CLOs

The merger of Penguin Random House and Simon & Schuster has the potential to touch every piece of the book business, reports the New York Times (25 February, Harris), including how much writers get paid, which books get priority at printing plants, and how independent bookshops are run. But first it must receive the go-ahead from federal regulators — no easy task amid an atmosphere of increased attention on the dominance of large companies. Erik Gordon, a professor at the University of Michigan Ross School of Business, predicted the Penguin Random House-Simon & Schuster merger "will get careful scrutiny." According to Gordon, federal regulators will be especially interested in the size of the combined company. As a fragmented sector, it can be difficult to get an accurate read on how dominant any one player is within the world of publishing. Penguin Random House has said the two companies combined would generate less than 20 percent of the general interest publishing revenue in the United States.

From "What Happens When a Publisher Becomes a Megapublisher?"
Abstract News © 2021 SmithBucklin

The Wall Street Journal (25 February, Michaels, Schechner) reports that European politicians are urging national governments to follow Australia's example by enacting new legislation that would give news organizations more power in their battle with tech giants. EU countries face a June deadline to adopt national versions of a bloc-wide law that aims to improve media producers’ bargaining position against Facebook, Google, and other tech giants. That law, called the Copyright Directive, was passed in 2019 and allows news publishers to demand payment for reuse of their content. Australia on Thursday passed a law that tackles many of the same issues, terms of which recently prompted Facebook to temporarily remove news from its platform in the country. Senior EU officials have said Facebook's actions in Australia show that tech platforms wield too much power against the press and other media.

From "Facebook Fight Over Media Payments Shifts Focus to Europe"
Abstract News © 2021 SmithBucklin

Qantas expects international travel to resume more broadly at the end of October, the Australian Broadcasting Corporation (25 February, Janda, Terzon) reports, coinciding with the projected completion of Australia's national vaccine rollout. The airline previously started selling tickets to the United States and United Kingdom as early as July. As of now, Qantas is planning to offer flights to 22 of its 25 pre-pandemic international destinations, including Los Angeles, London, Singapore, and Johannesburg. Though direct flights to New York, Santiago, and Osaka will remain paused, the airline said it hopes to eventually resume routes to those destinations, too. Qantas said it has A$4.2 billion in available cash to keep going until Australia's international border reopens and domestic travel ramps up to more normal levels. But analysts have cast doubt on the feasibility of Qantas' strategy. "They'll be lucky to be operating internationally prior to Christmas," predicted Neil Hansford of Strategic Aviation Solutions.

From "Qantas Hopes to Be Flying Internationally in October"
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Sweetgreen has pledged to go carbon neutral by 2027, according to Nation's Restaurant News (24 February, Fantozzi). The Washington, D.C.-based fast-casual restaurant chain is collaborating with Watershed, a software platform that helps businesses reduce their carbon footprint, to slash its carbon emissions by 50 percent over the next six years via sustainable sourcing, investments in clean energy, plant-forward menu makeovers, and building restaurants with eco-friendly materials. "With the food system driving 25 percent of global greenhouse gas emissions, the time for change is now,” said Nicolas Jammet, co-founder and chief concept officer of Sweetgreen. One element of Sweetgreen's plan is to analyze the sustainability practices of its suppliers in order to create a carbon footprint number for each of its menu items.

From "Sweetgreen Pledges to Go Carbon Neutral by 2027"
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KPMG UK confirmed Thursday it will split the roles of chair and chief executive, reports the Financial Times (25 February, Ralph). KPMG UK will hold an election to fill the CEO role, which will replace the previous position of senior partner. The move to overhaul its corporate governance follows Bill Michael stepping down as senior partner and chair after he told staff to "stop moaning" about their working conditions during the coronavirus pandemic. Michael also described discrimination caused by unconscious bias as "complete and utter crap." Bina Mehta, who become chair upon Michael's resignation, will remain in that position for the next 12 months. All 582 partners of KPMG UK will be eligible to vote in the election for CEO, which is due to finish by the end of April. Until a permanent replacement is elected, Mary O'Connor will remain in the position on an interim basis.

