From AT&T’s court filing:
“Time Warner accounts for a valuable, but exceptionally thin, slice of all the video content available to consumers, and AT&T’s legacy video distribution platforms are being squeezed by cable incumbents and tech giants alike.”
Another key part of AT&T’s argument: Its deal for Time Warner is a vertical merger, a union of two noncompeting companies that traditionally has not faced government opposition. While the Justice Department has said that times, and definitions of competition, have changed, AT&T has stuck by traditional metrics that would permit such a combination.
To prove that it would not abuse any increase in power that buying Time Warner would afford, AT&T said that it had offered rival distributors the same sort of deal that the government allowed in the last big vertical media merger: Comcast’s purchase of NBCUniversal.
• Letting rival video providers make use of so-called baseball-style arbitration in any dispute involving Turner’s channels. That means each party offers its competing resolutions to an arbitrator, who then picks one of the two.
• Preventing Turner from shutting down its service, or “going dark,” in the case of any dispute. Video subscribers have gotten increasingly used to such tactics when a channel operator and a video provider have battled over licensing fees.
This just in: Judge has ruled in favor of Trump in CFPB leadership tiff.
The Associated Press reports:
A federal judge has ruled in favor of President Trump in his effort to appoint the acting head of nation’s top financial watchdog agency, the Consumer Financial Protection Bureau.
In a ruling from the bench Tuesday afternoon, Judge Timothy Kelly declined to stop on an emergency basis the president from putting in place Mick Mulvaney, currently the White House’s budget director. In doing so, Kelly ruled against Leandra English, the CFPB’s deputy director. English had requested an emergency restraining order to stop Mulvaney from becoming the acting director of the bureau.
The leadership of the bureau had been thrown into chaos over the weekend after its permanent director, Richard Cordray, resigned Friday and appointed Ms. English as his successor. President Trump then quickly named his budget director as the acting director of the Consumer Financial Protection Bureau.
The numbers are in…
And the holiday shopping season got off to a strong start, reports the New Times’s Michael Corkery. Here’s a look at the numbers from the the National Retail Federation:
• More than 174 million Americans shopped from Thursday through Monday.
• Older millennials (ages 25 to 34) drove the five-day shopping spree, spending an average of $419.52.
• About 58 million consumers shopped online only.
• About 51 millionshopped in stores only.
• Roughly 64 million shopped in both stores and online.
What are the concerns of the G.O.P senators who might oppose the tax bill?
The Senate could vote on its tax overhaul as soon as this week. But first, Senate leaders need to win over a small number of Republican senators, and they cannot afford to lose more than two of those lawmakers for the bill to pass, assuming Democrats are unified in opposition.
The Mooch has left his Tufts advisory position.
According to The Boston Globe:
“This morning, Anthony Scaramucci informed The Fletcher School that he is resigning his position on the school’s Board of Advisors, effective immediately. We thank Mr. Scaramucci for his past service to Tufts and wish him well,” Admiral James Stavridis, dean of the school said in a statement.
This was of course after the former financier and White House communications director threatened to sue Tufts’ student newspaper and an op-ed writer over two columns that called him “unethical.”
Dan Drezner, a professor at the Fletcher School who wrote an op-ed about the situation, tweeted congratulations to the Tufts student who had sought to remove Mr. Scaramucci from his position.
Private equity can’t get enough casual dining.
Arby’s Restaurant Group, the sandwich chain owned by private equity firm Roark Capital Group, said it will buy Buffalo Wild Wings for $157 a share.
The deal, valued at $2.9 billion including debt, continues a spate of private equity-powered restaurant takeovers as casual dining brands struggle with competition and high food costs.
Atlanta-based Roark, which has holdings in food service companies such as Auntie Anne’s, Corner Bakery Cafe and Cinnabon, is providing the backing equity for the Buffalo Wild Wings transaction.
Last month, the Ruby Tuesday casual dining chain said it had agreed to be acquired by NRD Capital, another private equity firm based in Atlanta.
Earlier this month, the bakery-cafe chain Au Bon Pain was purchased by Panera Bread, which itself was bought this spring by private equity giant JAB Holding Co. JAB, a family-held European company thatalso owns the Krispy Kreme Doughnuts chain as well as coffee brands Keurig Green Mountain, Peet’s Coffee and Caribou Coffee.
Buffalo Wild Wings, known to fans as “B-Dubs,” has struggled with the rising cost of chicken wings, which it said recently were more than 25 percent higher year over year in its most recent quarter.
Sally Smith, who has been chief executive of the company for more than two decades, said this summer that she will retire by the end of the year. The announcement followed a rancorous proxy fight by activist investor Mick McGuire, which resulted in his firm Marcato Capital Management placing three directors — including Mr. McGuire — onto Buffalo Wild Wings’ board.
“The management team of Buffalo Wild Wings communicates its strategic and financial rationale to the investment community with inveterate avoidance of specificity,” Mr. McGuire wrote in a letter last year to the chicken chain’s leadership. “The chronic absence of detail around even the most basic of metrics causes us to question whether the right questions are being asked and answered.”
