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Good Morning Brew Daily Show. I'm Raymond Liu. And I'm Kayla Lopez. Today, Disney's live-action Moana crashes at the box office.

And why the Paramount-Warner Brothers merger isn't a done deal just yet. It's Tuesday, July 14th. Let's ride.

Good morning. Today, we've got Kayla back on the pod. Welcome back, Kayla.

Thanks so much for having me.

Chipotle fans all over the world, you might love this. The popular fast casual restaurant chain is opening up its first ever restaurant in Mexico. Yes, that means it's hoping it'll be successful as an American brand that makes Mexican inspired food and selling it back to Mexicans. The inaugural store will open up in the Monterey metro area and hopefully expand into Mexico City by 2027. Kayla, this is a pretty bold move here. You think it'll work?

Honestly, I think it might. Maybe this is just my opinion, but I feel like Chipotle is so far removed from actual Mexican food. that maybe it'll feel like it's just a healthy salad bar moving into town. But this isn't the first time that an American company has tried to sell food back to the country that inspired its menu. For example, Taco Bell tried and left Mexico in 2010, and Domino's Pizza actually left Italy in 2022.

Well, I don't know. Maybe it could work today. You have social media and everyone asking for a double chicken. Maybe the Chipotle sees something that we've done, but we shall see. And now a word from our sponsor, Ultra Running. Hey, Kayla, do you like to stay out there?

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The U.S. resumed strikes against Iran on Monday, hours after President Trump said he would reinstate a blockade on Iran to take control of the Strait of Hormuz. He also announced the U.S. would charge 20% on every cargo shipment as compensation for its costs. Now, he hasn't detailed exactly how this would work, but said plans would be made immediately. In a post on his social media, the president said the USA will be, from this point forward, known as the, quote, guardian of the Hormuz Strait and gave a deadline of 4 p.m. Eastern time on Tuesday. Iranian Foreign Minister Abbas Arachi responded with a post on X saying, Iran has always been the guardian of the strait and will remain so forever. The dueling comments means it'll likely be another continued standoff over the control of the strait. And to go over briefly of the timeline, the Trump administration stated that an interim peace deal had been made back in mid-June, including pulling back the U.S. naval blockade. Reports indicated progress was moving forward up until July 7th when Iran was accused of striking three ships in the strait. The U.S. responded by striking dozens of targets in Iran and reinstating sanctions on Iran's oil sales. Then, on July 8th, Trump declares that the ceasefire was over but says negotiations can continue while fears of the war perk back up again. Kayla, any new fee means a potential threat to raise fuel costs and a 20% charge would work out to be about $32 million for a fully loaded crude carrier at current oil prices, according to Bloomberg. So how are the markets reacting?

Well, as you've discussed on the pod in the past, up to 20% of the world's petroleum passes through this strait. So obviously any changes on the strait will have material impacts on oil prices. And they did. The markets reacted. Oil prices jumped on the news. And the price of crude rose above $80 a barrel yesterday for the first time since June when the U.S. and Iran agreed to a ceasefire. The S&P 500 was also down a little bit, about 0.8% yesterday. But does this really impact anyone besides oil traders and maybe people that are filling up today? Yes. Oil prices increasing will, of course, impact the price of gas at the pump. But sustained increases can impact everything from airline tickets to food costs to general inflation pressure. If this is a short-term change in the relationship between the U.S. and Iran,

It's possible that the price increases may be short-lived or not happen at all. The toll revenue could potentially stem some of the economic pressure we feel in the U.S., but it's not exactly clear how that would work.

Yeah, and I do want to get into the legality of the toll, because when Trump announced this 20% fee on all shipments, the first thing many are saying is, is this even legal? Well, the IMO, the International Maritime Organization, flatly said no. A spokesperson said, we have always been consistent on our stance on fees. IMO stands firmly against charging fees for passage through straits used for international navigation, and there is no legal basis through which to introduce mandatory tolls simply to transit through a strait. Even State Secretary Marco Rubio said before, no country is allowed to charge tolls or fees on an international waterway because there's this thing called international law. And then there's a whole feasibility of it all. If you remember, Iran attempted to enforce its own transit tolls, charging $2 million for a single vessel. Now at 20%, $32 million poses a massive logistical hurdle for a fleet operator. Also, these shipping contracts are negotiated months in advance. So to make an announcement just like this overnight, it's causing a lot of chaos. So with this blockade, it's just leaving many to kind of scratch their heads.

