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Netflix’s Ted Sarandos grilled in Senate hearing

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Netflix’s Ted Sarandos grilled in Senate hearing

Netflix Inc. Co-Chief Executive Ted Sarandos pledged to maintain a 45-day theatrical window for Warner Bros. films during a Senate subcommittee hearing Tuesday.

Sarandos also tried to dampen concerns about potential job losses and U.S. production declines related to the companies’ proposed multibillion-dollar deal.

During a two-hour hearing before the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, Sarandos told lawmakers the proposed merger would not run afoul of antitrust concerns and would, instead, “strengthen the American entertainment industry.”

About 80% of HBO Max subscribers also have Netflix subscriptions, which he said showed the two services were “complementary.” Netflix also plans to increase its film and television production spending to $26 billion this year, with a majority of that happening in the U.S., he said.

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“We are doubling down, even as much of the industry has pulled back,” Sarandos said, according to a written transcript of his opening remarks. “With this deal, we’re going to increase, not reduce, production investments going forward, supported by a stronger combined business and balance sheet.”

Sarandos was joined at the hearing by Warner Bros. Discovery Chief Revenue and Strategy Officer Bruce Campbell.

When asked by Sen. Adam Schiff (D-Calif.) whether senators should expect a “round of layoffs” or consumer price increases as a result of the deal, Campbell said no. He pointed to Netflix’s lack of comparable film and TV studios, or the distribution infrastructure that Warner Bros. has.

“We believe, based on our discussions with them in the negotiation process, that they’re not only going to keep those operations intact, in fact, they’re going to invest in those operations and invest in continued production, including on our lots in Burbank and elsewhere,” Campbell said.

Paramount Chief Executive David Ellison was also invited to appear as a witness, but declined because he did not believe it would be useful or helpful since the company’s bid for Warner had been rejected, Sen. Cory Booker (D-N.J.) said during the hearing. Ellison did, however, meet with him and other senators privately to answer questions, Booker said.

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Sarandos also tried to assuage concerns about the deal’s potential effect on theatrical distribution.

“I know I’ve earned some skepticism over there over the years on this because I was talking a lot about Netflix’s business model, which was different from that,” he said. “We didn’t own a theatrical distributor before. We do now, and a great one.”

When asked if the 45-day window would be “self-enforced,” Sarandos agreed, saying that was an industry standard. He did, however, note the general caveat that “routinely, movies that underperform, the window moves a little bit” but is still referred to as a 45-day window.

And in a sign of the growing role politics has played in the perception of the deal, Sarandos tried to sidestep questions from Republican senators about perceived “woke” content on the streaming platform, as well as inquiries from Booker about President Trump’s involvement in the merger. Trump previously said he “would be involved” in his administration’s decision to approve any deal.

The hearing comes just two months after Netflix prevailed in a hotly contested bidding war for Warner Bros. The $72-billion deal would dramatically reshape the Hollywood landscape and give the streamer control over Warner Bros.’ storied Burbank film and TV studios, its lot, HBO and HBO Max.

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Netflix also agreed to take on more than $10 billion in Warner Bros. debt, pushing the enterprise value of the transaction to $82.7 billion.

But Paramount has continued to pursue the company, fighting to acquire all of Warner Bros. Discovery, including its cable networks.

The company, led by Ellison, has made a direct appeal to Warner shareholders to tender their shares in support of a Paramount deal. A deadline for that offer was recently extended to Feb. 20.

Paramount has also filed proxy materials to ask Warner shareholders to reject the Netflix deal at an upcoming shareholders meeting.

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Heidi O’Neill, Formerly of Nike, Will Be New Lululemon’s New CEO

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Heidi O’Neill, Formerly of Nike, Will Be New Lululemon’s New CEO

Lululemon, the yoga pants and athletic clothing company, has hired a former executive from a rival, Nike, as its new chief executive.

Heidi O’Neill, who spent more than 25 years at Nike, will take the reins and join Lululemon’s board of directors on Sept. 8, the company announced on Wednesday.

The leadership change is happening during a tumultuous time for Lululemon, which had grown to $11 billion in revenue by persuading shoppers to ditch their jeans and slacks for stretchy leggings. But lately, sales have declined in North America amid intense competition and shifting fashion trends, with consumers favoring looser styles rather than the form-fitting silhouettes for which Lululemon is best known.

“As I step into the C.E.O. role in September, my job will be to build on that foundation — to accelerate product breakthroughs, deepen the brand’s cultural relevance, and unlock growth in markets around the world,” Ms. O’Neill, 61, said in a statement.

Lululemon, based in Vancouver, British Columbia, has also been entangled in a corporate power struggle over the company’s future. Its billionaire founder, Chip Wilson, has feuded with the board, nominated independent directors and criticized executives.

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Lululemon’s previous chief executive, Calvin McDonald, stepped down at the end of January as pressure mounted from Mr. Wilson and some investors. One activist investor, Elliott Investment Management, had pushed its own chief executive candidate, who was not selected.

The interim co-chiefs, Meghan Frank and André Maestrini, will lead the company until Ms. O’Neill’s arrival, when they are expected to return to other senior roles. The pair had outlined a plan to revive sales at Lululemon, promising to invest in stores, save more money and speed up product development.

“We start the year with a real plan, with real strategies,” Mr. Maestrini said in an interview this year. “We make sure decisions are made fast.”

Lululemon said last month that it would add Chip Bergh, the former chief executive of Levi Strauss, to its board to replace David Mussafer, the chairman of the private equity firm Advent International, whom Mr. Wilson had sought to remove.

