Good Wednesday morning. Expect a lot of legal fights over the F.C.C.’s net neutrality move. And we’re still trying to figure out if AT&T had a bad week or a good one. A note to readers: We’ll be taking Thanksgiving and Black Friday off. Enjoy the holiday, and see you all on Monday.
In choosing to dismantle net neutrality regulations, the F.C.C. chairman Ajit Pai has pleased traditional broadband providers who want to charge for some kinds of internet traffic while angering online tech giants who want all internet services to be treated equally. Expect the court battles to begin soon.
Here’s how Mr. Pai described his thinking:
(Here’s the NYT explainer on what the rule change might mean.)
Verizon’s statement: “We continue to believe that users should be able to access the internet when, where, and how they choose.”
Facebook’s statement: “We are disappointed that the proposal announced today by the F.C.C. fails to maintain the strong net neutrality protections that will ensure the internet remains open for everyone.”
Extra credit: The F.C.C.’s next fight will be with states that seek to impose net neutrality on a more local level, Politico reports.
• Devin Coldewey notes that millions of comments opposing a rollback of net neutrality rules were posted to the F.C.C.’s website. “For someone who claims to be working for the American people, F.C.C. Chairman Ajit Pai sure doesn’t seem to care what they have to say.” (TechCrunch)
• Shira Ovide writes, “No matter what the FCC does, America’s internet is not an equal place and it’s only going to become less fair.” (Bloomberg Gadfly)
Today’s DealBook briefing was written by Andrew Ross Sorkin and Michael J. de la Merced in New York and Amie Tsang in London.
On the bad side: The Justice Department sued to block its $85.4 billion bid for Time Warner. And President Trump once again weighed in on that transaction, saying, “Personally, I’ve always felt that that was a deal that’s not good for the country. I think your pricing is going to go up.”
On the good side: The F.C.C.’s net neutrality move. Also, potentially, Mr. Trump’s comments, which keep alive the question of whether the Justice lawsuit was politically motivated. And the case now has a judge — the man who approved Comcast’s takeover of NBCUniversal, a deal very similar to AT&T’s.
Spencer Kurn of New Street Research described the apparent contradiction of the government’s actions:
Or as Jennifer Saba of Breakingviews put it, “The Trump administration and tight coordination of policy are hardly synonymous, so it’s not surprising that watchdogs are roaming all over the field.”
Legal experts are split on the strength of the government’s case although many acknowledge that the Justice Department will have a hard time battling previous case law involving “vertical” mergers.
Extra credit: Bloomberg points out that Time Warner’s top five executives are set to receive as much as $216 million if the deal with AT&T goes through.
Two prominent merger advisers told Michael and Andrew that while the conditions and needs behind a surge in deal making are still there, the Justice Department’s move has given pause to many.
Blair Effron, Centerview Partners: “Is it idiosyncratic, or a different perspective on what the regulatory framework to going to be? We don’t know yet.”
Aryeh Bourkoff, LionTree: “This event does not eliminate the need for transformational events or scale in these industries. However, it has created a heightened level of uncertainty in the deal environment.”
And Rich Greenfield of the research firm BTIG told CNN that media M. & A. is delayed for now: “Nobody knows the rules of the road.”
• John Lasseter, who helped found Pixar and was one of the Walt Disney Company’s most important executives, will take a leave after unspecified “missteps” that made staff feel “disrespected or uncomfortable.” (NYT)
• Charlie Rose was officially fired by CBS and dropped by PBS. (NYT)
• Two female-led investor groups have emerged as potential buyers for the Weinstein Company, each with promises of helping sexual misconduct victims as part of their bids. But some media executives wonder if the offers are serious, or if they’re more about making statements. (NYT)
• Bob Weinstein paid about $600,000 to two female employees of Miramax who accused his brother, Harvey, of sexual harassment and assault. (New Yorker)
Senator Lisa Murkowski of Alaska, who helped torpedo Congress’ previous efforts to overturn the Affordable Care Act, may accept the Senate tax legislation’s elimination of a key part of the A.C.A. “Eliminating this tax would allow Alaskans to have greater control over their money and health care decisions,” she wrote in The Fairbanks Daily News-Miner.
