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    Published on: December 11, 2020

    by Kevin Coupe

    2020 has been more nightmare than dream for the Walt Disney Co., as the pandemic affected much of its business model - shutting down theme parks, limiting the sports events that it televised on its networks, closing the theaters that played its movies, and forcing mass layoffs throughout the company's various divisions.

    One of the few bright spots was Disney+, the new streaming network on which the company was able to offer content from its Disney archives as well as its Star Wars, Marvel and Pixar divisions, in addition to new programming (like the stage sensation "Hamilton" and the live-action Mulan) that originally might've been in theaters.

    Yesterday, in a four-hour investor day presentation, the company gave a master class in how to pivot a business, saying that it plans to spend billions of dollars on content for Disney+ and other streaming services (such as Hulu and ESPN+), produce dozens of series (some original, some spinoffs, some prequels, some sequels) as it builds a streaming empire that it sees as intertwined with its theatrical movie business, which it anticipates as coming back, at least to some degree, next year.

    The Wall Street Journal reports that Disney "plans to add more than 100 new titles to the service per year … drawing on franchises such as Star Wars and Marvel Studios to lure viewers."  It is a kind of flywheel concept, with gathering momentum created by new content creating an enlarged subscriber base, which then enables the company to create new content and ancillary products and experiences - an approach built deeply into the Disney DNA.

    While it does not have as many subscribers as Netflix, which has close to 200 million globally, Disney+ is ahead of schedule in terms of subscriber growth - the company says it has 86 million subscribers;  it originally projected that it would have between 60 million and 90 million by 2024.  Now, it is projecting that by 2024 it could have as many as 260 million subscribers.

    (Disney+ also is raising its subscription cost, from $6.99 a month to $7.99 a month.  I have to tell you that while I was a little skeptical about whether I would keep my subscription, I watch it enough to make it worth the money, and it remains cheaper than Netflix.)

    The point - and business lesson - is this:  It wasn't that long ago that Disney was seen as being almost impregnable in the structure of its business - any company with the rights to Luke Skywalker, Indiana Jones, Captain America, Sheriff Woody, plus a wide variety of venues in which to exploit their popularity, was a behemoth with enormous competitive advantages.

    And then, pandemic.  Suddenly, the losses were in the billions.

    The pivot to a streaming-centric model - which has not just been successful in terms of subscriber appeal, but also creatively, as can be seen in "The Mandalorian" - has been remarkable, with the company willing to rethink its strategy, tactics, and organizational structure.

    The goal is simple, I think:  go to where the customer is.  Understand what the core value proposition is, and be willing to cast aside things that might've been seen as core, but actually were just things with dust on them.

    Making such Eye-Opening moves is remarkable for any company.  But for one the size of Disney, with so much legacy and so much as stake?  Remarkable.  A proof that to be successful, you can't just wish upon a star.  You have to make hard, fast moves.

    Published on: December 11, 2020

    From the Wall Street Journal:

    "The economic recovery has downshifted, with job growth slowing and layoffs persisting at a high level amid rising coronavirus cases and related restrictions.

    The number of workers seeking unemployment benefits, a proxy for layoffs, climbed sharply by 137,000 to 853,000 last week, the Labor Department reported.

    "The level of applications was the highest since September, but still well down from a peak of nearly seven million in late March. The number of applications for a separate federal pandemic program also rose sharply last week."

    The story continues:  "The claims figures add to signs the recovery continues, but at a cooler pace. Job growth eased in November and the number of job openings edged down in early December. The labor market’s partial rebound has been a key component in the overall economic recovery from a pandemic-related downturn in the spring."

    KC's View:

    All of which suggests to me that for the foreseeable future, value-centric retailers are going to have a real advantage in certain markets, as parts of the economy continue to falter.

    Published on: December 11, 2020

    The Washington Post has a sad story about the growing problem of shoplifting in food stores, exacerbated by higher levels of economic and food insecurity.

    An excerpt:

    "The coronavirus recession has been a relentless churn of high unemployment and economic uncertainty. The government stimulus that kept millions of Americans from falling into poverty earlier in the pandemic is long gone, and new aid is still a dot on the horizon after months of congressional inaction. Hunger is chronic, at levels not seen in decades.

    "The result is a growing subset of Americans who are stealing food to survive.

    "Shoplifting is up markedly since the pandemic began in the spring and at higher levels than in past economic downturns, according to interviews with more than a dozen retailers, security experts and police departments across the country. But what’s distinctive about this trend, experts say, is what’s being taken — more staples like bread, pasta and baby formula."

