Friday, March 8, 2019



Business this week - The Economist

Posted: 07 Mar 2019 07:49 AM PST

 Carlos Ghosn was released from detention in Tokyo after posting bail of ¥1bn ($9m). The sacked chairman of Nissan, Mitsubishi and Renault had been held in custody since mid-November on charges of financial wrongdoing at Nissan, which he denies. Under strict bail conditions, Mr Ghosn will stay at a house under 24-hour camera surveillance. He is not allowed to communicate with people over the internet. See article.

For personal reasons

In an announcement that took Washington by surprise, Scott Gottlieb said he would resign as commissioner of the Food and Drug Administration. Mr Gottlieb had worked to speed up the approval of new drugs, but he was greatly disliked by the tobacco industry for his forceful attempt to halt the epidemic of teen vaping and proposal to ban menthol cigarettes. Before his resignation, conservative groups had been trying to halt his efforts to crack down on the vaping industry. Biotech stocks sank on the news, whereas tobacco stocks rose.

The chief executive of Vale stepped down. Prosecutors had asked for his "temporary" suspension after the collapse of a dam in Brazil that held waste from one of Vale's iron-ore mines, killing at least 186 people. Scores are still missing. See article.

Chevron and ExxonMobil significantly increased their production targets for shale oil in the Permian Basin, underlining how bigger oil companies are putting pressure on smaller independent firms that operate in the region. Chevron's boss remarked that "the shale game has become a scale game."

The American economy grew by 2.9% in 2018, its best performance in three years. The surge in growth in the middle of the year, thanks in part to tax cuts, was offset by decelerating consumer spending towards the end of the year.

A slowdown in the fourth quarter hit South Africa's economy, which grew by just 0.8% last year, well below the roughly 5% that is needed to make a dent in an unemployment rate of 27%.

Mizuho, one of Japan's biggest banks, booked a ¥680bn ($6.1bn) write-down. That was mostly because of restructuring costs, though Mizuho also lost money trading in foreign bonds, which many Japanese banks turned to in search of higher yields when interest rates turned negative at home.

America removed India from its Generalised System of Preferences, which lowers the barriers of entry for trade on certain goods, claiming that India had failed to provide equal access to its markets. Donald Trump has stepped up his complaints against India's trade practices, notably its stiff tariffs on imports of American motorcycles. Meanwhile, in a blow to Mr Trump, America's trade deficit in goods was $891bn in 2018, a record. See article.

Huawei launched a lawsuit against the American government over its ban on the company's telecoms equipment from official networks. America says that the Chinese firm represents a security threat, which it denies. In Canada a court heard America's request for the extradition of Meng Wanzhou, Huawei's chief financial officer.

Be prepared

Mark Carney said that "constructive developments" had reduced the Bank of England's estimate of the economic damage that would result from a disorderly Brexit. The bank had previously put the cost to the economy at around 8% of GDP. Mr Carney said that had fallen by about 3.5 percentage points but continued to warn of a "material" shock. The bank also reported that the potential disruption to cross-border financial services had been mitigated in Britain, but it criticised the EU for a lack of action on its part. Of the thousands of businesses that have spoken to the bank, half are unprepared for a no-deal Brexit. Of the half that do have plans, 50% claim to be "as prepared as we can be".

Lyft filed for an IPO, overtaking Uber, its bigger rival in the ride-hailing business, in the race to float on the stockmarket. Lyft will probably list in April on the NASDAQ exchange. Uber is expected to launch its IPO later this year. See article.

Gap decided to hive off its Old Navy business into a separately listed company. Old Navy sells a cheaper clothing range than Gap-branded apparel and provides almost half of the Gap company's sales. Gap became big when it cottoned on to the fashion for pastel colours in the 1980s, but it has struggled recently, announcing more store closures.

Days after defeating the government's appeal against its takeover of Time Warner, AT&T undertook a broad restructuring of the business. A newly created WarnerMedia Entertainment will house a string of assets, including HBO. The swift departure of Richard Plepler as HBO's boss spawned comparisons to "Game of Thrones", one of the channel's many hits. See article.

