Business

Advertisers Pay Attention as Meta’s Twitter Rival Surges

Published

2 years ago

July 6, 2023

Advertisers Pay Attention as Meta’s Twitter Rival Surges

Has Zuckerberg invented a Twitter killer?

Threads made its debut on Wednesday night with a bang. Meta’s new social network had already racked up more than 10 million sign-ups within seven hours of its launch, and attracted celebrities and politicians like Oprah Winfrey and Representative Alexandria Ocasio-Cortez, Democrat of New York.

But the presence of big-name advertisers such as Procter & Gamble and Ford points to the bigger commercial stakes in the fight between Mark Zuckerberg’s new platform and Elon Musk’s Twitter.

Meta is billing Threads as a “friendly” forum, but the social media giant is gunning for the blue bird. Mr. Zuckerberg wants the platform to become “a public conversations app with 1 billion+ people on it.” And he engaged with his nearly 600,000 Threads followers, responding with a laughing emoji when one suggested that the new social network could be Twitter’s undoing.

Advertisers are watching closely, even if they can’t buy ads there yet. “Threads could really fly and people are obviously concerned about brand safety on Twitter,” Martin Sorrell, the longtime advertising mogul who now leads S4 Capital, a digital marketing firm, told DealBook.

Twitter’s new C.E.O., Linda Yaccarino, joined last month aiming to patch relations with big brands that left the platform after Mr. Musk bought it and culled an army of content moderators. “Controversy is a negative and not something that brands want to deal with,” Mr. Sorrell said.

Meta has had its own problems with privacy and data, and some have already raised concerns about how it will handle disinformation on the platform. But the company has made strides to improve and is seen as a genuine alternative, Mr. Sorrell said, adding that the timing of the launch, just as Twitter looks to restrict how many tweets users can see, is “advantageous.”

Meta is also able to leverage the heft of its platforms and ad operations. The company has imported features from Instagram, which is used monthly by roughly two billion people. And it is targeting the same lucrative audience of digitally savvy creators, Adam Mosseri, the head of the photo-sharing app, said in an explanatory video.

One sticky feature: If a Threads user wants to delete the account, she has to also delete her Instagram account. Would that invite scrutiny from the F.T.C., which has pledged to crack down on firms that make opting out of a service too onerous, DealBook wonders?

Mr. Musk was unimpressed. “It is infinitely preferable to be attacked by strangers on Twitter, than indulge in the false happiness of hide-the-pain Instagram,” he tweeted.

Not everyone can use Threads. It’s available in 100 countries, but not in the Europe Union as Meta and privacy watchdogs battle over the company’s handling of user data. There are also no direct-messaging or livestream options, unlike Twitter.

HERE’S WHAT’S HAPPENING

Fed officials suggest that multiple interest rate increases are coming. Minutes from the central bank’s rate-setting meeting last month show that some officials favored raising rates instead of holding steady, as efforts to tamp down inflation show slow progress. Economists and investors will be watching Friday’s jobs report for further signs of how aggressive the Fed will be on rates this year.

The Biden administration appeals a ruling limiting communications with social media platforms. The Justice Department is seeking to overturn an injunction blocking a slew of government officials from encouraging companies to remove certain kinds of content. Meanwhile, the State Department reportedly canceled a regular meeting about hacking threats and the 2024 election with Facebook executives.

Donald Trump raises more than $35 million in the second quarter. The amount was nearly double what the former president raised in the previous three months and shows how multiple indictments appear not to have hurt him politically. Meanwhile, Gov. Ron DeSantis of Florida is still struggling to make a strong case against Mr. Trump.

Interest in ChatGPT and others appears to be cooling. Both web traffic and app downloads for the enormously popular A.I. chatbot and peers like Bing have waned, according to new research. That suggests that ChatGPT’s novelty is wearing off with mainstream users, even as the tech industry remains wildly enthusiastic about artificial intelligence.

Two top entertainment moguls team up

After stepping down as one of Paramount Global’s top executives last year, David Nevins has found a new perch: C.E.O. of The North Road Company, the studio founded by fellow entertainment veteran Peter Chernin.

The hire gives North Road a chief who helped produce some of the biggest series of the past two decades, DealBook’s Lauren Hirsch and The Times’s John Koblin report.

Industry executives had wondered where Mr. Nevins would go after Paramount. He rose to prominence by producing shows like “ER,” “24” and “Friday Night Lights.” He then joined Showtime’s entertainment division in 2010, overseeing hits like “Homeland,” “The Affair” and “Yellowjackets.”