    You can read the story here.

    Published on: December 11, 2020

    The Real Deal reports that Target has signed a lease for a 27,000 square foot space in the Soho neighborhood of Manhattan.

    The story says that this is the eleventh  building in the metropolitan area "that Target has taken over in the past 14 months. It will soon open locations in Chelsea, Yonkers, Times Square and Washington Heights."

    KC's View:

    When I read this story, I must admit that it makes me wonder exactly how the city justifies Walmart being blocked from opening a store in Manhattan.  Considering all the big box stores in the city, it just makes no sense.

    Published on: December 11, 2020

    FMI-The Food Industry Association and the National Grocers Association (NGA) yesterday celebrated a US Supreme Court decision in the case of Rutledge v. Pharmaceutical Care Management Association that, FMI said, "provides a crucial victory to all pharmacy stakeholders seeking the ability to regulate the practices of drug middlemen known as pharmacy benefit managers (PBMs). The decision restores Arkansas’ Act 900, a pro-pharmacy, pro-consumer law that, among other things, required PBMs to reimburse pharmacies at or above what the pharmacy paid to acquire certain medications."

    FMI president-CEO Leslie Sarasin said:

    "FMI is pleased that the Supreme Court voted unanimously to protect public access to health care through local pharmacies by allowing states to regulate PBMs, which have been allowed to operate virtually unchecked for far too long. This decision is a strong vote of confidence by the Supreme Court as FMI works to achieve greater oversight of PBMs. More than ever, Americans need convenient access to supermarket pharmacies and wellness services. Pharmacists are among the country’s most accessible health care providers, with close to 90% of the U.S. population living within five miles of a pharmacy. Our members want to preserve convenient, affordable access to supermarket pharmacies in every community and to prevent 'pharmacy deserts' for customers.”

    "Many independent grocery pharmacies have been forced to close their doors over the last few years due to the unfair practices of PBMs. We are glad that the Supreme Court has affirmed the authority of Arkansas and other states to regulate onerous PBM practices," said Greg Ferrara, NGA president-CEO. "NGA continues to work with Congress and federal agencies to advance pharmacy reforms at a national level that protect patient access and allow independent grocery pharmacies to continue to serve their communities."

    Published on: December 11, 2020

    Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

    •  In the United States, we now have had 16,045,957 confirmed cases of the Covid-19 coronavirus, resulting in 299,751 deaths and 9,336,480 reported recoveries.

    Globally, there have been 70,833,684 coronavirus cases, 1,591,008 fatalities, and 49,258,434 reported recoveries.  (Source.)

    •  Reuters reports this morning that Alex Azar, the US Secretary of Health and Human Services (HHS), said this morning that "U.S. approval of Pfizer Inc’s experimental COVID-19 vaccine should come within days, with the first Americans getting immunized as early as Monday or Tuesday."

    Azar said that the US Food and Drug Administration (FDA) has informed Pfizer of the authorization and will work with the company to ship the vaccine nationwide.

    The announcement follows yesterday's recommendation in a 17-4 vote by an FDA advisory panel that the vaccine should be cleared for emergency authorization, which will allow the two-dose treatment to be used.

    •  Even as the good news about the vaccine came from regulatory authorities, there was this sobering report from the Associated Press:

    " Just when the U.S. appears on the verge of rolling out a COVID-19 vaccine, the numbers have become gloomier than ever: Over 3,000 American deaths in a single day, more than on D-Day or 9/11. One million new cases in the span of five days. More than 106,000 people in the hospital.

    "The crisis across the country is pushing medical centers to the breaking point and leaving staff members and public health officials burned out and plagued by tears and nightmares … New cases per day are running at all-time highs of over 209,000 on average. And the number of people in the hospital with COVID-19 is setting records nearly every day."

    •  From the Wall Street Journal:

    A number of states continued to struggle with recent surges of infections. California reported more than 33,500 new cases for Thursday, slightly lower than Wednesday’s record total.

    'The rising case numbers prompted several states to impose new social-distancing measures.

    "In Pennsylvania, which reported more than 12,000 new cases for the first time since Dec. 4, Gov. Tom Wolf on Thursday instituted new restrictions on dining, retail and social gatherings. The new restrictions include a ban on extracurricular activities at schools, a suspension of indoor dining and limits on indoor events to 10 people and outdoor events to 50. The new measures go into effect Dec. 12 and remain in place until Jan. 4.

