Amazon: Your Prime-ary Care Provider

Plus: Disney and Warner Bros reveal the still-sad state of streaming. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

November 9, 2023

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TOGETHER WITH

Good morning.

We wish Zuck a speedy recovery from his knee surgery, but he'll have a hard time walking away from this under any circumstances.

Meta CEO Mark Zuckerberg allegedly shot down multiple initiatives to improve the well-being of teens on Facebook and Instagram, which number more than 33 million. As part of a consumer-protection lawsuit filed by the Massachusetts attorney general, court documents say Zuckerberg vetoed a move to disable "beauty filters" — which can exacerbate low self-esteem and body dysmorphia — and allegedly remained silent on proposals to step up investments in addressing issues of addiction, self-harm, and bullying on the sites. We'll see how the empire built on the "hot-or-not" website FaceMash pushes back on this one.

Morning Brief

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Amazon wants to be the discount doctor.

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It's still tough to be a major media company.

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Pilots are caught in the shifting winds of supply and demand.

Healthcare

Amazon Offers Prime Members a Discount For its Posh Healthcare Service

The doctor is in… your shopping cart.

Amazon said Wednesday it plans to offer Prime subscribers low-cost annual memberships to its boutique One Medical primary care business. It's the latest move by the e-commerce giant to bolster its future in the healthcare sector.

Give It to Me Straight, Doc

Earlier this year, Amazon acquired One Medical for nearly $4 billion, and to attract new members, the online retailer is now tapping its roughly 150 million US Prime subscribers, who already pay $139 a year for fast shipping, exclusive deals, and video streaming. One year of a One Medical membership typically runs $199, but Prime subscribers will now be able to get it for $9 a month or $99 annually.

But even with a massive built-in user base and half-off discounts, healthcare industry success is not guaranteed for Jeff Bezos & Co:

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Amazon's previous attempts to disrupt the health industry haven't always been fruitful. Both Amazon Care and Haven — its joint venture with Berkshire Hathaway and JPMorgan — folded just a few years after their respective launches.

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And Amazon's not the only one interested in this space. Other tech titans like Google and Microsoft tried starting small by developing programs to make it easier for patients to share personal health records with doctors. But the functions were limited and not enough people took to the services.

Past failures from Big Tech indicate that "scaling in health care is very different from scaling in tech, or any other industry for that matter. The standard growth formula simply doesn't work in health care," Stephen Dean, co-founder of Keona Health, wrote in a blog post.

Talk to the Pharmacist: Amazon's developments are similar to steps being taken by pharmacy chains. In the past few years, Walmart, CVS, and Walgreens have been ramping up their patient services, including testing for and treating common ailments like the flu, strep throat, and covid-19. Regions once considered healthcare deserts now have a few more options, and the pharmacy chains get a larger piece of the Medicare and Medicaid pies, which were worth a combined $1.6 trillion in 2021. It's win-cough-win.

- Griffin Kelly

Media & Entertainment

Disney, Warner Bros. Keep White-Knuckling the Linear TV Churn

Tuesday's media industry double feature was a scare-fest.

Both Disney and Warner Bros. Discovery delivered quarterly earnings reports on Wednesday. The bottom line? It's still a tumultuous time to be a major media conglomerate.

When You Wish Upon a Streaming Service

Despite some promising fundamentals, WBD had the objectively worse day of the two. The good news is the company's streaming unit posted something close to a profit. Its $111 million in adjusted EBITDA was a massive swing from the $634 million loss a year ago. Meanwhile, Barbie's $1.5 billion summer box office haul helped WBD's film studio revenue climb 4% to $3.2 billion. But even the biggest hit in the company's century-long history wasn't enough to cover a company loss of $417 million — enough to see its share price slide nearly 20% on Wednesday. Ouch.

Disney, meanwhile, posted a $420 million loss in its all-important streaming arm. While that's a big step up from the $1.4 billion loss a year ago, the dual talent strike in Hollywood halted virtually all production and related spending — and the company still doesn't expect direct-to-consumer profitability until at least Q4 of next year. But better-than-expected overall net income, fueled by a strong Parks and Experiences segment, helped Disney shares claw back a few points from a decade-low in after-hours trading.

Both companies, however, face the exact same demon:

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The shift to streaming has pulled viewers away from both companies' long-lucrative linear TV businesses — and the pain is starting to pile on. WBD reported a 12% decline in network TV advertising revenue.

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Disney attributed its 9% dip in linear TV revenue to fewer impressions and lower average viewership. Disney earlier this summer flirted with selling ABC, its flagship linear TV network.

"This is a generational disruption we're going through," WBD CEO David Zaslav said during the earnings call.

Growth or Die: WBD's adjusted profit in streaming was helped in part by combining HBO Max and Discovery+ into a single service, Max, early this summer. Now Disney has finally tipped its hand on when it may do something similar, announcing that a beta version of a combined Disney+ and Hulu app will launch in December, followed by an official launch next spring. That comes as Disney inches toward completing its buyout of Comcast's outstanding one-third stake in Hulu before December 1, at a price tag of at least $8.6 billion. It may be safe to say your streaming bills will continue to get bigger in the near future.

- Brian Boyle

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Industrials

American Airlines Is Trying to Poach All the Industry's Pilots

(Photo by Ross Sokolovski on Unsplash)

This Captain Crunch has some seriously big prizes inside.

To combat a crippling pilot shortage, PSA Airlines, a regional flier and subsidiary of American Airlines, is dangling bonus packages worth $250,000 to lure pilots away from FedEx and UPS. Believe it or not, the two shipping giants are helping them fill the cockpit.

Clipped Wings

The captain crunch – that's literally what insiders call it – has been especially hard on regional airlines like PSA, which typically offer lower pay and fewer career opportunities. PSA has already raised wages to $217.50 an hour for experienced pilots, but even that rate comes in well below what FedEx fliers can typically pocket (FedEx captains can earn as much as $336 an hour).

Hence the bonus package: PSA is offering pilots a $175,000 bonus attached to their first paycheck, according to a Wall Street Journal report, plus another $75,000 after a year of service, as well as a pathway to fly for the American Airlines mothership, where captains can score over $400 an hour.

Luckily for PSA, the cargo side of the industry is slowing just as commercial air travel is picking up:

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Through the first three-quarters of the year, UPS has seen domestic average package volume fall by 9% from a year ago, while FedEx said it saw a 13% drop for its domestic Express unit in the fiscal year ended in May.

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FedEx said in July that its crew of roughly 5,800 pilots is about 700 too many. And earlier this year, nearly 200 senior UPS pilots accepted a voluntary buyout package as the company looked to cull its ranks. Both cargo giants have gone so far as recruiting on PSA's behalf, passing along the message of the regional flier's bonus program.

Friendly Skies: The shifting winds of pilots' employment prospects reflect a pivot by the American economy, one in which consumers are finally spending less on things and more on experiences — i.e., less Amazon splurging, more late-night impulse buys on Expedia. What's good for American Airlines may just be bad for Amazon, at least until Jeff Bezos decides terrestrial air travel is just as exciting as going to space.

- Brian Boyle

Extra Upside

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Bird brain: Perdue debuts new snack, chicken feed for humans.

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Safe bet: Caesars lands deal with Las Vegas Culinary Union to prevent strike, MGM and Wynn still need to ante up.

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