Yeah, that makes a lot of sense. And before the war, an average of 110 vessels passed through the strait every day, according to CNN. That's obviously drastically fewer now, with about six reported a day recently. If that returned to normal levels, of course, that $32 million would be material revenue for the U.S. But it could have cargo companies looking for alternatives. That's a huge amount of tolls to pay. So, Ray, are there any other options for cargo?

Well, the shipping industry sources say that ships are increasingly switching off their public AIS tracking transponders, essentially traveling through the strait in the dark. According to Bloomberg, all of the six commodity carriers that passed through the Hormuz on Sunday did so with their transponders turned off. It's kind of turned this thing called dark crossings, because remember, there's two sides of the strait. There's the northern side controlled by Iran, and then there's the southern side controlled by Oman. the southern route even though it is protected by the u.s it is open to iranian attacks but the northern route is subject to iranian fees and potentially u.s penalties for not using the southern route so it kind of puts these carrier ships in quite a dilemma this conflict has forced these ships to travel through the strait secretly but the big question here is if shipping containers get used to relying on dark crossings as their new normal response to political conflicts and illegal tolls? How will international law protect or regulate that global supply chain if it's intentionally hiding itself from the world when it's crossing secretly through the strait?

Moving on, in another hurdle for Paramount, a coalition of 12 states led by California is suing to block the media company in its acquisition of Warner Brothers Discovery. The attorneys general are calling it an unlawful merger that would lead to, quote, higher prices, lower quality, and less content for film and television. As combined, it would control almost one-third of theatrical films and cable programming like CNN, CBS News, and Discovery, plus also bringing Paramount Plus and HBO Max onto the same corporate. The coalition requested that the merger isn't closed until after this legal process is over, which could be a problem for Paramount as they promised Warner shareholders about $650 million per quarter in fees if they don't close the deal by September 30th. This comes about one month after the Justice Department signed off on the deal and after the company has received regulatory approvals in over 20 countries. Ray, why are the states pushing back now? Well, you might be

thinking if the Justice Department has already given it a green light and Paramount has already got approvals from 20 countries, including massive markets like China and Australia. How does a band of these 12 states expect to win a case like this? Well, it's actually rooted in a dual sovereign nature of U.S. antitrust law, if I may put my quick legal scholar hat on for a second. State attorneys general have independent authority to enforce antitrust laws, meaning they can enforce both state and federal laws on behalf of their citizens. This stems from the fact that states passed their own antitrust laws before the federal Sherman Act of 1890. Then in 1976, Congress amended the Clayton Act that authorizes state AGs to bring any antitrust violations of the Sherman Act to federal court. So bringing it back to today, this coalition led by California's AG Rob Bonta is essentially saying the federal government here isn't doing its job properly, which means the states have to step up and step in as a check against corporate consolidation.

I love the legal history we got. than we got here. Yeah. And Paramount has already responded to this suit saying that it's a quote flawed application of the antitrust laws and that delaying this transaction will only harm entertainment workers who have already suffered over recent years. However, over 4,000 Hollywood figures have signed onto a campaign opposing the merger, including pretty big names like Robert De Niro, Sofia Coppola, Mark Ruffalo, JJ Abrams, the list goes on. Heavy hitters. Yeah. But the real concern here is about media consolidation. 40 years ago, there were 50 major companies that were controlling the media, and now the media is controlled by six corporations. Larger corporations means that smaller studios may have a harder time breaking into the space. But is that a bad thing? Wider distribution means more power for each company, which means that one company censoring or skewing the media could reach a wider population. However, advocates of media consolidation say that the massive scale that these companies reach mean they can cut cost efficiently and weather financial downturns more easily, making sure that you still get the next

