James Pitaro Named New President Of ESPN, Replacing John Skipper

Entryway sign to the ESPN Wide World of Sports Complex, located in Orlando, FL.

The ESPN Wide World of Sports Complex, located in Orlando, FL.
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ESPN might be the worldwide leader when it comes to TV sports coverage, but for nearly three months, it was lacking in leadership at the top ranks. That is now set to change, as The New York Times reports that James Pitaro, previously the chairman of consumer products and interactive at Disney, is stepping in as the company’s president. Pitaro fills a position that had been vacant since December, when John Skipper stepped down suddenly, citing a substance addiction.

Pitaro has been a major player in the media industry for almost two decades. He got his start in 2001 at Yahoo, where he quickly climbed the ranks and became vice president for media. In 2010, he moved to Disney, the parent company that owned ESPN, and managed a business unit that included gaming. Since 2015, he had been serving as co-chairman of Disney’s consumer products division.

“Jimmy forged his career at the intersection of technology, sports and media, and his vast experience and keen perspective will be invaluable in taking ESPN into the future,” said Robert Iger, chairman and chief executive of Disney

“Some of the best experiences of my professional career were working with the sports business,” Pitaro added. “I always knew in my heart I would return. This is a dream come true.”‘

ESPN has been relatively successful in recent years from a fiscal standpoint, but challenges still lie ahead. The New York Times reported that Disney made $55.1 billion in revenue and $14.8 billion in operating profit for the fiscal year ending Sept. 30. Media networks (primarily ESPN) had $23.5 billion revenue and $6.9 billion profit. To stay afloat, though, Pitaro will need to compete in an environment where cord-cutting is rampant and subscribers are dropping like flies.

Pitaro has pledged to try bold new things when ESPN’s situation calls for it. ESPN is already hard at work buying out assets from 21st Century Fox, including 22 regional sports networks. It’s also poised to launch ESPN Plus, a new sports streaming service, later this year.

“I come from the digital world, and spent most of my career building and investing in new media products,” Pitaro said.

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Uber, Waymo Mired In Legal Battle Over Intellectual Property

A gavel juxtaposed against the scales of justice.

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Two industry leaders in the world of transportation—more specifically, two companies competing to lead the global movement toward autonomous vehicles—are mired in a bitter court dispute.

Opening arguments were heard this week in the case of Waymo v. Uber, as the former company has accused the latter of using shady tactics to steal intellectual property, according to The Washington Post.

Charles Verhoeven, the lead attorney for Waymo, asserted that former Uber chief executive Travis Kalanick broke the law when he targeted and hired away one of Waymo’s engineers.

“The evidence is going to show that Mr. Kalanick, the CEO at the time, made a decision that winning was more important than obeying the law,” Verhoeven said. “He made a decision to cheat. Because for him, winning at all costs, no matter what, was his culture and was what he was going to do.” 

Verhoeven’s evidence includes a number of internal emails and text messages that show Kalanick believed Waymo’s work on autonomous vehicles was an existential threat to Uber’s business. That, the Waymo team alleges, is why Kalanick sought to poach talented engineer Anthony Levandowski—and have Levandowski pilfer 14,000 confidential files from Google’s parent company, Alphabet, before meeting with him.

This case could have major implications for the business world. Experts believe that whoever wins this case is going to have a huge advantage in terms of controlling the autonomous vehicle market.

More broadly, the case may also have an impact on intellectual property law as we know it. What exactly defines a “trade secret,” and how can such properties be controlled? These are especially vexing questions in Silicon Valley, where innovation happens quickly and people change jobs often. It’s difficult to control the flow of information in such an active marketplace of ideas.

“Waymo bears the burden of establishing that each and every one of these trade secrets are actual trade secrets,” argued William Carmody, a lawyer for the Uber side. “[When engineers change jobs], they don’t get a lobotomy.”

Is The Super Bowl Really An Economic Boon For Its Host City?