From "KPMG UK to Split Roles of Chair and Chief Executive"
Abstract News © 2021 SmithBucklin

GameStop shares shot up Thursday, triggering a series of NYSE trading halts, Reuters (25 February, Saldanha, Adinarayan, Randall) reports. GameStop shares hit US$160 at the open before being halted after several minutes of trading, and fell to around US$129 before the second halt. In late morning trade, the company's shares were up 56 percent, hovering at around US$143. The rally lifted other stocks popular on sites like Reddit's WallStreetBets, as AMC was up 12.5 percent and the headphone company Koss was up nearly 61 percent. Analysts were puzzled by the new rally, and some ruled out a short squeeze like the one in January that battered some hedge funds that bet against GameStop.

From "GameStop Shares Soar Around 50 Percent as 'Meme Stocks' Rally Again"
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Google will change procedures before July for reviewing its scientists’ work, according to a town hall recording heard by Reuters (25 February, Dastin, Dave). The tech giant is seeking to subdue internal tumult over the integrity of its artificial intelligence (AI) research. In remarks at a staff meeting last week, Google Research executives said they were working to regain trust after the company ousted two prominent women and rejected their work, according to an hour-long recording, the content of which was confirmed by two sources. Teams are already testing out a questionnaire that will assess projects for risk and help scientists navigate reviews, COO Maggie Johnson revealed during the meeting. Reuters reported in December that Google's "sensitive topics" review flagged at least three papers on AI, resulting in requests for the papers to be modified so as to avoid casting Google technology in a negative light.

From "Google Pledges Changes to Research Oversight After Internal Revolt"
Abstract News © 2021 SmithBucklin

Goldman Sachs boss David Solomon described the current remote work environment as an "aberration" rather than the "new normal," according to BBC News (25 February). While many other firms, especially in the tech sector, have suggested that working from home could become permanent in the future, Solomon said that does not suit the work culture at Goldman Sachs. "I don't think as we get out of the pandemic the overall operating mode of the way a business like ours operates will be vastly different," he said. Throughout 2020, the bank operated with less than 10 percent of its staff in the office, but Solomon said he is eager for more employees to return. He specifically mentioned an incoming class of 3,000 new recruits, arguing that remote work would deprive them of mentorship and guidance.

From "Goldman Sachs Boss Rejects Work From Home as the 'New Normal'"
Abstract News © 2021 SmithBucklin

EY is overhauling its German partnership after admitting its conduct in the Wirecard scandal has damaged trust in its business, according to the Financial Times (25 February, Storbeck). Munich prosecutors last year launched a criminal investigation into the EY partners who were in charge of the Wirecard audits after Germany's audit watchdog indicated they may have violated their professional duties. Under a raft of changes announced Thursday, Hubert Barth, who has led EY in Germany since 2016, will move to a "European" role, EY confirmed. The leadership of the German partnership will now be split in two, with EY bringing in Jean-Yves Jégourel to run the business alongside Henrik Ahlers. Additionally, EY said it will launch a quality improvement program to strengthen its internal governance over the next two years. The program will be overseen by an independent expert commission chaired by former German finance chief Theo Waigel.

From "EY Overhauls German Partnership in Effort to Repair Wirecard Damage"
Abstract News © 2021 SmithBucklin

India on Thursday rolled out new regulations for social media companies and digital streaming websites to make them more accountable for the online content shared on their platforms, reports the Associated Press (25 February, Saaliq). The new regulations also give the Indian government more power to police online content, especially content they deem to be impacting the "sovereignty and integrity of India." The Information Technology Ministry said the new regulations will require social media platforms like Facebook and Twitter to swiftly erase content authorities judged to be unlawful. Additionally, social media companies will be compelled to assist investigations by India’s law enforcement agencies. Apar Gupta, executive director of India Freedom Foundation, said the regulations will "undermine user rights and can lead to self-censorship if users fear that their conversations are no longer private."