    "Virginia Gov. Ralph Northam on Thursday issued an executive order imposing a statewide curfew to keep residents at home late at night, an expanded mask mandate to include all indoor settings and outdoor settings where social-distancing isn’t possible and new limits to the size of social gatherings. The new measures go into effect Dec. 14 and last until Jan. 31. Virginia reported more than 3,900 new cases for Thursday, down slightly from a record set on Wednesday, according to Johns Hopkins data.

    "Ohio Gov. Mike DeWine, meanwhile, announced an extension of an overnight curfew that will remain in effect until Jan. 2. Thursday marked the state’s fourth-highest case count to date, with 11,738 new Covid-19 infections, Mr. DeWine said."

    •  USA Today reports that FedEx and UPS plan to divide and conquer the US when it comes to distributing the Covid-19 vaccine, splitting up the country in a way that they say will be most efficient and effective.

    Executives with the two companies explained the strategy yesterday to a US Senate subcommittee.  They said that they are working with the Federal Aviation Administration (FAA) to get priority for flights carrying the vaccine.

    •  USA Today reports that "a top Clorox executive says retail shelves won’t be well-stocked with the company’s popular disinfectant wipes until mid-2021 as feverish demand during the COVID-19 pandemic continues to outstrip supply … His comments mark the third time this year the company has pushed back the time frame for easing nationwide shortages. In May, Clorox officials said they expected substantial improvement in supplies by last summer. Then in August, an executive said stocking up would take at least until the end of 2020."

    •  CNBC reports that "Walmart is getting ready to administer Covid-19 vaccinations across the country once a vaccine is approved, the company’s chief medical officer said Thursday.

    "In a post on the company’s website, Dr. Tom Van Gilder said the retailer is preparing its more than 5,000 stores and Sam’s Club pharmacies to receive the vaccine doses — such as having freezers and dry ice at pharmacies to store them at the right temperature … Gilder said Walmart is entering into agreements with states to be able to offer vaccinations at pharmacies or other locations, such as long-term care facilities. He did not specify the states or any agreements that the company has signed.

    "He said Walmart has begun to tackle other challenges that could slow down or complicate a widespread rollout to the general public, including educating employees about the vaccine so they’re informed ahead of time.

    "Walmart is also thinking through a process to help people keep track of their first and second doses of the vaccine. The vaccines that require two doses must be separated by 21 or 28 days, depending on which one, and that timing boosts effectiveness."

    •  Hy-Vee has announced that "it will offer rapid antigen COVID-19 testing at 47 Hy-Vee pharmacy locations via an outdoor, drive-thru testing process." 

    The first 18 locations started testing yesterday, "with the additional 28 locations scheduled to begin testing over the next two weeks. Patients will receive same day test results in as little as 1-2 hours after completing the test."

    •  The Associated Press has an answer to the question, "Can I stop wearing a mask after getting a COVID-19 vaccine?"

    Simply, no.

    "For a couple reasons, masks and social distancing will still be recommended for some time after people are vaccinated.

    "To start, the first coronavirus vaccines require two shots; Pfizer’s second dose comes three weeks after the first and Moderna’s comes after four weeks. And the effect of vaccinations generally aren’t immediate.

    "People are expected to get some level of protection within a couple of weeks after the first shot. But full protection may not happen until a couple weeks after the second shot.

    "It’s also not yet known whether the Pfizer and Moderna vaccines protect people from infection entirely, or just from symptoms. That means vaccinated people might still be able to get infected and pass the virus on, although it would likely be at a much lower rate … And even once vaccine supplies start ramping up, getting hundreds of millions shots into people’s arms is expected to take months."

    •  The Los Angeles Times writes about a study in South Korea, based on a "meticulous and often invasive contact tracing regime," that "raised concerns that the widely accepted standard of 6 feet of social distance may not be far enough to keep people safe."

    Basically, the premise is that the virus can be contracted via droplets that touch the face, as opposed to just being breathed in, and those droplets can travel farther than six feet depending on air flow - especially in places like restaurants.

    •  The Seattle Times reports that "a day after Washington (3-1) paused all team-related football activities due to an increase in positive COVID-19 cases within its program, Saturday’s game at Oregon will be canceled and declared a no contest … The Pac-12’s minimum threshold requires each team to have 53 available scholarship players — including one quarterback, seven offensive linemen and four defensive linemen — for a game to go on. According to a source inside the program, the Huskies are 'well below' the 53-scholarship minimum.

    Published on: December 11, 2020

    •  Nielsen is out with new numbers about online shopping in America.

