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Business Updates: Stocks Fall, Swelling September’s Losses
The chairman of the Ozy Media board resigned on Thursday, saying he lacked the experience in “crisis management and investigations” to continue leading the company.
Marc Lasry, a hedge fund manager who is also a co-owner of the Milwaukee Bucks, made the announcement four days after The New York Times reported that someone from Ozy appeared to have impersonated a YouTube executive during a conference call with Goldman Sachs bankers while trying to raise $40 million dollars.
Ozy’s chief executive, Carlos Watson, told The Times that the person had been Samir Rao, the company’s co-founder and chief operating officer. During the call, the supposed YouTube executive praised Ozy, saying it was a great success on the platform. Mr. Watson attributed the incident to a mental health crisis. Mr. Rao has not replied to questions about his role on the call.
“I believe that going forward Ozy requires experience in areas like crisis management and investigations, where I do not have particular expertise,” Mr. Lasry said in an emailed statement. “For that reason, I have stepped down from the company’s board. I remain an investor in the company and wish it the best going forward.”
Ozy, which made its debut in 2013, presents itself as a popular millennial media company. It investors have included Emerson Collective, the organization run by Laurene Powell Jobs, and Axel Springer, the publishing giant based in Berlin. Ron Conway, a Silicon Valley investor and an early Ozy backer, said this week that he had returned his shares to the company.
U.S. stocks fell in midday trading on Thursday, with the S&P 500 adding to its deficit for September in the last trading day of the month.
The S&P 500 was down as much as 0.9 percent, while the Nasdaq composite was as much as 0.4 percent lower. The S&P 500 is on track to end September down about 4.5 percent after seven consecutive months of gains.
Energy stocks were among the best performing in the S&P 500 for the month, climbing about 10 percent, as oil prices rose more than 7 percent in September. Material and utility companies slipped as traders adapted to supply chain bottlenecks.
Initial claims for state jobless benefits rose for its third straight week to 362,000 last week, up 11,000 from the previous week, the Labor Department reported on Thursday.
European stock indexes fell slightly, with the Stoxx Europe 600 about 0.1 percent lower.
Bed Bath & Beyond slid about 23 percent after the company slashed its forecasts for sales and earnings. The company said the recent rise in Covid-19 cases had led to a sharp slowdown in traffic to its stores, and said costs and supply-chain problems were hitting its bottom line.
Regime change at Hollywood studios is almost always bloody. A new king or queen arrives and those loyal to the previous court lose their jobs.
But the guillotine has been dropping at Paramount Pictures with surprising speed, creating something of a panic inside the 109-year-old film company.
ViacomCBS, which owns Paramount, ousted Paramount’s chairman, James N. Gianopulos, on Sept. 13 and replaced him with Brian Robbins, a children’s television executive. By Sept. 17, Chris Petrikin, the studio’s respected executive vice president of global communications and corporate branding, had been shown the door. Emma Watts, president of the Paramount Motion Picture Group, was dismissed last week. And on Thursday, Paramount parted with its animation president, Mireille Soria.
Paramount declined to comment on the departures.
The speed with which Mr. Robbins is making changes reflects his personal style — forward charge! — and the vulnerable position in which Paramount and its corporate parent find themselves.
Paramount was once the most powerful studio in Hollywood, delivering culture-defining films like “The Godfather,” “Grease,” “Raiders of the Lost Ark,” “Forrest Gump” and “Beverly Hills Cop.” But severe mismanagement in the 2010s left it on life support. Mr. Gianopulos pulled it back from the brink, but the studio remains an also-ran, with many analysts viewing it as unequipped to compete with franchise-rich competitors like Disney and Universal.
Similarly, ViacomCBS ranks as a small player in the streaming business that has come to dominate the media industry. Mr. Robbins, who has online entertainment experience on his résumé and little attachment to calcified Hollywood business models, was installed at Paramount because ViacomCBS wants the studio to prioritize streaming distribution for films — in particular, feeding content to Paramount+, the conglomerate’s nascent streaming service.
United Airlines said on Thursday that the number of employees who could be fired for not being vaccinated has been nearly halved since it announced the results of a successful vaccine mandate less than two days earlier.
Now, the company said it plans to dismiss 320 of its 67,000 U.S. employees for failing to either provide proof of vaccination or a request an exemption for medical or religious reasons. That is down from 593 employees when the airline announced the results of its vaccination requirement this week.
