|Bid||12.20 x 1300|
|Ask||12.29 x 1200|
|Day's range||11.92 - 13.12|
|52-week range||10.10 - 53.71|
|Beta (5Y monthly)||1.47|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||0.96 (7.52%)|
|Ex-dividend date||12 Mar 2020|
|1y target est||N/A|
(Bloomberg Opinion) -- What was once sacrosanct is no more. Apple Inc. seems to have blinked.Late Wednesday, Bloomberg News reported that Apple has relaxed its rules requiring a 30% cut for any content sold inside video apps on its iOS platform. The tech giant said its program allows “premium subscription video” providers the ability to charge consumers directly using their own payment systems without paying a commission to Apple.For customers of Amazon.com Inc., which started taking advantage of the change on Wednesday, it means Amazon’s Prime Video subscribers in the U.S., U.K. and Germany, can now buy or rent video content using the e-commerce company’s app on Apple’s platforms. Amazon.com Inc. had previously only allowed video purchases outside of Apple’s ecosystem, such as its website. Canal+, owned by Vivendi SA, and Altice USA Inc.’s Altice One had already joined Apple’s program in recent years.As recently as last year, Apple CEO Tim Cook told CBS News the company didn’t have a dominant position in any market. But analysts have said Apple’s App Store may be the one business where it actually had excessive power over developers, because of the steep commission it was able to demand in exchange for allowing their apps, in-app purchases and subscriptions to be sold on its platforms. (The 30% subscription fee is lowered to 15% after the first year.)The Apple App Store’s high commission structure has been infuriating for many companies. In 2019, music-streaming company Spotify Technology SA filed a complaint against Apple with the European Commission, while Epic Games Inc. CEO Tim Sweeney, whose company makes Fortnite, has consistently railed against Apple’s commission structure as unjustified. Netflix Inc. even abandoned using Apple’s payment system altogether to avoid the fee in 2018.Why did Apple budge? Perhaps it’s a move to preempt further pressure from regulators. Whatever the reason, once the first step is made toward lower fees, there is no turning back.It’s only a matter time before other companies such as Netflix, Spotify and countless others ask for better terms as well. Lower middle-man fees can also be good news for consumers if it leads to lower prices, too.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Treasury Secretary Steve Mnuchin said he expects to have a small business loan program up and running in the coming week while workers can expect aid from the $2 trillion stimulus package in the form of direct deposits or checks in about three weeks.The administration is focused on getting money out quickly, Mnuchin said on “Fox News Sunday,” one of two television appearances for the day. “That’s a combination of small business loans that will be available this week” and checks to households which he called “bridge checks.”“Any FDIC bank, any credit union, any fintech lender will be authorized to make these loans” to a small business subject to certain approvals, Mnuchin said.Meanwhile, Agustin Carstens, head of the Bank for International Settlements, called on banks worldwide to suspend dividend payments, for now, to focus on what he called “the last mile” of getting money out to small businesses. Mnuchin was the White House’s lead negotiator on a $2 trillion economic stimulus package signed into law by President Donald Trump Friday to buffer the economy against the wide-scale shutdown and joblessness as the coronavirus swept through the country.The magnitude of the economic devastation being wrought by the coronavirus pandemic was laid bare on Thursday when the U.S. government reported an unprecedented surge in the number of people seeking jobless benefits.Wall Street’s RoleA total of 3.28 million people filed for unemployment insurance in the week ended March 21, dwarfing previous highs in Labor Department reports published since 1967.In a separate interview on CBS News’s “Face the Nation,” Mnuchin said the stimulus package should provide economic relief to workers and business for about eight to ten weeks.Unlike the Troubled Asset Relief Program, where the Treasury compelled banks to beef up their capital during the financial crisis, Mnuchin told CBS, “We are not going to force money on any companies.”The firms have to request aid, he said, and the Wall Street banks helping to manage the assistance will be working for “very reduced rates.”Lawmakers are urging the administration to get the funds out quickly. Senator Mike Crapo, an Idaho Republican who is chairman of the Senate Banking Committee, wrote to Federal Reserve Chairman Jerome Powell and Mnuchin Saturday, urging both to “work quickly” to issue guidance so that “businesses -- including small and medium-sized businesses -- states, municipalities and Tribes, understand what programs and facilities are available.”Suspend DividendsThe Fed has announced its intention to launch a Main Street Lending Facility to loan directly to medium-sized businesses while the stimulus bill recommends support for the markets that finance states and municipalities.Carstens, chief executive officer of the BIS, a coordinator for global central banks based in Basel, Switzerland, said banks worldwide should suspend all dividend and stock buyback programs to retain more capital for lending as he called for stronger forms of credit support.“The U.S. Federal Reserve’s decision to enter the corporate bond market marks a bold step in the right direction,” Carstens wrote in a column for the Financial Times this weekend. “But more may still be needed to build the last mile to the small businesses at the end of the line.”Carstens recommended a government-guaranteed loan program equal to the amount of taxes small businesses paid in 2019 that could be securitizes and then refinanced through the central bank. The stimulus bill already outlines how lending should be conducted for small business and lists payroll costs as one criteria.(Updates with BIS chief Carstens in final three paragraphs)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The magnitude of the economic devastation being wrought by the coronavirus pandemic was laid bare on Thursday when the U.S. government reported an unprecedented surge in the number of people seeking jobless benefits.A total of 3.28 million people filed for unemployment insurance in the week ended March 21, dwarfing previous highs in Labor Department reports published since 1967. Two weeks earlier, before closures of businesses swept across vast swaths of the country, the number stood at 211,000, close to a half-century low.