Warner Bros. Discovery Splits Up & Chipotle’s New Dip to the Rescue?
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, using your iPhone will look a little different this fall after Apple gave its software the biggest design overhaul in a decade. Then Warner Bros. Discovery is hitting Command Z and undoing the 2022 merger that created it. It's Tuesday, June 10th. Let's ride. ♪

Do you consider yourself a well-traveled American? Have you stared up at the Purple Mountains, driven across the Fruited Plains, eaten Skyline Chili in Cincinnati? Well, here's a benchmark for your travels. The average American has visited 16 states in addition to the one they live in, according to a new YouGov survey. The state most have visited is Florida.

Florida, Toby's home state, followed by New York, Texas, and California. The least visited state is Alaska, followed by North Dakota. Wait, Neil, I think I'm finally above average in something because I've been to an even 40 states, and I know that because I recently crossed Arizona off my list because I had to lay over there for a wedding in Sonoma. Whoa, whoa, whoa. You're not counting being in the airport as visiting a state, are you? Why would that not count?

That is not in my criteria. You need, according, for me, if you visit a state, you need to breathe the air of the state. You need to be outside in that particular state. I don't have any time limits, but you do need to be outside. Being in an airport does not count. Interesting. I did have to walk on the tarmac to get on the plane, so I think that still counts. What's your number at, Neil? I'm actually at...

There was a lot of road tripping I did during COVID. So I am at 48. Yeah. Wow. That is impressive. What are the final two states that you haven't actually don't even tell me that we have people guess those last two states. This is kind of fun. Actually leave a comment on the YouTube video, the Spotify or send us an email. What are the final two states? Neil has to check off his list. Neil, any hints for our audience? No hints, but if you do get both of them, right, you can come with me and check them off the list when I do go.

On a road trip? Okay, sounds good. And now a word from our sponsor, Domain Money. Neil, as I've grown older, I've come to a startling conclusion. I don't know everything. What? You? Toby Howell? Where is this humility coming from? From a conversation with one of Domain Money's certified financial planners. We were going through some of the tax smart strategies they recommend from maximizing deductions to setting up an S-corp. And I realized that, dang,

I hadn't thought of any of this. Cut yourself some slack, Toby. That's the whole idea of Domain Money, personalized guidance from an expert who understands your financial goals and helps you build an action roadmap to get there. Okay, I feel better then because Adriana, my Domain Money expert, had the most impressive spreadsheet I've ever seen. That's because you don't know a pivot table from a picnic table. If you want to be wowed like Toby, check out domainmoney.com slash mbdaily and start building your financial plan today.

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Apple's Worldwide Developer Conference took place yesterday, and it was as underwhelming as asking Siri to do anything other than set a timer. The biggest update was mainly cosmetic. This fall will bring a massive overhaul of the design language across every Apple operating system that leans into a liquid glass aesthetic. It is a redesign inspired by Apple's Vision OS software, bringing a translucent effect to search bars, menus, and app icons that

essentially letting users see through everything. Apple also confirmed it's renaming its operating systems to match the upcoming calendar year. So iOS 18 becomes iOS 26, Mac OS 15 becomes Mac OS 26, and so on and so forth.

Beyond the fancy new paint job, Apple did announce some AI updates. Namely, its tech can now translate conversations between two people speaking different languages in real time over text in phone calls. And finally, it is letting third-party developers tap into its foundational AI models, opening the door for others to directly integrate the tech into their own apps themselves.

and hopefully create something better than Apple has so far. As for the much maligned Siri, she heard her name mentioned, but only for Apple's software chief to say that anticipated updates like enhanced conversational abilities and contextual awareness were likely not going to arrive until 2026.

Overall, Neil, this was mainly an aesthetic and design element focused keynote instead of one bringing any major software or hardware breakthroughs. Yeah, I mean, I feel like in any other year besides the one we're in, this might have been a more exciting WWDC with interesting updates and new design language for Apple for the first time in a decade. But you do just have to compare it with competitors like

with Google, Microsoft, OpenAI, who are rolling out these very whiz-bang AI features that, you know, feel like you're in 2030 or 2040. Apple is very much still feels like it's stuck somewhere in 2019. And while customers may be excited for a lot of the new features, and I

we know we can go into more of those in detail because I do think there were some exciting stuff coming to your iPhone. In general, investors are just not impressed. This is not what they want to hear. They want to hear an updated Siri with ChatGPT included. And that's why shares were down about 1% yesterday. It was just a kind of a wet

noodle. I think more emblematic of shareholders' disappointment was right when the Siri update came out. Six minutes into the show, Apple stock immediately dropped 2.5%. If you look at its stock chart, you can almost see the moment where the word Siri was mentioned and the delay was announced. So that was one of the more disappointing moments of the whole keynote. And then you said that maybe in another year, this would have been a more smiled upon update. But

