Ford Puts New CEO in the Driver’s Seat

Ford's logo.

Image credit: rvlsoft / Shutterstock

On Monday, Ford replaced its current chief executive, Mark Fields, with Jim Hackett, who had been responsible for the Ford subsidiary that works on autonomous vehicles. During Fields’ three-year stint as CEO, Ford has seen losses in both sales and profits. Although the U.S. automotive industry as a whole has been soft, Ford’s sales are down 25% this year, and first quarter profits fell by 30%, which is a far greater decline than its competitors.

Ford’s board was critical of Fields’ failure to keep pace with companies like Tesla, General Motors, and Google in the development of self-driving cars. Ford has not only fallen behind these companies in this area, but it has also failed to deliver profitable sales of their existing models despite the fact that, at the recent annual meeting, Fields said that Ford was capable of staying competitive in the current automotive market while also “keeping one foot in the future.” Ford promised to have a fully autonomous car on the road by 2021. But the Board felt that was not soon enough to beat the competitors who are already testing such vehicles.

Other issues have dogged Fields during his time at Ford. Ford has had a number of safety recalls that have raised concerns about its ability to insure quality. Fields was also involved in a failed plan to build an assembly plant for small cars in Mexico. And as recently as last week, Fields cut 1,400 jobs in an effort to improve the bottom line. But the stock price continued to decline.

The appointment of Hackett to the top job is a signal that the Board sees self-driving cars as the wave of the future and will be putting more pressure on the new CEO to successfully and more quickly develop a self-driving automobile that can compete in the marketplace.

Airlines Making Billions From Baggage Fees

A huge pile of cash.

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Airlines are making a killing from fees. Last year, U.S. based airlines brought in a total of $4.2 billion from baggage fees alone, according to figures released by the Department of Transportation. That’s a 10% increase from 2015.

Yet according to airline executives, profits aren’t as high as they were in the past, even with lower fuel costs. Airlines reported $13.6 billion in profits total, down 45% from 2015, citing higher labor costs as the reason for the lower figures. Lower passenger fares also attributed to the lower revenue, as ticket sales fell one percent to $124.2 billion.

These lower profits are the main justification for extra fees, not just for luggage but legroom, seat selections, and early boarding to name a few. Airline executives claim these fees allow passengers to choose the kinds of service they want, even though few flyers are fans.

This news comes right as executives from America’s major airlines testified before Congress about their customer service protocols. While this was prompted by last month’s United Airlines debacle, many took the opportunity to vocalize their disdain for airline fees.

William McGee, a former airline executive now representing the Consumers Union, argues that the fees are disingenuous and unfair to passengers.

“We’ve heard a lot about pricing today, about fares being lower than they were 25 years ago,” McGee testified. “The fact is that obscures fees we didn’t used to pay. Every day there are higher and higher fees. Passengers are getting gouged.”

Massachusetts Rep. Michael Capuano agrees that customers are negatively affected by these business practices.

“I go in the computer to try to figure out which flight I want to take. Some charge fees for baggage. Some charge fees for oxygen. Who knows? You can’t get comparable prices,” Capuano said.

As expected, executives from United and American disagreed, saying the baggage fees help keep other costs, such a ticket prices, low.

ESPN Facing Major Layoffs

A photo of an ESPN microphone.

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ESPN is the latest organization to be hit by the digital craze. The sports network is laying off 100 employees this week (mostly on-air talent) hitting every facet of the organization as ESPN is moving toward a mostly digitized medium.

Sources say the decision comes after an increasing amount of costs and decreasing number of cable subscribers have cut into its bottom line. For a network that has spent billions of dollars in deals with major sports teams and events, layoffs are no surprise to anyone. So who is getting hit? Well, some big names at the network.

Yesterday, Deadspin posted a number of tweets from ESPN anchors, writers, and reporters who were given the bad news, some of who worked at the network for decades.

NFL Reporter Ed Werder was one of the first to go.

“After 17 years reporting on #NFL, I’ve been informed that I’m being laid off by ESPN effective immediately. I have no plans to retire,” he tweeted.

“SportsCenter” Anchor Jay Crawford, Big Ten Reporter Brian Bennett, and MLB Writer Jayson Stark are some of the other talent who are now gone. College Basketball reporter C.L. Brown found out about his firing while on vacation.

ESPN President John Skipper noted how difficult this decision was, thanking the former employees for their “great work” and “many contributions,” yet made it clear that the layoffs had to be done.