“This shows the severity of the downturn, and the speed of it,” said Michelle Meyer, head of U.S. economics at Bank of America Corp. “It speaks to the unusual nature of this recession -- it is an abrupt plunge into recession versus prior downturns, where the shock has time to multiply. We could have very high numbers continue for the next few weeks.”Economists’ projections for the figure ranged as high as 4.4 million. Before adjusting for seasonal fluctuations, initial filings were at just under 3 million.Even with the surge, the S&P 500 extended its advance, heading for its first three-day rally since February, as investors speculated the $2 trillion rescue package passed by the Senate will lessen the pandemic’s toll on the economy.Claims increased in all 50 states and the District of Columbia, with nine states reporting jumps of at least 100,000 from the prior week, unadjusted state data showed:Pennsylvania reported the biggest number of claims, with an estimated 378,900California claims rose by 129,200 to 186,800In New York state, where approximately half of all known coronavirus cases in the U.S. are located, claims rose by 66,000 to 80,300Ohio claims rose to an estimated 187,800Illinois claims rose to 114,700Florida claims rose to 74,000Michigan claims jumped to 129,300“This morning’s data leaves no doubt that the economy is currently in a recession,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank AG.The surge reflects reports from state-level unemployment offices across the country last week citing unprecedented levels of web traffic and exponential increases in applications for unemployment benefits. The reported claims likely represent just the beginning of millions of virus-related job losses as more states order non-essential businesses closed.What Bloomberg’s Economists Say“The deterioration in claims to date already implies an unemployment rate approaching 5.5% in April, and there is no reason to believe this is the peak. The volume of applications overwhelming state administrative offices suggests additional million-plus weeks for initial claims may lay ahead.”\-- Eliza Winger, Carl Riccadonna and Yelena ShulyatyevaClick here for the full note.U.S. lawmakers are aiming to boost benefits for those laid off. As part of a $2 trillion stimulus package waiting to be approved by the House of Representatives, unemployment insurance would be extended and expanded.The sharp rise in claims signals the unemployment rate could rise several percentage points in coming months, after matching a 50-year low of 3.5% in February, which reflected 5.8 million unemployed Americans.The sudden stop of the nation’s economy paired with a consumer retrenchment have several economists predicting gross domestic product will shrink in the second quarter by the most in quarterly records dating back to 1947.Read more: Economists See U.S. Facing Worst-Ever Quarterly ContractionIn St. Petersburg, Florida, getting benefits has already stymied sportswriter Jim Holliman in the first days of his unemployment. Holliman, 47, had been freelancing for a unit of CBS Interactive focused on sports gambling in recent months, and he hoped to turn it into a full-time gig. He’s been in and out of jobs since his longtime employer, the Tampa Tribune newspaper, shut down in 2016.Coverage opportunities dried up this month as major sports leagues and arenas closed. By late last week, his employer notified him it barely had enough work for full-time reporters, Holliman said Wednesday. “I was getting close to 40 hours a week freelancing and hoping to turn it into a full time job, and then obviously the sports world hit a brick wall,” he said.Other DataA separate report Thursday from the Commerce Department showed the U.S. merchandise trade deficit narrowed in February to $59.9 billion, the smallest since September 2016, as exports increased and imports declined.The pickup in shipments to overseas customers reflected more U.S. sales of motor vehicles and industrial supplies, such as petroleum products. The value of imports was the smallest since September 2017 as companies purchased less capital equipment, industrial supplies and consumer goods.Gross domestic product climbed at an unrevised 2.1% annualized pace in the final three months of 2019, ahead of the virus disruptions that will likely see the economy contract in the first and second quarters.The Federal Reserve Bank of Kansas City’s manufacturing index fell to minus 17 in March, its lowest reading since 2009, as the outbreak fueled concerns of shutdowns and future demand.(Adds market reaction and regional manufacturing data in last bullet)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Federal Reserve Chairman Jerome Powell said the central bank will maintain its muscular efforts to support the flow of credit in the U.S. economy as Americans hunker down from the coronavirus pandemic.“We will keep doing that aggressively and forthrightly, as we have been,” Powell said Thursday in a Fed chief’s first-ever interview on NBC’s “Today” show. “When it comes to this lending we’re not going to run out of ammunition. That doesn’t happen.”Over the past three weeks, the U.S. central bank has introduced an unprecedented series of measures, pushing it deep into uncharted territory as it seeks to cushion the blow of the coronavirus on financial markets and the U.S. economy.The steps include massive bond purchases, emergency facilities to bolster credit markets, actions with foreign central banks to ease the supply of dollars worldwide, and programs for lending directly to American businesses.“We know that economic activity will decline probably substantially in the second quarter,” Powell said, adding that people were intentionally withdrawing from normal life to protect their health.That might mean the U.S. entering a recession, the Fed chief conceded, but argued it would be temporary.“This is a unique situation, this is not a typical downturn,” Powell said. “At a certain point we will get the spread of the virus under control and at that time confidence will return. Businesses will reopen again, people will come back to work.”His NBC interviewer, Savannah Guthrie, later confirmed in a tweet that it was the first time a Fed chair had ever appeared on the Today show in its 68-year history, in a emblematic sign of the extraordinary times facing the country.Powell emphasized that note of optimism, saying, “You may well see significant rises in unemployment, significant declines in economic activity, but there can also be a good rebound on the other side of that.”Powell appeared to distance himself from President Donald Trump’s position that the U.S. should perhaps seek a quick reopening of the economy because the clampdown on normal activity may cause more harm than the virus.‘Listen to the Experts’“We would tend to listen to the experts. Dr. Fauci said something like, the virus is going to set the timetable,” he said, referring to Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases. “That sounds right to me. The sooner we get the spread of the virus under control, people will regain confidence.”The Fed chief also pointed to the $2 trillion aid bill approved last night in the U.S. Senate that’s on its way to the House of Representatives today.“This bill that’s just passed is going to try to provide relief and stability,” he said. The legislation contains additional funds for the U.S. Treasury that can be used to boost the Fed’s lending firepower, he said, while the central bank’s actions will also lay the groundwork for a speedy economic recovery.Boost Recovery“The Federal Reserve is working hard to support you now,” he said. “Our policies will be very important when the recovery does come to make that recovery as strong as possible.”Michael Gapen, chief U.S. economist at Barclays Plc in New York, said looking past the second quarter was the right way to think about the challenge. “We can’t avoid taking an economic hit,” he said. “We can prevent some of the nastier second-round of effects like large-scale layoffs or a credit crunch.”The appearance on the popular morning show as many Americans are stuck in their homes marks the Fed chief’s first public remarks since he held an emergency Sunday evening press briefing by teleconference on March 15 to announce the central bank had slashed interest rates to almost zero.Public communication for Fed chairs has for decades been carefully choreographed, given the weight that even subtle signals can carry for investors.Powell gave only one other TV interview as chair, on CBS’s “60 Minutes.” Ben Bernanke, who led the Fed during the financial crisis, made his own rare appearance on “60 Minutes” in March 2009. Former Fed Chairman Alan Greenspan curbed on-the-record interviews with the press after his 1987 appearance on ABC’s “This Week with David Brinkley” caused stocks to drop.