I saw a lot of people being pretty mad at liquid glass, this new design aesthetic, because it so perfectly encapsulates what Apple is right now, just kind of wallpapering over something with slight aesthetic changes rather than doing something deeper. And then also people are saying it's not necessarily an improvement in any way. It's

cool looking kind of, if that's your opinion, but the fact that there's all these layers now, it doesn't necessarily improve readability in any major way. So I cannot wait to see it actually in the wild because the initial reaction from some people on design X and, and,

from other graphic designers saying this wasn't it, Apple, even though this was their main thing. Do you remember the first reaction to the AirPods? Yeah, everyone hated them. Yeah, and they turned out to be ubiquitous. I'm not usually an Apple defender, but here I am defending Apple against you. We'll see. It'll come to people's iPhones. But let's talk about some of the features that they did release that people will find on their phones in the fall. You mentioned live translation, which I think

will be very interesting where if you're talking to somebody in another language in real time on FaceTime, it will translate it for you. Same goes in iMessage. There's this other feature for the Apple Watch called an AI workout buddy that offers you encouragement and overall, you know, support and coaching and mentorship, uh, as you're exercising. So you have this workout buddy coming. Another thing that I think is cool is, uh,

beefed up spotlight so when you hit command space on your macbook you know that that's sort of your guide to your entire computer they're adding even more features to commit to spotlight so when you hit command space it'll kind of just be everything for you on your macbook and then in other

iMessage is getting a lot of stuff that people become accustomed to with Android, with WhatsApp. They're doing better spam filtering for unwanted calls, which I got to say, I went from an Android to an iPhone and the spam increased exponentially when I went to the iPhone. So Apple does have a lot of work to do there. It looks like they're addressing that.

Neil, that was just me calling you. You never pick up my phone calls. Why are you filtering out with these spam filters? All right, so big picture. What's the big picture here for Apple? The big picture here is that they're hoping to give customers more reason to upgrade their devices. Their device cycle usually starts in September and especially ahead of, you know, March.

potential price hikes due to tariffs. They're trying to paint a picture that, hey, it is still worth it to upgrade that iPhone. It is still worth it to splurge on that new model because right now, AI may not be it. So it's going to be potentially this design language that convinces people to shell out that $1,000 to get their new iPhone. Turns out changing over

Max back to HBO Max wasn't the biggest pivot Warner Bros. Discovery had in store for us this spring. The entertainment giant and parent company of HBO, CNN, and a movie empire said yesterday it's going to break up into two standalone companies, one cable-focused, one streaming-focused, in the hopes they'd be better off alone

then together. Company number one, Global Networks. This company will house Warner's cable channels, TBS, TNT, CNN, Discovery, and dozens more. It will also include the television rights to U.S. sporting events like March Madness. Company number two, this you can call the cooler one. This is streaming and studios. Max, or HBO Max, will live here, as will its movie studios, such as DC and its vast film and TV library. And like

And just like that, this is not original. There's a growing trend of entertainment companies purging their declining traditional TV businesses to focus investors on higher growth streaming units that don't include the cable baggage. Comcast did this last year when it announced plans to spin off most of its cable business into a new unit

called Versant. Still, while it didn't shock anyone, the Warner breakup is a stunning acknowledgement that the blockbuster $43 billion merger between Warner Media and Discovery has been a total flop after just three years. The stock has declined more than 60% since the deal closed, and CEO David Zaslav was under growing investor pressure to make changes. He did make changes, but the company's stock dipped again yesterday. Maybe it's too little too late. Yeah,

What a disaster, honestly. We were talking before the show, what do you do with global networks, which is the cable TV portion of this spinoff? Who wants to invest in something that, by all intents and purposes, is a declining and slowing business? Yes, it still spits off cash. It actually spits off more cash than its streaming division, but...

