Minimum Wages Are Rising Across the Country. Should They Apply to Minors?
The minimum wage is having a moment. As the cost of living sails past them, cities and states across the country are ditching the federal base and raising the pay floor to catch up. Last January, 11 states and the District of Columbia raised their minimum wage as the result of legislative action or voter initiatives. Twenty-nine states currently boast minimum wages above the federal rate, and cities like Seattle, San Francisco, and soon Los Angeles—whose city council is poised to raise the minimum wage to $15—have nearly doubled it. While the popularity of higher base pay isn’t surprising in blue states and progressive metropolises, the minimum wage is also inching up in solidly conservative places like, Arkansas, South Dakota, Alaska, and Nebraska. In some of those places—both blue and red—legislators have tried to make sure one group doesn’t benefit: minors.
South Dakota residents voted to raise the state’s minimum wage to $8.50 last year, but this March, Gov. Dennis Daugaard signed into law a bill that sets a separate, lower rate of $7.50 an hour for workers under the age of 18. (Unlike the wage hike, the minimum wage for minors will not annually adjust for the cost of living.) Last April, Minnesota folded a subminimum youth wage into its overall wage increase. The most recent example didn't quite make it to the finish line: A bill in Nebraska designed to establish a lower minimum wage for student workers aged 18 and younger broke a filibuster and advanced through two rounds of debate before finally dying on the floor of the nonpartisan unicameral Legislature. State Sen. Laura Ebke, a self-proclaimed “Republican and conservative libertarian,” introduced LB599 just months after Nebraska voters overwhelmingly approved a ballot measure to increase the state’s minimum wage from $7.25 to $9 an hour by 2016. Nebraska’s “Student Minimum Wage” proposal fell just four votes shy of the supermajority required under the state constitution to amend a law passed by public vote. Noting a “limited window of opportunity,” Ebke says she has no plans to reintroduce a similar bill in future legislative sessions.
Why raise the minimum wage, only to try and lower it for the youngest workers? While critics of the Nebraska bill portrayed it as a conservative attempt to dial back the minimum wage and unjustly discriminate against the voteless, its defenders described it as a plan to save high school jobs, provide “educational” opportunities, and boost the rural economy. Echoing their conservative peers in the South Dakota Legislature, supporters of LB599 warned that Nebraska’s recent wage hike could prevent many small businesses from hiring student workers. Without a bill like LB599, supporters claimed, rural mom-and-pop shops hiring high school students for low wages would be more likely to hire part-time adult workers who don’t require hand-holding and can legally handle tasks like selling alcohol or manning power tools. The lower wage, Ebke wrote on her website, “may help to incentivize employers to give young workers their first chance at a job.” (Of course, attempts to secure exceptions from minimum wage laws aren’t exclusive to pay for minors: After aiding in the campaign for a higher minimum wage in L.A., union leaders there are seeking an exemption for businesses with collective bargaining.)
In Nebraska, the effort to reduce the minimum wage for young workers was backed by the Nebraska Grocery Industry Association, whose members are likely among the biggest employers in the state of high school–aged workers. Despite a highly visible, monthslong campaign to increase the minimum wage—and despite the fact that Nebraska (save for minor exemptions) has always enforced a uniform minimum wage—the group and other supporters of LB599 alleged that the original initiative wasn’t clear about which workers it would help and that most Nebraska voters aren’t opposed to paying students less than their senior counterparts. According to Kathy Siefken, executive director of the Nebraska Grocery Industry Association, “no one voted on that.”
Nearly unheard from in the debate were student workers themselves, despite the bill’s underlying question: How much are student workers really worth? Eighteen-year-old Grace Miller, a high school senior in Arcadia, Nebraska, who’s been working part-time jobs since she turned 16, told me, “I think we deserve as much pay as the adults.” For the last eight months, Miller has been working after-school shifts at Orscheln’s Farm & Home store in Broken Bow, Nebraska. “We’ve got as much going on as they do, maybe even more. Most adults just work an eight-hour day, while I go to school and then go to work for four hours.”