“Dynamic change demands an increased focus on versatility and value,” Skipper stated, “and as a result, we have been engaged in the challenging process of determining the talent–anchors, analysts, reporters, writers, and those who handle play-by-play–necessary to meet those demands.”

Many of the people laid off were at the end of their contracts and unwilling to take a massive pay cut. The rest of which were bought out of their contracts.

Meet the Unicorn Frappuccino That Everyone is Raving About

A photo of a pink and blue "Unicorn Frappuccino" from Starbucks.

Photo credit: Brian Chow at Flickr Creative Commons.

Starbucks’ new multi-colored drink is a dream come true for sugar enthusiasts and frozen drink lovers, offering an array of colors and flavors with every sip and giving drinkers one sweet-filled experience.

“Like its mythical namesake, the Unicorn Frappuccino blended crème comes with a bit of magic, starting as a purple beverage with swirls of blue and a first taste that is sweet and fruity,” a spokesperson for Starbucks said in a statement. “But give it a stir and its color changes to pink, and the flavor evolves to tangy and tart. The more swirl, the more the beverage’s color and flavors transform.”

This limited edition drink is only being offered from April 19 through April 23, and it’s caffeine free, so coffee lovers won’t be offended by this sugar-filled creation. The Unicorn Frap consists of the crème Frappuccino mixed with mango syrup and dusted with a pink powder and sour blue drizzle. Then it’s topped with vanilla whipped cream and sweet pink and sour blue powder, making it paradise in a cup for all sweets lovers.

Starbucks says its inspiration for the drink came from the Internet, as social media is blowing up with pictures and recipes of Unicorn-themed foods and beverages. Not one to shy away from a trend, Starbucks decided to play along and offer loyal customers something fun and festive before people moved on to something else. Case in point: last year’s Pokemon Go Frappuccino.

Naturally, people have been going crazy and posting their excitement on Snapchat, Twitter and Instagram. It’s safe to say that social media will be bombarded with photos of the drink this coming week, as the frap is expected to sell out.

It should also be noted–although I’m sure it’s no surprise–that the Unicorn Frappuccino is not friendly to those watching their diet. A tall Frap with whole milk comes in at 280 calories, with 11 grams of fat and 39 grams of sugar.

Virgin America is No More

A photo of a Virgin America airplane in flight.

Photo credit: Chris Parypa Photography / Shutterstock

Sad news for fans of Virgin America: the airline is all but finished after its recent merger with Alaska Airlines.

Last year Alaska Airlines purchased Virgin America for $2.6 billion, leaving many to wonder what would become of the two different airlines, as Virgin was popular for being flashy, fun, and more young-adult centric. Alaska plans on retiring the Virgin name and logo some time in 2019.

“While the Virgin America name is beloved to many, we concluded that to be successful on the West Coast we had to do so under one name—for consistency and efficiency, and to allow us to continue to deliver low fares,” said Sangita Woerner, Alaska Airlines’ vice president of marketing.

Frequent Virgin flyers can take solace in one thing: Alaska Airlines will be keeping the “flair” that Virgin offered, such as mood lighting, music, and free WIFI and entertainment.

One person who isn’t happy about Virgin’s departure is Virgin America founder Richard Branson.

“With a lot of things in life, there is a point where we have to let go and appreciate the fact that we had this ride at all,” Branson said in a blog post. “Many tears are shed today, this time over Alaska Airlines’ decision to buy and now retire Virgin America. It has a very different business model and sadly, it could not find a way to maintain its own brand and that of Virgin America.”

Starting next year, Virgin’s frequent flyer program will disappear, but members will not lose their status. Current frequent flyers have the option of converting their miles to Alaska’s at a rate of 1 to 1.3 miles, or they can wait it out and have their miles traded evenly when the program dissolves.

The merger between the two airlines created the fifth-largest airline in the United States, boasting 1,200 daily flights and close to 300 planes. Alaska Airlines plans on expanding their market to 21 new cities over the next year.

Using Export Complexity to Explain Income Inequality

An image of a cargo ship, a port, and some air planes.

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Researchers from MIT have developed a new method for predicting the economic success of countries around the world: the complexity of that country’s export economy. For the last decade or so, Professor César Hidalgo and his colleagues have been doing research and writing papers to back up this idea. They argue that “not just [the] diversity but the expertise and technological infrastructure required to produce [exports] is a better predictor of future economic growth than factors economists have historically focused on, such as capital and education.”

