Netflix announced a significant leadership change Thursday, appointing Ted Sarandos, the content chief, as co-chief executive, alongside Reed Hastings.
“I am excited to announce that we have appointed Ted Sarandos to be Netflix co-C.E.O. with me, and also elected him to our board of directors,” Mr. Hastings said in a statement. Mr. Sarandos will continue as head of content.
The change in many ways formalizes Mr. Sarandos’s stature within the company. His compensation for the last few years has been equal to that of Mr. Hastings, and he has become a more visible presence, often speaking on behalf of Netflix.
The streaming service reported a surge of 10.1 million new customers Thursday in its second-quarter results, extending the huge gains it made the first three months of the year when the coronavirus pandemic prompted lockdowns across the globe. The company initially forecast 7.5 million, and Goldman Sachs predicted 12.5 million in a note last week.
How many people have Netflix?
Netflix now has 192.95 million customers worldwide and about 66 million in the United States. The stock has jumped more than 60 percent so far this year, in part because the service seems tailor made for a world that has become homebound. But the company plans a much weaker performance in the current quarter and expects to add 2.5 million new subscribers. Investors sent shares down more than 10 percent in after-hours trading.
How strong is its content pipeline?
Netflix said its slate was on track last quarter but that it could see a slowdown in releases for the current period. Blockbusters like “Extraction,” a thriller starring Chris Hemsworth, drew in 99 million views in its first four weeks. Last week, Netflix debuted “The Old Guard,” a smart action epic starring Charlize Theron. Fresh programming is crucial to Netflix’s growth because new shows tend to drive new subscriptions.
The company said it would release new content this quarter, including Season 2 of “The Umbrella Academy” and “Enola Holmes” a period mystery film with Millie Bobbie Brown “Stranger Things” playing the sister of Sherlock Holmes.
Can it maintain positive cash flow?
Netflix reported nearly $900 million in positive free cash flow this quarter, making it the second-consecutive period where it finally had more cash come in the door than go out. Earlier in the year, Netflix said it still expected to burn about $1 billion in cash for all of 2020.
A special episode of the popular NBCUniversal comedy “30 Rock” debuted on Thursday, serving as both a remotely filmed reunion for stars like Tina Fey and Alec Baldwin as well as an explicit overture by the media giant to advertisers. But many people around the country could not watch the show.
Several large TV station owners decided not to broadcast the episode, which was intended as a pandemic-proof replacement to the gilded annual courtship ritual that NBCUniversal normally relies on to showcase its offerings to advertisers. The reasoning for the opt-out, according to Vulture: Companies like Sinclair Broadcast Group were uncomfortable with the episode’s promotion of NBCUniversal’s new Peacock streaming platform, a competitor to traditional television that became widely available on Wednesday.
But NBCUniversal owns its own stations in nearly all of the top 10 viewership markets and will also start showing the episode on Friday on other platforms, including its app, Peacock and cable networks like USA and Bravo. The last episode of “30 Rock” aired in 2013.
The special episode, which comes after NBCUniversal removed four earlier episodes depicting actors in blackface, featured a running gag about Jane Krakowski’s character being canceled, but for an unrelated reason.
Earlier on Thursday, NBCUniversal hosted a so-called creativity summit, where it talked up new advertising options involving influencers, product placement and interactive experiences. The company showed off a behind-the-scenes featurette about the episode, which the ad chief Linda Yaccarino described in a statement as “a dynamic solution to a truly unprecedented” TV selling season.
The national average interest rate on 30-year fixed mortgages fell below 3 percent for the first time on record this week, as the Federal Reserve’s recent efforts to pump trillions of dollars into financial markets shows signs of filtering through into the deeply troubled American economy.
Freddie Mac’s nationwide weekly survey of mortgage rates showed the average rate on a 30-year mortgage at 2.98 percent as of Thursday.