Conservatives have long argued that higher minimum wages deplete employment opportunities, especially for young and entry-level workers. To make up for the higher wages, they say, employers will freeze or slow down their hiring practices. Citing the most extreme possibility put forth by a February 2014 Congressional Budget Office study, Republican Minority Leader Mitch McConnell claimed raising the federal minimum wage to $10.10, as President Obama has pushed for, would "destroy half a million to 1 million jobs."
So does lowering the minimum wage for minors really create, or at least preserve, an incentive to hire them? And could it mitigate some of the supposedly deleterious effects of a wage hike? The evidence is hardly conclusive, but several previous studies suggest it might. According to a 2003 cross-national analysis from the Federal Reserve, “the evidence … suggests that the employment effects of minimum wages vary considerably across countries. In particular, disemployment effects of minimum wages appear to be smaller in countries that have subminimum wage provisions for youths." A study of state-sponsored minimum wages conducted by the National Bureau of Economic Research in 1991 offered similar results. To varying degrees, Australia and much of Europe allow for youth subminimum wage provisions. Federal law in the United States allows employers to pay workers under the age of 20 a training wage as low as $4.25 an hour during their first 90 days of employment.
But the Nebraska debate highlights other questions likely to shape the debate if and when similar bills emerge: Should exemptions be made for minors with dependents, or who are no longer enrolled in school? If it’s illegal to ask someone’s age in a job interview, can an employer even legally utilize a youth minimum wage bill? And what message does such a law send to young workers? “As a grocery store manager, I had lazy and inexperienced employees that were over the age of 19, and I had some that, yes, were under the age of 19,” Nebraska state Sen. Adam Morfeld said during a hearing on LB599. “We shouldn’t be characterizing a certain class of individuals as more lazy or less experienced. We should be judging them on their work ethic. We shouldn’t be making arbitrary distinctions based on age.”
No other states are currently considering a similar proposal, but as the minimum wage continues to rise in states and cities across the country, there’s a good chance conservative opposition—having won once already in South Dakota—will try it on for size again.
If You Drop Your Air Conditioner Out the Window, the Only Thing That Matters Is Whether You Hurt Anyone
"This is the story of every New Yorker's worst nightmare happening to me," writes Jessica Roy in Daily Intelligencer. Bedbug infestation? Low Uber rating? Plutocrat rats the size of cats gentrifying your neighborhood? Nope: Every New Yorker's worst nightmare is, according to Roy, when the 100-pound air conditioner you have uncertainly balanced on your windowsill ("It teeters a little bit") slips from your grasp and crashes to the ground two flights below.
This is only proximately accurate. Every New Yorker's worst nightmare is not when you drop your air conditioner out the window. Every New Yorker's worst nightmare is being under that window.
If you drop your air conditioner out the window, the only thing that matters is whether or not you hurt someone.
"[H]appening to me" is maximally narcissistic displacement of responsibility here. You ARE the nightmare. pic.twitter.com/n9E7sOzBIb— Tom Scocca (@tomscocca) May 29, 2015
We at Moneybox are sympathetic to customers who wish to elude gratuitous service fees ("I do manage to say no to installation, however, because it costs $50," Roy writes), who try to align their consumer habits with their sociocultural and political identities ("I am a feminist who can definitely install a 100-pound air conditioner herself"), and who embody a can-do DIY spirit ("It teeters a little bit"). In most circumstances, we at Moneybox would reflexively support any customer seeking redress from a retailer ("I'm, like, upset! I'm sorry! You guys won't, like ... refund me, right?") after sustaining injuries by said retailer's product ("The air conditioner slides out of my hands and takes a layer of skin with it") when said retailer hasn't even advised the customer on, for example, the influence of blood-sugar levels on air-conditioning-installation outcomes ("I haven't eaten dinner yet, so I'm, like, real hangry").