season of Love Island. So just to remind people, if this deal closes, there would just be essentially four companies, Paramount, Disney, Universal, and Sony, that would control roughly 86% of the market for widely released films. And those four distributors would control more than 90% of top grossing films, according to the lawsuit. And I do want to be clear here. These are big budget films, like your typical summer blockbuster. So the states want to focus on the fact that this merger would kind of give Paramount the ability to dominate these big wide releases, because I think they feel like they would have a bigger case in this. Otherwise, you know, they don't want to just tackle the entire film industry, kind of be too broad of a case for them to win. Another thing to note here is that David Ellison publicly pledged to release at least 30 films a year in cinemas to help theaters out, which actually got the backing of AMC to support the deal. But there's another group called Cinemas United, which represents 31,000 screens, more than 31,000 screens across the country. They're actually fully backing the state's case because they're saying it wouldn't just affect Hollywood and L.A. and Tinseltown. It actually hurts small town theaters in smaller communities. Moving on, is it possible to have Moana fatigue after just three films? Well, Disney found out the hard way. The live-action Moana had its sights on a $60 million opening, but only came away with $43 million at the domestic box office over the weekend. It's a troubling start for Disney that sunk in about $250 million to make and another $100 million to market. it. For the studio, it tied last year's box office bomb Snow White for the lowest opening of any of its live action remakes of animated classics. While critics hated it, giving it a 34% aggregate score on Rotten Tomatoes, audiences kind of loved it, giving it an aggregate score of 90%. The original 2016 animated Moana grossed $640 million and became the most watched movie of all time on Disney+. Shout out to all my parents out there. Moana 2, which came out in 2024, grossed over $1 billion. In a statement, Disney said the opening weekend was a good start ahead of its full month of summer vacation play with families. Kayla, I have to be honest, when the trailer for this live action Moana came out, I thought to myself, already? Seems like I wasn't the only one.

Yeah, I really had no interest in seeing this movie and I actually watched Toy Story 5 this weekend instead.

Which did well.

It did great. And this is a really surprising misstep from Disney, but it does have an interesting backstory. So apparently Moana 2 was actually slated to be a television series on Disney Plus, presumably to attract more subscribers to that platform. But it was transformed into a blockbuster movie when executives saw early footage and when the media giant decided maybe to shift their strategy to prioritize immediate revenue and profitability instead of Disney Plus subscribers. but that decision meant pushing back the live remake of Moana from summer of 2025 release date by one year to this weekend to give each movie some breathing room but it's possible that that mistake wasn't about proximity I don't know if you've ever met a child but they're typically very willing to re-watch the same movie over and over again the same song yeah and I'm I mean I must have seen Kiki's delivery service like 400 times in one year so apologies to my parents on that. But I wonder if it's about the similarity in the stories instead of providing a more unique take on the same story. Anecdotally, I've seen a lot of chatter online since I haven't seen the live remake, but it feels like the live action remake is bar for bar, very, very similar to the animated original and that lack of a unique take. on the same story may be responsible for keeping some viewers at home. So, Ray, my question to you is, are Americans sick of the same old stories, or are they just not showing up to movies at all?

Well, this just might be an acute problem for Disney because the box office has been overall pretty good this year. Total domestic box office reached roughly $4.46 billion so far this year, the highest it's since been in 2019. That's according to the Wall Street Journal. many event films this year have actually met and surpassed expectations you're you're thinking about project hail mary super mario galaxy movie the michael jackson biopic devil wears prada 2 and then you also have low budget horror standouts like obsession and backrooms and of course you have like heavyweights like the odyssey coming out this friday dune part 3 the fourth spider-man movie and avengers doomsday which is kind of funny we mentioned toy story 5 that actually did well setting a franchise record with 160 million dollars during its opening weekend so to me it seems like disney just played it wrong this this this time around and felt like it was kind of rushing to get this live action moana out a lot of people are saying look 10 years from the original animated classic if you're trying to play on the whole nostalgia factor 10 years is not that long to kind of land so it seems like they just had a big misstep here okay we're gonna take a quick break and we'll come back with kayla's trends hey toby how's your duck impression it's not all