One football player tackling another.

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The Super Bowl is the biggest event of the year in American sports, and conventional wisdom would hold that the game leads to an economic windfall for its host city every year. Some skeptics are fighting back against that notion, however. According to The New York Times, the benefits of investing in a big stadium and hosting the big game aren’t all they’re cracked up to be.

The Times noted that seven cities have built new NFL stadiums within the last 12 years, and all of them will have hosted the Super Bowl by 2020. Los Angeles and Las Vegas are the next two cities expected to construct new venues and host future Super Bowls. These building projects are controversial because they often require a hefty amount of public funding. Minneapolis, which is hosting the game this year, needed $150 million from the city and $348 million from the state of Minnesota to build the U.S. Bank Stadium.

Economists say that the benefits of holding the Super Bowl don’t typically outweigh such high costs.

“They always talk really good about that stuff, and then they go off the rails,” Holy Cross sports economist Victor Matheson told the Times. “[Super Bowl profit estimates have] been criticized as extremely overinflated, inaccurate, even purposely misrepresented.”

Matheson pointed to hotel rooms as an example. Some experts have pledged that the Super Bowl will generate 230,000 nights of hotel stays. That sounds like a big number, but it’s not all profit.

Firstly, that doesn’t mean the city is gaining that number of hotel rates; that’s the total number of stays, not the increase over normal rates. Many of those rooms would have been filled anyway. Secondly, money spent at Minneapolis hotels isn’t necessarily funneled back into the city’s economy—a lot of it goes to the hotels’ parent companies, which are often located elsewhere.

None of this is to say building a stadium is a mistake, necessarily. It just means that for cities that do undertake such a massive project, they had better have secondary reasons for doing so.

“I would not have done a deal just for the football stadium,” said R.T. Rybak, the former Minneapolis mayor who approved funding for the U.S. Bank Stadium. “You don’t build a stadium for the Super Bowl.”

Wells Fargo to Close Hundreds of Branches

A photo of a Wells Fargo bank.

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Wells Fargo had a pretty rough year. The bank announced this week that it will be closing 800 more branches by the end of 2020 in an effort to cut more than $4 billion in expenses. Last year, Wells Fargo shut down more than 200 branches following endless controversy and legal issues surrounding fake accounts that were created to meet the bank’s unreachable sales goals.

“We will have as many branches as our customers want for as long as they want them,” said John Shrewsberry, the chief financial officer.

Executives told Wall Street analysts that online and mobile banking are the main reasons why the company is losing money, but many believe digital banking plays a very small (if any) role in Wells Fargo’s troubles. The bank’s legal expenses reached a staggering $3.3 billion (or 59 cents per share) before taxes, which is more than triple what the company had set aside for legal funds the previous quarter.  

In addition to the fake account fiasco, Wells Fargo is facing numerous mortgage-related investigations along with other financial matters, most of which aren’t tax deductible. It’s no surprise that Wall Street isn’t feeling confident in the bank’s ability to come out unscathed, or at least with very few bruises.

Last month, bank executives said they would be sharing a portion of their tax cuts with employees, through both increased wages and charitable donations. It’s too early to say how many employees will miss out on these tax breaks due to losing their jobs from the closures. 

CEO Tim Sloan says things are getting better for the bank, but he couldn’t offer analysts a timeline for when Wells Fargo will be in the clear.

“I just can’t provide you with that absolute guarantee at this moment in time,” Sloan said. “Maybe someday I will, but I think it’s going to be something we look at in the rear-view mirror over a longer period of time, as opposed to having some inflection point today or tomorrow or the week after that.”

Investors Still Confident In Uber Despite Its Problems

A photo of someone using the Uber app.

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It’s no big news that Uber has had a rough 2017. From harassment scandals to activist investors to regulatory troubles, the ridesharing company has had a lot of challenges in the past year. But despite all of that, investors remain confident that the $70 billion company is poised for growth.