Marcato, which owns 6.4 percent of Buffalo Wild Wings, said it will vote in favor of the Arby’s deal. Both the Arby’s and Buffalo Wild Wings boards unanimously approved the acquisition.
Shares of Buffalo Wild Wings were up 6.3 percent, or $9.23 a share, to $155.63 in recent trading Tuesday.
Will Republican Senate leaders be able to come up with 50 votes?
That’s the big question as the Republican tax bill hurtles through Congress. And as of Monday night, it was clear that they still had work to do. At least a half-dozen Republican senators have expressed concerns about the tax overhaul.
Here’s a list
1. Bob Corker Tennessee
2. Jeff Flake Arizona
3. James Lankford Oklahoma
4. Jerry Moran Kansas
5. Susan Collins Maine
6. Ron Johnson Wisconsin
7. Steve Daines Montana
Republican leadership cannot afford to lose more than two of those lawmakers for the bill to pass, assuming Democrats are unified in opposition.
The Senate Budget Committee is scheduled to meet at 2:30 p.m. to approve the Senate’s tax rewrite, which will actually consist of two pieces of legislation melded together: the tax overhaul and a separate measure that would open up the Arctic National Wildlife Refuge in Alaska to oil and gas drilling.
But even this procedural step could hold drama. Bob Corker of Tennessee and Ron Johnson of Wisconsin, both sit on the Budget Committee. On Monday, both Mr. Corker and Mr. Johnson said they could oppose the bill in the Budget Committee if their concerns were not addressed.
Complicating matters, Axios writes:
Johnson and Corker sit on opposite ends of a Catch 22 seesaw: Johnson wants lots more money for “pass-through” businesses. But every extra dollar you give him is another dollar that will blow out the deficit and worry deficit hawks like Corker, Flake and McCain.
WeWork and Meetup: blending work and play.
The deal, which will be announced this morning, is part of WeWork’s plan to move beyond providing co-working spaces. The wildly ambitious company, which is already planning a kindergarten for budding entrepreneurs, wants to fit into more aspects of everyday life.
That’s why it is spending an undisclosed amount to buy Meetup, the 16-year-old social network that connects like-minded hobbyists.
“It’s like a magical puzzle that fits together,” Scott Heiferman, the chief executive and a co-founder of Meetup, told DealBook’s Michael J. de la Merced.
Having Meetups in WeWork spaces helps make use of office locations that tend to be busy during the day and less so after hours. But Shiva Rajaraman, WeWork’s chief product officer, asserted that the union was about building a bigger sense of community: “This is a great tool to introduce people to their passions.”
How it came together: Mr. Heiferman and his team, who hadn’t raised outside money in years, began looking for investments to finance international expansion. That eventually led to a meeting with WeWork’s co-founder and C.E.O., Adam Neumann.
One of the biggest unfriendly takeover bids of the year has gone away.
Emerson Electric withdrew its $29 billion acquisition offer for Rockwell Automation today after failing three times to get its target to come to the negotiating table. The reason why? Primarily that Emerson couldn’t meet its fellow industrial parts maker’s price expectations — and had no other negotiating levers to pull.
Rockwell had repeatedly said that it viewed the takeover bids as too low. By going public, Emerson was hoping to get shareholders in the target company to apply pressure on management. That didn’t work, however: Shares in Rockwell never meaningfully approached the level of any of its suitor’s proposals, suggesting that investors weren’t particularly hoping for a deal.
And Rockwell had some defenses that Emerson couldn’t breach, including a staggered board and no provision for shareholders to call special meetings. That meant Emerson couldn’t wage a proper proxy fight to replace directors at the target company’s board.
“Instead of engaging in constructive dialogue, the Rockwell board decided to let this unique and value-generative opportunity go unexplored,” David Farr, Emerson’s chairman and C.E.O., said in a statement.
Looks like deal junkies will have to wait for Broadcom to go hostile against Qualcomm for their merger fight fix.
Alwaleed’s arrest makes business think twice about Saudi Arabia.
It has now been more than three weeks since Prince Alwaleed bin Talal, the face of the kingdom’s business elite for decades, was detained without explanation as part of a purported anticorruption drive. And the mystery is making many potential business partners of Saudi Arabia nervous.
For his latest column, Andrew spoke with executives including Bill Gates and the former Citigroup chairman Dick Parsons. Here’s what Mr. Parsons said:
“There is no transparency. Nobody understands what is going on. It is unclear why or what the rationale is. If you’re an investor or a businessperson, you’re going to take a step back from the starting line and say, ‘I’m just going to keep my money in my pocket.’ ”
And Mr. Gates called the prince “an important partner” in both business and philanthropic matters.
What executives are whispering about: Whether Crown Prince Mohammed bin Salman, who has led the arrests of Saudi royals, plans to seize Prince Alwaleed’s Rotana entertainment company. It’s the biggest media player in the region and owns television, magazine and radio assets.
