fuqua School of Business and graduated in May 2014, according to Gallagher’s book. He reportedly did not tell his classmates about his time at the company.

In September of 2014, Snapchat finally agreed to pay Brown $157.5 million in a cash settlement that included a gag order banning him from ever speaking publicly about the company.

Snapchat also released a statement that month acknowledging that Brown “originally came up with the idea of creating an application for sending disappearing picture messages” — but it buried the news from the tech press by publishing the release immediately before Apple’s iPhone 6 and Apple Watch launch event.

Brown’s former home in Kings Grant, where he allegedly engaged in a bizarre feud with his neighbors.
MLS

‘Mocking grandchildren’

Last November — nearly a year after Brown’s confrontation with neighbors and cops during the music video incident — a police officer knocked on the door of his mansion. Brown refused to let the officer inside, but cracked the door open a few inches to talk, according to a police report. It was two days after Thanksgiving.

The officer was there to confront Brown about what his neighbors said was an escalating harassment campaign they claimed he had waged against them.

Brown, the neighbors claimed, had damaged his neighbors’ lawn by driving his vehicle through it. He was also accused of shining his vehicle’s headlights into their bedroom windows and setting off his car alarm in the middle of the night to aggravate them, according to the police report.

In addition, neighbors accused Brown of walking up and down the street in front of his neighbor’s house while “making remarks to his family,” “mocking his grandchildren” and “making hand gestures,” the police report said.

Brown denied driving his vehicle in his neighbor’s lawn, entering their property or interacting or speaking with anyone while walking in front of their property, according to the report. He allegedly responded by claiming to the police officer that the neighbor had stolen half an acre of land from him and killed his palm trees.

“Mr. Brown stated [that the neighbor] has been pouring gasoline and oil down palm trees on his side of the property line which has turned them pink and killed them,” the report reads. “He stated [he] had video footage on his phone of the incident but told me he was not going to show me.” 

Brown reportedly added that his neighbor’s actions could be considered domestic terrorism and said he was considering calling the FBI. He said he was considering having his neighbor hauled away to Alvin S. Glenn Detention Center, a prison on the outskirts of Columbia, the police report says. 

The police officer told Brown that his neighbors had asked him to stop contacting them, then left, according to the report.

Brown accused his neighbors of stealing his property and killing his palm trees, according to a police report.
MLS

Arrest warrant

Shortly after the police officer left Brown’s residence, Brown’s neighbor called again to report a civil disturbance. The neighbor told police that — minutes after the first police officer had left — Brown walked onto his property and “began using profanity and antagonizing him.”

Brown then allegedly walked back to the border between their two yards, where he continued yelling “derogatory terms” at his neighbor and his grandchildren.

“Brown then grabbed his crotch toward him and his grandchildren,” the police report reads.

The neighbor also detailed more previous alleged incidents involving Brown. He said that Brown intimidated him with a Belgian Malinois dog that he had trained to respond to German commands, according to the report.

“Mr. Brown will command the dog to bark at him, and aggressively charge at him,” the neighbor told police.

Brown’s neighbors claimed that he intimidated them with a Belgian Malinois dog that he had trained to respond to German commands, according to police records.
Getty Images/iStockphoto

The neighbor also described a past incident in which Brown allegedly interrupted a dinner party. The neighbor and his family were entertaining guests on their front porch when Brown drove into his driveway, got out of his vehicle and “started making derogatory comments to his family and guest,” forcing everyone to go inside, according to the report. 

“He and his family are afraid for their wellbeing due to the fact that Mr. Brown’s behavior had gotten more aggressive over time,” the police report reads. 

When the police officer arrived at Brown’s house in response to the call, the officer said he saw Snapchat co-founder yelling at the neighbor from the back window of his house. The officer tried to speak with Brown, but he reportedly refused to come to the door. 

Four days after the last dust-up, seven police officers showed up at Brown’s house and knocked on his door. They were carrying an arrest warrant for his arrest on a charge of first degree harassment.

A section of a police report about Brown allegedly harassing his neighbors.

No one answered the door, so the officers reportedly went to Brown’s parents’ house nearby. Brown’s brother answered the door and allegedly said that Brown had left South Carolina for another state.

According to the police report, Brown’s father then reportedly arrived and explained that Brown had just been dropped off at an out-of-state mental health rehabilitation center. The center charges $58,000 for a minimum 20-day stay.