“We’ve seen it over years and years, and I think [former CEO Travis Kalanick] has learned some very challenging lessons,” said William Ford of General Atlantic, one of the firms that has invested in Uber. “But the good news is he is learning. I think he’s taken good counsel from his board and some of his investors, and he’s got our confidence.”

But the company’s challenges aren’t over yet. The transport regulator in London recently refused Uber’s license renewal bid, a decision the company says it plans to appeal.

Regulatory agency Transport for London cited Uber’s approach to reporting serious criminal offenses and failing to do background checks on drivers as reasons why the company’s license renewal bid was rejected.

The GMB, Britain’s general trade union, and the London Taxi Drivers’ Association may participate in the case, too, if Westminster Magistrates’ Court Chief Magistrate Emma Arbuthnot agrees to allow it.

A hearing on the case is scheduled for April of 2018, but that may be pushed back due to scheduling issues. Meanwhile, Uber’s 40,000 London drivers will be able to continue taking passengers until the appeals process is exhausted—a process that could take years.

In an attempt to get its licensing back on track, new Uber CEO Dara Khosrowshahi apologized to Londoners and met with Transport for London Commissioner Mike Brown for talks.

On December 10, an Uber spokesman said, “We continue having constructive discussions with Transport for London in order to resolve this. As our new CEO, Dara Khosrowshahi, has said, we are determined to make things right.”

Regardless of the troubles in London and the issues simmering in the company itself, investors are still feeling that the company has something to offer.

In addition to General Atlantic, Uber has attracted investments from the likes of Goldman Sachs, Dragoneer Investments, Chinese ridesharing service Didi Chuxing, and Saudi Arabia’s Public Investment Fund. Why? Because the company’s troubles will pass, and they’re banking on the fact that Uber remains a worthy investment.

Many investors believe that after the drama and shakeups of 2017, the company is poised for growth. It’s certainly been growing this year, with Q2 results showing revenue of $1.75 billion, as compared to Q2 2016, when the company’s revenue was a mere $800 million. Not only that, but global trips are up 150 percent from Q2 2016.

Uber has also received sign-off from the SEC to change the description of its business model to one in which the company is merely an “agent” and its customers are the drivers, not the passengers. This would mean Uber could report financial results without disclosing how much drivers are being paid, thus allowing it to report only the net transaction revenue that goes to Uber, leaving out the driver’s compensation. This change hints that an IPO may not be far off.

With numbers like that and the strong potential for an IPO in the near future, it’s no surprise that investors remain confident in the ridesharing company.

Disney, Fox Are in Talks to Complete Major Merger in Entertainment Industry

The logo for Walt Disney Pictures.

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Two of the biggest names in the entertainment industry are preparing to team up. According to the Financial Times, executives at Disney and 21st Century Fox have revived talks regarding a major merger in which Disney would purchase around $50 billion worth of Fox’s international and entertainment-related assets. This would include the company’s 39 percent stake in the pan-European broadcaster Sky.

The negotiations have been largely focused on Fox’s movie studio, its cable channels such as FX, and its international business holdings, including both Sky and Star of India. Analysis from MoffettNathanson has indicated that the total value of the assets sold would make up a significant percentage of the company’s $60 billion total value.

“Disney would gain more scale in TV and film production [and] cable networks, as well as adding its own distribution angle while accelerating its [direct to consumer video] strategy,” the MoffettNathanson analysts wrote in a research note.

For Fox, this potential blockbuster move comes at a tricky inflection point in the company’s history. Fox is separately working to complete a takeover of Sky rather than to merely own 39 percent of the company, but those efforts have run into regulatory trouble. Meanwhile, Fox may still be considering offers from other buyers, as cable TV giant Comcast has also expressed interest in controlling Fox’s entertainment assets.