And what’s more, the most recent research shows that this complexity can also say a lot about income equality in those countries as well. Basically, countries with greater export complexity have lower income inequality because there are more workers in more industries that are generating exports and, subsequently, income. Looking at data collected between 1963 and 2008, researchers found that “countries whose economic complexity increased, such as South Korea, saw reductions in income inequality, while countries whose economic complexity decreased, such as Norway, saw income inequality increase.”

This research comes at a time of renewed interest, both politically and scientifically, in the issue of income inequality in many parts of the world. There are a number of factors that can be used to determine the current or future success of an economy, but not all of those factors are equally important. Relying solely on GDP, which is often the case, is much less useful than combining it with export complexity, education, and population. However, relying just on export complexity seems to work almost as well as using all of the aforementioned methods.

This development could be extremely useful to both governments and businesses in the future, as they seek to do right by their citizens and employees, respectively. Essentially, finding a new niche isn’t just good for a company, but it can help the country as well.

Burger King Buys Popeyes Chicken

A photo of the outside of a Popeyes Restaurant.

Photo credit: Jonathan Weiss / Shutterstock

Restaurant Brands International, the company that owns Burger King, will be buying Popeyes Louisiana Kitchen for $1.8 billion. Popeyes is known for its Cajun cuisine and extremely popular fried chicken which can be found in its 2,600 restaurants worldwide.

Daniel Schwartz, CEO of Restaurant Brands International, is excited about the new venture.

“RBI is adding a brand that has a distinctive position within a compelling segment and strong U.S. and international prospects for growth,” he said in a statement. “As Popeyes becomes part of the RBI family we believe we can deliver growth and opportunities for all of our stakeholders including our valued employees and franchisees. We look forward to taking an already very strong brand and accelerating its pace of growth and opening new restaurants in the U.S. and around the world.”

Restaurant Brands International is already doing well in the fast food market due to Burger King’s rising sales, but this Popeyes purchase can make it a formidable opponent in the fried chicken arena, where KFC is still king. Wall Street seems to think it has a chance. As of Tuesday morning, the company’s value rose 19% (up from Friday’s closing numbers), bringing Popeyes’ stock up to $79 per share.

Popeyes was founded in the early 1970s in New Orleans, and has since become a staple for chicken lovers in more than 25 countries. Cheryl Bachelder, CEO of Popeyes, is just as excited as Schwartz when it comes to the RBI/Popeyes partnership.

“As Popeyes enters its 45th year,” she said, “it’s success reflects the amazing brand entrusted to us by founder Al Copeland, Sr. and the unique high trust partnership that we enjoy with our franchise owners. RBI has observed our success and seen the opportunity for exceptional future unit growth in the U.S. and around the world.

Restaurant Brands International also owns Tim Horton’s, the Canadian coffee and doughnut chain.

Walmart Offers Free Two-Day Shipping

A photo of the outside of a Walmart building.

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Walmart has been gunning for Amazon’s top spot in the online shopping world, and it’s coming up the ranks pretty fast. As of this week, Walmart customers will receive free two-day shipping on millions of items store-wide for purchases of $35 and up.

One of Amazon Prime’s most popular features is its two-day shipping. That’s what made Prime so successful, despite its $99 annual fee. Walmart took notice and introduced its ShippingPass program, which offered two-day shipping for an annual cost of $49.

However, Amazon Prime offers a lot more benefits and perks other than just shipping, making it a better deal overall. Walmart must have realized this because they are now offering free shipping without the annual fee. This is a great way to attract customers who want no frills and their packages delivered quickly. Users don’t have to enroll in a program, either.

Marc Lore, CEO of Walmart US e-commerce, told reporters that “at a very fundamental level, we just don’t believe in having to charge for a membership.”

Lore seems to be sticking to his word, because anyone who purchased a ShippingPass will have their money refunded.

While the free shipping will not count for every item sold, it will for more than two million of the most popular items people usually buy from Walmart, such as food, toiletries, clothes, baby items, electronics, and household supplies. For those who have little time to go shopping but can’t really afford the extra shipping costs usually tagged onto online orders, this is a huge blessing. Orders must be placed before 2pm PST to arrive in two days.

Another added bonus: Walmart doesn’t plan on raising prices to offset the shipping costs.

“It won’t affect our pricing at all,” Lore said. “In fact, we are looking to get more aggressive on the pricing side.”

Online Media Moving to Quality Video Content In Order to Catch Up With Television

An iPad playing a video.

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Will online media ever shut out print and television as sources of news and entertainment? The answer to that question is a resounding, “maybe.”

The Internet has done a great job of gobbling up print media through its ability to share timely news, information, and classified ads.