By the time he left last year, Mr. Nevins had become chief creative officer of scripted content for the Paramount+ streaming service.

Mr. Nevins is teaming up with a highly regarded Hollywood veteran. Mr. Chernin, who was Rupert Murdoch’s top deputy at News Corp., founded Chernin Entertainment in 2010, producing the likes of “Ford v Ferrari” and “Hidden Figures.” He then created North Road, which includes Chernin Entertainment, last year to establish an independent studio aimed at feeding Hollywood’s appetites.

To build out his new venture, Mr. Chernin has acquired companies including Kinetic Content, which produced “Love Is Blind” for Netflix, and the documentary producer Words + Pictures, which was behind ESPN’s “30 for 30.”

North Road has plenty of money behind it. It raised $150 million from the Qatar Investment Authority this year, valuing it at roughly $1 billion. That comes on top of $500 million that the investment firm Providence Equity Partners put into North Road at launch, and $300 million in debt financing from Apollo.

Mr. Nevins is joining North Road at an inflection point for the entertainment industry. After years of runaway spending on content in the name of subscriber growth, streaming services are retrenching as Wall Street soured on the strategy.

Mr. Chernin contends that entertainment giants will increasingly focus on working with independent production companies with quality content and solid financials.

“This is going to be a good time to be a well-funded” stand-alone company, Mr. Nevins told DealBook.

A new narrative for Taylor Swift and FTX

The sudden collapse last year of Sam Bankman-Fried’s FTX ensnared a slew of celebrities who had become paid ambassadors for the crypto exchange, including the famed quarterback Tom Brady and his wife at the time, the supermodel Gisele Bündchen.

One superstar who escaped the mess, however, was Taylor Swift. The pop singer won plaudits for her business savvy after Adam Moskowitz, a lawyer suing Brady and Bündchen over their FTX ties, said that Swift had passed on a similar sponsorship deal. The truth is more complicated, The Times’s Erin Griffith and David Yaffe-Bellany report:

In an interview with The New York Times, Mr. Moskowitz said he had no inside information about the talks.
In reality, Ms. Swift’s side signed the sponsorship agreement with FTX after more than six months of discussions, three people with knowledge of the deal said, and it was Mr. Bankman-Fried who pulled out. The last-minute reversal left Ms. Swift’s team frustrated and disappointed, two of the people said.
A spokeswoman for Ms. Swift declined to comment.

Canada makes the news

A fight between Canada and Big Tech generated more headlines on Wednesday, after the country’s government pulled advertising from Facebook and Instagram. The reason: Meta, the parent group of the social platforms, said it would block access to news in Canada because of a law requiring tech companies to pay media owners for links to their news content — a regulatory process that is being watched closely by lawmakers worldwide as a potential model.

The law will take effect in about six months. The Canadian government says that digital platforms, like Meta and Google, have benefited from free content while devouring publishers’ ad revenue. The tech companies counter that their platforms have extended the publishers’ ability to reach audiences.

A push to regulate is gathering pace. In 2021, Australia introduced similar regulations. Meta blocked news there, only to relent after tweaks were made. The company and Google subsequently negotiated deals with Australian media companies and publishers have raked in millions. The Canadian law built on the Australian model, and other countries are weighing their own measures.

Canada is particularly upset with Meta. Pablo Rodriguez, the minister of Canadian heritage, accused the company of being “unreasonable and irresponsible” for not engaging with the government, unlike Alphabet, the parent group of Google. He added that pulling the advertising would cost the company millions.

U.S. lawmakers are watching. California introduced a similar bill in March and some federal lawmakers have indicated their support for Canada’s approach. “It’s unacceptable for companies like Google & Facebook to abuse their power to cut off access to news. Leaders are right to stand firm against these tactics,” Senator Elizabeth Warren, Democrat of Massachusetts, tweeted. Senator Amy Klobuchar, Democrat of Minnesota, who has co-sponsored a bill similar to the one in Canada, told The Globe and Mail newspaper that lawmakers must resist company pressure: “Of course monopolies will fight us every step of the way.”

Meta did not respond to a request for comment. A Google spokeswoman said the company hoped conversations with the government could help resolve concerns so that it won’t end up blocking information.