From "India Introduces New Rules to Regulate Online Content"
Abstract News © 2021 SmithBucklin

“Fortnite” creator Epic Games' battle to paint Apple as a harmful monopoly is drawing more technology companies into the fray as each side seeks to bolster its case, reports the Wall Street Journal (25 February, Higgins, Needleman). Epic wants to take testimony from a senior executive at Match Group, the owner of Tinder and other apps, as well as a former Apple executive. Facebook, which is unhappy with Apple for separate reasons, has pledged to support Epic in the legal battle. For its part, Apple has subpoenaed Sony, Microsoft, Nintendo, Amazon, and Samsung. The latest skirmish occurred Wednesday when Valve, one of the largest computer game distributors in the world, complained to a federal judge in California about Apple's expansive pretrial effort to subpoena its privately-held financial records of its offerings. Judge Thomas Hixson sought to find a compromise between Valve and Apple, limiting the scope of the request and noting that a protective order is in place to limit a rival’s ability to see private information. The Epic/Apple litigation appears set to expand into the kind of high-stakes legal contest that broke out almost a decade ago between Apple, Google, and Samsung over the creation of the smartphone.

From "Fight Between 'Fortnite' Creator and Apple Reels in More Tech Players"
Abstract News © 2021 SmithBucklin

Reuters (26 February) reports the US Senate parliamentarian ruled the chamber cannot include President Joe Biden’s proposed US$15 per hour minimum wage in a US$1.9 trillion coronavirus bill, dealing a blow to Democrats. White House spokeswoman Jen Psaki said President Biden is "disappointed in the decision." Democrats and progressives had hoped to include the minimum wage increase in the legislation to help cushion the economic blow of the coronavirus pandemic and better compensate low-wage workers who have spent months on the front lines of the health crisis as essential workers. Democrats are trying to advance the COVID-19 bill through a special "budget reconciliation" process that would allow them to pass it in the Senate with a simple majority, meaning they will not need Republican support. But there are rules that limit what can be included in the budget reconciliation process, and Senate parliamentarian Elizabeth MacDonough is tasked with determining what is allowed. The exclusion from the COVID-19 relief bill does not mean the US$15 per hour minimum wage fight is over, however. Proponents could seek to pass a separate bill without using the reconciliation process, but they presumably would need Republican support.

From "US Senate Referee Says Democrats Cannot Include US$15 Minimum Wage in COVID-19 Bill"
Abstract News © 2021 SmithBucklin

CNBC News (23 February, Repko) has learned that Best Buy will pay pandemic-related bonuses to all hourly employees and give additional paid time off to those who get COVID-19 vaccines. The consumer electronics retailer announced the bonuses on Tuesday about two weeks after it confirmed it will lay off some store staff as part of a companywide reorganization. Best Buy has not said how much the bonuses will cost the company.

From "Best Buy Gives Pandemic-related Bonuses to Employees"
Abstract News © 2021 SmithBucklin

Grocery chains are coming under pressure to boost hourly employees’ pay again, as municipalities push continued aid for frontline workers nearly a year into the coronavirus pandemic, reports the Wall Street Journal (24 February, Kang). Seattle and a number of other cities have passed new rules requiring supermarkets to give employees temporary bonus pay. Los Angeles and other cities are considering following suit. But some grocers are pushing back, saying the hazard pay will increase expenses by about 30 percent in stores and squeeze already-thin profit margins, ultimately passing higher costs to shoppers. Some chains, like Kroger, have already indicated they will close stores in areas with new wage mandates. The fight over frontline worker pay comes after many grocery store chains increased hourly wages for workers in the spring of 2020 before phasing out the hazard pay months later.

From "A Clash Over Hazard Pay for Grocery Workers in the COVID-19 Pandemic"
Abstract News © 2021 SmithBucklin

CNN (23 February, Vales-Dapena) reports that Chuck Hoskin, Jr., principal chief of the Cherokee Nation, has called on Jeep to cease using the tribe's name on its SUVs. The Jeep Grand Cherokee ranks as the brand's top-selling model, while the Jeep Cherokee is its No. 3 best-seller. The company has sold SUVs under the Cherokee brand name for nearly 45 years. Jeep said in an official statement, "We are, more than ever, committed to a respectful and open dialogue with Cherokee Nation." Hoskin said he could not see any sort of arrangement under which it would be acceptable for Jeep to continue using the tribe's name on its automobiles.