The neighbors appear to have since dropped the charges against Brown. They did not respond to multiple requests for comment for this story.

Snapchat’s 2017 initial public offering made Evan Spiegel and Bobby Murphy multi-billionaires in their twenties.
REUTERS

‘Vanished’

When Snapchat went public in 2017, the Los Angeles Times noted that the company’s mysterious third founder had “vanished from public life.”

The IPO made both both Spiegel and Murphy multi-billionaires in their twenties. If Brown had settled his lawsuit in exchange for Snapchat shares instead of cash, he too could have become a billionaire.

Even with Snapchat shares down 80% so far this year, a 20% stake in the company would be worth more than $3 billion.

In August of this year, Spiegel and his supermodel wife Miranda Kerr paid $145 million for an estate across the street from the Playboy mansion, Dirt.com reported in August. Combined with a $30 million villa Spiegel and Kerr maintain in Paris, the value of the Snapchat CEO’s real estate holdings is higher than the entire cash settlement received by Brown.

Meanwhile, the other Snapchat co-founder, Bobby Murphy, reportedly owns at least nine multimillion-dollar properties in Los Angeles worth a collective $60 million.

Murphy and Spiegel are both worth more than $2 billion each, according to Forbes.

A little over a month after Brown allegedly went to rehab, he sold his house on Jan. 11, 2022 for $1.04 million, property records show. It’s unclear where he currently lives. 

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CEOs fixing Biden’s Saudi oil mess because he won’t

Some of Wall Street’s top CEOs spent the last week on a diplomatic mission to ­Saudi Arabia. It wasn’t touted as diplomacy, of course. The financiers who attended the Future Investment Initiative in ­Saudi Arabia, known as “Davos in the Desert,” are a well-scripted bunch who prefer to keep their dealings private whenever possible.

Tough luck. Word leaked to me that what went down was vastly more important than seminars on climate change or whatever else the globalist crowd likes to virtue-signal about.

Rather, I am told by people with knowledge of the matter that the real reason so many top CEOs attended the conference was to forge a truce between the Saudis and the Biden administration. The ongoing and very public bellicosity between the two longtime allies is bad for business, both the CEOs’ and that of the US.

True, Saudi Arabia is a big Wall Street client looking to further modernize its economy through investment-banking deals, while it turns to our financial sector to manage its riches. But the growing consensus among the people who run the US financial system is that having the Saudis as an enemy is among the biggest geo­political and economic mistakes of the mistake-prone Biden administration.

It will embolden the aims of our common enemy, the terrorist regime in Iran, and drive the Kingdom further into the hands of our rivals, Russia and especially China. (Reps from China flooded the conference this year, I am told, and not because they like the desert heat). Plus the bickering will do nothing to satisfy our ­energy needs and save Sleepy Joe Biden’s presidency.

Biden was reportedly blindsided when the Saudis and OPEC announced cuts to oil.
Anadolu Agency via Getty Images

For the unacquainted, what goes down in Riyadh every year for ­almost a decade is very similar to the more established World Economic Forum confab in Davos, Switzerland. Running the show in Riyadh is a more controversial host than milquetoast globalist WEF chief Klaus Schwab.

It’s the crown prince, Mohammed bin Salman — known by haters and admirers alike as MBS. When MBS (now just 37) became the Kingdom’s de facto ruler a few years ago, he was in charge of a country with enormous oil wealth and vast economic potential.

Uneven record

He was also in charge of maintaining the somewhat uncomfortable relationship with us because of his country’s often lousy record on human rights. There were hopes the youthful new leader would enact reforms, soften the Kingdom’s anti-Democratic impulse and modernize its economy away from its reliance on crude.

Let’s just say it hasn’t gone down exactly that way. The crown prince instituted some much-needed changes, such as expanding women’s rights. The Kingdom’s giant oil company, Saudi Aramco, is venturing beyond fuel into areas such as tech. The Saudis have continued to support Israel’s existence, albeit tacitly, and remain an enemy of Iran.

MBS also put a slew of people he deemed potential rivals under house arrest immediately after taking control. Then presidential candidate Biden campaigned in 2020 to make Saudi Arabia a “pariah” nation because the Kingdom hasn’t shed its autocratic leanings, and because MBS is widely blamed for the assassination of a journalist critical of his regime, Jamal Khashoggi.