Why Many Businesses Are Becoming More Vocal In Support of LGBTQ Rights - Daily

Posted: 07 Mar 2019 08:13 AM PST

Executive Summary

There is perhaps no clearer case study on the intersection of business and social issues than the rise in business activism on LGBTQ rights. For many years, businesses have been working to improve their brands and their internal practices on LGBTQ issues, investing in culture, benefits, and marketing to welcome LGBTQ workers and customers, and to telegraph inclusion and openness. But in recent years, something has shifted: more companies are speaking up on public policy impacting the LGBTQ community, and many are doing so in places where they face stiff headwinds, putting their brands and political relationships on the lineLGBTQ inclusion is good for the economy, and as more and more businesses make this connection, they are stepping forward to make the economic case for non-discrimination protections and against discriminatory laws. And they are not doing it alone. They are turning to coalitions to ensure they have strength in numbers, resources, and messaging alignment.

Juj Winn/Getty Images

One of the clearer case studies on the intersection of business and social issues is how companies have handled the rise of LGBTQ rights.

For many years, businesses have been working to improve their brands and their internal practices on LGBTQ issues, investing in culture, benefits, and marketing to welcome LGBTQ workers and customers, and to telegraph inclusion and openness. Political activism has been slower in coming. In recent years, however, something has shifted: more companies are speaking up on public policy impacting the LGBTQ community, and many are doing so in places where they face stiff headwinds, putting their brands and political relationships on the line — a pointed action in a climate where legal and political debates continue over whether businesses can refuse to serve LGBTQ people.

This increased public activity is largely the result of rapid opinion shifts, and Millennials and Generation Z are often at the leading edge. Sixty-seven percent of young adults in the U.S. do not believe that small business owners should be allowed to refuse service to LGBT people for religious reasons, compared to 60% of Americans overall and 53% of senior citizens. Millennials are now the largest group in the U.S. workforce and are essential to recruitment, brand, and consumer strategies. The public opinion shift they are driving has a wide range of economic impacts, such as the war for talent and the ability of cities and states to attract corporate investment. Tourism — including conventions and major sporting events — is a specific concern. In a 2016 poll, nearly 50% of American meeting planners said they would avoid planning events in states that pass anti-LGBTQ legislation. And the net approval of same-sex relationships is emerging as a predictor of competitiveness and innovation in cities.

All this to say, LGBTQ inclusion is good for the economy, and as more and more businesses make this connection, they are stepping forward to make the economic case for non-discrimination protections and against discriminatory laws. And they are not doing it alone. They are turning to coalitions to ensure they have strength in numbers, resources, and messaging alignment.

In one example, then-Indiana Gov. Mike Pence signed a "religious exemption" bill that would have allowed businesses to turn away LGBTQ customers and potential hires in 2015. This development was met with an immediate loss of 12 business conventions worth $60 million and the launch of the Indiana Competes business coalition advocating for LGBTQ nondiscrimination. The law was quickly amended. The pattern continued in 2016, when North Carolina lawmakers passed the HB2 "bathroom bill" to restrict where transgender people could use the restroom in public and in schools. HB2 was filed, passed, and signed into law in a single day, and businesses immediately began to take individual actions. Within a week of passage, two equality groups had organized more than 140 major CEOs and business leaders into an open letter to the governor. In the year that HB2 remained a law, the state lost $630 million in canceled sports events, job opportunities, performances, and conventions. The law was repealed in 2017.

That same year, Texas lawmakers pursued a similar  "bathroom bill" and economists predicted massive losses: in tourism alone, $3.3 billion in annual gross product and 35,600 full-time jobs — just initially. The legislation failed, but the state still saw $66 million in cancelled conventions over the course of the debate. Three business coalitions were active in this effort: Texas Competes (a coalition that has been making the economic case for nondiscrimination since 2015), Keep Texas Open for Business (a coalition within the state chamber of commerce), and Texas Welcomes All (a coalition of tourism stakeholders).

These coalitions serve more than a convening role.

First, they reduce political risk by building critical mass. Because every business has its own legislative agenda, speaking up on a divisive issue, often in opposition to elected leadership, can create risk of political retaliation. But if a business is joined by its peers, the risk of being an isolated target drops significantly.

Second, coalitions centralize resources and expertise, such as political intel and data on the economic impacts of discrimination. While a company might be internally supportive of its LGBTQ employees, legislation impacting the LGBTQ community isn't typically the core competence of a corporation's government affairs team, who tend to focus on industry issues like regulations and taxes. This expertise gap becomes an issue when public policies impacting LGBTQ people have potentially huge financial, operational, and brand impacts. Even tracking legislation can be a challenge, because many measures with discriminatory intent may be worded in confusing ways, as was the case for the 2008 California Marriage Protection Act, and more recently, Question 3 in Massachusetts. Other measures may never explicitly mention LGBTQ people, as with Arkansas' Intrastate Commerce Improvement Act.