THE SPEED READ

Deals

JetBlue said it would withdraw from an alliance with American Airlines after a judge blocked the partnership amid opposition from the Justice Department. (CNBC)
The Raine Group, the merchant bank focused on sports, media and tech deals, raised $760 million for its latest investment fund. (Raine)

Policy

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Business

Albania Gives Jared Kushner Hotel Project a Nod as Trump Returns

Published

3 hours ago

January 16, 2025

Press Room

Albania Gives Jared Kushner Hotel Project a Nod as Trump Returns

The government of Albania has given preliminary approval to a plan proposed by Jared Kushner, Donald J. Trump’s son-in-law, to build a $1.4 billion luxury hotel complex on a small abandoned military base off the coast of Albania.

The project is one of several involving Mr. Trump and his extended family that directly involve foreign government entities that will be moving ahead even while Mr. Trump will be in charge of foreign policy related to these same nations.

The approval by Albania’s Strategic Investment Committee — which is led by Prime Minister Edi Rama — gives Mr. Kushner and his business partners the right to move ahead with accelerated negotiations to build the luxury resort on a 111-acre section of the 2.2-square-mile island of Sazan that will be connected by ferry to the mainland.

Mr. Kushner and the Albanian government did not respond Wednesday to requests for comment. But when previously asked about this project, both have said that the evaluation is not being influenced by Mr. Kushner’s ties to Mr. Trump or any effort to try to seek favors from the U.S. government.

“The fact that such a renowned American entrepreneur shows his interest on investing in Albania makes us very proud and happy,” a spokesman for Mr. Rama said last year in a statement to The New York Times when asked about the projects.

Mr. Kushner’s Affinity Partners, a private equity company backed with about $4.6 billion in money mostly from Saudi Arabia and other Middle East sovereign wealth funds, is pursuing the Albania project along with Asher Abehsera, a real-estate executive that Mr. Kushner has previously teamed up with to build projects in Brooklyn, N.Y.

The Albanian government, according to an official document recently posted online, will now work with their American partners to clear the proposed hotel site of any potential buried munitions and to examine any other environmental or legal concerns that need to be resolved before the project can move ahead.

The document, dated Dec. 30, notes that the government “has the right to revoke the decision,” depending on the final project negotiations.

Mr. Kushner’s firm has said the plan is to build a five-star “eco-resort community” on the island by turning a “former military base into a vibrant international destination for hospitality and wellness.”

Ivanka Trump, Mr. Trump’s daughter, has said she is helping with the project as well. “We will execute on it,” she said about the project, during a podcast last year.

This project is just one of two major real-estate deals that Mr. Kushner is pursuing along with Mr. Abehsera that involve foreign governments.

Separately, the partnership received preliminary approval last year to build a luxury hotel complex in Belgrade, Serbia, in the former ministry of defense building, which has sat empty for decades after it was bombed by NATO in 1999 during a war there.

Serbia and Albania have foreign policy matters pending with the United States, as both countries seek continued U.S. support for their long-stalled efforts to join the European Union, and officials in Washington are trying to convince Serbia to tighten ties with the United States, instead of Russia.

Virginia Canter, who served as White House ethics lawyer during the Obama and Clinton administrations and also an ethics adviser to the International Monetary Fund, said even if there was no attempt to gain influence with Mr. Trump, any government deal involving his family creates that impression.

“It all looks like favoritism, like they are providing access to Kushner because they want to be on the good side of Trump,” Ms. Canter said, now with State Democracy Defenders Fund, a group that tracks federal government corruption and ethics issues.

Business

Craft supplies retailer Joann declares bankruptcy for the second time in a year

Published

4 hours ago

January 16, 2025

Press Room

Craft supplies retailer Joann declares bankruptcy for the second time in a year

The craft supplies and fabric retailer Joann filed for bankruptcy for the second time in less than a year, as the chain wrestles with declining sales and inventory shortages, the company said Wednesday.

The retailer emerged from a previous Chapter 11 bankruptcy process last April after eliminating $505 million in debt. Now, with $615 million in liabilities, the company will begin a court-supervised sale of its assets to repay creditors. The company owes an additional $133 million to its suppliers.

“We hope that this process enables us to find a path that would allow Joann to continue operating,” said interim Chief Executive Michael Prendergast in a statement. “The last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step.”

Joann’s more than 800 stores and websites will remain open throughout the bankruptcy process, the company said, and employees will continue to receive pay and benefits. The Hudson, Ohio-based company was founded in 1943 and has stores in 49 states, including several in Southern California.

According to court documents, Joann began receiving unpredictable and inconsistent deliveries of yarn and sewing items from its suppliers, making it difficult to keep its shelves stocked. Joann’s suppliers also discontinued certain items the retailer relied on.