If completed, this deal would have a major impact on the long-term direction of Disney’s business model. Today’s consumers are increasingly looking to consume TV programming in an “on-demand” fashion, and Disney has been looking for a way to compete with bigwigs like Netflix and Amazon in that realm. Disney is working to develop two new streaming services: one aimed at sports fans and another with more family-oriented programming. Acquiring Fox’s programming would give them a lot more content to beef up those new offerings.

ESPN is Laying Off Another 150 Employees

 

ESPN's logo.

ESPN has long been an industry leader in cable TV sports programming, but it’s fallen on tough times lately. The network announced Wednesday that it was laying off 150 people, marking the second major series of cuts it’s had to make this calendar year.

“Today we are informing approximately 150 people at ESPN that their jobs are being eliminated,” said ESPN President John Skipper. “The majority of the jobs eliminated are in studio production, digital content, and technology, and they generally reflect decisions to do less in certain instances and redirect resources.”

This round of job cutbacks comes shortly after the network’s April announcement that it was laying off 150 people. That move included ousting a number of prominent on-air personalities, including former pro football players Trent Dilfer and Danny Kanell. This round of layoffs is directed more toward behind-the-scenes employees at ESPN. The company also let about 300 employees go back in October 2015.

These layoffs come amid a series of major business challenges for ESPN. First and foremost, the network has had to deal with declining revenue from subscribers as the number of people paying monthly fees for cable TV packages continues to decrease. This trend has led to tens of millions of dollars in lost revenue.

While job losses have been ongoing for over two years now, ESPN continues to look for ways to keep the ship afloat. For instance, the network is planning to open a new studio in New York in 2018, where it will host both a morning show and an afternoon opinion show as a way of bringing in new streams of revenue. Additionally, the network is looking to capitalize on the popularity of social media with a new Snapchat version of “SportsCenter.” This will offer sports fans a way to watch game highlights on their smartphones without having to watch traditional cable TV.

TripAdvisor’s Stocks Drop After Bungling Sexual Assault Charges

TripAdvisor's logo.

TripAdvisor, a website for both travel booking and discussion, came under fire this week for deleting and ignoring several reports of rape and assault.

Back in 2010, Kristie Love took a trip to Mexico, where she stayed at the Iberostar Paraiso Maya. She returned to the hotel after a night out to find that her electronic key card had been deactivated. When she asked a uniformed guard for help, he assaulted her. Hotel staff refused to call the police.

Love wrote on the TravelAdvisor message boards several times over the next seven years describing her experiences and asking that action be taken against the perpetrator—or at least that potential travelers be warned.

All of her posts were deleted.

Subsequently, two other women reported being assaulted at the same location.

After a well-publicized investigative report from USA Today, TripAdvisor addressed the issue in a recent press release. According to the release, TripAdvisor previously had a policy of removing language from its forums that wasn’t “family-friendly.” Love’s posts, for example, were removed because they contained the word “rape.” Now, however, TripAdvisor welcomes first-hand accounts of negative experiences such as robbery, theft, and assault in order to warn other travelers. Love’s posts have been republished.

Additionally, TripAdvisor has started a new campaign to mark travel locations like hotels and restaurants with warning symbols if any safety issues have been reported. Mexico’s Iberostar Paraiso Maya, Iberostar Paraiso Lindo, and Grand Velas Maya have all been flagged. According to TripAdvisor company spokesman Brian Hoyt, the warnings are meant to alert visitors that they should do more research before booking a stay at any of these places. The flags will remain active for at least three months, after which an internal committee will decide whether or not to remove them.

After the press release, TripAdvisor said it had issued an apology to Love. TripAdvisor Chief Executive Steve Kaufer also said on his LinkedIn that an apology had been made.

However, Love reacted with disdain: “WHAT APOLOGY?” she wrote on Kaufer’s LinkedIn page. “I’ve yet to hear a word from TripAdvisor, and certainly not an apology!”

The apology was reportedly made shortly after.

Meanwhile shares of TripAdvisor stock have dropped 20% to five-year lows. The company has lost $1 billion in market value since this issue came to light.