On their own, businesses are less likely to have the expertise to recognize and thoroughly analyze these bills and connect them back to their economic and business risks. Coalitions provide outsourced expertise and give businesses the chance to partner with state and national equality organizations that can bring their own resources to bear. Through these partnerships, businesses gain access to economic impact studies, public opinion data, analysis of filed legislation, and insights from peers in other states that have gone through a similar process. This information helps them communicate a strong, data-driven argument against discriminatory legislation.

Lastly, coalitions help their members develop a clear and unified message that, in turn, makes their case for nondiscrimination more powerful to lawmakers and the public. Together, these core functions of business coalitions on LGBTQ rights help build trust among business leaders — a much-needed currency when these efforts become politically hot.

Though nondiscrimination protections for LGBTQ people are advancing in places like New York and Virginia, advocates in the U.S. still anticipate discriminatory bills filed in several states, focused on religious exemptions, preemption of municipal nondiscrimination protections, and the rights of transgender people. The data-backed economic argument for nondiscrimination has the power to drive bipartisan support, by decoupling the issue from partisan politics and providing cover for pro-business lawmakers representing  socially conservative districts.

Nationally, and in individual states where pro- or anti-LGBTQ legislation is proposed, businesses have a real opportunity to make a difference. They can join an existing coalition or, in the absence of such an effort, ask their local chamber of commerce, visitors bureau, or LGBTQ equality organization to lead the way by creating one. Once convened, or on their own, they can place op-eds in local newspapers to influence public opinion, host educational sessions for employees, and make direct appeals to legislators based on both economic and values-based arguments. And when nondiscrimination legislation passes, businesses can be vocal in their praise and celebration of these efforts as vital to investing in a forward-looking, inclusive economy.

The work of equality requires many voices, and the emergence of the business community as a major force for LGBTQ rights has changed the conversation. Business leaders and the coalitions that convene them will have a game-changing role to play in 2019 and beyond, in the U.S. and around the world. Business competitiveness, the economic strength of their operating environments, and their commitment to inclusion and diversity demand that they stay the course.

What 'Leaving Neverland' Means For Michael Jackson's Business Empire - Forbes

Posted: 07 Mar 2019 02:34 PM PST

Wave Of Uncertainty: The legacy of Michael Jackson, photographed in 2005, is at a crossroads. But a commercial reckoning could prove more elusive than some may think. (Photo by M. Caulfield/WireImage)Getty

Michael Jackson is, once again, at the center of a very public reckoning. This week, HBO's Leaving Neverland resurfaced graphic sex abuse accusations, leveled on screen by Wade Robson and James Safechuck, who allege the singer molested them repeatedly as boys. The film prompted renewed debate over Jackson's legacy; the New Yorker called the film "horrifying and unforgettable" while the Washington Post dubbed it "devastating and credible."

At the same time, defenders loudly proclaimed Jackson's innocence, noting he'd been cleared of all charges in his highly publicized 2005 trial. His estate filed a $100 million lawsuit against HBO, and his family called the film "a public lynching." Some observers seized on Robson's history and reversal between testifying on Jackson's behalf in 2005 and bringing his story to HBO, and fans protested Leaving Neverland with campaigns stretching from Twitter to the London bus system.

Regardless of the ultimate cultural fallout from the past week, a commercial reckoning may prove elusive for Jackson. The singer has pulled in $2.4 billion since his death in 2009, much of it from the sale of two assets: Jackson received $750 million for his half of the Sony/ATV publishing catalogue in 2016 and $287 million for his EMI Music Publishing stake last year. Thus far, Jackson's remaining deals appear largely intact in the wake of Leaving Neverland, judging by a brief survey of his financial realm.

The singer's empire begins with his music, the logical first target of any Jackson backlash. Indeed, several radio outlets from Canada to New Zealand have pulled his songs from rotation, but he's available on most stations and, critically, via streaming services like Apple Music and Spotify, which recently rolled back a controversial policy on problematic artists. Neither service replied to a request for comment, nor did Sony/ATV, which still administers his publishing. A spokesperson for Sony, which houses Jackson's recorded music catalog, declined to comment, but a rep for Jackson's estate confirms the singer's major deals—including the Sony pact—remain in place.