As far back as 2008, Bill E. Ford, President and CEO of General Atlantic, saw the possibilities in digital media. “One of the biggest shifts that we’ve been focused on is the shift from offline to online media,” he said in an interview with Financial Times. “We have several investments taking advantage of that trend.”

Those investments include the digital publishing platform Vox Media, Snap (the company that owns Snapchat), and Buzzfeed.

But digital media still has some distance to go before it catches up with television in the sheer hours of media consumed.

According to recent surveys, people spend more than four hours a day watching TV but approximately an hour a day on Facebook.

The difference, arguably, is video, and digital platforms are picking up the pace on producing just such material.

Social media giant Facebook is working on the premise that video is the digital space trend of the future. Facebook founder Mark Zuckerberg said he believes that within five years, most of what people consume online will be video. At that pace, online video ads could give Facebook a good shot at competing for dollars currently spent on television advertising.

“People are creating and sharing more video, and we think it’s pretty clear that video is only going to become more important,” Zuckerberg said. As a result, Facebook is going to a “video first” mentality, prioritizing video content across its apps and taking steps to make it easier for people to express themselves through enhancements such as live video.

However, a big challenge to digital media is quality. People are still largely turning to television for news and information, probably because of an underlying belief that TV is a more reliable and trustworthy source than social media.

General Atlantic Vice President Zack Kaplan, who serves on the Board of Directors of Vox Media, said in a recent article, “For digital content companies, success will increasingly require a prioritization of quality programming and meaningful journalism over commoditized and replicable clickbait; the creation of content that sustainably and uniquely captures real consumer time—not unique visitors, clicks, page views, video views, or swipes.”

The market is already reflecting the need to move to high-quality online media. In 2016, MLB Advanced Media agreed to pay $50 million a year through 2023 for League of Legends streaming rights. League of Legends generated more than 360 million hours of live consumption per year.

“Continued strategic investment is following brands and platforms that can similarly capture this kind of consumer attention,” Kaplan said. “Time is the metric that links big deals in the market.”

Online media platforms will need to invest real money to bring that higher-quality content and programming to their users. This will cause users to spend more time on their platforms over those of the competition. Twitter is experimenting with live sports, and Snap is working with TV broadcast networks to produce original and exclusive shows. Only time will tell how Twitter and Snap do in the face of digital behemoths like Amazon and Netflix, who are already making a great deal of high-quality, original content.

But the movers and shakers of the world’s digital platforms aren’t the only ones who need to understand the value of capturing viewers’ time through high-quality video and reliable news and information. Investors also need to understand the changing landscape of digital media and the growing online video trend in order to make strategic and profitable investments, both today and in the future.

Paul McCartney is Suing Sony for Song Rights

A photo of Paul McCartney.

Photo credit: s_bukley / Shutterstock

Paul McCartney wants his music back.

The Beatle is suing Sony/ATV Music Publishing to regain the rights of the Beatles songs he both wrote and co-wrote with John Lennon. That equates to 267 songs in total.

McCartney filed the suit this week, stating that he has the rights to obtain his music due to copyright termination. Copyright termination is when the original creators have the right to reclaim ownership of their work after a specific length of time has passed. Sir Paul is citing the 1976 U.S. Copyright Act, which over the past few years has allowed many performers to regain control over their work. McCartney argues that the act would allow him to receive the rights back as early as next year.

This lawsuit is one of many attempts by McCartney to gain back control of his music, as he has been in a decades-long battle with Sony for the rights. He first lost those rights back in the ’80s, when Michael Jackson outbid him for the whole ATV catalog, paying $41.5 million. In 1995, Sony and Jackson formed Sony/ATV, thus giving Sony a 50% share of the music. Last year, Jackson’s estate sold his 50% stake to Sony for $750 million, and now McCartney only has to battle one entity for his catalog. He has been sending notices to Sony/ATV about his wishes since 2008.

That said, McCartney’s lawyers are fearful that Sony will push back with its win against Duran Duran, who filed a similar suit against them and lost. The problem: the British court says that any contracts signed in the U.K. take precedence over any rights they may have in the U.S. Plus, British law says music publishers can keep the rights for up to 70 years after a musician’s death. McCartney filed the lawsuit in New York City hoping that will work in his favor.

While Sony has continued to fight McCartney over the years, a statement by the company said it has “the highest respect for Sir Paul McCartney with whom we have enjoyed a long and mutually rewarding relationship with respect to the treasured Lennon and McCartney song catalogue.”

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