However, it still stands that if you drop your air conditioner out the window, the only thing that matters is whether or not you hurt someone.
"The craziest thing happened to me—I poured gasoline all over my neighbor's doorway and lit a match."— Tom Scocca (@tomscocca) May 29, 2015
Wait a minute, you say. One, installing air conditioning units is hard! Two, Roy's apartment overlooked a patio, not a busy sidewalk! Three, falling air conditioners aren't even all that dangerous—a Gawker investigation could only find a single instance of an A/C death in New York, all the way back in 1988.
No, no, and no. If you want A/C and don't want to pay an installation fee, the solution is not to plonk the unit on your windowsill ("It teeters a little bit"), close the window, and hope for the best—the solution is to pay the installation fee, or to make some friends who can help you. Patios are designed for use by people who can be harmed by falling A/C units. And pointing out that your falling 100-pound hunk of sheet metal and aluminum tubes probably won't kill anyone—when the same ostensibly reassuring Gawker piece is a litany of head injuries, broken ribs and pelvises, and cracked vertebrae—is sort of like arguing in favor of blowing stop signs near primary schools in your Escalade so long as the pedestrians whose legs you crush and skulls you splinter don't die.
"Why is everything the worst?" Roy asks at one point in her piece. Everything is not the worst, fellow New Yorker. If you drop your air conditioner out the window, the only thing that matters is whether or not you hurt someone. You didn't. You are living the dream.
Why a Chilean Startup Decided to Reinvent the Bicycle
Designing a secure bicycle lock might not sound like rocket science, but with 15 million bike thefts per year—one every two seconds—it's clear that bike security remains an unsolved problem.
Naturally, not every entrepreneur would see it that way. After all, starting up a business in an already competitive field is typically a nonstarter. But Yerka's experience should prove that not every product is perfect—and even if something has already been invented, it doesn't mean it can't be reinvented. Here's how the Santiago, Chile-based startup showed that indeed, the bicycle also needed a redesign.
Last August, co-founders Andrés Roi Eggers, Cristobal Cabello, and Juan José Monsalve shared their company's innovative design for a self-locking bike in a YouTube video that attracted 3 million views in one month. The response convinced the three founders to drop out of Adolfo Ibanez University in Santiago and launch a crowdfunding campaign for their product. In April, Yerka raised $68,000 on Indiegogo to fund an initial manufacturing run in China. The campaign marked the highest total ever for a Chilean project on Indiegogo.
What separates the Yerka lock system from other bike locks is the way the bike's own frame is used to lock it in place. The removable vertical frame and seat reattaches to the bike's two-part diagonal frame to create a secure locking mechanism.
"If you break the lock, you're breaking the bike," says Cristobal, adding that the company has a patent pending on its design.
Yerka plans to ship its first 300 bikes to select Indiegogo backers in September, after which the founders will begin work on a redesign. One of the features the company is planning to add is bluetooth-enabled unlocking technology, so owners can unlock the bike from their iOS or Android smartphone.
Yerka aims to begin selling its bikes in early 2016, pricing each one at around $500, with an option to add the bluetooth feature for an additional $100. Eventually, the founders may license their design to large bike companies.
While Yerka seems to be off to a fast start, the founders know they still have their work cut out for them.
"We still have some improvements to make," says Cristobal. "This is like the Yerka 1.0."
A Whole Lot of Amazon Prime Members Can Now Get Same-Day Delivery for Free
In the on-demand economy, Amazon Prime’s longstanding free two-day delivery just doesn’t cut it anymore, because two days isn’t on-demand—it’s two days. That might be why Amazon seems to be rushing out same-day delivery to its membership program as fast as possible. On Thursday it said the service will be free for Prime members in 14 metro areas on orders of qualifying items over $35:
Amazon says that its free same-day delivery covers more than a million items. Prime subscribers will pay $5.99 per order for anything less than $35 while the service will start at $9.98 per order for nonmembers. That said, the “same-day” means something closer to a 24-hour day than the same calendar day. Order by noon and Amazon says your package will arrive by 9 p.m.; order any later than that and it will come the following day.
