Quibi Is Exploring a Sale
Quibi, the short-form streaming service started by Jeffrey Katzenberg and led by Meg Whitman, is exploring a sale of the company, two people familiar with the matter said Monday.
The company is working with financial advisers to consider a range of options that also include raising money or going public by merging with a special purpose acquisition vehicle, according to the people, who spoke on condition of anonymity to discuss company plans.
Quibi was launched earlier this year with the aim of providing short entertainment and news videos for people on the go. But it fell out of the list of the 50 most downloaded free iPhone apps in the United States after just a week when it debuted in April. Executives blamed the coronavirus pandemic, saying people no longer needed to turn to their smartphones in the same way while stuck at home.
While Quibi is not in danger of running out of cash immediately, raising funds could help stem any short-term worries. Quibi raised $750 million in March, bringing its total funding to $1.75 billion.
“Meg and Jeffrey are committed to continuing to build the business in the way that gives the greatest experience for customers, greatest value for shareholders and greatest opportunity for employees,” a spokesperson for the company said. “We do not comment on rumor or speculation.”
The Wall Street Journal first reported that Quibi was exploring its options.
The Hollywood unions representing the interests of the directors, actors, below-the-line crafts people and the Teamsters have reached a deal with the major studios to restart production during the Covid-19 pandemic.
The agreement focuses on testing regimens, personal protective equipment, and a zone-based system similar to the one used by Universal Pictures for its film “Jurassic World: Dominion,” which began shooting in July outside London after the studio negotiated its terms individually with the various unions.
“The new measures will be implemented by employers in order to minimize the risk of transmission,” the unions said in a statement. “To ensure workers’ livelihoods are not burdened with added uncertainty during the pandemic, the agreement also includes Covid-19 sick leave and quarantine pay.”
The detailed testing program spells out everything from pre-employment testing to how frequently actors, who are unable to wear PPE or physically distance themselves from others when shooting, will be tested (three times a week). It delineates how sick leave will be paid out, an early sticking point between the organizations, food catering protocols and how the productions will handle contact tracing.
The agreement extends until April 30, 2021.
The Office of the Comptroller of the Currency is imposing civil penalties on three former Wells Fargo executives, expanding the circle of former bank leaders facing punishment for their role in Wells Fargo’s misdeeds.
The agency said on Monday it had levied a $925,000 fine on Matthew Raphaelson, the former chief financial officer of Wells Fargo’s retail bank group, and barred him from the banking industry. It imposed smaller fines on Kenneth Zimmerman, the former head of the bank’s deposit products group, and on Tracy Kidd, the former head of human resources for the retail banking division.
All three “knew or should have known about the systemic sales practices misconduct problem in the Community Bank,” the regulator said in legal filings. The executives, who each agreed to a settlement deal with the regulator, were all fired or pushed out after the bank’s sales practices scandal ignited.
The comptroller’s office previously charged eight Wells Fargo executives — including John G. Stumpf, a former chief executive — over their role in fostering a toxic sales culture that foisted unwanted products and sham bank accounts on millions of customers. Mr. Stumpf agreed to a lifetime ban on working in the banking industry and to a $17.5 million penalty.
Wells Fargo is still struggling to move on from the scandal and remains under an asset-cap restriction, imposed by the Federal Reserve in 2018, that prevents the bank from growing.
After the bank’s most recent quarterly earnings report, Charles W. Scharf, Wells Fargo’s current chief executive, said that addressing the Fed’s concerns was “our highest priority.”
“We are responsible for the position we’re in,” Mr. Scharf said. “We still have much to do to build the right risk and control foundation, which is what our regulators expect.”
Stocks on Wall Street slid for the fourth straight session on Monday, after a steep drop in global markets that was fueled by the rising prospect of tighter economic restrictions to control the surge in coronavirus infections.
The S&P 500 recovered some of its sharpest losses, to close down 1.2 percent, after a late rally in shares of technology stocks. The Nasdaq composite was only slightly lower. Shares in Europe ended sharply lower, with the benchmark Stoxx Europe 600 and the FTSE 100 both down more than 3 percent.
Stocks have been falling for weeks, in part because investors were losing confidence in Washington’s ability to deliver another deal to support the hobbling U.S. economy. The death of Justice Ruth Bader Ginsburg late on Friday was seen as making that deal even less likely.