United in August became one of the first large U.S. employers to require workers to be vaccinated against the coronavirus. Tyson, AT&T and other companies have since imposed similar mandates, and President Biden this month directed the Labor Department to require businesses with at least 100 workers to require vaccinations or weekly testing.
About 2,000 employees have sought exemptions. What happens to them could be determined by a lawsuit filed by some workers seeking to overturn United’s decision to place exempted workers on temporary unpaid leave.
United attributed the drop in the number of employees at risk of losing their jobs to late uploads of proofs of vaccination. United also said it expects the figure to drop further as human resources officials meet with people individually and determine that some have been vaccinated but failed to provide proof.
Treasury Secretary Janet L. Yellen said on Thursday that the statutory debt limit should be abolished, arguing that the borrowing cap is “destructive” and poses unnecessary risks to the economy.
She made the comments at a House Financial Services Committee hearing, as the United States faces an Oct. 18 deadline to raise or suspend the debt limit. Ms. Yellen warned on Thursday that failure to act would be “catastrophic” for the economy and said she supported proposed legislation to do away with the limit because it blocks the government from carrying out spending that Congress has authorized.
“I believe when Congress legislates expenditures and puts in place tax policy that determines taxes, those are the crucial decisions Congress is making,” Ms. Yellen said. “And if to finance those spending and tax decisions it is necessary to issue additional debt, I believe it is very destructive to put the president and myself, as Treasury secretary, in a situation where we might be unable to pay the bills that result from those past decisions.”
The debt limit was instituted in the early 20th century so the Treasury did not need to ask for permission each time it needed to issue bonds to pay bills. The first debt limit was part of the Second Liberty Bond Act of 1917, according to the Congressional Research Service. A general limit on the federal debt was imposed in 1939.
Republicans are refusing to join Democrats in raising the debt limit, insisting that they act alone in protest of big spending packages that Democrats hope to enact. At Thursday’s hearing, Ms. Yellen said dealing with the debt limit should be a bipartisan responsibility, because it allows the government to repay debts that were incurred by Democrats and Republicans.
If the debt limit is not addressed by the Oct. 18 deadline, Social Security payments will be delayed, troops might not receive their paychecks on time, and interest rates for mortgages and car loans could spike.
Ms. Yellen also warned that an erosion of confidence in the security of U.S. Treasury debt would be a “catastrophic event.”
Antigone Davis, Facebook’s global head of safety, faced harsh questioning on Capitol Hill on Thursday about Instagram’s effect on teenagers, addressing accusations that Facebook has known for years that its photo-sharing app has caused mental and emotional harm.
Members of the Senate’s consumer protection subcommittee admonished Ms. Davis and Facebook for withholding internal information about how its services adversely affect young people and for not significantly changing those services to reduce those downsides.
“It has hidden its own research on addiction and the toxic effects of its products,” said Senator Richard Blumenthal, the chairman of the subcommittee and a Democrat of Connecticut. “It has attempted to deceive the public and us in Congress about what it knows, and it has weaponized childhood vulnerabilities against children themselves. It’s chosen growth over children’s mental health and well-being, greed over preventing the suffering of children.”
Lawmakers called for regulations to rein in the Facebook, saying repeated scandals on safety, data privacy abuses and misinformation have created a trust deficit.
“You’ve lost trust, and we do not trust you with influencing our children,” said Senator Marsha Blackburn of Tennessee, the ranking Republican on the subcommittee.
The hearing was the first of two on Facebook’s harmful effect on children. The second, on Tuesday, will be with a whistle-blower who has shared documents on Facebook’s research on teenagers.
The hearings were called after The Wall Street Journal published a series of articles this month about internal research at Facebook. One of the articles reported that, according to Facebook’s findings, one in three teenagers said Instagram made his or her body image issues worse. Among teenagers who had suicidal thoughts, 13 percent of British users and 6 percent of American users said they could trace those thoughts to Instagram.
On Wednesday evening, Facebook released two slide decks from the research cited by The Journal. The company heavily annotated the slides, at times disputing or reframing the accuracy and intention of the research report. The company said in its slides that many teenagers reported positive experiences on Instagram, including that the app at times helped with mental health.