Many have criticized Biden’s lack of action to get the US more energy independent.
Getty Images

More recently, tensions have gone from bad to worse after our feeble leader sought to cut domestic oil production, traveled to the Middle East and begged the crown prince to increase supply. Biden thought he had a deal until MBS and OPEC announced cuts, prompting the administration to threaten sanctions and maybe more.

OK, I know what you’re saying: This MBS is a bad dude. Wall Street likes him only for his money, his control of Saudi Aramco and the massive state pension fund. Both are growing gushers of investment-banking and money-management fees for the likes of Goldman Sachs, JPMorgan, BlackRock etc. — the very same type of people who are telling the White House to back off.

Point taken, but the fat cats who went to Riyadh (JP’s Jamie Dimon, Goldman’s David Solomon, reps for big private-equity and money-management firms) are also saying the world is filled with bad actors. The Saudis are probably the best — and most strategically important — of the bunch.

It’s a geopolitical reality that the Trump administration and prior presidents have accepted, but the progressive zealots currently in charge of Team Biden won’t.

It’s also foolhardy. Biden’s scorched-earth approach to MBS is hurting the American consumer and the country’s national-security interests, and Wall Street executives make the point both to me and their contacts in the White House that our time would be better spent completing pipelines if we really want to lower the cost of fuel here at home.

On top of all that, the recent spat over oil production may not be the one-sided affair the White House and Dems are claiming. In private meetings with CEOs, the Saudis contend the oil-production cut was well-telegraphed no matter what Biden may have thought after his famous fist bump with MBS in July.

‘No choice’ on supply

OPEC’s move is a function of a long-standing desire to keep ­prices from falling below $80-$90 a barrel. Because Biden keeps releasing oil from the Strategic Petroleum Reserve and with the world economy falling into recession, the Saudis say they had no choice but to cut supply.

If the White House didn’t know that, Sleepy Joe must have been half-asleep during those talks, the Saudis say.

These are all points made by senior Wall Street executives to people in the Biden administration in recent days, I am told. The Wall Streeters get that MBS is no saint, but Sleepy Joe’s weak hand makes the crown prince a necessary evil. Biden should take their advice and focus on some real enemies.

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US home price plunge is ‘just beginning’ as housing market rapidly cools: economist

A substantial plunge in US home prices is likely “just beginning” as decades-high mortgage rates cause a downturn in the housing market, a prominent economist cautioned Friday.

The warning from Pantheon Macroeconomics chief economist Ian Shepherdson followed more dismal data that showed a slowdown in housing activity.

Pending home sales – a measure based on signed contracts – plunged 10.2% in September, according to the National Association of Realtors.

The pending home sales index has plummeted 35% compared to one year ago, according to Shepherdson.

But cratering demand has only recently started to result in lower home prices – meaning more financial pain is on the way for prospective sellers.

“The bad news is that prices have much further to fall before the market adjusts fully to the collapse in demand,” Shepherdson said in a note to clients.

“Home prices have only recently started to decline on a month-to-month basis,” Shepherdson added. “The resilience in prices was made possible by a lack of existing homes on the market, but supply is now rising — albeit slowly — as homeowners who previously held off on selling worry that further delays will mean they fetch a much lower price.”

Mortgage rates are above 7%.
Bloomberg via Getty Images

As The Post reported, Shepherdson recently warned he expects home prices to fall by 20% by next year – a substantial correction after values hit record highs during the pandemic-era housing boom.

Mortgage rates topped 7% this week for the first time since 2002, according to Freddie Mac. Long-term rates have spiked as the Federal Reserve hikes interest rates to combat inflation.

“The good news is that mortgage rates likely are close to a peak, and if they remain around their current level, sales will find a floor early next year,” Shepherdson added.

Home prices are falling fast in some markets.
Getty Images

Sellers are slashing their asking prices to entice buyers who are facing the worst affordability crunch in decades. Mortgage payments are commanding a much larger share of household income, and while home prices are falling fast, they’re still higher than they were one year ago.

NAR Chief Economist Lawrence Yun warned that 7% mortgage rates are the “new normal” for buyers until the economy begins to improve.

“Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers,” Yun said.

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Don Lemon claims covering politics in primetime gig had ‘gotten old’

CNN anchor Don Lemon revealed Thursday that he felt the political focus of his nixed primetime show had gotten stale prior to his move to the struggling cable network’s revamped morning show.