    Here are some of them:  " 15 million new buyers have started to shop online, reaching 11% of total grocery sales … Approximately 50-60% of U.S. shoppers who made their first e-commerce purchase between March and October this year have already made a repeat purchase within the online channel … Nielsen also surveyed the reasons why Americans were opting to shop more online, with the most popular driver being the need for same-day delivery (37%) and it saves time (29%)."

    Published on: December 11, 2020

    •  Suzy Monford, formerly group vice president of e-commerce at Kroger and, before that, president of the company's QFC division in the Pacific Northwest, has been named president-CEO of Seattle-based PCC Community Markets.

    The Cincinnati Business Courier notes that Monford "had been CEO of Andronico’s Community Markets in the San Francisco area before joining Kroger. She previously had leadership roles at H-E-B Grocer and H-E-B Central Market in Texas."

    The Seattle Times notes that "previous PCC CEO Cate Hardy left in May to become CEO of The Wine Group, the second-largest winemaker in the world.  Monford will be the sixth CEO in PCC’s 65-plus-year history and the second woman to have held the role."

    KC's View:

    Big fan of PCC, and I'll be excited to see how Monford steers the company, especially when it comes to e-commerce.  (They need to get rid of Instacart, for starters…)

    Published on: December 11, 2020

    I loved this email from MNB reader Mike Spindler, reacting to the suggestion that Amazon will soon be antitrust regulators' sights:

    So Amazon is next in the box, with our politicians, eh?

    Their sin?   

    Saving out butts when we needed essentials during the pandemic?

    Hiring half a million people while state mandated shutdowns killed millions of jobs and scores of thousands of businesses?

    Paying lots of those folks well above the national minimum wage and benefits while politicians whine, moan and do not much?

    And according to your MNB today, investing more in renewable energy than any other corporate citizen?

    They are not perfect by any stretch and their vision is business and profit not altruism but I would say they have stepped nicely up to the plate.

    Agreed.  Absolutely.

    Got the following email from MNB reader Charles P. Moore:

    Thank you (and your reader, Doug Peterson!) for the response to the earlier, rather mis-informed email from another reader on the SNAP/EBT program. Indeed, the Restaurant Meals exception is for those who are "elderly, homeless, and disabled”, a small subset of the whole. It is appropriately responsive to true need. Likewise, the claims of fraud in the overall program tend to be way overblown. The context provided re the mortgage deduction or your reference to those who cheat on their taxes was terrific in response.

    There is, however, significant room for improvement in the program with regard to encouraging people to use these supplemental programs in ways that improve their health and that of their families. Indeed, a quite sound argument can be made for increasing resources to these families, based on lifetime health ROI of improved healthy eating. This argument could and should be compelling to both ‘conservatives’ and ‘liberals’ alike.

    I know that I am ‘preaching to the choir’ on this, but please bear with me. The incremental annual costs to society, to the taxpayer, of heart disease, diabetes, and other nutritionally related chronic diseases in this population dwarfs all supportive transfer benefits combined (housing, energy, food, etc.). And yet, SNAP/EBT do not adequately differentiate between foods that encourage good health versus those we know lead to these issues when over consumed. We also know that this population, whether urban or rural, are often underserved by stores offering ready access to the healthy, fresh foods at affordable prices, yet have plenty of access to shelf-stable, highly processed foods and fast food restaurants.

    So, there is a strong ROI argument for increasing access and affordability of the healthiest fare for these populations and for encouraging healthy eating choices financially as well as educationally.

    Counter-arguments that government should not ‘tell’ people they can’t enjoy foods and drinks others enjoy ignore that people may use other resources to eat candy and drink sugary drinks, etc, so their ‘freedom’ is not limited by mandating the primary usage of the taxpayer’s resource to highest and best effect.

    Another counterargument, that it is too difficult to determine which foods are healthy and which are less so, or downright unhealthy, also fails. The government already makes such differentiation in the WIC food program, and with the digital capabilities of today, it would not be difficult to fully support the healthiest choices and to limit support for the least healthy. Down to the SKU level. And this includes addressing perverse SNAP restrictions which currently eliminate rotisserie chickens, often offered as a loss leader at a cost per pound comparable to uncooked chicken. This is all quite in the realm of possible today.

    Unfortunately, these governmental decisions have been previously made largely influenced by the processed food lobbying community rather than by the health community. However, if we shift our policy emphasis to chronic disease reduction we can much more rationally increase the resources available such that families in these situations have ample, healthy food, all the time.