(Updates with comments from Powell from seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Ford Motor Co. announced a three-pronged effort on Tuesday to help the U.S. bolster its supply of life-saving medical equipment needed to combat the coronavirus. Even as its North American factories remain shuttered for traditional car-making work, Ford is partnering with General Electric Co. to scale up production of that company’s ventilators; it’s working with 3M Co. to manufacture respirators; and its United Auto Workers employees will assemble more than 100,000 plastic face shields a week. It was an impressive show of goodwill, especially for a company whose bloated balance sheet places it among those most vulnerable from a looming, sharp economic downturn.And it’s not going to be enough. Ford expects the first ventilators from its GE partnership — simplified models of what the industrial giant usually makes — to be ready by early June, CEO Jim Hackett told CBS This Morning on Tuesday. Just hours later, New York Governor Andrew Cuomo held a press conference and warned that the coronavirus is spreading faster in the state than previously anticipated, putting the area on course to hit the apex of cases in as soon as 14 days. At that point, it will need 140,000 total hospital beds and an additional 30,000 ventilators. “You cannot buy them, you cannot find them. Every state is trying to get them, other countries are trying to get them,” Cuomo said of ventilators. While the governor said it’s admirable that companies such as Ford and General Motors Co. are willing to get into the business, “it does us no good if they start to create a ventilator in three weeks or four weeks or five weeks.”Therein lies the problem. On March 16, I wrote about how America needed to once again marshal its great arsenal of democracy and put the nation’s manufacturers to work producing the tools needed to fight the coronavirus. In the absence of leadership by the Trump administration, manufacturers would have to take it upon themselves to fill the void, I wrote. In the days since, I’ve been genuinely awestruck by the reports of companies taking up the call. But the truth is, the void is too big for industry to fill on its own.President Donald Trump has been reluctant to use the 1950s-era Defense Production Act that gives the government the power to press U.S. industry into service on matters of national need, preferring to orchestrate contributions on a volunteer basis. He did invoke it on Tuesday with regard to production of testing kits and masks, but that fails to address a crucial shortage in ventilators. It’s great that companies are willing to help on this front without being explicitly ordered to do so, but you still need some sort of a plan. Timing is one issue, with Cuomo arguing a more forceful implementation of the Defense Production Act that gave manufacturers the startup capital needed to repurpose factories could help speed things along. Another is that there are many smaller companies who may not have the capacity to make entire ventilators like Ford can, but could make parts or offer services, if only someone would give them some direction and organize them into workable partnerships. Perhaps the biggest is the question of distribution, as my colleague Joe Nocera has written: Who decides where the ventilators go once they are manufactured? Apart from the Ford partnership, GE has doubled its capacity of ventilator production since the start of the coronavirus crisis and plans to double it again in the second quarter. That is incredible and commendable. But who gets them? New York, which has the most cases in the U.S.? GE’s home state of Massachusetts? One of the many other countries around the world where GE does business? The government that’s willing to pay the most for them? I’m not trying to cast doubts on GE’s good intentions here, but these are impossible decisions for any company to make on its own. The federal government is sitting on a stockpile of 20,000 ventilators but has been reluctant to deploy all of those to New York, Cuomo said, with the Federal Emergency Management Agency offering a mere 400. “What am I going to do with 400 ventilators when I need 30,000?” he said. “You pick the 26,000 people who are going to die because you only sent 400 ventilators.” One argument made by the New York Times as to why Trump has been reluctant to apply the Defense Production Act more forcefully is because he doesn’t want to be blamed for how slowly shortages of protective gear and ventilators are addressed. Worded a different way, if true, he is shifting responsibility for that to CEOs who are simply trying to help their country in any way they can, and that is unsustainable. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said Sunday night on CBS’s “60 Minutes” that “there is an infinite amount of cash in the Federal Reserve. We will do whatever we need to do to make sure there’s enough cash in the banking system.”Roughly 12 hours later, the central bank backed up those words with its most aggressive action yet to combat the coronavirus-induced credit crunch. In a statement Monday morning, it announced open-ended purchases of U.S. Treasuries and agency mortgage-backed securities. The Fed will buy “in the amounts needed to support the smooth functioning of markets for Treasury securities and agency MBS.” Just a week ago, it had suggested caps of $500 billion of Treasuries and $200 billion of agency MBS. Large numbers, to be sure, but not quite a “whatever it takes” promise.But that’s not all. The Fed unveiled details about several other programs, which will provide up to $300 billion in new financing, including a Secondary Market Corporate Credit Facility, which allows the central bank unprecedented access to the U.S. credit markets. The Treasury will make an initial $10 billion investment in this special-purpose vehicle, which can then purchase corporate bonds rated triple-B or higher with no more than five years until maturity. Notably, it can also buy U.S.-listed exchange-traded funds that “provide broad exposure to the market for U.S. investment grade corporate bonds.”The Fed actually announced several more measures, but the moves to address the chaos in Treasuries and corporate bonds are likely the most immediately significant. That’s because a look at the debt markets since the collapse of Lehman Brothers Holdings Inc. shows that it’s governmental and nonfinancial corporate obligations that have ballooned in the past decade. So it’s no wonder that they’re responsible for straining the financial system this time around.During the weekend, I read “Firefighting: The Financial Crisis and Its Lessons,” by Ben S. Bernanke, Timothy F. Geithner and Henry M. Paulson Jr. I was struck by these lines in the introduction: “Financial crises recur in part because memories fade.”“It was fueled, as crises usually are, by a credit boom, in which many families as well as financial institutions became dangerously overleveraged, financing themselves almost entirely with debt. The danger was heightened because so much risk had migrated to financial institutions that operated outside the constraints and protections of the traditional banking system.”