“From a purely political perspective, what already promised to be one of, if not the, craziest and most politically charged election cycles of our lifetimes only heated up more,” analysts from Bespoke Investment Research wrote in a morning note to clients.
Oil prices dropped more than 3 percent, and energy, materials and industrial shares also tumbled, suggesting growing investor doubts about the outlook for the global economic recovery.
Shares of companies that are sensitive to the pandemic and the return of restrictions on travel in particular fared poorly on Monday. Delta Air Lines fell more than 9 percent, for example.
Sectors of the market relatively immune to the ups and downs of the business cycle, including some large-cap technology companies fared better. Apple and Netflix c
limbed more than 3 percent. Both companies benefited from stay-at-home orders in March and April as people turned to their devices for work and entertainment.
Countries around the world are reporting significant increases in coronavirus cases, just as cooler weather comes to the northern hemisphere, drawing more people inside. In the United States, the daily count is climbing again as universities and schools reopen. Over all, at least 73 countries are seeing surges in newly detected cases.
In a reflection of growing uncertainty in the wake of Justice Ginsburg’s death, some health care stocks that are closely linked to the Affordable Care Act were battered. She had voted to uphold the health care law. Centene, HCA Services and Universal Health Services all fell.
U.S. stocks have already tumbled for three consecutive weeks and the S&P 500 is down down 8 percent from its Sept. 2 record. With the decline on Monday added, the index is approaching a correction, the market’s term of art for a 10 percent drop from a recent high.
President Trump said on Monday that he would not approve a deal for TikTok if its Chinese owner did not fully sell its interest in the product, a move that would scuttle an arrangement that was expected to help the app avoid a federal ban.
Asked about reports that TikTok’s Chinese owner, ByteDance, would still own 80 percent of the service after the deal, Mr. Trump said that they would “have nothing to do with it, and if they do we just won’t make the deal.”
He said Oracle and Walmart, which under the deal would take a 20 percent stake in the new company, TikTok Global, would control the service.
“And if we find that they don’t have total control, then we’re not going to approve the deal,” he said during an appearance on “Fox & Friends.”
His comments came as TikTok disputed the ownership structure that was sketched out by Oracle and the Trump administration.
A spokesman for TikTok said on Sunday that ByteDance would hold 80 percent of the new company until a planned public offering for the service took place on the U.S. stock market in about a year. Oracle and Walmart would hold a 20 percent stake, the spokesman said. ByteDance echoed that characterization in a statement posted to apps in China on Monday and said that the deal did not involve a transfer of TikTok’s valuable algorithm.
But on Monday, Oracle disputed part of TikTok’s description of the deal. Ken Glueck, an executive at the company, said in a statement that upon “creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global.”
The back and forth underscores how fluid the deal remains and that — despite Mr. Trump’s comments Saturday that he had given the deal his “blessing” — TikTok could still fail to satisfy the government’s national security concerns. On Saturday, the Commerce Department delayed for one week a plan to ban TikTok from U.S. app stores while the government reviews the transaction. If it doesn’t satisfy Mr. Trump’s concerns, new downloads of TikTok could essentially be banned in the United States.
The Chinese government also released new regulations last month that appeared to make it difficult to sell TikTok’s core technology without a license, raising the prospect Beijing could move to block a deal.
Weeks of drama over the social media app TikTok left investors and others wondering what it was all for.
TikTok was set to be banned in the United States starting at midnight on Sunday. But in a deal announced on Saturday, the app said it would separate itself from its Chinese parent company, ByteDance, and become an independent entity called TikTok Global. Oracle would become TikTok’s new cloud provider, while Walmart would offer its “omni-channel retail capabilities,” the companies said.
Oracle and Walmart would own a cumulative 20 percent stake in TikTok Global, which said it planned to hire 25,000 people in the United States over an undisclosed period and go public sometime in the next year. TikTok also promised to pay $5 billion in “new tax dollars to the U.S. Treasury,” according to a joint announcement from Oracle and Walmart.
Mr. Trump initially pronounced the agreement a success and blessed it, saying on Saturday that TikTok would “have nothing to do with China, it’ll be totally secure, that’s part of the deal,” only to reverse course on Monday morning with a threat to kill it.