Own a Business? Keep Politics Out of It

A businessman opens his shirt to reveal an American flag underneath.

Photo credit: Shutterstock

Regardless of whether you voted for Hillary, Trump, or a third-party candidate, this key piece of advice remains the same: keep politics out of business. 

While it can be tempting to jump on the political bandwagon, doing so comes at the risk of losing your customers (and ultimately your business). The NFL learned this lesson the hard way.

It all started in 2016, when 49ers quarterback Colin Kaepernick decided to protest against racial inequality by kneeling during the national anthem. Inspired by Kaepernick, other players decided to do the same. But not everyone viewed it as a peaceful form of protest. Some Americans found kneeling during the national anthem to be disrespectful to the men and women who died defending this country.

Regardless of where you stand on the issue, it was decidedly a bad call to allow employees of the NFL to insert their personal political agenda into a classic American sport. Why? Because those who disagreed with the act became so enraged that they launched their own form of protest.

Using the hashtag #BurnTheNFL, disgruntled fans started a social media campaign in which they ignited all their NFL merchandise in a sea of flames. Even more impactful, they vowed to stop purchasing game tickets and to stop watching the sport all together.

See the trickle down effect?

The better solution would have been for Kaepernick to protest on his own time and his own dime. What he does outside of work is his business, but so long as he is on the clock, he has an obligation to respect his customers’ opinions. And that’s how it ought to be for all employees and business owners.

As I stated earlier, it doesn’t matter whether you’re a Democrat or a Conservative—this is nonpartisan post in which I advise everyone to keep politics out of business.

Trump and the Stock Market: Correlation Does Not Equal Causation

The front page cover for The Economist magazine. The cover features a photo of Trump with the word, "Trumponomics" written across his face.

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Ever since Trump took office, the stock market has hit some record highs. Most recently, the Dow reached over 23,000 for the first time in history.

President Trump, of course, credits himself for this trend. In a series of tweets published on Oct. 11, the president wrote:

“Stock market has increased by 5.2 trillion dollars since the election on November 8th, a 25% increase. Lowest unemployment in 6 years and if Congress gives us the massive tax cuts (and reform) I am asking for, those numbers will grow by leaps and bounds.”

But while it’s tempting to attribute the recent economic growth to the newly elected president, experts say that just isn’t accurate.

Kevin Caron, a portfolio manager and market strategist who helped oversee $180 billion dollars at Stifel Nicolaus, attributes the growth to earnings rather than politics.

“The new records have everything to do with earnings,” Caron explained. “It’s obvious that the stock market follows earnings, but the market narrative always wants to find something more interest. But the reality is very simple: The market has gone higher because earnings have improved.”

Maris Ogg, president of Tower Bridge Advisors, agrees.

“So far, earnings have beat expectations,” said Ogg. “I think that the most important thing economically that has happened this year is the clear, sustainable recovery occurring in Europe. We’re getting confirmation of that with almost every economic release.”

Other business moguls have different theories. Walter Hellwig, senior vice president at BB&T Wealth Management, believes the recent growth has more to do with the time of year.

“The seasonal factor is playing a big role,” Hellwig told Business Insider. “We’re out of the ‘sell in May and go away’ time frame. Between now and the end of the year, I think people are going to keep buying, with good earnings still coming in.”

And then there’s Bill Schultz, chief investment officer at McQueen, Ball, & Associates. Schultz gave several reasons for the rise of the Dow, none of which have to do with Trump.

“The underlying economy has performed better than a lot of people expected,” Schultz expounded in an interview with Business Insider. “You’re starting to see a lot of capital expenditures take place through corporations. You’ve got better confidence coming from individuals. There’s not as much concern about the Fed aggressively raising rates. And the economies around the world have performed better.”

In summation, Trump’s involvement with the rise of the stock market is likely more coincidental than anything. However, it’s unlikely that he’ll ever stop taking credit for it.

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