“The financial panic paralyzed credit and shattered confidence in the broader economy, and the resulting job losses and foreclosures in turn created more panic in the financial system.”Note how “families” and “financial institutions” are singled out as taking on too much leverage heading into 2008. No one denies that. But as I showed in this data visualization, households and banks haven’t increased their debt as a percentage of gross domestic product in the past decade. Whether because of increased regulations or simply because they were burned last time around, they’ve been relatively prudent with taking on debt.The same can’t be said of nonfinancial corporations. Encouraged by rock-bottom interest rates from the Fed, Corporate America ramped up its borrowing, with companies in many cases willingly allowing their credit ratings to slide and using debt proceeds to buy back stock. The market value of the Bloomberg Barclays investment-grade corporate bond index, a proxy for the size of the broad market, has grown from about $1.8 trillion in October 2008 to more than $6 trillion as of this month. The Institute of International Finance estimates that global nonfinancial corporate debt has grown by some $27 trillion since the 2008 crisis.When writing about this in September 2018, when the Fed was still raising interest rates and trimming its balance sheet, I said that “all the talk about global central banks beginning a ‘great unwind’ of their extraordinary monetary stimulus is positively quaint,” given the buildup in debt over the decade. Monday’s extraordinary actions by the Fed, in truth, never seemed a matter of “if,” but rather “when” and “why.” The vast sums of bonds sloshing around in the financial system would be too great during times of stress not to cause precisely what Bernanke, Geithner and Paulson saw in 2008: “Paralyzed credit and shattered confidence in the broader economy.”There will be time later for Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin, among others, to reflect upon their time leading crucial U.S. institutions through this period. Like their predecessors, they’ll probably note that some companies became dangerously overleveraged and couldn’t withstand the economic shock from the coronavirus outbreak. That conveniently skims over the conditions that encouraged the huge debt buildup in the first place. But retrospection does the Fed little good in the moment. “Once it’s clear that a crisis is truly systemic, underreacting is much more dangerous that overreacting,” Bernanke, Geithner and Paulson concluded. The markets and the economy have reached that level of systemic risk. So Powell and his colleagues, learning from the lessons of 2008, stand ready to do near-infinite quantitative easing and whip up as many new facilities as needed across markets to restore stability. The time for worrying about doing too much passed the moment the central bank announced a 100-basis-point interest-rate cut less than three days before its scheduled decision.Technically, $250 trillion of debt isn’t infinite. But it’s far more than the global financial system can handle when staring down an unknowable economic shock. The markets have always seen the Fed as having virtually unlimited power. In a world full of leverage, we’re witnessing the central bank deploy the heavy artillery like never before.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Two crisis-veteran Federal Reserve officials said the central bank has plenty of room for more moves following a flurry of action last week to cushion the economic wallop from coronavirus-related shutdowns, flagging corporate bonds and state and local governments as two areas for potential assistance.“Everything is on the table” for the Fed as far as additional lending programs, St. Louis Fed President James Bullard, who took office in April 2008, said in a telephone interview Sunday. He warned U.S. unemployment may hit 30% in the second quarter, with an unprecedented drop in gross domestic product that he said could halve to $2.5 trillion during the three-month period.Neel Kashkari, the Minneapolis Fed president who helped oversee the government’s response to the financial crisis as a Treasury official in 2008, told CBS that “we’re far from out of ammunition.”Congressional WranglingThe comments preceded Sunday’s vote by Senate Democrats to block Majority Leader Mitch McConnell’s attempt to advance a coronavirus economic rescue package, putting in question McConnell’s plan for the Senate to pass the bill Monday. U.S. stock futures plummeted as leaders in both chambers failed to reach agreement on how to spend nearly $2 trillion.The bill already envisions a more expansive role for the Fed. It would authorize the Treasury to use $425 billion “to make loans, loan guarantees, and other investments in support of programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system that supports lending to eligible businesses, states or municipalities.”Senate Banking Committee Chairman Mike Crapo told Bloomberg News that the legislation would let the Fed lend to, and buy debt from, state and local governments.“There is more that we can do if necessary” with existing emergency authority, Bullard said. “There is probably much more in the months ahead depending on where Congress wants to go.”Bullard said the Fed has “unlimited” potential to buy government debt following a commitment to purchase at least $500 billion in Treasuries.Careful ApproachThe Fed could look at buying other corporate debt, as well as some types of municipal debt. At the same time, he said the Fed would need to be careful with such a program, and it could be problematic to pick and choose which debt to buy, just as European authorities have struggled with purchasing sovereign debt.The St. Louis Fed’s view of the virus-related shutdowns on the economy is more dire than Wall Street. JPMorgan Chase & Co. expects gross domestic product to shrink at an annualized rate of 14% in the April-June period while Bank of America Corp. and Oxford Economics both see a 12% drop.Goldman Sachs Group Inc. sees a 24% plunge. Morgan Stanley economists said in a report to clients on Sunday that they now expect the economy to shrink a record 30.1% in the second quarter, driving up unemployment to an average of 12.8% over the period.More SupportThe Fed and other bank regulators said in a statement late Sunday that they were encouraging banks to modify loan terms for customers affected by the coronavirus, such as by offering payment deferrals and extensions.Kashkari said “there is a range of things the Federal Reserve could do” now.“Some people have suggested that we should be providing more support directly to the corporate bond market -- and I’m sympathetic with those views -- and also the municipal market, making sure that states and cities are able to access the capital markets as well,” he said in an interview on CBS’s “60 Minutes,” recorded Thursday and aired Sunday evening.Kashkari said the key lessons from the 2008 experience were that policy makers “should all be erring on the side of overreacting to try to avoid the worst economic outcomes,” which means going big with the relief package and not worrying about how targeted the measures are.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The Federal Reserve can and probably will do more to support financial markets and the economy after rolling out a string of aggressive interventions over the past week, Minneapolis Fed President Neel Kashkari said.