Same-day delivery isn’t the only on-demand option Amazon has been experimenting with. In late December, Amazon announced Prime Now, which promised to deliver eligible items in under an hour for $7.99, or later in the day for free. At the time, Prime Now was only available in central Manhattan, but since has expanded to all of Manhattan and Brooklyn as well as parts of Miami and Baltimore. In late March, Amazon also introduced the “Dash Button” for Prime members—brand-specific buttons that facilitate preset orders with a single touch. (For example, pressing the Tide dash button might initiate a new order of laundry detergent.)
Amazon’s push into faster delivery options marks its latest effort in a race among retailers to win the same-day shipping market. Google last summer introduced a similar same-day delivery program with Google Express. Walmart and eBay have also recently begun testing subscriber programs for unlimited free or cheap delivery. On top of that, there are the true on-demand economy companies like Uber and Sidecar, which on top of promising to pick up and transport people nearly instantaneously have also started to transport things. For Amazon to keep Prime great, it needs to keep the core delivery options great. So when everything else starts to become same-day focused, Amazon’s delivery needs to as well.
Norway’s Giant Oil Fund Will Divest From Coal. Irony Noted.
Norway's $900 billion sovereign wealth fund may soon have to drop its investments in the coal industry, thanks to a new set of rules making their way through the country's parliament. Starting next year, the fund would be forced to pull its money from companies such as mining firms or utilities that make at least 30 percent of their revenue from coal, according to the Associated Press. The law received bipartisan support in committee and is widely expected to pass during a final vote early next month.
This is a notable victory for climate change activists who have been lobbying institutional investors to divest from fossil fuels. A number of university endowments and foundations have already joined the cause, but Norway's sovereign wealth fund is the globe's largest, laying claim to roughly 1 percent of all the world's stocks and bonds. Environmentalists just landed a very, very big ally in their crusade.
The turn of events is also a little ironic. Norway's sovereign wealth fund is sometimes referred to as its "oil fund" because it was created in order to manage the country's substantial petroleum revenues. Thanks to its extensive offshore oil resources, Norway is among the world's biggest crude exporters, which makes the business of drilling up and shipping out fossil fuels a large and critical part of its economy. Some Norwegian politicians have seemingly attempted to get around the cognitive dissonance by pointing out that coal is an especially noxious contributor to climate change—"Coal is in a class by itself as the source with the greatest responsibility for greenhouse gas emissions," said one member of parliament—but there is at least a little humor here.
It's worth dwelling on the exact message Norway is sending with this gesture because, in the end, divestment movements are mostly about public relations. As Rebecca Leber recently explained at the New Republic, there is scant evidence that these campaigns harm their targets financially. And even in the land of hypotheticals, it's hard to imagine a scenario in which they ever could. Most investors are relatively amoral when it comes to where they park their money. So even if some get queasy about an industry like tobacco or fossil fuels and decide to divest, there are plenty more out there in the market who will be willing to buy, especially if share prices are only being driven down for essentially political or idealistic reasons. If worst comes to worst, a corporation could just start buying back its own shares to prop its price back up (which they do plenty of already).
That's why the real goal of divestment is to politically stigmatize an industry—to demonstrate that some businesses are so reprehensible that colleges and even entire countries feel the need to avoid investing in them, even if it means accepting slightly smaller profits.