Lemon, who is set to serve as co-host of the new “CNN This Morning” beginning Nov. 1, said he grew “tired” of the politically charged nature of primetime news.

“I would be lying to you if I didn’t say that was a factor,” Lemon told Semafor in an interview published Wednesday.

The left-leaning anchor was known for frequently targeting former President Donald Trump in nightly monologues.

“Look, has it been frustrating over the last couple of years having to deal with politics in the way it’s been dealt with in primetime? Yes. Was I tired of it? In some ways, yeah it’s gotten old,” Lemon told the outlet. “But I also think we were transitioning to a different time.”

Lemon noted changes in the news cycle as the war in Ukraine supplanted Trump mania as CNN’s main topic of conversation in primetime, adding he “was ready to move on and I think the audience is ready to move on as well.”

Don Lemon said he grew tired of the political focus of his primetime show.
YouTube/Hell Of A Week

The 56-year-old anchor couldn’t resist taking another shot at Trump, telling Semafor the former president “didn’t have the courage” to submit to an interview on his primetime show, “Don Lemon Tonight.”

Lemon is moving from primetime to mornings as CNN President Chris Licht leads an overhaul at the network. Licht and top brass at WarnerBros. Discovery are trying to shift the network toward centrist news coverage rather than the opinion-based programming that has seen its ratings crater.

“Don Lemon Tonight” recently aired its last show.
CNN

Lemon denied the network’s nudging under new leadership has been “uncomfortable” and expressed support for Licht’s vision.

“I really like Chris. When I read stories about what’s happening at CNN and about Chris and what he’s doing, I think it’s unfair,” Lemon said. “I think people should give him a chance. Everyone has a new vision when they come in as a new boss. Let’s see what his vision is and how it plays out.”

CNN is in the midst of massive shakeup.
CNN

The nixed “Don Lemon Tonight” struggled with low ratings prior to CNN’s shakeup. Despite losing a coveted primetime gig, Lemon has insisted his shift to mornings is a “promotion.”

Lemon is set to host “CNN This Morning” alongside fellow anchors Kaitlin Collins and Poppy Harlow. The show will air weekdays from 6 a.m. to 9 a.m.

He also provided a glimpse into how he plans to approach his new gig, telling Semafor that he will “be wearing what I wear in my normal everyday life” to reflect the more casual environment.

“I’m just going to be myself. It seems to have worked for the past however many decades in the business,” Lemon said. “I’m really not concerned about the ratings. I’m concerned about making it the best morning show possible and appealing to multiple demographics and people who are interested in other things than raw, tribal politics.”

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Housing starts tumble more than expected in September

US homebuilding fell more than expected in September, led by a 13.1% decline in multi-unit projects, according to Census Bureau data released on Wednesday.

Housing starts dropped 8.1% to a seasonally adjusted annual rate of 1.439 million units last month. Data for August was revised down to a rate of 1.566 million units from the previously reported 1.575 million units. Economists polled by Reuters had forecast starts would come in at a rate of 1.475 million units.

The Federal Reserve’s aggressive monetary policy tightening has significantly weakened the housing market, with most indicators falling to levels last seen during the first wave of the COVID-19 pandemic in the spring of 2020. In contrast, other sectors of the economy, like the labor market, have shown resilience despite the central bank’s attempts to cool demand.

Since March, the Fed has lifted its benchmark policy rate from near zero to a range of 3.00%-3.25%, and the fed funds rate is now expected to end the year in the mid-4% range with inflation yet to show signs of abating materially.

Mortgage rates have risen even higher. The 30-year fixed mortgage rate averaged 6.94% last week, the highest since 2002, up from 6.81% a week earlier, according to the Mortgage Bankers Association.

Permits for future home construction rose 1.4% to a rate of 1.564 million units in September. Residential fixed investment declined at its steepest pace in two years in the second quarter, contributing to the second straight quarterly drop in gross domestic product during that period.

Homebuilding is likely to remain on the back foot for the rest of the year. A survey on Tuesday showed the National Association of Home Builders/Wells Fargo Housing Market sentiment index fell for the 10th straight month in October.

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Spirit Airlines shareholders approve $3.8B merger with JetBlue

Spirit Airlines shareholders voted Wednesday to accept a $3.8 billion buyout from JetBlue Airways, but the deal could still face a challenge from federal antitrust regulators.