“Some people have suggested that we should be providing more support directly to the corporate bond market -- and I’m sympathetic with those views -- and also the municipal market, making sure that states and cities are able to access the capital markets as well,” Kashkari said in an interview on CBS’s “60 Minutes,” recorded Thursday and aired Sunday evening.“There is a range of things the Federal Reserve could do,” Kashkari, the former Treasury official who oversaw the bank bailouts in 2008, said. “We’re far from out of ammunition.”Financial markets have come under severe stress in recent weeks amid investor panic over the coronavirus outbreak and its impact on the U.S. economy.Fed officials intervened on March 15 by slashing short-term interest rates to essentially zero and restarting bond-buying programs to pump hundreds of billions of dollars of cash into the banking system.Over the past week, they’ve also redeployed a number of crisis-era emergency lending facilities in a bid to keep credit flowing throughout the economy.The moves haven’t been enough to assuage investors, who continued to sell Sunday evening when stock futures markets reopened. Congressional leaders haven’t yet come to an agreement on emergency economic relief over the weekend as government-mandated lockdowns spread across the country, shuttering businesses and idling millions of workers.Kashkari said the key lessons from the 2008 experience were that policy makers “should all be erring on the side of overreacting to try to avoid the worst economic outcomes,” which means going big with the relief package and not worrying about how targeted the measures are.“My advice to Congress, as they’re designing their programs to help workers and to help small businesses: err on being generous,” he said.Earlier Sunday, speaking in a Bloomberg News interview, St. Louis Fed President James Bullard warned that unemployment could soar to a record-high 30% in the second quarter -- and the economy could shrink by 50% -- if lawmakers don’t formulate an adequate response to the crisis.(Adds comments from Kashkari starting in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Government watchdog groups have called for investigations by ethics officials, prosecutors and regulators of sales of stock by senators briefed in January on the coronavirus threat.Still, enforcement experts say that the trades are unlikely to lead to direct regulatory or legal sanctions, leaving it to ethics officials and voters to decide whether the senators crossed the line.Republican Senators Richard Burr of North Carolina, Kelly Loeffler of Georgia, and James Inhofe of Oklahoma, as well as Dianne Feinstein, a Democrat from California, have defended the transactions, asserting they weren’t related to any information they received as part of their congressional duties.While critics of the sales have questioned the legality of the trades, John Britt, a retired Securities and Exchange Commission enforcement attorney who spent three decades at the agency, said there’s little chance authorities could bring a successful insider trading case here. Burr -- who has called on the Senate ethics committee to review the trades -- had been receiving periodic classified briefings about the virus and its potential impact in the U.S. as chairman of the intelligence committee, but many investors had already been adjusting their portfolios as they tried to assess the market impact.“There was plenty of public information available and the markets were already frothy,” Britt said. “Based on what we now know, he walks.”Burr Invites Ethics Probe of Stock Sales After Virus UpdatesWhile Burr has said he’ll retire when his term ends in 2022, the others may need to explain the trades to voters.Loeffler is seen as being at particular risk politically from the controversy. She faces a special election in November after being sworn in two months ago to replace a Georgia senator who retired early citing his health problems. Loeffler, who is married to New York Stock Exchange chairman Jeffrey Sprecher, is already locked in a primary battle with Representative Doug Collins, President Donald Trump’s favorite to fill the empty seat.Collins seized on the news, tweeting “People are losing their jobs, their businesses, their retirements, and even their lives and Kelly Loeffler is profiting off their pain?”Loeffler defended her actions in an interview on Bloomberg TV, saying, “I’ve made extra careful precautions to comply not just with the letter of the law but with the spirit of the law.”She said any investment decisions are handled by a third party and “if anyone reaches out, I will be completely responsive.”Inhofe, who is also up for re-election in November, also said an adviser handles his investments and that he has no direct input since asking the adviser to begin moving him out of stocks in December 2018.Feinstein doesn’t go back before voters until 2024. She and her husband sold between $1.5 million and $6 million in a cancer therapy company Allogene Therapeutics, she said, calling it a small part of their portfolio. Feinstein and Inhofe said they didn’t attend the January briefing, a classified session in January with top U.S. public health officials on the looming crisis that preceded some of the sales the senators disclosed.“During my Senate career I’ve held all assets in a blind trust of which I have no control,” Feinstein tweeted. “Reports that I sold any assets are incorrect.”The Stocks Senators Unloaded Before the Coronavirus CrashUntil the STOCK Act (Stop Trading on Congressional Knowledge) was passed in 2012, members of Congress were exempt from the insider-trading laws that governed the marketplace. The act was designed to prevent them from benefiting from access to market-moving information ahead of the general public.Its passage followed a series of media reports, including an expose by the CBS program “60 Minutes,” that showed how members of Congress with oversight of industries such as financial services, defense contracting and health care reaped huge gains through well-timed trades in the market.Senator Mike Braun, a Republican from Indiana, said the four will need to explain whether they followed ethical guidelines to prevent insider trading.“Some have had it so they weren’t involved in it, had it in a blind trust and so forth,” Braun said. “That’s what you’re supposed to do, ethically. And you’ll still be required to talk about it in an atmosphere like we’ve got here.”If assets were actively traded by the senators in question rather than in a blind trust, he added, “then I think that’s a little harder discussion.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The World Health Organization declared the coronavirus outbreak a pandemic. President Donald Trump is said to be weighing whether to restrict non-essential travel from Europe to the U.S. He will address the nation later Wednesday.Local and state officials across the U.S. took several steps to discourage or ban large gatherings, and Seattle became the first major American city to close its public schools. Italy closed all businesses except pharmacies and grocery stores.The U.S. government’s top infectious-disease specialist told lawmakers the pathogen is 10 times more deadly than the seasonal flu. U.K. cases jumped 22% to 456, while Italy, the center of the outbreak in Europe, saw a 31% increase in fatalities, to 827.Key Developments:Confirmed cases top 123,000 globally; 4,578 deadGermany’s Merkel says 60%-70% of population potentially at riskAirbnb refuses guest refundsVirus at Bear Stearns moment and may get worse, Summers saysMonth-long U.S. college basketball tournament to be played without fansSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here.Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts. For analysis of the impact from Bloomberg Economics, click here. To see the impact on oil and commodities demand, click here.CBS News Closes Two N.Y. Offices After Staffers Test Positive (6 p.m. NY)CBS News closed offices in midtown Manhattan Wednesday after two employees tested positive for coronavirus. Employees at 524 and 555 West 57th St. were told to work from home and not return to the buildings until Monday. Individuals who were in contact with the employees were told to self quarantine for 14 days.CBS, a division of ViacomCBS Inc., said its regular news broadcasts would continue from alternative studios.U.S. Weighs Restricting Non-Essential Travel From Europe (5:15 p.m. NY)President Donald Trump is weighing whether to restrict non-essential travel from Europe to the U.S. as the outbreak of coronavirus continues to spread on both continents, according to two people familiar with the matter.The restrictions would include some business travel, according to one of the people, but it’s unclear how far ranging the limits would be.Basketball Tournament to Be Played Without Fans (4:46 p.m. NY)The NCAA will conduct upcoming championship events, including Division I men’s and women’s basketball tournaments, with only “essential staff and limited family attendance,” NCAA President Mark Emmert said.U.S. Capital Declares Emergency (4:43 p.m. NY)Washington Mayor Muriel Bowser declares state of emergency for the district amid coronavirus outbreak, NBC reports in tweet.Seattle Closing Public Schools (3:47 p.m. NY)Seattle will close its public schools starting Thursday for at least two weeks. With more than 53,000 students, it would be the first major public school district in the U.S. to shut its doors in an effort to contain the spread of the coronavirus. Several other schools in the area, including the University of Washington, have already suspended in-person classes.Officials have been reluctant to close public schools, in part because of the impact on the health system. Doctors and nurses may be forced to skip work if they have to stay home to watch their kids.Multiple People at Princeton Party Test Positive (3:35 p.m. NY)Multiple people have tested positive for coronavirus after attending a party in Princeton, New Jersey, on Feb. 29, the town’s health department said. Of the 47 people at the party, 14 were from Princeton, all of whom have been contacted; nine are complaining of one or more symptoms and are being evaluated.N.Y. to Contract Directly With Private Labs (3:16 p.m. NY)New York will start contracting directly with private labs to increase testing for the new coronavirus, Governor Andrew Cuomo said at a press briefing.The state’s health department works with about 28 labs that are expert in this type of work, Cuomo said.U.K. Govt to Draft Emergency Laws (3:15 p.m. NY)U.K. Health Secretary Matt Hancock offered to work with his Labour opponents on writing emergency laws to tackle the virus outbreak. Labour welcomed the move and said it would join talks, expected to start on Thursday. Emergency laws are likely to allow teachers to teach larger classes, hauliers to work longer shifts.Hancock said Parliament will remain open, despite the WHO declaring a pandemic, and a health minister becoming infected.Ohio Becomes Latest State to Ban Gatherings (3:13 p.m. NY)Ohio will issue an order shortly restricting mass gatherings that would ban spectators at indoor sporting events, including professional games and upcoming college basketball tournament contests. The order will also limit visitors at nursing homes and assisted-living facilities to one per day per resident with screenings, Governor Mike DeWine said.“We are doing the things we are doing because we have the potential to become like Italy,” DeWine said on Twitter.More Big Meetings Banned Across U.S. (2:50 p.m. NY)Local and state officials across the U.S. took several steps to discourage or ban large gatherings in an effort to slow the spread of the coronavirus. Washington recommended that meetings of more than 1,000 people in the nation’s capital be canceled or postponed through at least March 31.San Francisco public health officials banned events of 1,000 people or more, including games for the National Basketball Assocation’s Golden State Warriors, which will play without fans during its game Thursday night against the Brooklyn Nets. The order lasts for two weeks but can be extended as needed.In Washington state, Governor Jay Inslee said that he was prohibiting events of more than 250 people in its three most-populous counties -- King, Pierce and Snohomish -- which include Seattle, Tacoma and Everett. The order affects a wide range of functions, including sporting events, concerts, festivals, conventions and fund-raisers, as well as family gatherings like weddings.“These are not easy decisions,” Inslee said Wednesday in Seattle. “The decisions that we’re making today and the decisions that we probably will be making in the upcoming days are going to be profoundly disturbing to a lot of the ways that we live our lives today. But I believe they are the right ones. They are the necessary ones.”“We do not want to see an avalanche of people coming into our hospitals,” Inslee said.Warriors to Play Games With No Fans After Ban (2:28 p.m. NY)San Francisco officials banned public events with more than 1,000 people, including games for the NBA’s Golden State Warriors. Mayor London Breed said she had spoken with the team’s management, and that they support the decision. The team -- which won three championships in the last decade before struggling this season -- recently moved from Oakland into San Francisco’s new Chase Center arena. The order lasts for two weeks but can be extended as needed.Kuwait Shuts Down Country (2:21 p.m. NY)The government declared the period of March 12-26 an official holiday in an effort to limit exposure to the coronavirus outbreak, state-run Kuwait News Agency reported on Wednesday. Employers will continue to pay salaries. All commercial flights will be suspended.Trump Aides Back Raising Europe Warning (2:01 p.m. NY)President Donald Trump’s advisers are recommending that the U.S. raise its travel alert to Level 3 for the entire European Union, a move that would mean Americans should avoid everything but essential travel to the 27-nation bloc and should self-quarantine for two weeks upon returning home, according to three people familiar with the matter.While no final decision has been made, the move is among many measures the administration is considering as it seeks to control the growing spread of the coronavirus, according to the people. Trump would make the final decision on any change in the travel alert.A Level 3 advisory from the Centers for Disease Control and Prevention means those countries are witnessing “widespread, ongoing transmission” of the virus. The people said that the recommendation would likely exclude the U.K.Capital One Asks Employees to Work From Home (1:20 p.m. NY)Capital One Financial Corp. requested that its employees work from home if they can, joining other companies in trying to stem the spread of the deadly coronavirus.Chief Executive Officer Richard Fairbank told staff that they should begin working from home on Thursday. For branch workers or those in other roles that can’t be performed remotely, the firm will begin spacing out employees to “reduce density” in workplaces.WHO Declares Pandemic (12:37 p.m. NY)The outbreak of coronavirus is now a pandemic, the World Health Organization’s top official said Wednesday in a press briefing. The long-awaited pronouncement came as worldwide cases topped 120,000 while the number of deaths exceed 4,300.