It was the latest in a string of record-low readings for the cost of home loans, and a rare bright spot for the economy. Roughly 15 million American jobs have been destroyed since the coronavirus pandemic exploded in March. Gross domestic product is expected to experience its largest ever contraction on record in the second quarter. The unemployment rate of 11.1 percent, while down from 14.7 percent in April, is still the highest since World War II.
But for those who are still receiving a paycheck, the collapse of borrowing costs in the market for home loans has suddenly made homeownership more affordable, analysts and economists say.
“If you have your job, you’ve got your financial house in order, gosh this is a great time to go and buy a home because mortgage rates are dirt cheap,” said Frank Nothaft, chief economist at CoreLogic, a real estate research firm.
Stocks on Wall Street slipped on Thursday, following global markets lower, as the market’s turbulent week continued with investors assessing new reports on the world’s two largest economies.
Data on U.S. retail sales in June and unemployment claims for last week showed the economy was continuing to limp out of a coronavirus-driven slump as several states eased lockdowns from May. That recovery, however, is already threatened by a recent surge in domestic coronavirus cases that have forced states to shut down again.
Retail sales climbed 7.5 percent in June after a sharp rebound in May, the Commerce Department said, a surge in spending fueled in part by federal stimulus checks and tax refunds. About 1.3 million new claims for state unemployment benefits were filed last week, virtually the same number as the week before, the Labor Department reported.
Earlier, China reported that its economy grew 3.2 percent in the second quarter, after contracting 6.8 percent in the first three months of 2020, but its retail sales numbers were weak.
The S&P 500 fell less than half a percent, while the technology heavy Nasdaq composite dropped by twice as much.
Stock markets in Europe and Asia were also lower. In a reversal of Wednesday’s trading, stocks that are likely to benefit most from a return of travel when the pandemic eventually recedes — airlines, hotel operators and cruise lines — were the worst performers in the S&P 500.
Also weighing on markets: White House officials said on Wednesday they had not ruled out further sanctions on top Chinese officials to punish China for its handling of Hong Kong. The United States also said it was studying the national security risks of social media applications including China’s TikTok and WeChat.
Oil prices fell after OPEC and allies such as Russia agreed to taper record supply curbs from August, though the drop was cushioned by hopes for a swift pickup in U.S. demand after a big drawdown from the country’s crude stocks.
The president of the Federal Reserve Bank of New York, John C. Williams, told a group of investors and market watchers that the central bank needed to think “carefully” about how to safeguard financial market infrastructure.
Financial markets approached the brink of a total meltdown in mid-March, as even trading in the Treasury securities that form the backbone of the global financial system became difficult.
Mr. Williams said officials were thinking through what happened in March, and were also contemplating earlier disruptions in very short-term funding markets, called repo, that caused problems in September 2019. This is not the time now to draw “firm conclusions,” he said, but as the Fed makes it through the pandemic, it will be important to “really think through” how to safeguard the internal gears of finance.
“I’m never going to be convinced that we can come up with a perfect mousetrap,” he said, explaining that the Fed would still need to be ready to step in to make sure markets continue working in moments of shock. “But those should be extraordinary circumstances.”
“There will be important lessons here,” Mr. Williams said, pointing out that the 2008 global financial crisis ushered in useful changes to bank regulation and that this could be a similar case. “Out of this situation, I think we will get some lessons that will help us.”
As coronavirus cases surged in many parts of the country and new restrictions on business were imposed, 1.3 million new claims for state unemployment benefits were filed last week, virtually the same number as the week before, the Labor Department reported Thursday.
Initial weekly unemployment claims,
both regular and those under the Pandemic Unemployment Assistance program
Initial weekly unemployment claims, both regular and those under the Pandemic Unemployment Assistance program
It was a slight drop from 1.31 million in the week ending July 4.
Although weekly claims have plunged from late March and early April, when they twice topped six million, they have exceeded one million for 17 weeks.