No one is thinking that cable TV is a growing market anymore. So a lot of industry watchers are saying that they're probably just going to sell this maybe to a PE, some company that just wants to have the cashflow, but not necessarily a growing business. I do think a lot of these moves, uh,

kind of track back to this original merger that created so much debt load on Warner Bros. Discovery. They had to take out more than $50 billion in debt, and while they have paid that down, everything that you look back at Warner Bros. Discovery's history has been marked by moves to pay down that debt. Look at the killing of CNN's streaming service, which

you know, barely had a life. It was so short lived. And then also they didn't renew their NBA rights for Turner sports. Uh, that is another move probably tied to that big debt load. And now here they are splitting these properties in two. So maybe that ill advised decision to merge in the first place is what led to the series of cascading events that led it to breaking up, um,

now. Yeah, I mean, go back to that merger and the conventional wisdom at the time was these legacy entertainment companies like Disney and Warner Brothers were like, we have to compete with Netflix and these upstart tech companies that are eating our lunch and streaming. How do we do that? And that's by bulking up. So

WarnerMedia combined with Discovery and said, OK, well, we have HBO and all of those amazing shows that people love, and then we can combine them with Discovery and reality TV, 90 Day Fiance stuff that people also love. We put put them together on a streaming service. Then that's a real solid competitor to Netflix. But it turns out people don't want that.

HBO Max has retrenched just to more HBO kind of style shows. People weren't really watching the discovery stuff on that channel. It's a very similar thing to what happened with Disney. They acquired 21st century Fox in order to bulk up in scale. And that strategy just

Netflix has only gotten bigger and widened the gap with these legacy entertainment companies. And you're seeing this company split up. And hopefully the idea is that they're going to, quote, unlock shareholder value by allowing investors to just invest in HBO Max essentially without, you know, all of that cable stuff dragging the share price down.

Moving on, Chipotle wants you to buy the dip. No, not its stock, though I'm sure it would be cool with that. But Adobo Ranch, the chain's first new dip in five years. Adobo Ranch, a spicier rendition of the condiment, will hit stores a week from today and it won't come a moment too soon. Chipotle is in need of a jumpstart after a year of

So is a new dip

really going to meaningfully boost sales? You might laugh, but it's certainly possible if history is any indication. Go back to 2017 when Chipotle added queso to the menu. It got roasted by customers and investors alike, with even Goldman Sachs ripping the new product, sending the stock down. So Chipotle went back into the lab and launched a reformulated queso blanco three years later,

that immediately gave a lift to sales, and that was the last new dip Chipotle launched before this one. So there's precedent for a new dip being a big deal to this business. But the question is, Toby, is Adobo Ranch the right dip for the right time? It looks delicious. I'm not going to lie. And I think that they are tapping into the zeitgeist right now because ranch is increasingly popular amongst younger readers. And there's a little caveat that I'll get to in a second, but just look at Taco Bell. They recently just rolled out their own crispy chicken nuggets.

What came along with that? A spicy ranch created with Hidden Valley. KFC also has five different ranch flavors at its new saucy restaurant concept. So clearly it is something that chicken restaurants are leaning into. Might as well get on the bandwagon if you're Chipotle as well.

But Ranch has kind of this polarizing place in the pantheon of Gen Z condiments right now because according to data analyzed by Rubik's Fuse, 21% of Gen Z say that Ranch is overrated. That is two times more than any other flavor. But then you look on the flip side and say 44% say that unique flavor twist like Almond

adding some spice into it, make it go down easier. So I think Chipotle is doing the right thing here. If you just rolled out ranch, kind of gross, honestly. No one wants to put ranch on their Chipotle bowls, but when you do a little adobo seasoning in there, get a little spice to it, then it suddenly becomes something that Gen Z will resonate with. - And just over the past few years, ranch has been on an absolute hot streak. They've, Burt's Bees made a lip balm

with ranch and it sold out in six hours. I know you're making a face, but it literally sold out in six hours. And thanks to hidden Valley ranch, which is the biggest brand sales of bottled ranch in the U S people are not going to believe this, but they totaled 1.3 billion. That's more than ketchup 1.26 billion. And

$969.9 million for barbecue sauce. So in the overall condiment leaderboard, there's mayo, number one. And then in the past year, ranch has leapfrog, ketchup, and barbecue sauce for that number two spot.