“All countries can still change the course of this pandemic,” WHO Director-General Tedros Adhanom Ghebreyesus said in the briefing. “If countries detect, test, treat, isolate, trace and mobilize their people in the response, those with a handful of cases can prevent those cases becoming clusters and those clusters becoming community transmission.”The new coronavirus is the cause of the first pandemic since 2009, when a novel influenza strain swept around the world, infecting millions of people.Washington Urges Large Gatherings be Canceled (12:11 p.m. NY)Washington recommended that gatherings of more than 1,000 people be canceled or postponed through at least March 31 in the nation’s capital.U.S. to Allow Tax Extensions Without Penalty (12 p.m. NY)Individuals can ask for tax extensions without penalty or interest, Treasury Sec. Steven Mnuchin told reporters.Case at Mining Conference Sparks Race to Limit Spread (11:58 a.m. NY)The race is on to limit the spread of the coronavirus after news of an infection at an international mining conference in Toronto attended by more than 23,100 people, including Canadian Prime Minister Justin Trudeau.TSA to Allow Higher Volume of Sanitizer at Checkpoints (11:54 a.m. NY)TSA will allow passengers to carry a higher volume of hand sanitizer liquid through airport checkpoints likely beginning today or Thursday.The agency implemented a new policy Tuesday to change the swab that checks hands for traces of explosives for every passenger, citing concern about spreading the virus.Coronavirus Seen Far More Lethal, Fauci Says (11:53 a.m. NY)Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told U.S. lawmakers the new coronavirus is 10 times more deadly than the seasonal flu.“The flu has a mortality of 0.1%. This is ten times that. That’s the reason I want to emphasize we have to stay ahead of the game.”N.Y. to Recommend Swing Shifts, More Telework: Cuomo (9:41 a.m. NY)The State of New York will ask businesses to consider having employees work two shifts and allowing telework, Gov. Andrew Cuomo said in a CNN interview.“This is about reducing the density,” Cuomo said. “The spread is not going to stop on its own.”New York has 20 new cases of virus, Cuomo said, mostly in the New Rochelle area.Hungary Declares State of Emergency, Shuts Universities (9:24 a.m. NY)Hungary’s government declared a state of emergency, closing university campuses and banning large gatherings.The government described the measures as unprecedented in the three decades since the fall of communism. Hungary has registered 13 cases of the coronavirus.Cases Jump in the Netherlands, Sweden (9:20 a.m.)In the Netherlands, a fifth death was reported, while the number of confirmed cases rose by 121 to 503, according to the daily update from the Dutch RIVM National Institute for Public Health and the Environment. The province of North-Brabant remains the hardest hit region.To combat the spread of the virus in Brabant, professional soccer matches in the two highest leagues in the country as well as other sports in the province, will be canceled this weekend.Cases in Sweden rose to 461 from 326.U.K. Unveils Stimulus (8:54 a.m. NY)U.K. Chancellor of the Exchequer Rishi Sunak says announced a total fiscal stimulus package valued at 30 billion pounds ($39 billion) to support jobs and businesses. That came hours after the Bank of England cut interest rates.The government will fund statutory sick pay for employees of small and medium-sized companies who are off work because of coronavirus, Sunak said.Toronto Mining Conference Attendee Tests Positive (8:47 a.m. NY)A man in his 50s who attended a mining conference in Toronto, one of the industry’s biggest, has tested positive for Covid-19. The man went to the hospital in Sudbury, Ontario, on March 7. He was discharged home and remains in self-isolation.More than 23,100 people attended the Prospectors & Developers Association of Canada conference in Toronto March 1 to 4, including Canadian Prime Minister Justin Trudeau and Ontario Premier Doug Ford. The man attended the conference March 2 and 3.\--With assistance from Adveith Nair, Robert Hutton, Sophie Alexander, Jason Scott, Ryan Beene, Justin Sink, Greg Sullivan, Anurag Kotoky, Joyce Cutler, Dina Bass, Golnar Motevalli, Viktoria Dendrinou, Siddharth Philip, Charlotte Ryan, Lisa Du, Jan Dahinten, John Tozzi, Jenny Surane, Nick Wadhams, Jennifer Jacobs, Kara Wetzel, Noah Buhayar, Matt Day, David R. Baker and Christopher Palmeri.To contact Bloomberg News staff for this story: Adveith Nair in London at email@example.com;Jeff Sutherland in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Stuart Wallace at email@example.com, ;Drew Armstrong at firstname.lastname@example.org, Andrés R. Martinez, Mark SchoifetFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The coronavirus is disrupting Disney's live-action "Mulan" remake as China postpone the film's highly anticipated premiere.
Hollywood is bracing for impact as the coronavirus continues to disrupt the industry — delaying everything from movie premieres to production schedules.
NFL team owners on Thursday voted to approve a new collective bargaining agreement, but the players are unlikely to vote yes in its current form.
(Bloomberg Opinion) -- “House of Brands” probably wasn’t the best choice of words by ViacomCBS Inc. in describing its streaming-TV strategy. It’s best for a company in its position to avoid what sounds eerily similar to another phrase — one that implies a shaky structure doomed to collapse. It’s also best not to remind people of the name of a hit series created by Netflix Inc., the very symbol of the end of times for cable networks like those owned by ViacomCBS. But the company may be on to something. Its house — er, collection — of TV and film brands were slapped together, just like its name, through the December merger of Viacom and CBS. Together, they have the potential to constitute an attractive streaming-TV offering for consumers different from existing ones. That means there’s at least hope for ViacomCBS, and that’s truly all investors and employees could reasonably expect right now. On Thursday, ViacomCBS posted unflattering results for its first quarter as a unified company, and its shares plunged 18%. It’s a reflection of the difficulty of stitching together two businesses with much different cultures — a challenge for any chief executive officer, but one that’s exacerbated in this case by the historical tensions between the two sides and the industry streaming wars that have threatened to make both of them irrelevant. Analysts predicted at least $7 billion of revenue for the period ended Dec. 31, but ViacomCBS took in only $6.87 billion amid a drop in traditional TV viewers, lower political advertising spending and a weak box-office showing. The merger closed on Dec. 5.But there were slivers of good news. Among them was the company’s announcement that it’s creating a new subscription-video service that will expand on the $6-a-month CBS All Access app ($10 for the commercial-free version) by stuffing it with more content from other parts of the empire. The company referred to it as a “House of Brands” product, the idea being that it can bring together its various entertainment, news, sports and film properties to reach a wider audience. The company’s biggest assets are CBS, MTV, Nickelodeon, BET, Comedy Central, Paramount Pictures and Showtime. It also owns Pluto TV, the advertising-supported service for consumers who want to stream for free, while Showtime targets the higher-end of the market with an $11-a-month online