New claims for Pandemic Unemployment Assistance, the government’s emergency program for laid-off freelancers, the self-employed and others not covered by traditional unemployment benefits, fell to 928,000 from slightly over one million a week earlier. That number, unlike the figure for state claims, is not seasonally adjusted.
Experts have been watching closely to see what economic impact the renewed coronavirus outbreak in several states will have on the overall economy. In some of those states, like Florida, Georgia, California and Washington, initial jobless claims jumped last week.
The persistently high level of new unemployment claims suggests that “it’s going to be a much more gradual recovery than we were all expecting,” said Ian Shepherdson of Pantheon Macroeconomics.
Low-wage workers have been especially hard hit by the pandemic, accounting for more than half the total decline in employment, according to new research from Oxford Economics.
“The labor market is not as bad as it was a couple of months ago, but we are still in a very deep hole,” said Gus Faucher, chief economist at PNC Financial Services Group in Pittsburgh.
Retail sales climbed 7.5 percent in June after a sharp rebound in May, the Commerce Department said Thursday, as federal stimulus checks and tax refunds continued to fuel a burst of summertime spending at newly reopened stores and restaurants. But the good news may be petering out as that money dries up and the coronavirus pandemic surges around the United States.
The jumps in deaths and cases in Florida, Texas and California, in particular, are putting the specter of another shutdown on the horizon and may spook consumers who were beginning to emerge from “lockdown fatigue.” That may be a blow for retailers that just reopened and were already facing the significant challenge of bringing customers back into stores that are now outfitted with safety measures like plexiglass barriers, face masks and tape markings to signify social distancing protocols.
The June data followed a May jump that was the largest monthly surge on record, even before it was revised up to 18.2 percent — but that had followed two months of record declines. While overall sales are within 1 percent of where they were in February, that figure masks major shifts that have taken place in what people are buying and whether they are shopping from home.
Monthly retail and food sales
Feb. 2020 level
Monthly retail and food sales
In June, categories like restaurants and bars, electronics and appliance stores and clothing and clothing accessories saw jumps, but still tumbled overall from a year earlier. There was also a surge in spending for sporting goods and books, with sales in that category increasing 27 percent from May. Grocery stores experienced a slight decline in sales, as people started to eat more meals outside their homes. Spending on motor vehicles increased from May and was up from last year.
Change in June
retail sales from:
Change in June
retail sales from:
Food service/drink places
“When people feel safe about their health, there is a real desire to shop again,” said Michelle Meyer, head of U.S. economics at Bank of America.
But shoppers pulled back as soon as the virus began surging in parts of the country that had been largely spared from the pandemic early on, Ms. Meyer said.
“Looking ahead to July or August it starts to become more challenging to repeat the gains we have been seeing,” she said.
Economists at Morgan Stanley said in a note last week that the resurgence of Covid-19 cases in the southern and western parts of the U.S. “keeps us cautious on the durability of the consumer recovery in the near-term.” Even without new state and local measures, they wrote, more risk aversion and voluntary social distancing could cause the spending rebound in May and June to deteriorate.
Many retailers that were deemed nonessential reopened in May and June and now face the prospect of a second closure. Apple, for example, has re-closed about 100 U.S. stores in the past month based on rising case counts in certain states.
Amid continuing layoffs, some employers are hiring. At America Knits in Swainsboro, Ga., managers have hired 25 people in the last three months, bringing the total work force to 80. And the company plans to bring on 14 more workers in the coming weeks.
When America Knits opened a year ago, the goal was to make high-end T-shirts, said Steve Hawkins, the company’s president. With the arrival of the coronavirus this spring, the company shifted gears and is producing cloth masks and isolation gowns, in addition to a small number of T-shirts.
“The first four weeks were difficult,” Mr. Hawkins said. But as operators grew more skilled and the company became more efficient, he said, mask and gown production became profitable. “Even though we are moving back to T-shirts, we hope to reinvent ourselves as a medical supplier,” Mr. Hawkins said.