It was invented just 70 years ago, but Ranch is now number two on the leaderboard in the condiment race in the United States. What are we doing in this country that we got Mayo one and Ranch number two as our condiments, but put some respect on Ranch's name. What other condiment can go from, you know, salads to pizza to chicken wings to chips to Chipotle bowls now? It certainly has some range. Let's take a quick break and come back with Toby's Trends.

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Today's Toby's Trends is a real snoozer because it's all about sleep. As too often a sleep-deprived host of a morning podcast, sleep has taken on an outside role in our lives as we bring you all the news. It has also taken on an outsized role in the lives of many a tech pro and influencer. Tweets about sleep stacks rack up

millions of views on X. Andrew Huberman brings in guests to talk about their sleep protocols, all while companies roll out new gadgets to track, analyze, and improve your sleep in every conceivable way. Venture capital funding into the sleep tech space more than doubled between 2017 and 2021 as companies tried to snag a slice of the sleepy pie. 8Sleep, one of those VC-backed companies, recently released

a $5,000 mattress cover that adjusts your body temperature and position throughout the night to increase restorative sleep. $5,000. In other words, the sleep economy is alive and well, and it's easier than ever to spend a month's rent trying to get some shut-eye. Part of the reason why this trend is so relevant today is because sleep culture has done a 180 in the past few years.

Before, the typical hustle bro might brag about how little sleep they got as a badge of honor showing how hard they grind. But now it seems like the opposite is true. To socially signal you're rich and successful, you put all this time, effort, and money into trying to get perfect sleep scores, often going to extraordinary lengths to do so. It has been a fascinating switch, Neil. One filled with mouth tape, 4 a.m.,

morning routines and more supplements than a CVS. And you can speak from personal experience because this is top of mind for you. You just recorded a YouTube video where you went through a bunch of different sleep hacks ranging from the free ones to one to

costing more than $3,000. So I'd love to hear your experience going through these different ways of sleeping and these different technological sort of applications that people are trying to sell you to enhance your sleep. - Yeah, we just posted this on our YouTube channel. Go check it out. But basically, Sleep Stack is just the stuff you do before your sleep. So yeah, I went out to test gradually more expensive ones

And the biggest takeaway I had from this video was that spending more money does not equal better sleep. The simpler is usually better. Getting consistent sleep and sticking to a consistent routine is better than any marginal boost you might get from something like

a $5,000 mattress cover. And the easiest way to stay consistent is do just basic things. But I do think that it's just been so interesting to see in the business world how sleep culture totally flipped because it really used to be like,

First one in, last one out, office culture. You don't want to be the person who is getting a good night's sleep. You want to grind, grind, grind. And now there's all this push towards sleep hygiene. And it's way more common for CEOs to try to optimize their sleep because they're saying, if I can't be on my best, I can't lead my company. It's going to lead to worse returns for my shareholders. So all these lifestyle changes have kind of put sleep into this –

on a pedestal right now in the business world, which is just not something that used to be the case if you go back even a few years ago. Okay. But what was the craziest hack that you tried that was supposed to help your sleep? And you're like, wait, why am I doing this? Well, the scariest one for me was the mouth tape because I thought it's just scary because you're cutting off a major airway. And that ended up being my favorite thing in the whole video because it just led to deeper breaths and it just

put you out like a light. So that was the biggest 180 degree switch I had was mouth tape used to be so scary to me and it's probably scary to a lot of people, but it actually was a lot better and it's very cheap as well. So again, part of that thing that cheaper...

Tends to be better than more expensive when it comes to sleep. Okay, let's sprint to the finish with some final headlines. Waymo suspended its self-driving taxi service in parts of Los Angeles yesterday after at least five of its vehicles were set on fire during anti-deportation protests over the weekend. These cars burned violently and released toxic gases when set on fire because of their lithium ionization.

on batteries, though it's not believed that the protesters targeted robo taxis specifically. While Waymo started up the coast in San Francisco, its robo taxis are not a rare sight in L.A. After beginning service in November 2024, there are currently 300 Waymo EVs offering self-driving rides in the city. Each of those Jaguar I-Pace cars, souped up with cameras and sensors, carry a total price tag of up to $200,000.

Meanwhile, protests continued for a fourth day against ICE immigration sweeps as President Trump deployed hundreds of Marines to the area in addition to the National Guard. And irate California launched a lawsuit against the Trump administration for taking that action it did not request.