From "Chief of Cherokee Nation Asks Jeep to Stop Using Tribe's Name"
Abstract News © 2021 SmithBucklin

California may soon begin enforcing its first-in-the-nation net neutrality law after a federal judge on Tuesday ruled against broadband providers that had sought to scuttle the state’s open-internet safeguards, reports the Washington Post (23 February, Romm). The ruling came as a significant blow to AT&T, Comcast, Verizon, and other telecommunications giants. California enacted its net neutrality law in 2018, months after the US government under President Donald Trump eliminated national net neutrality protections. The US Department of Justice promptly sued to block the California law, and then telecommunications companies, operating through their major lobbying groups, followed suit. The carriers argued that California's law constituted a "classic example of unconstitutional state regulation." The case remained in limbo for several years until a federal judge in California’s Eastern District earlier this week sided with the state in a ruling that net neutrality supporters saw as a major win. The four trade groups that had filed the lawsuit said Tuesday they will "review the court's opinion before deciding on next steps,” signaling a potential appeal.

From "Net Neutrality Law to Take Effect in California After Judge Deals Blow to Telecommunications Industry"
Abstract News © 2021 SmithBucklin

The US Food and Drug Administration (FDA) on Wednesday said Johnson & Johnson's single-dose COVID-19 vaccine is 66.1 percent effective in preventing moderate to severe virus disease and appears safe, reports the Wall Street Journal (24 February, Burton, Loftus). The positive report is a key step toward a possible FDA authorization of the vaccine as early as this weekend, a source said. If the vaccine is approved, it will become the third authorized coronavirus shot in the United States. In its review of the Johnson & Johnson vaccine, the FDA confirmed it works safely by a number of measures, including against new variants of the coronavirus. A committee of outside medical specialists will meet Friday to evaluate the analyses by both the FDA and Johnson & Johnson.

From "Johnson & Johnson's COVID-19 Vaccine Is Safe and Effective, FDA Says"
Abstract News © 2021 SmithBucklin

Australia's Fortescue Metals Group has apologized to the Wintawari Guruma people for clearing land on a heritage site while flouting a government condition for representatives of the community to be present when the damage took place, Reuters (24 February) reports. The Fortescue incident came just days after a similar incident, underscoring the iron ore industry's struggles to show they have improved practices to manage important sites after Rio Tinto destroyed two sacred rock shelters for a mine expansion last May. Fortescue had state government permission to clear the land in the Weelamurra Creek area, but an administrative error led to land-clearing works earlier than scheduled on 1 February in the absence of the representatives. Fortescue CEO Elizabeth Gaines said she has "spoken to Wintawari Guruma Aboriginal Corporation (WGAC) Chairman Glen Camille regarding this incident to personally express my regret and sincere apology on behalf of Fortescue." The WGAC said it is "disappointed" and "concerned" about the incident and has reportedly requested that the Western Australian government prosecute Fortescue.

From "Fortescue Apologizes for Clearing Land on Aboriginal Sacred Site"
Abstract News © 2021 SmithBucklin

Baker Hughes, AXA Group, and 16 other companies recently wound down their work on Russia’s Nord Stream 2 natural gas pipeline and will not be sanctioned, according to a document the Biden administration sent to Congress last week which was seen by Reuters (24 February). The Russian energy company Gazprom is racing to finish the pipeline, which will carry Russian gas to Germany under the Baltic Sea. US President Joe Biden believes the pipeline is a "bad deal" for Europe, and many US lawmakers and officials say the pipeline will strengthen Russia's political and economic leverage over Europe.

From "Baker Hughes, AXA Group, 16 Others Stopped Work on Nord Stream 2 Pipeline"
Abstract News © 2021 SmithBucklin

Facebook has pledged to pay at least US$1 billion for news over the next three years, according to the Financial Times (24 February, Barker), matching Google's spending plans. The social media giant made the announcement as it looks to contain the fallout from its short-lived ban on news in Australia. The US$2 billion in total funding from Facebook and Google reflects the significant shift in commercial power towards struggling news groups, but it remains unclear whether the sum will satisfy publishers' growing demands. Meanwhile, regulators around the world are still deciding how to approach the situation, and could take costly action against tech giants in the future.

From "Facebook Pledges to Pay US$1 Billion for News"
Abstract News © 2021 SmithBucklin