JetBlue emerged as the winner in a bidding war with Frontier to acquire Spirit, the nation’s biggest budget airline.

Spirit announced the outcome after a brief meeting, which was held online. Spirit said only that the JetBlue deal was supported by a majority of shares voted; it promised an exact count within four business days.

Wall Street widely expected shareholders to approve the sale after they forced Spirit to drop a proposed merger with Frontier Airlines in favor of JetBlue’s richer, all-cash offer.

“This is an important step forward on our path to closing a combination that will create the most compelling national low-fare challenger to the dominant US carriers,” Spirit CEO Ted Christie said after the vote.

JetBlue issued a statement calling the vote “a major milestone in our plan to join with Spirit to create a high-quality, low-fare national challenger to the Big Four airlines” — a reference to American, United, Delta and Southwest. JetBlue vowed to work through the regulatory process.

JetBlue is expected to repaint Spirit planes and fold its pilots and other employees into the JetBlue workforce. The deal would make New York-based JetBlue the nation’s fifth-biggest airline with more than 450 planes and about 7,000 pilots and — it hopes — help it win customers from the bigger airlines.

However it would also eliminate Spirit, the nation’s biggest budget carrier, and that might not sit well with regulators, who appear to oppose any further consolidation in the airline industry after a round of mergers between 2005 and 2016.

The Justice Department is currently fighting to kill a partnership in New York and Boston between JetBlue and American, which the airlines call the Northeast alliance or NEA. Department lawyers say the alliance is anti-competitive and will drive up prices for consumers. A trial that began last month in federal court in Boston resumes Monday.

The outcome of the NEA trial could have a huge impact on whether the Justice Department lets JetBlue buy Spirit or sues to block the sale, according to Florian Ederer, an antitrust expert and economics professor at Yale University.

The Justice Department is currently fighting to kill a partnership in New York and Boston between JetBlue and American, which the airlines call the Northeast alliance.
REUTERS

“If (JetBlue and American) win the case, and the judge thinks the NEA does not harm consumers enough, it’s almost guaranteed that there will be an antitrust challenge to the Spirit acquisition,” Ederer said.

JetBlue argues the alliance with American should be allowed because it’s not a merger. The acquisition of Spirit, however, would merge two airlines.

JetBlue CEO Robin Hayes has said he is confident of winning regulatory approval to buy Spirit. The airlines hope to close the sale in the first half of 2024.

Spirit and Frontier announced their planned merger in February. Both are so-called ultra-low-cost carriers that charge lower fares than other airlines but tack on more fees to make up some of the difference.

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Papa John’s founder slammed for saying he ‘lost a home’ in Florida due to Hurricane Ian

John Schnatter, the founder of Papa John’s Pizza who was forced to step down as CEO after uttering a racial slur during a conference call, was slammed on Tuesday for telling a cable news channel that he had “lost a home” in Florida as a result of Hurricane Ian.

Schnatter, whose net worth was pegged by Forbes at around $1 billion in 2017, is the owner of an expansive real estate portfolio that includes some 20 properties throughout the country, including a $6 million condominium in Naples, Fla., according to Louisville Business First.

The mogul told OAN on Tuesday that his property in Naples suffered damage from the massive Category 4 storm which left dozens dead after bringing record rainfall, flooding and storm surge to Florida.

In a viral clip circulating online, the cable network noted that Schnatter, 60, was speaking from one of his other homes in Utah.

“Of course, you’re currently in Utah but we’re seeing the images of your home in Naples,” the anchor, Stella Inger Escobedo, said during the interview with Schnatter.

“It appears it is completely under water.”

“Just seeing all those images — it’s heartbreaking,” Escobedo added. “Can you tell us the aftermath in your neighborhood?”

Schnatter said the extent of the damage depicted in the images “gives you a little bit of perspective…[as to] how devastating this storm is.”

He then added that he wasn’t “worried about myself because I have the resources and the team and institutional knowledge” to get through the crisis.

“You just can’t imagine how bad this is and my heart goes out to the folks in Florida,” Schnatter said.

“Yeah, I lost a home, but they’ve lost everything.”

Schnatter shared images of the damage to his home in Naples, Fla., which was caused by Hurricane Ian.
OANN

Schnatter and OAN were ridiculed on social media for the segment.