Lawmakers said the documents were only a small part of the internal Facebook research they had seen on Instagram and teenagers. The company appeared to be cherry-picking data to suit its messaging, Mr. Blumenthal said.
“To be very blunt, it is more concealment and deception,” Mr. Blumenthal said in an interview before the hearing. “I am increasingly convinced that they are incapable of holding themselves accountable, and therefore the public, either through users or the Congress, has to impose accountability.”
The research appears to contradict public statements by Facebook’s chief executive, Mark Zuckerberg, and the executive in charge of Instagram, Adam Mosseri. Both have long downplayed warnings that Instagram — through filters that can enhance images and a “like” button that can be used as a gauge of popularity — created a fraught environment for young users and made many teenagers feel worse about themselves.
This week, Mr. Mosseri announced that Facebook would pause plans to release a version of Instagram aimed at children in elementary and middle school.
Mr. Mosseri has argued that The Journal’s article on Instagram took research out of context, and said the number of teenagers in the study was “quite small.” He has said many teenagers report positive experiences on Instagram.
Ms. Davis, who has led safety at Facebook for seven years, is expected to reiterate that message in the hearing. The company has defended the idea of an app for children, like YouTube Kids, saying it could provide stronger safety and privacy features for young children than the main Instagram app.
Chicago’s brawny tabloid has entered into a merger agreement with the nonprofit organization behind the public radio show “This American Life.”
The Chicago Sun-Times, once home to the film critic Roger Ebert and the columnist Mike Royko, and Chicago Public Media, the owner of the city’s National Public Radio affiliate, WBEZ, announced on Wednesday that they had signed a nonbinding letter of intent that would allow the organization to acquire the paper. If the deal goes through, the publication that bills itself as Chicago’s oldest continuously published newspaper will become part of the nonprofit group.
“This would allow us to invest in our people, improve the news products we create and strengthen our digital future,” Nykia Wright, the Sun-Times chief executive, said in a statement.
The potential deal stands in contrast with the one reached by The Sun-Times’s age-old rival, The Chicago Tribune, whose parent company, Tribune Publishing, was sold this year to the New York hedge fund Alden Global Capital.
The Sun-Times came about with the 1948 merger of The Chicago Sun and The Chicago Daily Times. The tabloid was owned by the extended family of the Chicago department store magnate Marshall Field before it was sold to Rupert Murdoch for $90 million in 1983. Three years later, Mr. Murdoch flipped it to a group of investors for $145 million.
After a series of further ownership changes, and an attempt by Tribune Publishing to buy the paper, a group of local unions and businessmen, including Michael Sacks, an investor, and Rocky Wirtz, the owner of the Chicago Blackhawks hockey team, took ownership of The Sun-Times in 2019.
WBEZ, the noncommercial radio station, might be best known for “This American Life,” the narrative audio show hosted by Ira Glass, which has had an outsize influence on podcasting. (Last year, The New York Times announced a partnership with “This American Life,” which WBEZ no longer owns.)
Matt Moog, the interim chief executive of Chicago Public Media, said a merger “has the potential to be both a light and a hope for Chicago news.”
Alden Global Capital’s purchase of Tribune Publishing, which owns The Baltimore Sun, The Daily News and several other metropolitan dailies in addition to The Tribune, gained shareholder approval in May. The sale was resisted by many journalists who cited the hedge fund’s penchant for cutting costs at the papers it already owned through a subsidiary, MediaNews Group.
The Sun-Times’s potential move to local nonprofit ownership would mirror the corporate structure of The Philadelphia Inquirer, which in 2016 was donated by its owner, H.F. Lenfest, a cable magnate, to the Lenfest Institute for Journalism, a nonprofit organization he had established.
Jim Friedlich, the chief executive of the Lenfest Institute, said in an email that he had advised Chicago Public Media on its potential acquisition of The Sun-Times.
“The city’s news capacity has been gutted over the years by out-of-town hedge fund owners, the secular decline of print and a failure to invest in the digital transformation of local news products,” Mr. Friedlich said. “Today’s announcement is wonderful news and a model for other public media and local newspapers to emulate.”
After 18 months during which it subsidized 11.6 million jobs, Britain’s government-funded furlough program ended on Thursday, along with some other pandemic relief measures. While it marked another milestone in Britain’s efforts to put the pandemic in the past, the country is experiencing a slowing economic recovery and increasingly severe supply chain disruptions.