Along with the “unanticipated inventory challenges,” Joann and other retailers face pressure from inflation-wary consumers and interest rates that were for a time the highest in decades. The crafts supplier has also been hindered by competition from others in the space, including Michael’s, Etsy and Hobby Lobby, said Retail Wire Chief Executive Dominick Miserandino.

“It did not necessarily learn to evolve like its nearby competitors,” Miserandino said of Joann. “Not many people have heard of Joann in the way they’ve heard of Michael’s.”

Joann is not the first retailer to continue to struggle after going through bankruptcy. The party supply chain Party City announced last month it would be shutting down operations, after filing for and emerging from Chapter 11 bankruptcy in 2023.

Over the last two years, more than 60 companies have filed for bankruptcy for a second or third time, Bloomberg reported, based on information from BankruptcyData. That’s the most over a comparable period since 2020, when the COVID-19 pandemic kept shoppers home.

Discount chain Big Lots filed for bankruptcy last September, and the Container Store, a retailer offering storage and organization products, declared bankruptcy last month. Companies that rely heavily on brick-and-mortar locations are scrambling to keep up with online retailers and big-box chains. Fast-casual restaurants such as Red Lobster and Rubio’s Coastal Grill have also struggled.

High prices have prompted consumers to pull back on discretionary spending, while rising operating and labor costs put additional pressure on businesses, experts said. The U.S. annual inflation rate for 2024 was 2.9%, down from 3.4% in 2023. But inflation has been on the rise since September and remains above the Federal Reserve’s goal of 2%.

If a sale process for Joann is approved, Gordon Brothers Retail Partners would serve as the stalking-horse bidder and set the floor for the auction.

Business

U.S. Sues Southwest Airlines Over Chronic Delays

Published

11 hours ago

January 15, 2025

Press Room

U.S. Sues Southwest Airlines Over Chronic Delays

The federal government sued Southwest Airlines on Wednesday, accusing the airline of harming passengers who flew on two routes that were plagued by consistent delays in 2022.

In a lawsuit, the Transportation Department said it was seeking more than $2.1 million in civil penalties over the flights between airports in Chicago and Oakland, Calif., as well as Baltimore and Cleveland, that were chronically delayed over five months that year.

“Airlines have a legal obligation to ensure that their flight schedules provide travelers with realistic departure and arrival times,” the transportation secretary, Pete Buttigieg, said in a statement. “Today’s action sends a message to all airlines that the department is prepared to go to court in order to enforce passenger protections.”

Carriers are barred from operating unrealistic flight schedules, which the Transportation Department considers an unfair, deceptive and anticompetitive practice. A “chronically delayed” flight is defined as one that operates at least 10 times a month and is late by at least 30 minutes more than half the time.

In a statement, Southwest said it was “disappointed” that the department chose to sue over the flights that took place more than two years ago. The airline said it had operated 20 million flights since the Transportation Department enacted its policy against chronically delayed flights more than a decade ago, with no other violations.

“Any claim that these two flights represent an unrealistic schedule is simply not credible when compared with our performance over the past 15 years,” Southwest said.

Last year, Southwest canceled fewer than 1 percent of its flights, but more than 22 percent arrived at least 15 minutes later than scheduled, according to Cirium, an aviation data provider. Delta Air Lines, United Airlines, Alaska Airlines and American Airlines all had fewer such delays.

The lawsuit was filed in the United States District Court for the Northern District of California. In it, the government said that a Southwest flight from Chicago to Oakland arrived late 19 out of 25 trips in April 2022, with delays averaging more than an hour. The consistent delays continued through August of that year, averaging an hour or more. On another flight, between Baltimore and Cleveland, average delay times reached as high as 96 minutes per month during the same period. In a statement, the department said that Southwest, rather than poor weather or air traffic control, was responsible for more than 90 percent of the delays.

“Holding out these chronically delayed flights disregarded consumers’ need to have reliable information about the real arrival time of a flight and harmed thousands of passengers traveling on these Southwest flights by causing disruptions to travel plans or other plans,” the department said in the lawsuit.

The government said Southwest had violated federal rules 58 times in August 2022 after four months of consistent delays. Each violation faces a civil penalty of up to $37,377, or more than $2.1 million in total, according to the lawsuit.

The Transportation Department on Wednesday also said that it had penalized Frontier Airlines for chronically delayed flights, fining the airline $650,000. Half that amount was paid to the Treasury and the rest is slated to be forgiven if the airline has no more chronically delayed flights over the next three years.

This month, the department ordered JetBlue Airways to pay a $2 million fine for failing to address similarly delayed flights over a span of more than a year ending in November 2023, with half the money going to passengers affected by the delays.