Good Wednesday. (Want this by email? Sign up here.)
AT&T beats the government, again
A federal appeals court ruled against the Justice Department on its bid to block AT&T’s $85.4 billion takeover of Time Warner. It’s the final blow to the government’s two-year effort to thwart one of the biggest media mergers in years.
A three-judge panel ruled that a lower court had applied antitrust laws correctly. “The government’s objections that the District Court misunderstood and misapplied economic principles and clearly erred in rejecting the quantitative model are unpersuasive,” Judge Judith Rogers wrote on behalf of the panel.
AT&T is free to reboot Time Warner. Now a division known as WarnerMedia, it will be turned into a streaming-video business — AT&T’s version of what has become the TV industry’s go-to strategy. Among its planned products: a service that combines HBO, Warner Bros. movies like “Wonder Woman” and shows like “Friends.”
The Justice Department won’t appeal the decision. The court’s ruling was a blow to the department’s top antitrust official, Makan Delrahim, who had hoped the case would strike a blow against so-called vertical mergers, which combine companies with complementary businesses.
Where should Mr. Delrahim look now? Joe Nocera of Bloomberg Opinion argues that there are far larger consolidation problems in other industries, including tech and airlines.
Elon Musk won’t stop fighting the S.E.C.
Many executives facing a contempt of court allegation from the Securities and Exchange Commission would stay quiet. Not Elon Musk.
“Something is broken with S.E.C. oversight,” the Tesla C.E.O. tweeted yesterday. He was replying to a follower who complained about the contempt accusation moving Tesla’s stock.
That will annoy S.E.C. officials, who worry that Mr. Musk isn’t taking their previous settlement with him seriously, according to the WSJ. Tesla lawyers conceded to the S.E.C. that they did not vet a tweet by Mr. Musk about production targets, though they helped write a subsequent “clarifying” tweet.
The S.E.C. must try to punish Mr. Musk, some experts say. Officials “have to enforce this settlement,” Charles Elson of the University of Delaware told the FT. “If they let this go then every C.E.O. will be saying they’re special.” But other lawyers think Mr. Musk’s actions underscore how toothless the S.E.C. is.
What will Michael Cohen say about Trump?
All eyes will be on Michael Cohen at 10 a.m. Eastern today as he testifies before the House Oversight and Reform Committee. Mr. Cohen, once President Trump’s personal lawyer, has prepared testimony in which he’s expected to call his onetime boss a “con man” and a “cheat,” Nicholas Fandos and Maggie Haberman of the NYT report:
• “Mr. Cohen is likely to lay out a picture of Mr. Trump that is fundamentally at odds with the take-charge, top-flight businessman persona he developed on the reality show ‘The Apprentice’ over the course of a decade.”
• “Among the most explosive and potentially damning aspects of Mr. Cohen’s testimony before the oversight committee will be providing evidence of potential criminal conduct since Mr. Trump became president, according to people familiar with the plans.” Some of that is tied to hush payments made to the porn star Stormy Daniels.
• Mr. Cohen is also expected to discuss the role of Allen Weisselberg, the Trump Organization’s C.F.O., in those payments, as well as how long Mr. Trump continued to discuss plans for a Trump Tower in Moscow in 2016.
• “He will also describe the president inflating or devaluing his net worth, referring to a financial statement of Mr. Trump’s that Mr. Cohen has in his possession, the people said.”
• The scheduled testimony has already sparked some controversy, with Rep. Matt Gaetz, a Florida Republican and ally of the president, threatening to reveal what he said were Mr. Cohen’s extramarital affairs. Mr. Gaetz subsequently apologized.
Brexit might be pushed back a while
Prime Minister Theresa May has agreed that Parliament should have the option of seeking to delay Britain’s exit from the E.U., Stephen Castle of the NYT reports.
Her new plan offers lawmakers a vote on her Brexit deal by March 12. If that is rejected, a second vote by March 13 will let Parliament choose to leave the E.U. without a deal. If that is rejected, a vote will be held by March 14 that would allow lawmakers to request a “short, limited extension” to the process.
“Mrs. May’s reversal was striking because she had insisted dozens of times in Parliament that Britain would definitely leave the European Union on schedule on March 29,” Mr. Castle writes. But it is “the latest in a long line of retreats as she has struggled to cajole the fractious Tories into supporting a revised version of the deal.”
“While her move lessens significantly the risk of a potentially disastrous ‘no deal’ Brexit by the March 29 deadline, an extension of the negotiating period will merely delay that danger by a couple of months, not end it,” Mr. Castle adds.
All 27 other E.U. governments would have to approve a postponement, and “unless Britain plans to hold a general election or another referendum, the delay is not likely to extend beyond early July, when a newly elected European Parliament is scheduled to meet.”
More: The news reduces the significance of a series of parliamentary votes on a Brexit motion scheduled for later today. The pound is rebounding. And the E.U. has agreed on tough rules for London-based financial services companies operating on the Continent after Brexit.
The F.T.C. assembles a Big Tech task force
The Federal Trade Commission announced yesterday that it had a new team of officials to police tech giants.
The task force will have 17 staff lawyers dedicated to “monitoring competition in U.S. technology markets, investigating any potential anticompetitive conduct in those markets, and taking enforcement actions when warranted.”