While it's still too early to see how Leaving Neverland will impact overall consumption of Jackson's work, early indications are that the numbers are mostly flat or rising. "We haven't seen an uptick or downtick in album sales or song sales, but there has been an upward trend the last two weeks for streams," says Jim Lidestri, chief of Border City Media, the company behind the BuzzAngle music charts. Newer week-over-week numbers provided by rival outfit Nielsen for the period ending Tuesday tell a similar story. While Jackson's U.S. terrestrial radio spins dipped by 5%, on-demand audio and video streams ticked up by half a percent apiece while album sales increased by 3.4% and song sales grew 5.8%.

Such a boost could be attributed to Jackson's fanswho have advocated consuming the singer's music instead of watching Leaving Neverlandor to the old adage that any publicity is good publicity. Either way, Jackson's postmortem music earnings are insulated against a potential decline in consumption by a quarter-billion-dollar pact signed with Sony last year. Although most record deals contain morals clauses that allow labels wide latitude to drop artists, it's not clear how such provisions would apply to a deceased performer, and observers see such action as extremely unlikely anyhow.

"From a purely business perspective, it's hard to imagine Sony Music/Epic Records or Sony/ATV dropping Michael Jackson," says veteran entertainment attorney Bernie Resnick. "Setting aside the 'did he or didn't he' debate, and speaking of Mr. Jackson purely as an artist, the King of Pop is the star of the biggest-selling LP in the history of the recording industry."

Like Sony itself, Sony/ATV recently signed a long-term deal with Jackson. The idea of the company disentangling itself from the singerwho paid $47.5 million for the original ATV catalog, which included some of the Beatles' biggest hits, in the 1980s before merging it with Sony's a decade laterseems complicated at best. Any theoretical unwinding of Jackson's publishing would likely drag along other music contained within his Mijac publishing entity, including the catalog of Sly and the Family Stone, as well as hits popularized by Aretha Franklin and Jackson's late father-in-law Elvis Presley.

Beyond music, other licensing deals appear to have remained in place thus far. Authentic Brands Group, which handles Jackson's merchandise, asserts that none of its partners have pulled out of any agreements. Michael Jackson One, the Cirque du Soleil production at Mandalay Bay in Las Vegas, seems to be on track as well (although there is a petition calling for its cancellation). Sin City ticketing is notoriously opaque, but show dates look to be half-to-two-thirds full as far out as December, although a spokesperson for Cirque wouldn't reveal exact sales numbers.

Selling Neverland: Jackson's ranch is on the block; the asking price has dropped from $100 million to $31 million since 2015. (AP Photo/Carolyn Kaster, File)

One area where Leaving Neverland may have already had a negative impact on Jackson's postmortem finances is the property named in the film's title, where many instances of abuse allegedly occurred. In 2015, Neverland Ranch went up for sale with a price tag of $100 million; within two years, the price fell to $67 million. The number recently dropped again, to $31 milliona discount of nearly 70% on its initial list priceand although the estate has characterized the dip as a coincidence, it's hard to imagine the documentary not affecting its sale.

Without a steady flow of new material, deceased starsamong whom Jackson was the highest-paid last year, earning $400 million, mostly from the EMI salemust find ways to expand their audience. That's what may prove toughest for Jackson's financial legacy in the wake of Leaving Neverland. A planned Broadway musical based on his work has already hit possibly unrelated speed bumps, although a spokesperson for the show confirms it's on schedule to launch this summer. The fate of Michael Jackson's Halloween—a television special launched in 2017, with aspirations of becoming an annual event, that features a pair of children roaming a haunted house with the help of Jackson's spirit—is less clear. (A representative for CBS, which aired the program, didn't reply to a request for comment.)

But the amount of money generated by those sorts of brand extensions is negligible compared with Jackson's music and publishingespecially abroad, where he's particularly popular. Thriller has sold some 100 million copies, with 66 million coming internationally. Jackson fans also appear poised to consume his work over-the-top if need be, as evidenced by their embrace of the concert film released this week as Leaving Neverland counter-programming.