The deal puts more control of TikTok into the hands of Americans, with four of the five members of the new entity’s board being American, but the agreement does not deliver on Mr. Trump’s original demand of a full sale of TikTok and it does not eliminate China from the mix. Under the initial terms, ByteDance would still control 80 percent of TikTok Global, two people with knowledge of the situation have said, though details may change.
Lawmakers, policy specialists and others said the way that TikTok’s deal was done also deserved more scrutiny.
“There’s no there there,” said Carl Tobias, a law professor at the University of Richmond who focuses on federal courts and the constitution. “Is this really about trade, or about the political benefit of trying to bash China and show how tough the administration can be?”
The combination of the pandemic recession and the aggressive spending by lawmakers to combat it have significantly increased projections for the nation’s long-term federal debt load, the Congressional Budget Office said on Monday, though the office’s director stressed that the country was not facing an immediate fiscal crisis.
The budget office now forecasts that rising deficits will push the country’s debt to 195 percent of its gross domestic product by 2050, meaning it would take nearly two years’ worth of all the goods and services that the United States produces to pay off all the debt it will have accumulated by then. Last year, the budget office forecast that the debt load would reach 144 percent by 2049.
“The economic disruption caused by the 2020 coronavirus pandemic and the federal government’s response to it contribute significantly to that difference,” the office said in the new report.
The country has been on a path toward rising future debt for years, as retiring baby boomers increase the benefits the government pays for Social Security and Medicare and the cost grows of paying interest on the borrowing the government will need to do to continue those benefits. Tax revenues will not keep pace with spending increases under current law, forecasters predict, even if many of President Trump’s signature 2017 tax cuts — which added to the debt after they were approved — expire as scheduled in 2025.
Total debt will nearly match the size of the economy by Sept. 30, the end of the 2020 fiscal year, the budget office said earlier this month.
“The fiscal path over the coming decades is unsustainable,” the budget office director, Phillip L. Swagel, said in a published statement released along with the report. But he added that Congress still had the ability to spend more to combat the pandemic and help people and businesses weather the downturn.
“The United States is not facing an immediate fiscal crisis,” Mr. Swagel said. “The current low interest rates indicate that the debt is manageable for now and that fiscal policy could be used to address national priorities.”
The Federal Reserve on Monday released a preliminary sketch of its plan to overhaul how regulators approach the Community Reinvestment Act, which requires banks to invest in poor communities and lend to low-income individuals in the areas where they do business.
The proposal comes after the Fed refused to sign onto an overhaul that another financial regulator, the Office of the Comptroller of the Currency, approved in May.
President Trump’s former comptroller, Joseph Otting, made overhauling how the 1977 law is applied a priority of his time in government. Just before leaving the agency, Mr. Otting, a one-time banker who had experienced personal run-ins with C.R.A. rules, released a final rule that would streamline it, but he failed to garner support from either the Fed or the Federal Deposit Insurance Corporation.
Critics blasted the O.C.C. plan, saying that it had been rushed and that it might allow banks to meet requirements without catering to community needs. The F.D.I.C., which had initially signed onto the proposal, dropped off for the final version. Even banking groups were concerned about the inconsistency across agencies.
There was broad agreement that the approach to bank examination needed a refresh to satisfy the law’s intent in an era of mobile banking, but the Fed differed with the O.C.C. on the details. Lael Brainard, a Fed governor, and central bank staff members had been examining the law themselves and, with the approval of the Fed chair, Jerome H. Powell, drafted their own proposal, which the central bank unveiled on Monday.
The Fed’s suggestion takes a more piece-by-piece approach to applying the Community Reinvestment Act. It would clarify metrics that would be used to oversee lending, tailored to community conditions and based on existing data, while taking a qualitative approach on activities that are hard to boil down to numbers, like retail services. It is now open to a 120-day comment period.
Randal K. Quarles, the Fed’s vice chair for supervision, signed off on the proposal, noting that it “seeks feedback on several approaches designed to make the rules clearer, more transparent, and less subjective.”
He said he hoped the preliminary effort “will be an important step toward achieving consistency across the three banking agencies.”