‘It’s now a severely wounded animal.’
That was what John Huey, a former editor in chief of Time Inc., said of his former employer after it agreed to sell itself to Meredith for $2.8 billion.
Employees of the publisher have demanded to know whether the Koch brothers, the billionaire industrialists who helped finance the deal, would try to exert political influence through magazines like Time, according to the NYT.
It’s not clear whether the Kochs will have the chance to do so. The FT reports that Meredith is considering breaking up Time Inc. and selling off news-focused magazines like Time, Fortune and Sports Illustrated (a prospect that we raised yesterday).
The Koch division behind the deal
Many people may not have heard of Koch Equity Development. But the unit of Koch Industries that lent $650 million to Meredith has helped plenty of other takeover transactions, according to the WSJ. Among them: the sales of Infor for $2 billion and of ADT for about $7 billion.
The Time Inc. flyaround:
• Our friend Joe Nocera predicts that neither Time nor his publishing alma mater, Fortune, will survive the move to Meredith. (Bloomberg View)
• Tara Lachapelle writes that while Time Inc. shareholders are receiving a below-average takeover premium, “This is a situation in which investors will want to take the money that Meredith and the Kochs are offering and run.” (Gadfly)
Not every business mogul supports the tax overhaul.
Ken Griffin of Citadel — a financier who would stand to benefit — said that he didn’t need his taxes cut that much:
“You would usually reserve tax reform of this nature for right in the midst of a recession,” the billionaire said in an interview with CNBC’s Leslie Picker. “Do we need to cut taxes as much as we are? Probably not. Do we need to reform taxes, simply taxes, and keep America competitive. Absolutely.”
And Randy Levine, the president of the Yankees and a self-described longtime supporter of Mr. Trump, wrote an open letter to the president on the conservative news site Newsmax calling for big changes to the proposed tax plans.
Where we stand on the Senate Budget Committee vote:
Republican leaders have been feverishly trying to devise compromises that would win over their colleagues on the committee before today’s scheduled vote on whether to forward the tax proposal to the full Senate. Two Republican members of the committee, Ron Johnson of Wisconsin and Bob Corker of Tennessee, have expressed opposition to the current legislation.
• Last-minute changes to the Senate’s tax bill could personally benefit Mr. Trump because of his stakes in so-called pass-through entities, according to a new analysis. (WaPo)
• Overseas airlines — including Middle Eastern carriers fighting with their American counterparts — would have to pay corporate taxes on part of their profits under the proposal. (WSJ)
• One of the lesser known beneficiaries of the House plan is a tuna cannery in American Samoa. Its tax break would be reinstated. (WSJ)
Don’t forget the bigger stakes in the C.F.P.B. fight.
The White House’s selection of Mick Mulvaney as acting director is part of Mr. Trump’s push to deregulate Wall Street, the NYT reported. The effort is built on the premise that the financial industry has been left “devastated and unable to properly serve the public,” according to a presidential tweet.
For the moment, there are still two people claiming to be the leader of the agency. Neither Leandra English nor Mick Mulvaney have backed down from their claims to the acting director role. A judge heard opening arguments in Ms. English’s lawsuit against Mr. Trump over who is acting director of the consumer watchdog.
Many legal experts, including our friend Steven Davidoff Solomon of U.C. Berkeley, have supported the White House assertion that it can pick the agency’s next leader based on a federal statute.
Don’t read too much into SoftBank’s low Uber valuation.
The $48 billion level that SoftBank is offering as it seeks to buy up shares from existing investors is an opening bid, and the NYT notes that the price is likely to fluctuate as the tender offer proceeds.
Moreover, secondary offerings like what SoftBank is pursuing tend to be at a lower valuation than primary ones in which a company sells new shares. (Uber is also selling new stock to the Japanese conglomerate at its current valuation of $78.5 billion.)
But some investors will be disappointed in the lower valuation in any case, and will see in it an appraisal of Uber’s challenges: its chronically fractious board; its grappling with regulatory challenges around the world; and its latest headache, a hacking scandal that had been kept under wraps until recently.
The Uber flyaround:
• Illinois and the city of Chicago have sued the ride-hailing company over that hack. (Recode)
• Waymo, the self-driving car unit of Alphabet, has sought a delay in its court battle with Uber after new evidence emerged in the case. (NYT)
Bitcoin breaks the $10,000 mark.
At least, it has on some Korean exchanges. And it’s poised to do so on American markets this morning.
Bitcoin supporters feel vindicated for now, according to the NYT — but some are preparing for a downturn. As one commenter on Reddit put it, “This is officially madness. I am going to prepare myself for a large correction.”
Quote of the Day
“With these legal shenanigans, however, the Mooch has traveled about three counties past the line, and just kept on going.”
— Dan Drezner, a professor at Tufts University’s Fletcher School of Law and Diplomacy, in a WaPo op-ed on Anthony Scaramucci’s threat to sue the school’s student newspaper over two columns that called the former financier “unethical.”
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