What's going on in Norway is a tiny bit different, however. There, some politicians, and even the sovereign wealth fund's management, have played up the idea that they need to reduce the amount of "climate risk" in the country's portfolio. The idea is that the world can only burn a limited fraction of its fossil-fuel reserves before the earth's temperature rises to dangerous levels, and any concerted action to reduce greenhouse emissions could end up leaving a whole bunch of oil wells and coal veins completely valueless. So, in order to avoid holding on to a bunch of stocks that will suddenly be worth bupkis when the globe gets around to serious carbon regulations, Norway needs to wind them down now. In that light, the idea of an important oil exporter ditching coal investments seems a bit less laughable—the country just wants its fiscal future to be a little less tightly hitched to the fortune of fossil fuels.
Unfortunately, it's difficult to tell whether the professionals charged with managing the wealth fund sincerely believe this. On the one hand, the fund indeed nixed 32 coal companies from its holdings in 2014, citing the threat of climate regulations. On the other, it's been accused of quietly increasing its overall investment in coal while merely paying lip service to divestment. And although the fund says it's actually been unloading its coal holdings in recent quarters, the fact that Norway's parliament is forcing its hand through legislation muddies the picture a bit.
In any event, there is now a global oil power that officially wants to wash its hands of the coal business. The reasons might just boil down to the fact that politicians want to send a message about climate change, or they might also involve a dose of economics. Make of it what you will.
Jawbone Accuses Fitbit of Poaching Its Workers to Steal Its Secrets
It’s an ugly week in the fitness-bracelet industry. On Wednesday, Jawbone filed a strongly worded lawsuit against Fitbit in California State Court that accused its main rival in wearable tech of “systematically plundering” company secrets by poaching Jawbone employees. “In plain violation of the terms of Jawbone’s stringent confidentiality protections, the acts of the Defendants in this case bear the hallmarks of a carefully orchestrated plan to abscond with reams of proprietary and confidential information,” the suit alleges.
Why does Jawbone think Fitbit is playing dirty? Well, earlier this year, the suit claims, Fitbit recruiters contacted roughly 30 percent of Jawbone’s workforce and successfully brought over five employees. At some point, one unfortunate Fitbit recruiter also allegedly uttered a phrase that has become the refrain in Jawbone’s case: “Fitbit’s objective is to decimate Jawbone.” Anyway, in the days and weeks before their departures, the poached employees allegedly “gained access to and downloaded from their work computers information regarding Jawbone’s current and projected business plans, products and technology.” The downloaded files included supply-chain data and a Jawbone presentation titled “Playbook for the Future,” the lawsuit alleges. Jawbone claims its departing employees also used thumb drives and email to stow away files—“the informational equivalent of a gold mine,” Jawbone notes—for future use. Once they’d done that, the employees allegedly used computer cleaning tools and manual deletions to cover their tracks.
Jawbone’s lawyers are framing all of this as (a) malicious activity intended to “decimate” Jawbone and (b) a desperate effort by Fitbit to firm up its business strategy ahead of a planned initial public offering. Fitbit filed for an IPO in New York in early May and is reportedly looking to raise around $150 million. At the time, Fitbit said its sales soared to $745.4 million in 2014, nearly tripling from the previous year. Fitbit also said it sold 10.9 million devices in 2014 and made $132 million in profit. Despite this, Jawbone’s lawyers are asserting that “Fitbit and its management lacked the strategic direction, talent and expertise necessary to create a sustainable model for product growth and revenue in the future.” And so Jawbone claims Fitbit “sought to find what it was lacking internally by embarking on a systematic campaign to steal talent, expertise, strategic direction and highly confidential information from Jawbone concerning its current and future product and its market projections—and, in the process, ‘decimate’ its chief competitor.”
Jawbone is seeking a variety of financial damages in the suit in amounts to be determined at trial. It would like punitive and exemplary damages “in an amount appropriate to punish or set an example of Fitbit” and the former Jawbone employees. The company is also seeking relief from the court that would prevent the former Jawbone employees from disclosing any additional secrets to Fitbit and would prevent Fitbit from using the information it may have already obtained.