One Twitter user sarcastically remarked: “I’m not worried because I have 600 million and can afford proper insurance. OAN is ridiculous.”

Others also mocked OAN for misspelling the word “hurricane” in the chyron before quickly fixing the typo.

“Well it’s a hurrican, not a hurrican’t,” tweeted one Twitter user.

But others defended Schnatter. They noted that he acknowledged he would be better off than most people in Florida who have had their properties destroyed and lives upended.

“Idk seems like u took this pretty outta context here,” one Twitter user wrote.

“Isn’t he sorta admitting that because he’s rich he’ll be just fine and that people that aren’t Papa John will not be?”

Schnatter, whose net worth was valued by Forbes at $1 billion back in 2017, is reported to own many properties across the country.
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Another Twitter user wrote: “i mean at least hes being honest, he could’ve pretended it affects him a lot more.”

At the time Schnatter filed for divorce from his wife in 2019, he owned at least three properties in Anchorage, Ky., not far from Louisville. The properties, which totaled more than 100 acres of land, were managed by a limited liability co-owned by Schnatter.

At least 70 people have been confirmed dead in Florida as a result of Hurricane Ian.
ZUMAPRESS.com

After he was forced out as CEO in 2018, he started selling a large chunk of his 31% ownership stake in Papa John’s. In total, he pocketed more than $500 million from the sale of his shares in the company that he built into the fourth-largest pizza chain in the country.

At least 71 Floridians have been confirmed dead as a result of the hurricane, according to authorities.

About 520,000 homes and businesses in Florida were still without electricity as of Monday evening, down from a peak of 2.6 million. But that is still nearly the same amount of customers in all of Rhode Island.

A Sept. 29 estimate from CoreLogic found that wind and storm surge damages from Ian could total between $28 billion and $47 billion, according to CNBC.

With Post wires

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Dow soars 700 points for 2nd straight day of gains

Stocks rose sharply on Wall Street Tuesday, clawing back more of the ground they lost in a miserable several weeks.

The Dow Jones Industrial Average surged 825.43 points, or 2.8%, to 30,316.32 and the Nasdaq jumped more than 350 points, or 3.3%.

The S&P 500 rose 3.1%. The benchmark index has been rallying since hitting its lowest point of the year on Friday to close out a September slump. European and Asian markets also made solid gains.

The broad gains come as major indexes remain in a bear market after falling 20% or more from their most recent record highs. The two-day rally is hitting markets as investors look for signs that central banks might ease up on their aggressive rate hikes aimed at taming the hottest inflation in four decades.

Australia’s central bank made an interest rate hike that was smaller than previous ones and that helped Australia’s market jump 3.8%. It is a potentially positive signal for investors, along with the latest jobs data from the US.

Investors in the US received potentially encouraging news from a government report on job openings that showed the number of available jobs in the US plummeted in August compared with July. It’s a sign that businesses may pull back further on hiring and potentially cool chronically high inflation.

The optimism could be misguided as inflation remains stubbornly hot, said John Lynch, chief investment officer for Comerica Wealth Management.

“Investors should be worried about false positives,” he said. “Be wary of the history of bear market rallies, they can be very seductive.”

Shares of Twitter soared 22% to $52 after billionaire Elon Musk proposed going ahead with his original offer of $54.20 to take the social media company private.

Major indexes could be in store for more declines ahead, he said, as more economic data and the next round of earnings reports paints a clearer picture of how inflation continues to impact business operations and consumer spending.

Treasury yields continued to pull back from their multiyear highs, which has helped relieve some of the pressure on stocks. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, fell to 3.59% from 3.65% late Monday. It got as high as 4% last week after starting the year at just 1.51%.

Central banks are being closely watched as they raise interest rates to make borrowing more difficult and slow economic growth to try to tame inflation. Investors are hoping that they will eventually ease off their aggressive rate hikes and the move by Australia’s central bank is a hopeful sign for some.

Wall Street is worried that the rate hikes, especially the increases from the Federal Reserve, could go too far in slowing growth and send economies into a recession. The Fed has already pushed its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March.

Economic growth is already slowing globally and the US economy contracted during the first two quarters of the year, which is considered an informal signal of a recession. The economy still has several strong pockets, including employment. Wall Street will get a more detailed look at the employment situation in the US when the government releases its monthly jobs report for September on Friday.

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