Meanwhile, the debate over art versus artist continues to rage. And Jackson's legacy could always be damaged further over time, especially if additional accusers come forward. Still, artists tainted by allegations of vile acts can maintain commercial appeal long after they're gone. One need look no further than sexual abuse claims leveled against Presleylast year's second-highest-paid dead celebrityfor proof that when it comes to business, pop royalty often take their teflon crowns to the grave.

For more on the business of music, follow me on Twitter.

Airbnb To Buy HotelTonight As It Pushes Deeper Into Hotel Booking Business - Forbes

Posted: 07 Mar 2019 10:00 AM PST

Financial Markets Wall Street Airbnb

In this Monday, March 13, 2017, photo, Airbnb co-founder and CEO Brian Chesky is interviewed during a luncheon meeting of the Economic Club of New York. (AP Photo/Richard Drew)ASSOCIATED PRESS

Airbnb wants to become the go-to place for anyone booking a trip—even if they want to stay in a hotel. The company, which built a business valued at $31 billion by matching travelers to homeowners with a room to spare, said Thursday it plans to acquire last-minute booking platform HotelTonight.

Airbnb will continue to run the HotelTonight brand, including its website and booking app. HotelTonight's CEO, Sam Shank, will now run Airbnb's luxury hotel business line, and most of the company's employees will be joining Airbnb, which did not disclose the price of the deal.

It's a symbolic acquisition for the peer-to-peer travel company that has been in a love-hate relationship with the hotel industry for years. Even as Airbnb and the hotel industry have waged acrimonious fights in cities like New York over the past 10 years, it has gradually warmed up to at least the boutique and luxury hotel industry. In February 2018, Airbnb announced that hotels would be a separate category on its website. At the time, it already had 24,000 boutique hotel rooms and over 180,000 B&Bs. Those numbers have more than doubled in the past year, according to Airbnb.

Adding HotelTonight will help Airbnb's image of being a go-to for more than just bespoke vacation homes or shared apartments. Started in 2010 by Shank, a travel entrepreneur, HotelTonight became known for offering great deals on last-minute hotel bookings via its website and app. The San Francisco-based startup had previously raised around $117 million in venture capital from investors including Accel, Coatue Management and Battery Ventures. In 2016, HotelTonight made Forbes Next Billion-Dollar Startups list after generating an estimated $60 million in revenue that year.

Play For Business Travelers

HotelTonight's last-minute deals also became particularly popular for business travelers, a market segment that Airbnb has been trying to court for years. In San Francisco, for example, HotelTonight showed rooms at the Hotel Kabuki discounted from $769 to $162 for Thursday night. A Hampton Inn in San Francisco marked down its rooms from $287 to $129.

There's already some crossover between boutique hotel brands that list both on Airbnb and HotelTonight, but there are no plans to immediately add HotelTonight's hotel inventory to Airbnb's website. Airbnb says hotels have to meet its hospitality standards, so a chain like the Hampton Inn is unlikely to cut it.

Still, even having the option to book a chain hotel from an Airbnb-owned brand will be a major departure from Airbnb's roots in shared, community-driven travel. Chesky has previously said that he wants to shed Airbnb's image as being an alternative travel website.

"I like to joke that we're one of the biggest alternatives in the world," Chesky told Forbes in February 2018. "Very rarely do 300 million people use something, and people say it's an alternative. But it's also rare for 300 million people to use it and to have so many people say it's not for me or it is an alternative."

The company's push deeper into the hotel industry also comes at a time when it is preparing to go public. Chesky has previously promised that his company would be IPO-ready by July 1, and the company has a lofty valuation to live up to. Over the past few years, Airbnb has been trying to expand its core business past homes and into new business lines like people-powered Experiences and restaurant reservations. It has also recently hired Fred Reid, the former Virgin America CEO, to lead transportation experiments. With the HotelTonight acquisition, Airbnb adds a last-minute booking business, too.

For more on Airbnb's grand travel ambitions, read Forbes' October 2018 cover story: "Old Unicorn, New Tricks: Airbnb Has A Sky-High Valuation. Here's Its Audacious Plan To Earn It."

Martin Shkreli continues to run business from prison, report says - CNN

Posted: 07 Mar 2019 02:34 PM PST

[unable to retrieve full-text content]Martin Shkreli continues to run business from prison, report says  CNN

Once the most hated CEO in America, Martin Shkreli continues to run his pharmaceutical company from prison using a contraband smartphone, according to a ...

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