It’s worth noting that while Jawbone might be loudly voicing doubts about Fitbit’s IPO aspirations, Jawbone has also come under fire for its business and financial health. Jawbone is 16 years old and yet is still a startup. As a Fortune article observed in January, it also “says nothing about its finances, other than to acknowledge it doesn’t make money.” In August 2014, contract manufacturer Flextronics alleged in a suit against Jawbone that “Jawbone’s financial condition is perilous and currently insufficient to pay its debts.” Recently, it secured a $300 million loan from asset management firm BlackRock. Product-wise, Jawbone’s fortunes haven’t been looking much better—its new Up3 fitness tracker received lukewarm reviews.
Things at Fitbit haven’t been perfect either. A device Fitbit released in late 2013 was pulled a few months later after some users reported developing a skin rash from it; similar problems were reported with a new Fitbit wearable this February. Fitbit didn’t respond to a Slate request for comment but told the New York Times in a statement that it was “unaware” of possessing any confidential or proprietary information from Jawbone and that “as a pioneer and leader in the connected health and fitness market, Fitbit has no need to take information from Jawbone or any other company.” Perhaps, but with one exception: how to make rash-free devices.
Los Angeles Unions Fought for a $15 Minimum Wage. Now They Want to Be Exempt From It.
Just like it did in Seattle and San Francisco, organized labor helped lead the fight to raise Los Angeles' minimum wage to $15 an hour. But now, with the City Council preparing to pass a final version of the bill that would do so, union leaders are asking for a major carve-out that would let businesses with collective bargaining agreements pay their employees less. In other words, they would like an exemption from the very law they've been trying to pass.
"With a collective bargaining agreement, a business owner and the employees negotiate an agreement that works for them both," Rusty Hicks, head of the Los Angeles County Federation of Labor and co-chairman of the Raise the Wage coalition, said in a statement. "This provision gives the parties the option, the freedom, to negotiate that agreement."
Predictably, the move has led to some charges of hypocrisy from conservatives, as well as pure bafflement among others. In Los Angeles, the Chamber of Commerce is arguing that labor groups want the change so that business owners will simply let workers organize instead of paying the new minimum, which would plump up union rolls.
And, you know, I'm sure they wouldn't be upset if that was the result. But, if Los Angeles is determined to go all in on a $15 minimum wage anyway, this basically seems like a sound idea. It's been done elsewhere—San Francisco included a union waiver in its recent minimum wage hike, as did Chicago and Oakland—and the minimum wage hike Los Angeles passed for hotel workers also included a version of the clause.* And, unless you have an ideological opposition to organized labor, it's hard to a see a reason not to do it.
To be clear, this is almost surely an implicit acknowledgment by the unions that there are at least some local industries in Los Angeles, such as apparel manufacturing, where $15 per hour is too high a minimum, and workers might prefer to accept lower pay in order to keep their jobs. Otherwise, there would be no point in pushing for it. No rational employee would choose to organize and accept a lower paycheck—plus pay union dues—unless they really, truly thought their job was being imperiled by their wage. Admitting that $15 wasn't a great fit for every sector of L.A.'s economy probably wouldn't have been politically convenient in the early stage of the lobbying campaign. But now that the new minimum seems close to becoming a reality—the City Council has voted in favor of it in principle, but needs to approve final legislative language—it can't hurt to give workers and businesses a safety net if they need it.
Beyond that, the idea is just kind of intriguing. Three cities have moved toward a $15 minimum, and potentially two of them will include the union exemption (Seattle has not). It will be instructive to see whether the idea works better or worse when businesses can opt out by embracing collective bargaining. Maybe there would be fewer job losses. Maybe there would be slightly more organizing activity. Maybe neither. But it'd potentially be fascinating to watch a scenario play out where some fast-food restaurants, for instance, let in unions to save on their payroll, while others try to make the math work at $15. Maybe we'd discover that organized labor wouldn't be so poisonous for the financial health of a McDonald's after all.