Microsoft, which lost out in the corporate scramble for TikTok, announced on Monday that it would acquire the video game maker Zenimax Media for $7.5 billion, a deal that would expand the tech giant’s reach in consumer markets.
ZeniMax Media is the parent company of Bethesda Softworks, a large private game developer and publisher, whose titles include The Elder Scrolls, Fallout, Doom, Quake and Wolfenstein.
Microsoft is mainly a business technology company with most of its revenue coming from productivity and communications software, and cloud computing services sold over the internet.
But its online gaming business and Xbox console sales are growing rapidly. In the quarter that ended in June, Microsoft’s gaming revenue jumped by 64 percent, to $1.3 billion from the year-ago quarter.
The video game industry has thrived during the pandemic as the homebound spend more time playing games. Microsoft is set to release a new Xbox in November, and Sony is expected to introduce the next iteration of its PlayStation this holiday season.
“Gaming is the most expansive category in the entertainment industry, as people everywhere turn to gaming to connect, socialize and play with their friends,” Satya Nadella, Microsoft’s chief executive, said in a statement announcing the deal.
The German airline Lufthansa warned on Monday that it would have to make even deeper cuts than planned because air travel was recovering more slowly than expected. Lufthansa said it would have to eliminate more than the 22,000 jobs previously announced, but did not specify how many, and it said that it would take its entire fleet of 14 super jumbo A380 planes out of service indefinitely.
As the pandemic wears on and school begins across the country, women working in retail say they are being forced to choose between keeping their jobs and making sure their children can keep up with remote learning.
Women in all types of jobs are feeling this squeeze. According to a study last month by the Census Bureau, women were three times more likely than men to have left their job because of child-care issues during the pandemic. But the inflexibility of retail work schedules — where shifts can vary widely week-to-week and employees have little choice but to take the hours they are given — make the pressure on those employees particularly acute and likely to lead to more women dropping out of the work force.
“The caregiving responsibilities outside of work are falling heavier on women than on men, and the retail sector in particular is one where you generally don’t have a lot of control over your schedule, which can lead to a real crunch,” said Emily Martin, vice president for education and workplace justice at the nonprofit National Women’s Law Center.
The retail industry, the second-biggest private-sector employer in the United States after health care, has been roiled by the pandemic, with millions of people out of work. Women made up nearly half of the 15.7 million workers in retail before the pandemic, but they accounted for 65 percent of the industry’s job losses between February and June, according to a report from the center.
Those who have kept their jobs were heralded as heroes and rewarded with bonuses and temporary raises during the early months of the pandemic. However, many of these same retail workers find themselves struggling to fulfill endless parenting obligations while hanging onto jobs that seem increasingly precarious in a weak economy.
As car sales collapsed in Europe because of the pandemic, one category grew rapidly: electric vehicles.
One reason is that purchase prices in Europe are coming tantalizingly close to the prices for cars with gasoline or diesel engines. For example:
An electric Volkswagen ID.3 for the same price as a Golf.
A Tesla Model 3 that costs as much as a BMW 3 Series.
A Renault Zoe electric subcompact whose monthly lease payment might equal a nice dinner for two in Paris.
This near parity is possible only with government subsidies that, depending on the country, ca
n cut more than $10,000 from the final price. Carmakers are offering deals on electric cars to meet stricter European Union regulations on carbon dioxide emissions. Electric vehicles are not yet as popular in the United States, largely because government incentives are less generous.
As electric cars become more mainstream, the automobile industry is rapidly approaching the tipping point when, even without subsidies, it will be as cheap, and maybe cheaper, to own a plug-in vehicle than one that burns fossil fuels. The carmaker that reaches price parity first may be positioned to dominate the segment.
A few years ago, industry experts expected 2025 would be the turning point. But technology is advancing faster than expected, and could be poised for a quantum leap. Elon Musk is expected to announce a breakthrough at Tesla’s “Battery Day” event on Tuesday that would allow electric cars to travel significantly farther without adding weight.
The balance of power in the auto industry may depend on which carmaker, electronics company or start-up succeeds in squeezing the most power per pound into a battery, what’s known as energy density.
“We’re seeing energy density increase faster than ever before,” said Milan Thakore, a senior research analyst at Wood Mackenzie, an energy consultant that recently pushed its prediction of the tipping point ahead by a year, to 2024.