Facing this uncertain recovery, the government announced a new pot of money on Thursday to support families as the country heads into what is expected to be a hard winter, with rising energy prices, higher inflation and cuts to benefits for millions of people.
Beginning in October, local authorities can distribute money from a 500 million-pound ($673 million) fund to households that need help paying for essential items such as food, clothing and utilities.
The fund “will provide a lifeline for those at risk of struggling to keep up with their bills over the winter, adding to the support the government is already providing to help people with the cost of living,” Rishi Sunak, the chancellor of the Exchequer, said in a statement.
For the Conservative government, the furlough program was a dramatic intervention. It helped pay up to 80 percent of wages for millions of people whose work schedules were cut throughout the pandemic and stopped unemployment spiking higher during lockdowns. By mid-August it had cost nearly £69 billion. At its peak, about nine million people were on the program, nearly a third of Britain’s work force.
The Resolution Foundation, which studies living standards, estimates that one million people were still on furlough as the program ended. Many analysts expect unemployment to rise even though job vacancies in Britain have climbed to a record high. There is a mismatch between the kinds of jobs that need filling and the skills held by people available to work, creating an unexpected labor market quandary.
But now the Treasury is trying to shore up its finances, looking for ways to raise tax revenue and cut spending. Grants for self-employed workers also ended on Thursday, and VAT, a type of sales tax, will be increased for hospitality, hotel and leisure attractions. The government is also ending a £20-a-week increase to a major government benefit program, Universal Credit, which will affect more than five million people.
The Joseph Rowntree Foundation, a charity dedicated to ending poverty, is one of many organizations that have urged the government not to end the extra Universal Credit benefit. On Thursday it said the new £500 million fund was an inadequate alternative.
“The support available through this fund is provided on a discretionary basis to families facing emergency situations,” Helen Barnard, the charity’s deputy director, said in a statement. “It does not come close to meeting the scale of the challenge facing millions of families on low incomes as a cost-of-living crisis looms and our social security system is cut down to inadequate levels.”
Last week, Kwasi Kwarteng, the government’s business secretary, said many households could experience a “very difficult winter.” Already, some commentators have compared the long lines at gas pumps, higher inflation and product shortages in supermarkets to the dreary days of the 1970s in Britain, which ended in the so-called Winter of Discontent.
Prices have recently been rising faster than expected. A related phenomenon — executives mentioning “inflation” on calls with investors — has also been running hot, the DealBook newsletter reports.
Mentions of “inflation” on earnings calls are at their highest in more than a decade, according to FactSet. The term came up at more than 220 S&P 500 companies during second-quarter earnings calls, beating the previous record, set one quarter earlier, showing that the surge in prices isn’t a passing preoccupation.
This doesn’t appear to be a big problem for profits — yet. A few companies have recently trimmed their forecasts because inflation was eating into their margins, but earnings expectations on the whole for S&P 500 firms are higher today than they were in June, according to FactSet.
Sherwin-Williams cut its sales and earnings forecast this week, citing rising prices and shortages of raw materials. “We are increasing our full-year raw material inflation outlook to be up a high-teens percentage compared to last year,” John Morikis, the company’s chief executive, told analysts.
FedEx trimmed its full-year profit guidance last week, in part because of the “higher operating costs we are incurring,” said Mike Lenz, the company’s chief financial officer. FedEx is raising many of its shipping rates by nearly 6 percent starting next year.
At General Mills, “ideally you’d not like to go back to retailers multiple times or consumers with price increases, but we’re clearly not in an ideal market,” said Jeff Harmening, the company’s chief executive, adding, “People understand the need to revise plans.”
In the next few weeks, companies will start to report third-quarter results. Central bankers have said that supply disruptions could prolong a period of high inflation, so it’s a safe bet that the “I” word will remain a popular discussion topic.
Amazon has settled with two of its most prominent internal critics, staving off a public hearing over accusations that the company illegally fired the pair, lawyers for the parties told an administrative judge on Wednesday.
The former employees, Emily Cunningham and Maren Costa, said in a statement that Amazon would be required to pay their back wages and “post a notice to all of its tech and warehouse workers nationwide that Amazon can’t fire workers for organizing and exercising their rights.” They called the settlement “a win for protecting workers rights.”