The union exemption could also reframe the purpose of the minimum wage in a fascinating way. At Vox, Matt Yglesias points out that some famously progressive Nordic countries get away without legislating national minimums of their own, because they can rely on widespread collective bargaining to guarantee that workers receive fair pay. He argues that the exemption Los Angeles unions are asking for is a move in the direction of that more flexible model. But in a way, I think it's almost the opposite. Rather than counting on strong collective bargaining rights to ensure livable and economically appropriate wages, L.A. would partly be relying on a high pay floor to spread collective bargaining rights, which in the end might actually be more important. After all, McDonald's cashiers, Walmart associates, and garment workers face lots of problems, from unpredictable schedules to being assigned too few hours to health and safety issues, that can't be addressed by a minimum wage alone. Why not give those workers leverage to negotiate for the rights they need most, whatever those may be?
*Correction, May 28, 2015: This article originally suggested that San Francisco did not have a similar exemption for unions in its minimum wage increase. This article has been corrected and revised throughout to reflect that it did.
McDonald’s, Unable to Fix Its Dismal Monthly Sales Numbers, Will Now Just Stop Sharing Them
There are plenty of reasons why it’s hard to forget McDonald’s is doing poorly, but one of the most important is its monthly same-store sales reports. Every month, McDonald’s announces how much sales have grown (or fallen) at restaurants open at least 13 months in its various market segments and across the globe. Lately, those figures have been nothing but dreadful. As of April, McDonald’s global same-store sales had shrunk for 11 consecutive months while its U.S. numbers had either declined or stayed largely flat. February was particularly bad: Sales plunged 4 percent in the U.S. and 1.7 percent globally, prompting McDonald’s to admit it needed to become a “modern, progressive burger company.”
But the McDonald’s Misery Watch is about to become less frequent: The company is ending its monthly reporting practice, which it began in 2003. According to Bloomberg, the company plans to stop reporting monthly same-store sales after June, when its second-quarter earnings are released. “To focus our activities and conversations around the strategic, longer-term actions we are taking as part of our plan, we have decided to discontinue our monthly sales disclosure, effective July 1,” Steve Easterbrook, McDonald’s chief executive, said at an analysts conference in New York City on Wednesday. Other items on McDonald’s turnaround agenda: increased hourly wages for employees of its corporate-owned stores, more control for franchisees, customized burgers, and all-day breakfast.
While it’ll be sad to see the monthly figures go—especially if your job is to report on McDonald’s fortunes (or lack thereof)—this is probably a good decision for the chain. For starters, reporting monthly sales is a rather outdated practice. In 2009, Walmart decided to give up reporting monthly same-store sales. Two years later, there was a “mass exodus” of retailers as everyone from Abercrombie & Fitch to American Eagle ditched their monthly same-store sales reports. Until now, McDonald’s has continued to report monthly figures even though most of its competitors do not. Pizza Hut, Taco Bell, Chipotle, and Starbucks are among the chains that don’t provide monthly updates on same-store sales. If McDonald’s sales aren’t scrutinized by investors every month anymore, the company might finally have some breathing room to improve.
Vox Media to Buy Silicon Valley News Machine Recode
Vox Media, which owns the Verge, SB Nation, the Curbed network of real estate sites, and Vox, is acquiring the Silicon Valley–based tech news site Recode, known for its unrelenting industry reporting. Recode was founded by Walt Mossberg and Kara Swisher in 2013 after they left the Wall Street Journal and the site they ran for the newspaper, AllThingsD.
The New York Times reports that terms for the all-stock deal aren't public, but given Recode's roughly 1.5 million monthly visitors (according ComScore), Vox Media's 53.2 million unique visitors in April were probably appealing. Swisher told the Times that, “Everybody is bigger than us. ... It’s not a secret that being a smaller fish is really hard.” Recode currently has 44 full-time employees and three contractors. The site will also bring its well-known and valuable tech conferences to Vox Media.