Ms. Murkowski signaled that she might back the tax plan if it passed alongside legislation that shores up state health insurance exchanges.
But there are still a handful of Republican senators on the fence about the Senate’s tax proposal — and three of them voting no would kill the legislation.
The tax flyaround
• The real estate industry is worried about the tax bill making homeownership less valuable and has been calling legislators, warning clients about future tax bills and staging protests. (NYT)
• An argument that the House bill, which removes tax breaks for graduate students, could undermine research in STEM fields. (Recode)
And it’s another headache for his successor, Dara Khosrowshahi.
To recap: Last year, hackers stole data on Uber drivers and customers, then demanded $100,000 ransom. The company paid off the hackers, who signed nondisclosure agreements, and then covered up the payments by disguising them as “bug bounties.”
“While I can’t erase the past, I can commit on behalf of every Uber employee that we will learn from our mistakes,” Mr. Khosrowshahi wrote in a company blog post about the incident, which emerged during a board review.
The incidents didn’t happen under Mr. Khosrowshahi’s tenure, and Uber has already dismissed its chief security officer. But it raises yet more questions about what went on while Mr. Kalanick was C.E.O. — a pertinent issue as the company prepares to go public in the next few years. A reminder: Mr. Kalanick is still on the board.
This time, it involves words used by the activist hedge fund manager to an African-American aide of Mayor Bill de Blasio’s.
From Shane Goldmacher of the NYT:
Mr. Loeb told the NYT that his comments weren’t aimed at Mr. Buery but at “the broad institutional failing by our government to confront a broken educational system.” (The financier is the chairman of Success Academy, a network of charter schools.)
It isn’t the first time Mr. Loeb has gotten into trouble for loaded language.
An important question: How much damage do these controversies do to Mr. Loeb’s much-cherished issue, charter schools?
“If you’re stupid enough to buy it, you’ll pay the price for it one day,” the JPMorgan Chase C.E.O. once said of the digital currency. Now his firm’s clients may be able to do just that: the bank is considering providing clients access to CME’s new Bitcoin product through its futures brokerage unit, according to the WSJ.
As David Fickling at Bloomberg Gadfly writes:
Behind the veil: As Bitcoin goes more mainstream — you can buy Bitcoin on Square — the NYT looks at Bitfinex, the opaque exchange that has had legal troubles and has been hacked twice.
She announced plans to retire as Hewlett-Packard Enterprise’s C.E.O. yesterday, saying, “I’ve been working straight for 35 years.”
Remember that she almost had another gig — C.E.O. of Uber — until she overplayed her hand in negotiations with the ride-hailing company.
• Apple paid about $30 million to acquire Vrvana, a Canadian start-up which produces an augmented reality headset, according to people close to the deal. (TechCrunch)
• A Chinese conglomerate paid millions of dollars in bribes to officials in Chad and Uganda in exchange for oil rights in their countries, according to a criminal complaint filed in Manhattan. (NYT)
• With less than half the power on Puerto Rico restored, the company that was hired to repair the electrical grid said it was “standing down” because it was owed tens of millions of dollars for weeks of work. (NYT)
• During the past 12 months, Tesla has been burning money at a clip of about $8,000 a minute, or $480,000 an hour, Bloomberg data show, putting it on a pace that would exhaust its cash pile on Aug. 6. (Bloomberg)
• Hedge funds are demanding better terms from multibillion-dollar buyouts involving Chinese firms. (Bloomberg)
• The Saudi corruption investigation is expanding: The number of bank and investment accounts being frozen has exceeded the initial 2,000, according to a Saudi official. (WSJ)
• Akzo Nobel and Axalta Coating Systems abandoned talks to merge, after Nippon Paint Holdings made a cash bid for Axalta. (WSJ)
• Silicon Valley is bursting with fledgling venture capital funds thanks to a seemingly endless flood of cash from college endowments, nonprofit foundations, pension funds and wealthy executives craving tech riches in a low-interest world. (WSJ)
• A commitment to raising the bar for so-called systemically important financial institution status doesn’t guarantee action and no bank is too small to get it wrong. (Breakingviews)
• The Patent Trial and Appeal Board has saved companies more than $2 billion in legal fees and has challenged patent trolls, but is now under existential threat. (NYT)
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