Swainsboro, in rural Georgia between Macon and Savannah, was home to larger textile companies that closed or moved offshore in recent decades. Mr. Hawkins said that he was trying to revive that tradition and that he hoped to increase production of T-shirts and fleece items by fall.
Many local employers pay close to the federal minimum wage of $7.25 an hour; America Knits offers about 25 percent more. “There’s a need for jobs,” Mr. Hawkins said. “People here still like to make things and like the factory environment.”
The federal government’s $600 weekly supplemental payment to unemployed Americans has been a major boost both for recipients and for the economy, according to research landing as Congress debates whether to extend the payments past July.
An analysis by economists at the JPMorgan Chase Institute and the University of Chicago found that workers quickly increased their spending once unemployment payments began to arrive in their bank accounts. In fact, they spent about 10 percent more than they did before the pandemic.
That’s not surprising given estimates that as many as two-thirds of workers on unemployment have been receiving more money than they earned in their jobs, thanks to the federal supplement. Should that benefit expire as scheduled at the end of the month, the analysis suggests, there would be abrupt consequences not only for millions of households, but also for the corners of the economy where they’ve been spending this money.
Congress and the White House have yet to agree on extending the payments, or whether to cap them at a less generous payout as the economic crisis stretches deeper into summer.
The economists’ analysis was based on about 60,000 Chase customers in 10 states whose checking accounts show a loss of wages earlier in the crisis and then the deposit of weekly unemployment payments.
Unemployment benefits for many workers are sent on prepaid debit cards, not deposited into bank accounts, so those captured in the study are likely on average to be more financially stable than typical jobless workers. That means the results may even underestimate the effect of the expanded unemployment benefits on increasing consumption.
As tens of millions of Americans have filed for jobless benefits in recent months, unemployed workers and economists alike have held out hope that most of those losses would prove temporary.
Those hopes may now be fading.
A survey conducted this month for The New York Times by the online research platform SurveyMonkey asked Americans whether they had returned to their old jobs and, if not, whether they expected to.
The survey had some encouraging news: Of the 17 percent of people who lost their jobs at some point during the crisis, 40 percent had returned to work, up from 29 percent when the same question was asked in June.
But of those who are still out of work, only 22 percent expect to return to their old jobs within the next month, and less than half expect ever to go back. If they are right, that would suggest that millions of jobs have been permanently destroyed.
Economists say it is hard to know how much to trust such self-assessments — laid-off workers might not have much insight into whether their former employers still plan to bring them back. But a wave of layoff announcements from big corporations in recent days suggest they may be correct. If so, it would be a gloomy indicator for the economy, because it takes much longer to create new jobs than to recall workers from furlough.
Domino’s Pizza got a boost from pandemic lockdowns as consumers ordered to stay at home turned to delivery services. Same-store sales grew 16 percent in the second quarter versus the year-ago period, the pizza delivery chain said on Thursday in its earnings report. Revenue for the quarter, which ended June 14, was $920 million, a 13.4 percent increase from a year earlier.
Target and CVS announced Thursday that they will require customers to wear face masks at all stores nationwide. The chains are the latest retailers to enforce mask mandates, on the heels of similar announcements by Walmart, Kroger and Kohl’s. “We’re joining others in taking the next step and requiring all customers to wear face coverings,” CVS tweeted on Thursday. CVS will start requiring masks on July 20 and Target’s policy will go into effect on August 1.
Delta Air Lines remains “overstaffed” even after 17,000 employees, a fifth of its work force, signed up to take buyouts or retire early, the carrier’s chief executive, Ed Bastian, said in a companywide memo. Mr. Bastian encouraged more employees to sign up for unpaid leaves of absence in order to avoid involuntary furloughs. American Airlines on Wednesday said that it may furlough as many as 20,000 people when a federal payroll stimulus expires this fall, while United Airlines last week said it could furlough up to 36,000 people after those funds run out.