Of course, Recode won't be the only tech site in the Vox universe. Verge editor-in-chief Nilay Patel wrote that the difference between Recode and the Verge is the former's emphasis on business news and the latter's focus on tech and culture (and tech culture). “The Verge is for understanding life on the cutting edge. The Verge is for everyone. So when the opportunity to work more closely with Recode arrived, it made perfect sense: Recode covers the business of technology," Patel wrote.
On Friday, news also surfaced that the startup Knowingly Corp. would acquire the Silicon Valley tech news property Gigaom, which was forced to shutter in March. And news of the Recode acquisition came shortly after Mat Honan of BuzzFeed announced that Verge Silicon Valley reporter Nitasha Tiku would be moving to BuzzFeed's recently established Silicon Valley bureau.
It's a game of musical chairs that's become more common in tech-news media, as sites attempt to meld styles and voices and offer something new and accessible. Vox properties seem to prioritize sharability, while Recode has a reputation for being hard-nosed and delivering scoops.
“This is going to be fun,” Patel wrote.
Charter Communications Will Buy Time Warner Cable for $55 Billion
It’s been barely a month since Comcast’s $45.2 billion bid for Time Warner Cable fell apart at the hands of regulators, but already the companies have moved on. Comcast has committed to being somewhat nicer to consumers. And Time Warner Cable said Tuesday that it will be acquired by Charter Communications, one of the largest cable operators in the United States, in a $55 billion cash-and-stock deal that values Time Warner Cable at $78.7 billion, or approximately $196 a share. Charter will also acquire Bright House Networks for $10.4 billion. Altogether, that will give Charter control of 23.9 million customers in 41 states.
While the month between the death of the Comcast–Time Warner Cable deal and the announcement of this one might seem short, it’s a merger that Charter and Time Warner Cable have considered plenty of times before. Charter made several bids for Time Warner Cable in 2013 but was turned away in favor of Comcast. This time around, John Malone, a telecom billionaire and the deal’s main backer thanks to a 27 percent stake in Charter held by his company Liberty Media, helped to nudge the merger along. The Wall Street Journal reports that Malone and Charter together “took a more light-handed approach”:
Mr. Malone got more involved, people familiar with the matter say, calling Time Warner Cable Chief Executive Rob Marcus in the early stages of Charter’s pursuit to indicate he wanted a friendly deal. Charter’s camp made a point of not submitting a lowball bid that would put off Time Warner Cable, the people said.
As with Comcast’s ill-fated deal, the big question with this new merger will be whether it can pass regulatory muster. The Journal reported last week that Federal Communications Commission Chairman Tom Wheeler had reached out to both Charter and Time Warner Cable to suggest that his agency was not necessarily opposed to any and all future big cable deals. At the same time, since Comcast’s deal collapsed, Wheeler has suggested he’d like to see the cable industry move toward competition rather than consolidation. “More competition would be better,” Wheeler said in a speech earlier this month at the National Cable and Telecommunications Association conference. He encouraged cable operators to “overbuild” into each others’ turf, essentially undoing their patchwork of regional monopolies. “While I know it is an anathema to your geographically defined way of looking at the industry, I believe—as some have already demonstrated—that it can also be an opportunity,” Wheeler added.
Does that mean Wheeler would also like to see Charter build into Time Warner Cable’s territory instead of buying it out? For now, the FCC has simply released a short statement noting that every merger is reviewed “on its merits” to determine “whether it would be in the public interest.” But Todd O’Boyle, program director at public interest group Common Cause, says there’s “no reason to assume that this will get a rubber stamp or pro forma approval.” Wall Street, for its part, appears to agree. Shares of Time Warner Cable were up just 7 percent in midday trading—far less than the 14 percent premium in Charter’s offer—suggesting investors are hesitant to buy in. Time Warner Cable might already be over the failed Comcast deal, but it seems like just about everyone else is not.