Tech “grows more important every day” in both the economy and daily life, the F.T.C.’s chairman, Joe Simons, said. “It makes sense for us to closely examine technology markets to ensure consumers benefit from free and fair competition.”
It’s not the F.T.C.’s first move against the tech giants. It was reported earlier this month to be considering a record multibillion-dollar fine for Facebook over privacy violations. And critics have increasingly called for breaking up big tech companies — especially the likes of Facebook, which controls Instagram and WhatsApp.
The F.T.C. competition director sees “distinct challenges” for antitrust enforcement in tech. That director, Bruce Hoffman, is also quoted at the Verge as suggesting that some companies could be forced to “spin off” previous acquisitions.
A Trump tax rise will hit 11 million people
President Trump’s decision to cap a popular tax break will affect 11 million filers this year, Jim Tankersley of the NYT reports:
• A $10,000 cap on deductions of state and local taxes from federal income taxes, which was intended to reduce the cost of Mr. Trump’s $1.5 trillion tax cut, will mean filers cannot deduct $323 billion on their 2018 federal returns.
• “Many filers will benefit from different parts of the tax cuts, such as the elimination of the alternative minimum tax and the reduction in marginal tax rates. Additionally, the law doubled the standard deduction that taxpayers may take, along with a host of other tax changes,” Mr. Tankersley writes.
• “The so-called SALT cap is, however, most likely to affect the richest Americans: More than half of the tax increases from the change will fall on the top 1 percent of income earners, according to estimates by the independent Tax Policy Center in Washington.”
Is the global economy headed up or down?
Some of the biggest figures in finance and economics have conflicting takes.
The Fed’s chairman, Jay Powell, told the Senate Banking Committee yesterday that current economic conditions were “healthy” and their outlook “favorable.” But he added that there were “crosscurrents and conflicting signals,” which meant that financial conditions were “now less supportive of growth than they were earlier last year.”
Jamie Dimon of JPMorgan Chase is also wary. “We are prepared for a recession,” he said in the bank’s annual presentation to investors yesterday. “We’re not predicting a recession. We’re simply pointing out that we are very conscious about the risks we bear.”
But Goldman Sachs is more sanguine. In a note published yesterday, economists at the firm argued that “some green shoots are emerging that suggest that sequential growth will pick up from here.” They believe the U.S. economy stands a good chance of picking up, and that China’s might, too.
Deutsche Bank hired Robert Innocentin from Bank of America as a managing director for its financial sponsors team, part of its investment-banking business.
Goldman Sachs has reportedly hired 100 employees to work in its nascent corporate cash management business, which aims to challenge Citigroup and JPMorgan Chase.
The speed read
• EBay is reportedly near a deal that would give the activist hedge funds Elliott Management and Starboard Value seats on its board and prepare the online marketplace for a breakup. (WSJ)
• Sunrise Communications is in “advanced discussions” to buy Liberty Global’s Swiss unit for $6.3 billion. (Reuters)
• The British retailer Marks & Spencer will pay up to £750 million, or $996 million, to form a joint venture with the online grocery specialist Ocado. (FT)
• Volkswagen plans to invest $1.7 billion into Ford Motor’s self-driving car division. (WSJ)
• ThirdLove, a lingerie start-up challenging Victoria’s Secret, raised $55 million from K. Catterton, Katie Couric and the YouTube C.E.O. Susan Wojcicki. (Forbes)
Politics and policy
• President Trump may drop a demand that North Korea eliminate nuclear weapons in pursuit of a peace deal. (NYT)
• The Senate Finance Committee grilled the C.E.O.s of seven pharmaceutical companies about lowering drug prices. (WSJ)
• The Congressional Budget Office said that the U.S. government will run out of cash by early fall if its debt limit isn’t increased. (Bloomberg)
• The House passed a bill designating over one million acres of wilderness for environmental protection. It still needs Mr. Trump’s approval. (NYT)
• Gary Cohn is writing a memoir that covers his time in the White House. (CNBC)
• President Trump might be undermining his trade negotiators, weakening a potential deal with China. (NYT)
• Facebook dropped the ball on privacy and fake news. Could it do better on hate speech? (Vanity Fair)
• Also: Its new subscription platform for content creators, which would compete with Patreon, appears to offer lousy terms. (Verge)
• At the Mobile World Congress in Barcelona, American officials called Huawei “duplicitous and deceitful.” Meanwhile, the United Arab Emirates announced that it plans to use Huawei hardware to build high-speed wireless networks. (WSJ, NYT)
• I.P.O investors will find Lyft and Uber hard to value, because they bear so little relation to other companies. (Bloomberg Opinion)
Best of the rest
• Fiat Chrysler plans to invest $4.5 billion around Detroit in the next three years, updating plants and creating jobs. (NYT)
• A three-hour malfunction affected after-hours trading of U.S. Treasuries, stock futures and commodities last night. (Bloomberg)
• Jay Powell, the Fed’s chairman, says that the idea that America might not honor its debt obligations “can’t even be considered.” (CNBC)
• Walmart is doubling down on efforts to profit from advertising and selling customer data. (WSJ)
• U.S. automakers bet heavily on China’s booming car market and cheap labor. It hasn’t paid off. (NYT)
• If tough bosses get results, they’re of a sort researchers struggle to find. (NYT)
Thanks for reading! We’ll see you tomorrow.
We’d love your feedback. Please email thoughts and suggestions to firstname.lastname@example.org.
Source link Business