The pair have said they were fired last year because they publicly pushed the company to reduce its impact on climate change and address concerns about its warehouse workers. Amazon has maintained that the former employees repeatedly broke internal policies.
An Amazon spokesman, Jose Negrete, said on Wednesday, “We have reached a mutual agreement that resolves the legal issues in this case and welcome the resolution of this matter.”
The settlement was reached at a high-wire moment for Amazon, which has pledged to be “Earth’s best employer” and is looking, in a tight labor market, to hire 40,000 corporate and tech workers and 125,000 warehouse workers in the United States.
In 2018, Ms. Costa and Ms. Cunningham, who worked as designers at Amazon’s Seattle headquarters, were part of a small group of employees who publicly pushed the company to do more to address its climate impact. They turned their efforts into an organization, Amazon Employees for Climate Justice, and helped get more than 8,700 Amazon colleagues to support its efforts.
Over time, Ms. Cunningham and Ms. Costa broadened their protests. After Amazon told them that they had violated its external-communications policy by speaking publicly about the business, their group organized 400 employees to also speak out, purposely violating the policy to make a point.
At the start of the pandemic, they announced an internal event for warehouse workers to speak to tech employees about their workplace safety conditions. Soon after, Amazon fired both women. Senator Elizabeth Warren, Democrat of Massachusetts, wrote Amazon expressing concerns over potential retaliation, and Tim Bray, an internet pioneer and a former vice president at Amazon’s cloud computing group, resigned in protest.
This spring, lawyers with the National Labor Relations Board said they had found merit in Ms. Costa and Ms. Cunningham’s accusations that they were fired in retaliation for their organizing. The agency’s Seattle office then brought a case against Amazon, saying the company “enforced its facially neutral External Communications and Solicitation policies selectively and disparately in order to restrict employees from engaging in protected, concerted activities.”
The hearing was scheduled to start Tuesday morning, but was delayed as the parties worked on a settlement.
The case is one of many tangles the company has had with the labor board since the start of the pandemic. Most visibly, in August, a hearing officer of the N.L.R.B. recommended that the agency throw out a union election at an Amazon warehouse in Bessemer, Ala., finding that Amazon’s “conduct interfered with the laboratory conditions necessary to conduct a fair election.” Amazon denies any interference and has vowed to appeal if the regional office of the labor board agrees with the recommendation and formally overturns the election, which rejected the union.
The Delta variant of the coronavirus is on a rampage in Vietnam, the second-biggest supplier of apparel and footwear to the United States after China, highlighting the uneven distribution of vaccines globally and the perils that new outbreaks pose to the world’s economy, Sapna Maheshwari and Patricia Cohen report for The New York Times.
With the holiday season fast approaching, many American retailers are anticipating delays and shortages of goods, along with higher prices tied to labor and already skyrocketing shipping costs. Nike cut its sales forecast last week, citing the loss of 10 weeks of production in Vietnam since mid-July and reopenings set to start in phases in October. Everlane said it was facing delays of four to eight weeks.
The densely packed industrial hub of Ho Chi Minh City, the country’s virus epicenter, has experienced a series of increasingly stringent lockdowns, with many factories temporarily closing in July. That paralyzed commercial activity and added stress to a strained global supply chain. Although new cases have started to decline, the government extended the lockdown through the end of September, as it struggles to vaccinate its residents.
American companies are looking outside Vietnam, often returning to Chinese factories that they worked with previously or finding partners in other countries that are not in the middle of a surge.
Whether they will have enough time to shift before the holidays is questionable. “September is a bad time to reposition things,” said Gordon Hanson, an economist and urban policy professor at Harvard Kennedy School.
Retailers are already trying to prepare customers. L.L. Bean is warning about holiday shipping delays and shortages and urging early shopping. READ THE ARTICLE →
The economy has begun to rebound from the coronavirus pandemic, but millions of people still haven’t returned to work. Some are looking but haven’t been able to find jobs. Others can’t work because of child care or other responsibilities. Still others say the pandemic led them to rethink how they prioritize their careers.
What is keeping you on the sidelines right now? How are you getting by financially without a steady paycheck? How has your time away from work changed your life, both now and in the future?
Today in the On Tech newsletter, Shira Ovide writes that those online eyeglass and mattress start-ups aren’t tech. But they are innovative.