Ms. O’Neill climbed the organizational chart at Nike for decades, working across divisions including consumer sports, product innovation and brand marketing, and was most recently its president of consumer, product and brand. She left Nike last year amid a shake-up of senior management that led to the elimination of her role.

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Analysts said Ms. O’Neill would be expected to find ways to energize Lululemon’s business and reset the company’s culture in order to improve performance.

“O’Neill is her own person who will come with an agenda of change,” said Neil Saunders, the managing director of GlobalData, a data analytics and consulting company. “The task ahead is a significant one, but it can be undertaken from a position of relative stability.”

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Angry Altadena residents ask officials to halt Edison’s undergrounding work

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Angry Altadena residents ask officials to halt Edison’s undergrounding work

Eaton wildfire survivors’ anger about Southern California Edison’s burying of electric wires in Altadena boiled over Tuesday with residents calling on government officials to temporarily halt the work.

In a letter to the Los Angeles County Board of Supervisors, more than 120 Altadena residents and the town’s council wrote that they had witnessed “manifest failures” by Edison in recent months as it has been tearing up streets and digging trenches to bury the wires.

The residents cited the unexpected financial cost of the work to homeowners and possible harm to the town’s remaining trees. They also pointed out how the work will leave telecommunication wires above ground on poles.

“The current lack of coordination is compounding the stress of a community still reeling from the Eaton Fire, and risks causing further irreparable harm,” the residents wrote.

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The council voted unanimously Tuesday night to send the letter.

Scott Johnson, an Edison spokesman, said Wednesday that the company has been working to address the concerns, including by looking for other sources of funds to help pay for the homeowners’ costs.

“We recognize this community has already faced a number of challenges,” he said.

Johnson said the company will allow homeowners to keep existing overhead lines connecting their homes to the grid if they are worried about the cost.

Edison’s crews, Johnson said, have also been trained to use equipment that avoids roots and preserves the health of trees.

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The utility has said that burying the wires as the town rebuilds thousands of homes destroyed in the fire will make the electrical grid safer and more reliable.

But anger has grown as work crews have shown up unexpectedly and residents learned they’re on the hook to pay tens of thousands of dollars to connect their homes to the buried lines.

Residents have also found the crews digging under the town’s oak and pine trees that survived last year’s fire. Arborists say the trenches could destroy the roots of some of the last remaining trees and kill them.

Amy Bodek, the county’s regional planning director, recently warned Edison that a government ordinance protects oak trees and that “utility trenching is not exempt from these requirements.”

Residents have also pointed out that in much of Altadena, the telecom companies, including Spectrum and AT&T, have not agreed to bury their wires in Edison’s trenches. That means the telecom wires will remain on poles above ground, which residents say is visually unappealing.

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“While our community supports the long-term benefits of moving utilities underground, the current execution by SCE is placing undue financial and planning burdens on homeowners, causing irreparable harm to our heritage tree canopy, and proceeding without adequate local oversight,” the residents wrote.

They want the project halted until the problems are addressed.

Edison announced last year that it would spend as much as $925 million to underground and rebuild its grid in Altadena and Malibu, where the Palisades fire caused devastation.

The work — which costs an estimated $4 million per mile — will earn the utility millions of dollars in profits as its electric customers pay for it over the next decades.

Pedro Pizarro, chief executive of Edison International, told Gov. Gavin Newsom last year that state utility rules would require Altadena and Malibu homeowners to pay to underground the electric wire from their property line to the panel on their house. Pizarro estimated it would cost $8,000 to $10,000 for each home.

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But some residents, who need to dig long trenches, say it will cost them much more.

“We are rebuilding and with the insurance shortfall, our finances are stretched already,” Marilyn Chong, an Altadena resident, wrote in a comment attached to the letter. “Incurring the additional burden of financing SCE’s infrastructure is not something we can or should have to do.”

Other fire survivors complained of Edison’s lack of planning and coordination with residents.

“I’ve started rebuilding, and apparently there won’t be underground power lines for me to connect with in time when my house will be done,” wrote Gail Murphy. “So apparently I’m supposed to be using a generator, and for how long!?”

Johnson said the company has set up a phone line for people with concerns or questions. That line — 1-800-250-7339 — is answered Monday through Saturday, he said.

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Residents can also go to Edison’s office in Altadena at 2680 Fair Oaks Avenue. The office is open Monday to Friday from 8 to 4:30.

It’s unclear if the Eaton fire would have been less disastrous if Altadena’s neighborhood power lines had been buried.

The blaze ignited under Edison’s towering transmission lines that run through Eaton Canyon. Those lines carry bulk power through the company’s territory. In Altadena, Edison is burying the smaller distribution lines, which carry power to homes.

The government investigation into the cause of the fire has not yet been released. Pizarro has said that a leading theory is that a century-old transmission line, which had not carried power for 50 years, somehow re-energized to spark the blaze.

The fire killed at least 19 people and destroyed more than 9,400 homes and other structures.

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Oil Prices Rise as Investors Weigh Cease-Fire Extension

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Oil Prices Rise as Investors Weigh Cease-Fire Extension

Oil prices rose and stocks moved slightly higher on Wednesday as investors tried to make sense of President Trump’s decision to extend the cease-fire with Iran despite doubts about the status of another round of peace talks.

An adviser to Mohammad Bagher Ghalibaf, the influential speaker of the Iranian Parliament, dismissed the cease-fire announcement, saying that it had “no meaning.” He equated the U.S. naval blockade with bombings, with commercial vessels coming under attack near the Strait of Hormuz, the crucial shipping lane that has been at the center of a growing energy crisis.

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