Yeah, vandalizing and setting cars on fire are kind of a hallmark of a lot of protests. And it looks like Waymo has become almost this poster child for a lot of these modern protests as well. I mean, even people protesting Waymos themselves, it used to be as simple as just putting a cone on the hood of these cars and disabling the sensors. But now they're finding themselves

In the middle of these protests in Los Angeles, it looks like Waymo is also suspending some service in certain parts of San Francisco, as it looks like potentially some protests breaking out there as well. But it has been fascinating to see how Waymo in particular has become such an emblematic

of, you know, potentially forward-looking tech and then also these protests in certain parts of the country. So they just keep finding themselves in the middle of it. And it's not great for them because just the Jaguars themselves cost $73,000. Then you add in all the bells and whistles that make a Waymo a Waymo and they cost between $150,000 to $200,000. So every Waymo that gets burned, that is a big, you know, financial hit for the company as well.

Yesterday, President Trump hosted a roundtable at the White House to promote a new House GOP proposal that aims to give every U.S.-born child $1,000 at birth, money that would grow over time and become accessible at age 18 for things like education, a home, or starting a business. Dubbed Trump Accounts,

The plan builds on the idea of baby bonds unveiled by a few states and would be available to families of all income levels. The reasoning behind giving every child a nest egg is to level the playing field. When children of wealthy families grow up, they often receive a financial boost like a trust fund that gives them a head start over their less affluent peers.

But critics argue that the flat dollar approach of Trump accounts could worsen wealth inequality because private investment management model again favors Wall Street adjacent folks over struggling families who might need money for more immediate needs like food or housing. You know, this is another stab at this concept that has supporters and detractors

on both sides of the aisle let's do some math right i mean that's what i was doing when i was listening to this so you get your seeded a thousand dollars assuming you don't put anything more in and there's going to be a 5 000 cap assuming a 7 return which is you know historically what the s p 500 returns over a long time horizon each year the 1 000 would grow to about 3 500

over 18 years so once you can access that account 18 years uh it'll be perhaps somewhere around 3500 so that's what you stand to gain uh this has been tried in a number of countries before the united kingdom had a child trust fund with government seed funding from 2002 to 2011 singapore has a baby bonus scheme and the idea here is to at least from the trump administration is to

a couple of things is promote family development, which is promote babies because there's a declining birth rate here in the United States across most of the Western and developed world as well. And then the other thing that Trump administration officials say, so they want people to be more invested in Wall Street and capitalism. And if you have a thousand bucks in the bank from when you're born, not in the bank, but it's invested in the stock market, then you'll pay more attention to the stock record. So maybe

It's a learning experience there. There's a long way to go for this thing to actually become law because it is tied into that one big, beautiful bill that passed the House but is facing a lot of headwinds in the Senate. Elon Musk is trying to kill it. So we'll see where it goes if it becomes reality. It is wrapped up in this larger bill whose future is in question.

After more than a decade of speculation, Microsoft announced the Xbox Ally, a handheld console in partnership with hardware maker Asus. The pitch? You can play any game anywhere because we've got Windows. So if you're one of the 34 million subscribers for Game Pass, you can play your favorite games there. But if not, you can access other platforms like Steam and EA Play to be the first Xbox handheld.

people never thought they'd see the day. The first thing that a lot of people did when they saw this announced was go, holy moly, this is going to be expensive. And they're probably right because you mentioned the company that they developed this in partnership, Asus. They have had a handheld console on the market since 2023. It's priced at $800.

to start. You could soup it up even further. For context, the Switch 2 costs around $450. The Steam Deck, which is another kind of competitor, maxes out at $650. So I would imagine that Xbox, if we know Xbox,

typically price things on the higher end of the spectrum. So maybe in the $1,000 range, probably a comma in there because if you just look at what Asus did, they're already at $800. You add a little Xbox premium fee on top of that. So that's what a lot of people said. It's probably a good idea to join the handheld console market

game because the Switch 2 has just sold like gangbusters, but who knows if it's going to come in at the correct price point for the market. We will see. That is all the time we have. Thanks so much for starting your morning with us and have a wonderful Tuesday. If you have any thoughts on today's episode, send an email with questions, comments, or feedback to morningbrewdaily at morningbrew.com and definitely be sure to guess which two states

I haven't been to for a chance to go visit those with me. Let's roll the credits. Emily Milliron is our executive producer. Raymond Liu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair and Makeup says blue cheese over ranch any day. Devin Emery is our president, and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow.