--:-- [Theme music fades out]
--:-- John Bickley: The NFL is back, and FanDuel's got everything you need to play your game. From same-game parlays to live betting. Right now, new customers bet $5 and get $300 in bonus bets if you win. 21-plus in president select states. 18-plus in Kentucky and Wyoming. Must be first online real money waging. $5 deposit required. Bonus issued is non-withdrawable bonus bets that expire seven days after receipt. Restrictions apply. See full terms at FanDuel.com slash sportsbook. Gambling problem? Call 1-800-GAMBLER.
--:-- John Bickley: Streaming giant Netflix suffered huge losses to its stock price this week. That 200 million subscribers is not actually enough viewers for the amount of money that they're spending on content. They're going to spend almost $20 billion in content acquisition in the next 12 months. What changes is the platform making to stop the collapse and shore up its business? I'm Georgia Howe with Daily Wire editor-in-chief John Bickley. It's April 23rd, And this is your Saturday edition of Morning Wire.
--:-- Georgia Howe: China's zero COVID policy has brought manufacturing to a standstill. How soon will the U.S. consumer feel the effects of Xi Jinping's draconian measures? And California lawmakers propose a four-day work week to try to entice people back into the workforce. After two years of being in the pandemic, we've had over 47 million employees leave their job looking for better opportunities. They're sending a clear message that they want a better work-life balance. Thanks for waking up with Morning Wire. Stay tuned.
--:-- Georgia Howe: We have the news you need to know. This show is sponsored by Indeed. News travels fast, but hiring can take forever. Find quality candidates fast with Indeed. Instead of spending hours on multiple job sites, you need one powerful hiring partner that can do it all. And with Indeed's instant match, over 90% of employers get quality candidates as soon as they sponsor their first job post. Start now with a $75 sponsored job credit to upgrade your job post at Indeed.com slash wire. Offer valid through April 30th. Indeed.com slash wire. Terms and conditions apply. Need to hire? You need Indeed.
--:-- Georgia Howe: Netflix stock is down 35% this week on news that the streaming platform has been losing subscribers at a massive rate. The latest drop comes after Netflix shares had already plunged 40% since the beginning of the year. That makes it the worst performing stock of 2022 in the S&P 500. Daily Wire culture reporter Megan Basham joins us now to tell us about what might be behind the Netflix crash and how the company plans to address it.
--:-- Megan Basham: Well, you know, there's just no sugarcoating this. Netflix's performance in 2022 has really been nothing short of disastrous. So the stock crash primarily stems from the company's announcement that it lost 200,000 subscribers in the first quarter of 2022. Now, when you hear it like that, it might not sound that bad, given that it has something like 221 million accounts worldwide. But then you consider that it was actually forecast to gain 2.5 million new users. So that was really a huge swing from expectations.
--:-- Megan Basham: Most striking, they lost 640,000 in North America, but that was offset by gains in Asia. Now, they're blaming it on some broader issues in the economy, like the war in Ukraine, but the market's not really buying that. So JP Morgan, for instance, just cut its price target for Netflix in half. And what that suggests is that they see a systemic business model issue here.
--:-- Megan Basham: Now what do analysts think is driving the subscriber loss? Well, you know one thing that you and I talked about last summer Georgia is just simply subscription fatigue. Disney Apple TV Hulu Amazon Prime a lot of streaming platforms have begun to struggle. There's also a question of whether we may have hit a saturation point for this industry. I mean, consider there are something like 300 streaming platforms now. And surveys show people are starting to feel overwhelmed by all of those options.
--:-- Megan Basham: Plus, it can get pretty expensive maintaining all of these subscriptions just to get maybe the two or three shows you really want to see out of each of those platforms. Right. It's starting to add up, especially if you're someone like me who actually pays for them. Right. And of course, a lot of people don't, which is another problem. But you know, you have to say that login sharing has been something of a problem since the beginning for Netflix, so it's a little hard to blame that for this current downturn.
--:-- Megan Basham: The bigger and arguably more vexing issue may actually be the content itself. So polling shows that customers feel that while there may be a lot of content on streaming, they don't always feel that it's the highest quality. So you add that to inflation pain and the fact that lots of people are looking to cut monthly costs, those rarely used subscriptions, well, they could be one of the first things on the chopping block. Right.
--:-- Megan Basham: Well, and some Netflix content has rubbed people the wrong way lately. I'm thinking specifically about that movie Cuties. But beyond that, there's definitely a perception, at least, that the content has political bias. Right. And, you know, anecdotally, personally, as a TV junkie, I can vouch for that. Specifically, there's this pretty persistent emphasis on progressive themes in a lot of the content. So to give you just one example, just this week, Netflix launched a new series called He's Expecting, a comedy about a pregnant man. And that's just a little taste of how overt this can be.
--:-- Megan Basham: So you have to think that some people may just be getting tired of that kind of messaging. And Netflix has been very transparent about their political stance. Look at the massive deals the company has made with, say, the Obamas or sports documentaries featuring Colin Kaepernick comparing the NFL draft to slavery. So what is Netflix planning to do to right the ship? Well, one of the big options under discussion is adding paid advertising. Now, many of its rivals like HBO Max, Disney, Hulu, they already have or are soon launching lower-priced ad-based subscription options. Netflix previously indicated that it wanted to avoid this in order to maintain that premium cachet that it has. But now with that stock price, the platform may have no choice but to embrace advertising.
--:-- Megan Basham: Interesting. So watching shows with ad breaks sounds like the old days. Yeah, it does. Kind of. We come full circle. All right. Well, Megan, thanks so much for reporting.
--:-- Georgia Howe: That's Daily Wire culture reporter Megan Basham. Coming up, draconian lockdowns in China have downstream effects for U.S. consumers. You can get this show and all of the content you love wherever you are, all on the Daily Wire app. Even if you're not a Daily Wire member, you'll be first to know what's trending with mobile notifications for the latest news. And you'll get content from all your favorite Daily Wire shows. Download the Daily Wire app and keep up with the facts no matter where your day takes you.
--:-- Georgia Howe: Economists worry that widespread lockdowns in China will have far-reaching effects on the global economy, as manufacturing plants remain shuttered for weeks. With supply chain shortages already driving up prices, products may soon begin disappearing from shelves. Here to discuss the ways China's lockdowns could affect American consumers is Daily Wire reporter Tim Pierce.
--:-- Tim Pierce: So, well, these lockdowns are extremely severe. They go way beyond anything we saw here in the States. The Chinese government has recently locked down at least 40 cities in an effort to completely stamp out the virus. There are reports people are starving because they've run out of food and cannot leave their homes. The government was planning to deliver food, but those emergency programs have reportedly collapsed along with the rest of the local economy.
--:-- Tim Pierce: The areas affected by the lockdowns, which include Shanghai, account for about 40% of China's GDP. Shanghai's port is the largest in the world and handled about 20% of Chinese freight traffic last year. The current lockdowns have brought it to a complete standstill, so you can imagine how that is affecting global supply chains.
--:-- Tim Pierce: Right, and what sorts of items would be affected by this? Well, almost every sector will be affected, but tech and cars are of particular concern. Shanghai is one of the world's largest manufacturing hubs for tech products, such as semiconductors, electronics, and cars. Companies such as Sony, Apple, and Tesla source their products from Shanghai and are already cutting back on their 2022 projections as a result of the lockdown.
--:-- Tim Pierce: Actually, more than half of U.S. multinational corporations doing business with China have scaled back their revenue projections over the lockdowns. Now, some companies have started housing their factory workers on site in order to keep some production going. But those arrangements will likely become very difficult to maintain over time. At a certain point, I imagine companies will need to find an alternative place to manufacture if the lockdowns continue.
--:-- Tim Pierce: Have we seen any companies pull out of China over this already? Not much yet, but it's certainly possible we could see a mass exodus of companies if China continues down this path. And we should note that there are other reasons American companies may be considering exiting China, specifically national security. Here's U.S. Treasury Secretary Janet Yellen warning about that in a speech to the Atlantic Council last week.
--:-- Tim Pierce: China has recently affirmed a special relationship with Russia. I fervently hope that China will make something positive of this relationship and help to end this war. Going forward, it will be increasingly difficult to separate economic issues from broader considerations of national interest, including national security. Yellen went on to say that globalism, or the idea that the world could be united around free trade and shared values, is being threatened by China and its lockdowns.
--:-- Tim Pierce: And she said that the U.S. may be better served with economic allies who share our values. Now, virtually every other country, even Australia, has abandoned the zero COVID approach. This seems like a lot of damage to inflict on their economy. Why is China doing this? It's definitely strange, but China has been pursuing the zero COVID strategy since the beginning. So some people have theorized that it's simply a matter of pride for the communist party.
--:-- Tim Pierce: It could also be a political liability for Xi Jinping to flip on the strategy at this point because he's endorsed it up till now. China has reported a shockingly low case count, though it's always difficult to trust information coming from the Chinese state. The other issue is that China's vaccines have been shown to be much less effective than Western vaccines. So they may feel the population is still very vulnerable. And as of April 17th, Shanghai reported a goal of having zero COVID cases outside of quarantine areas.
--:-- Tim Pierce: Always hard to get the full picture with China. Tim, thanks for reporting.
--:-- Georgia Howe: That's Daily Wire's Tim Pierce. Lawmakers in California are considering implementing a four-day workweek for large companies. Here to give us the details is Daily Wire's Charlotte Pence Bond.
--:-- Charlotte Pence Bond: Hey, Charlotte. Hey, John. So a four-day work week, what's the story here? Well, California legislators had introduced a new bill known as AB 2932 that would reduce the work week from 40 hours to 32 hours. So yes from five days down to four days for large companies with more than 500 employees Any employee who works more than that 32 hours would be paid time and a half Employees would also be paid at the same rate as the original 40 hours. So it would give them a boost in their hourly pay.
--:-- Charlotte Pence Bond: All right, so we're talking about a 20% reduction in total productivity. This is obviously a major deal. Is this actually going to happen? Well, that remains to be seen. The California State Assembly's Labor and Employment Committee is supposed to make a decision on whether or not the legislation can continue. And of course, it actually has to pass and then be signed into law before we go into effect. If it does, the law would impact more than 2,600 businesses in the state.
--:-- Charlotte Pence Bond: Some other four-day workweek ideas are four 10-hour days. So there's no reduction in hours, but now there's the question of whether this one could lead to workers having to do the same amount of work, but just in less time. So some competing ideas about how to go about this. What is the goal here, though? What are the benefits other than obviously the three-day weekend? Well, 38 companies in the U.S. and Canada are trying out a four-day work week from this April to October as part of a program with Four Day Week Global, which is a nonprofit company associated with the University of Oxford.
--:-- Charlotte Pence Bond: Now, a change like this might attract workers to apply for a certain job knowing that they'll get a longer weekend. But it also could lead to employers struggling to bring people on because of higher labor costs. We know that millions of people left the workforce during the Great Resignation. But most employers don't appear to be on board. A recent poll of 459 mostly tech companies showed that 90% of companies weren't planning to shift to a four-day workweek. and that's according to Sequoia Consulting Group.
--:-- Charlotte Pence Bond: One of the co-sponsors of the California bill, Assemblymember Christina Garcia, was asked about the financial impact of this, especially for small businesses. The reality is that we have a worker shortage, like more than 60% of businesses are reporting they do. Their bottom line's already being affected. They're already struggling. And so I think on the reverse side, not adapting would have a bigger loss out there.
--:-- Charlotte Pence Bond: All right, so she's arguing that big businesses have to just absorb the increased cost. Has the bill received any pushback? It definitely has. The California Chamber of Commerce called the bill a job killer. I looked at a letter to one of the co-sponsors of the measure written by a policy advocate with the chamber, and it was signed by dozens of other organizations. It said the bill imposes a tremendous cost on employers and includes provisions that are impossible to comply with, exposing businesses to litigation, and that its impact on labor costs in California will discourage job growth in the state, noting that up to one million jobs may be lost if it goes into effect.
--:-- Charlotte Pence Bond: Peter Rex, the CEO of Rex, the technology investment and real estate firm, moved his company from California to Texas three years ago. He says the 32-hour workweek will hurt the state. California, as a result, is going to continue to lose relative strength and power and competitiveness as an economy, and people are going to continue to move out because business leaders like myself are going to move out.
--:-- Georgia Howe: Well, we'll be watching to see not just if this bill goes forward, but what it might lead to next. Absolutely. Thanks, Charlotte.
--:-- John Bickley: That was Daily Wire's Charlotte Pence Bond. Thanks for listening to Morning Wire. We created this show to bring more balance to the national conversation. If you love our show and you stand with our mission, please consider subscribing, leaving us a five-star rating and most importantly, sharing our podcast with a friend. That's all the time we've got this morning. Thanks for waking up with us. We'll be back tomorrow with the news you need to know.