subscription.The strategy sounds a bit like the approach Comcast Corp.’s NBCUniversal is taking with its Peacock product, which is set to launch in April. Peacock will have a diverse library — everything from “Parks and Recreation” to “Jurassic Park” plus new shows — that most people will be able to access for free, with the option of paying $10 a month to cut out the ads. In contrast, Disney+, the fast-growing streaming service from Walt Disney Co., has more narrow appeal as it’s predominantly geared toward children and Marvel and “Star Wars” superfans; it has also shunned advertisers (for now). Peacock mimics the breadth of Netflix, whereas Disney+ looks more like a niche add-on option for Netflixers. A tremendous challenge for all the media giants, but especially ViacomCBS, is deciding where to put their content. ViacomCBS needs to continue to nourish its cable networks, the biggest moneymakers, while choosing which titles to save for CBS All Access to drive subscriber growth and which to sell to rival streaming services that are willing to pay for them. For example, the Paramount division previously produced the popular — and controversial — series “13 Reasons Why” for Netflix, a show that could have also appealed to MTV’s audience and potentially would have been a good fit for the expansion of CBS All Access. In that sense, it’s as if the different units within ViacomCBS are competing with one another. For once, though, Viacom and CBS are working under one clear leader, which is probably the biggest positive development following years of infighting and drama at both entities, both controlled by the Redstone family. Bob Bakish, Viacom’s well-liked, hard-nosed CEO of the last three years, is now in charge of the merged company, while Joe Ianniello, who had been Leslie Moonves’s No. 2 at CBS, is leaving next month. Moonves was ousted in September 2018 after a slew of sexual-harassment allegations came to light, ultimately paving the way for the merger of CBS and Viacom. Ianniello, though instrumental in getting the deal done — if only for the outrageous pay package used to placate him — was a symbol of the old regime and a possible wrench in Bakish’s salvage plan.Bakish has a lot of work to do, and fast. But his idea isn’t a bad one. To contact the author of this story: Tara Lachapelle at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Comcast Corp.’s soon-to-launch Peacock service shows that advertising is the future of streaming TV. Consumers may be OK with that. On Thursday, the cable giant’s NBCUniversal entertainment division showcased Peacock to investors ahead of the app’s soft launch slated for April 15. Like Netflix, Disney+ and HBO Max (and to some extent, the content-lite Apple TV+), Peacock offers a library of movies; older and current network TV shows, such as “The Office” and “This Is Us”; and original programming made exclusively for its streaming audience. But it differs from the other services in one significant way: Peacock’s primary source of revenue will be ads, not subscriptions, allowing viewers the option of streaming for free. Let’s face it, paying for individual streaming-video apps at $7, $13 and $15 a pop isn’t all that cord-cutting was cracked up to be. The streaming-TV subscription model is brand new and broken. One app isn’t enough, yet having multiple subscriptions can get so expensive customers are left to wonder why they even got rid of cable. The streaming wars haven’t been a delight for the entertainment giants and their shareholders, either: These new apps are extremely costly to build and to stock with content, and they’ll cannibalize the larger revenue streams generated by traditional TV networks. Put it this way: TV just seems to work better for everyone when the consumer is the product, able to be sized up by advertisers desperate for a few moments of our time in hopes of activating a shopping reflex.Anecdotally, it’s said that viewers can’t stand ads. But in fact, research has shown that the No. 1 gripe for video subscribers is how much they’re paying. In a survey of about 6,000 North Americans conducted for TiVo Corp. toward the end of last year, about 70% said their reason for cutting the cord was that pay TV was too expensive. A separate survey by Ampere Analysis Ltd. similarly found price to be by far the biggest motivator for consumers switching to ad-supported apps, and 39% said they don't mind seeing ads while they watch. “We continue to believe consumers do not hate ads,” Rich Greenfield, an analyst for LightShed Partners, wrote in a report this week. “They hate heavy ad loads of un-targeted, repetitive ads in contrast to Instagram where the ads feel more like content.” Peacock is promising just five minutes of ads per hour.Media companies developing streaming services shouldn't underestimate the power of “free,” my colleague Sarah Halzack and I wrote last year in a column highlighting the appeal of ad-supported streaming offerings, such as Tubi, The Roku Channel and Pluto TV, which is now owned by ViacomCBS Inc. But compared to the quality of those apps, Peacock doesn’t feel free — it has plenty of premium content, carefully thought-out navigation and features, and with the option to watch some programming live and other stuff on-demand. A fuller content library can be accessed with Peacock Premium for $5 a month, although Comcast subscribers — even those who only have internet service — can get that version at no extra cost. For $10 a month, Peacock can be ad-free. But Comcast is probably hoping everyone will opt for the ads. About 70% of Hulu’s subscribers are on its ad-supported version, Peter Naylor, who heads up advertising sales for Hulu, said at a conference last year. And according to LightShed’s Greenfield, Hulu makes more money from its ad-supported version than from its ad-free subscriptions.For Comcast, it’s about “light advertising and bundling,” Jeff Shell, the newly installed CEO of the NBCUniversal unit, said during Thursday’s presentation. It’s one of the first signs of ”the great re-bundling” that I wrote about in November, as media giants realize they need to do something about the big consumer pain point of streaming: too many subscriptions.Comcast predicts Peacock will have at least 30 million active accounts and $2.5 billion of revenue by 2024, and that Ebitda will break even by then. Walt Disney Co. estimates Disney+ will turn profitable that same year, but it will take at least twice as many subscribers paying about $7 a month to do so. Similarly, AT&T Inc. is forecasting HBO Max won’t start making money until 2025, even though its fee is $15 a month. Meanwhile, Netflix has insisted it won’t adopt ads, despite the company’s $19 billion of content obligations as it burns through billions of dollars of cash each year.Of course, if ads are the name of the game, the industry has work to do to make them less annoying. Hulu, which is controlled by Disney, has been on the forefront of trying new advertising methods that are less interruptive than traditional commercials. It rolled out “pause ads” last year, which promote a brand’s product on screen while a video is paused.Comcast may be the only media giant to fully embrace ads so far for its streaming debut, but others will probably transition to a model more like Peacock’s over time. After all, birds of a feather flock together.To contact the author of this story: Tara Lachapelle at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Needham and Co analyst Laura Martin said rising competition from Disney+ and Apple could cause the streaming giant to lose 4 million U.S. subscribers in 2020.