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So obviously, Toby is not here today. So I'm going to do my best impersonation for this week's Toby's Trends. And this week's Trends is Pawn Shops. If you haven't seen any of the 675 episodes of Pawn Stars as that's true, over 20 seasons, pawn shops are businesses that give you cash in exchange for your valuables. While you can sell your stuff outright, pawn shops primarily provide pawn loans where you basically give them your items in exchange for some cash. Then in 30 to 90 days, you return with the cash plus interest and you get your items back. If you don't return with the cash plus interest, they can sell your valuables in their shop. Though it may not feel great to drop off your grandma's engagement ring with some guy named Big Hoss for a few months. These loans don't need credit checks or employment verification, and it won't hit your credit score if you don't pay them back. So these pawn loans are looking pretty good if you have limited options and need cash quickly. And these businesses are finding that more and more people do need cash quickly. The two publicly traded pawn corporations both posted record financials last earnings, and the average pawn loan has increased to $230 from $160 in 2022. There are a few reasons behind this increase. First, with the price of gold and silver up, it means your jewelry can fetch higher loans at the shop. And second, average savings have decreased since COVID, meaning there's a higher need for pawn loans and other high-cost debt, according to NPR. Ray, what else does this trend say about

the American consumer? Yeah, so pawn shops can be viewed as this sort of bellwether for consumer behavior, especially when they are in need of cash fast, because they often, these are customers that don't want to deal with the big banks who often prefer customers seeking large loan amounts, talking like five figures, maybe even six figures. These are customers who are more in need of sometimes a thousand, a couple thousand.

just to kind of get them through the month. But this also kind of points to the K-shaped economy, which we've talked about many times on this pod, where the American consumer can be basically on two different tracks. The affluent consumer who has the means to keep spending and spending and spending, kind of uplifting and keeping the economy stable. And then you have the consumer who has to struggle with higher prices for everyday goods. So these pawn shops provide sort of a relief for those in need to pay for their groceries, pay rent, maybe even take an occasional vacation. You know, I think everyone deserves a vacation. So these are folks who are putting up their items to get a loan for cash. They don't want to deal with the big banks. And kind of like these pawn shops are taking advantage of the situation.

A hundred percent. And I can't believe that the trend of seeing these pawn shops selling high-end things like Birkins and actually targeting both sides of the K-shaped economy.

Yeah. I mean, these are customers who also can afford, it's kind of attracting, there's always this, this is what happens where it attracts a kind of new level of customers where these are now customers that can afford everyday goods, but may want to kind of treat themselves every now and then. So instead of getting a Chanel bag at full retail, you're seeing them go to pawn shops to kind of score these good deals. And we see like these trends will be covered as secondhand luxury items. So now these pawn shops, again, ultimately they kind of win in this environment. All right, let's spin to the finish for our final headlines for the day. The Seattle Seahawks not only did a Super Bowl win put them at the top of the NFL, it made them the top of a two-buy list for a tech billionaire. Vinod Khosla, co-founder of Sun Microsystems, and his family have agreed to buy the Seattle Seahawks for $9.6 billion, a record price for the controlling stake of an NFL franchise. that actually surpasses the sale of Washington Commanders for $6 billion by a group led by private equity titan, Josh Harris. The future of the Seahawks have been kind of up in the air since the death of Microsoft co-founder, Paul Allen, who bought the team back in 1997. Once the team won the Superbowl, the Allen estate actually announced the team was up for sale shortly after they hoisted the Lombardi trophy. But before Kosa can complete the purchase, he'll have to divest his minority stake in the 49ers, who, you know, maybe this will help us get over the hump. Kayla, this seems to be the move. The Boston Celtics went through the same thing, win a championship, raise your value, then sell the team for billions of dollars.