    Regarding the offensive decades-old cigarette ads we showed the other day, MNB reader Andy Casey wrote:

    I heard a good quote many years ago that seems relevant: Applying today’s morality and judgement to yesterday’s problems will inevitably produce poor results. That is not to excuse anything bad that happened in the past but decision making is always cleaner looking back than when it is occurring. Morality isn’t static either. And frankly, that is appropriate because if we aren’t learning and making better decisions as a population, shame on us.

    'I agree, but only to a point.  There is a fine line between forgiveness and understanding … and I think that "he/she didn't know any better" is an excuse that only goes so far.

    My larger point in posting the ads was to suggest that there are things that we do today that most of know will be looked back on years from now with dismayL:  How could they do that?, people will say.  I think it is worth looking around now to try to identify those things now, so people will see us as being on the right side of history.

    And finally, another in our occasional series of stories about customer service experiences:

    I ordered a gift from Nordstrom using their online site and was pleased when they offered free gift wrapping because I would pick up at their curb at their Easton store here in Columbus OH.  I arrived at the curb pick-up site and dialed the number on the signs that were posted and got a mailbox full message.  There was no way to contact the store so I had to go inside where the employees said they knew the phone didn't work, and were waiting for customers to come into the store to collect their orders. 

    My gift was promptly given to me at a counter in store but it defeated the whole purpose of curbside pick up.  I have a much higher expectation of customer service from Nordstrom, when you promise curbside then be creative and overcome any issues you have in providing the service you promised.

    Message delivered.

    Published on: December 11, 2020

    In Thursday Night Football, the Los Angeles Rams beat the New England Patriots 24-3.

    Published on: December 11, 2020

    The writer-director Paul Schrader once said that screenwriting "is not an art form, because screenplays are not works of art. They are invitations to others to collaborate on a work of art."

    I thought about that quote the other day when I watched David Fincher's new movie, Mank, which can most easily be described as the story behind the making of Citizen Kane, arguably one of the four or five best movies ever made.  But Mank is far more than that, because in so many ways it is a meditation of the nature of creativity within the world of filmmaking, where screenwriters often are seen as a necessary evil.  People can say that the script is important, but film never has been seen as a writer's medium;  it generally is perceived as a director's medium, where what we seen on the screen is far more a result of the director's vision that the writer's.  In some ways, this is entirely fair - film, after all, is a visual medium, and movies often are better when they show us rather than tell us the story and characters.

    Herman J. Mankiewicz, on the other hand, was a man of words.  He'd written for the New York Times and then The New Yorker in its early days, and he was a member of the famed Algonquin Round Table.  He was lured to Hollywood, like so many smart and savvy writers - think Raymond Chandler and William Faulkner - by the promise of easy money;  he used to send telegrams to other writers saying, "Millions are to be grabbed out here and your only competition is idiots. Don’t let this get around.” 

    As Mank begins, the eponymous protagonist (played by the great Gary Oldman), having broken his leg in a car accident, has been spirited out of town by John Houseman (yes, that john Houseman) to work on the script for what eventually would be called Citizen Kane.  It is no small challenge - Mank was on a tight deadline set by Orson Welles, and he's a chronic drinker and compulsive gambler with almost no self-discipline.

    The film's premise - it was written by Jack Fincher, the director's father, and largely reflects one side of a debate that has occupied many film critics and historians over the years - is that Mank developed the characters of Charles Foster Kane and Susan Alexander based on his real-life and largely unpleasant experiences with William Randolph Hearst (played by Charles Dance) and Marion Davies (Amanda Seyfried in a revelatory performance).  The other side of the argument - and its supporters are no less passionate about it - is that Mankiewicz was far less a creator of the film than Welles.

    One of the conceits is that Mank shares an aesthetic with Citizen Kane - it is shot in gorgeous black-and-white, and there are shots all through the movie reminiscent of the classic 1941 movie (enough so that there are moments where Fincher seems to be showing off a bit).

    But narrative - as fascinating as it is - is less important here than how the film charts the rotting of a man's soul.  He knows he is wasting his talent, he knows that he has become a clown for other people's amusement, and he often is unsuccessful when reaching for an iota of respect or dignity. Mank believes he is better than that, and yet he is trapped by ambitions that can be fulfilled by settling.  It is a lesson worth learning.

    Mank is a fascinating movie about the movies - and, ironically enough, it is available on Netflix.  I recommend it.

    Tried a new Albarino the other night, and loved it - the 2019 Seastone, which is crisp, with just enough fruit, and perfect with seafood or a light pasta.

    That's it for this week.  Have a good weekend … I'll see you Monday.

    Stay safe.  Be healthy.