Yeah, right after a big win seems like a great time to sell a team. And as a Jags fan, maybe I won't see the team change hands for a minute. But it only took a week after winning before the team announced it was up for sale. It does feel like a quick turnaround, but it's not exactly the case that they were just waiting for a big win to sell the team. So when the Seahawks owner died in 2018, as you mentioned, the team was placed in a trust controlled by Allen's sister, Jody Allen. But the mandate of the trust was always to sell the team. It just took a little bit of time to do that. However, NFL league rules require that a team be primarily owned by an individual, not an entity like a trust. And so reports came out in February that the NFL was allegedly pushing Jody Allen and the trust to sell the team, even reportedly fining the Seahawks $5 million, although the league denied those allegations. Regardless of the reasoning why the team was sold, it seems like it certainly paid off. Moving on. If you've ever wanted to eat four bowls of fettuccine Alfredo in one sitting, good news. Olive Garden is bringing its never-ending pasta pass back for a limited time. For the 10,000 lucky customers who claim one, a $100 pasta pass gives you unlimited access to the never-ending pasta bowl menu for 13 weeks. Say that five times fast. That means unlimited reggaetoni with Alfredo, spaghetti with marinara, fettuccine with meat sauce, the list goes on. Do you want to get in on the action? Well, you can buy the pasta pass on Olive Garden's website starting on Thursday, but blink and you may miss it because over the years, these pasta passes have typically all been claimed within minutes of launch. Now, this is the first time since 2019 that Olive Garden is offering this promotion. And I do wonder if it has anything to do with the recent trend of GLP-1s decreasing the amount of food that the average individual eats, which might make this promotion a little more palatable for Olive Garden. It may change those financials and make it slightly less expensive for the restaurant. Regardless, it sounds like this will be the hottest online sales event since the Ares tour. So Ray, are you going to wait in line for the pasta pass? Only if I'm guaranteed

a pass. Listen, if I'm a pasta pass holder, I say challenge accepted. Let me starve all day, put me in an olive garden and see how many rounds I can go. I was looking at some of the numbers and Axios broke it down nicely, the economics of it all. And it actually favors frequent diners. So in order for a pass holder to break even, they would have to Thank you. just go about seven times. So you just need to go every day of the week or pick a couple of days where you go for lunch and dinner. And before the pasta pass, as you mentioned, only ran for eight weeks, which meant you had to go at least 10 times. But this year's 13 week promotion gives a diner's an additional five weeks to kind of stuff your face with pasta. So listen, I'm all for it. I say if you're lucky enough to get one, carbo load away. Finally, Sam Neill, the iconic actor, passed away suddenly at the age of 78. So far, there's been no cause of death reported by his family. Neil was previously diagnosed with a rare blood cancer and had remained cancer-free after a successful cancer treatment. You may know him from his roles in Peaky Blinders, The Piano, Event Horizon, but probably most famously as Dr. Alan Grant in the original 1993 Jurassic Park. More importantly, he developed a social media game mainly around his winery in New Zealand, But if you go through his entire IMDb, he's appeared in more than 150 films and TV shows over the span of five decades, capping off a long and storied career.

Yeah, very sad news to hear and definitely a storied career. I can't believe I'm admitting this online, but I've actually never seen any of the Jurassic

Park movies.

So I do know what I'm going to do this weekend. It's time for a marathon.

There's tons of Jurassic Park movies out there. I say if you had to watch one, it's the first one. And I watched it recently. Still very much holds up.

Okay, amazing.

That is all for today's show. Thanks for stopping by. Kayla, I just want to thank you again for subbing in. If you actually want to hear more from Kayla and Kyle, you can actually check out their podcast, Permit Last Email, any way you get your podcast. If you have any comments, kudos, or concerns, you can DM us on Instagram at mvdailyshow. As always, thank you to our production crew. Emily Milliron is our supervising producer. Olivia Graham is our producer. Olivia Lake is our associate producer. Technical direction is by Nina Miller. Hair and makeup is pining off Toby's hair gel for $30,000. Devin Emery is our president. And our show is brought to you by Morning Brew.

Great show today. We'll see you all tomorrow.