Someone To Believe In

This blog has featured articles on a range of subjects from sports, to business, to the environment, healthcare, marketing, and poetry. I thought about some different topics to write about since it has been a little while since I have shared on this blog forum, but nothing was “striking a cord” with me.

I decided that it was a good time to take a break from mergers & acquisitions coverage, or a piece on the media wars, or writing about healthcare (which are all important topics) in order to take a different approach.

I have shared on this blog a few times in the past that I host a podcast on Life Coach Radio Network twice per month titled, “Undivided”, the series just reached the two-year milestone and the episodes focus on social justice issues or wellness topics that impact people. I am hosting the 50th episode this evening on the debate over body image, which is a very big issue with people from across the demographic spectrum.

The episode is going to feature an expert in the area, Suzanne Reilley, and will be a powerful, inspiring program for those dealing with that issue in their lives. I am not an expert, but in my research, at the heart of all of it, there is a root cause just like anything else. That root cause is different in certain people or circumstances, but the common thread is similar to other emotional or psychological issues: it is the lack of someone believing in the individual and/or the lack of someone in their life to provide them with unconditional love.

The underlying fact is that we all need someone to believe in, we need someone we can look up to, and we need someone who believes in us. Many people lack the spiritual connectedness in an increasingly noisy world filled with distractions, to take the time to understand that when we do not have that person in our lives, God fills that role for us. God is always there to provide you with unconditional love and support.

Our society tends to forget that spiritual component very easily. However, anyone who has dealt with substance abuse addictions will tell you that in treatment they teach you to surrender to a higher power and acknowledge the presence of God. That void from alcohol, drugs, gambling, or addiction to working out/body image is all filled by the love of God. The presence of other people: friends, mentors, sponsors, teachers, coaches, or a relative are additional resources that are important and have their place in the process of wellness.

These other support roles do not measure up to the love and peace that come from having a connection with God. It is sadly being largely removed from our societal conversation in favor of worldly possessions and other methods which have proven to leave people still with an underlying sense of unfulfillment.

The pressures of society to look, act, or react in a certain way also confound the situation and can leave the individual eventually feeling adrift or disconnected. The long term emotional and mental anguish that this can cause is also scientifically proven to be a major issue in our society.

In addition to the need for a spiritual connection and other measures of wellness (diet, sleep, exercise) is the need for mentors. Many companies and non-profit community type groups have developed mentorship programs for young people or for young adults entering the workforce. These programs are invaluable and provide stability and support for those who do not have a family or anyone else in their life to provide it to them.

In the end, whether you are struggling with body image, substance abuse, or another type of medical disorder; we all need someone to believe in. We all need someone to believe in us. We all need to remember that those people are out there. We all need to remember that God is with us all always and that He loves us for who we are unconditionally. My hope and prayer are that fact provides comfort to those who feel lost and alone. Please turn it over to God, and let God do the rest.

GMO News: Monsanto, Executive Order, & Mexico

The GMO (genetically modified organism) in food debate continues to rage both here in America and in the European Union. The issues related to GMO containing ingredients in food have been well documented on this site in the past such as the conglomerate controlling the seeds for crops, the migration of GMO crop pollen into organic crop fields, and the dangers of the Roundup weed killer product being labeled a carcinogen by the World Health Organization.

The news this week about Monsanto and the mounting legal battles they face over the Roundup product and the lawsuits that have been brought against the company in nearly every state in the country have brought renewed scrutiny to the chemicals used in crop management.

The media also released a report that prior to Bayer merging with Monsanto they found evidence of Monsanto making lists of entities in the EU which were trying to stop them from using GMOs and detailing how they were going to “handle” these entities. This news tarnishes the image further of Monsanto, known as the “world’s most disliked company” and draws into question their business practices.

The legal claims of many farmers, custodians, grounds keepers, and other consumers who have developed cancer after being exposed to Roundup is going to be a narrative for Bayer/Monsanto in the years to come. The secondary issue that will stem from those legal proceedings will be the role of using Roundup on soybean crops and other staple food items and the ramifications of that process on food safety.

The role of Monsanto and other big bio-tech companies in creating GMO crops has also come into focus with an executive order that was put forward by the current administration from The White House last week. That executive order, according to UPI and other media outlets, streamlines the regulatory process of the three main federal agencies regarding GMOs in the food supply. Some maintain that the order makes it easier for GMO ingredients to be used in food products.

However, in fair balance, the executive order can also be interpreted to provide more clarity on the exact regulatory process that agencies such as the FDA and USDA need to take toward labeling a product that contains GMO materials. The current process is so convoluted that it creates opportunities for loopholes for the food companies with regard to GMOs.

The studies that came about this week regarding yield curves of GMO containing crops compared to organic crops were also revealing. The results tend to poke a hole in the GMO proponent’s contention that the yields are better with their products, the results show very little difference in the yield curves compared to organic crop yields.

The use of GMO components in farming also correspond with more chemicals being used in the overall process and make our food supply chain even further reliant on a few large corporations, which is an unsettling situation when you consider those consequences.

The legal battles over GMO crops in Hawaii and Mexico have been center stage in the GMO debate in recent months as well. In both situations, the bio-tech companies, namely Monsanto, have been dealt setbacks. The situation in Hawaii was a change in the law there to require a disclosure around the use of pesticides and the presence of GMOs in crops as well as the creation of buffer zones near medical centers and schools barring the use of those chemicals or GMO products in those areas.

Mexico banned the use of GMO corn and the planting of GMO corn within the entire country, which means that Monsanto cannot operate their corn harvesting production areas in the country. The law also stipulates that no GMO corn can be sold in Mexico as well, which is a significant blow to the big bio-tech companies.

Some have asked me: when will the U.S. “get it” on GMOs? The EU has banned them, now Mexico, and the lobbyists keep churning out messaging that GMOs are safe and are essentially for sustainable crop yields. Both of those statements are being heavily challenged at this point.

The answer to that question is unclear and complicated. The seeds are the main problem, because if the seeds contain GMOs even in the case of organic products we have a ramp up problem that we must deal with in the short term. The long -term issue will be the availability of land for organic farming and making sure it is far enough away from GMO crop sites due to the migration of pollen that I mentioned earlier.

The remediation and rehabilitation of certain crop land to convert it to organic farming standards is a secondary issue, one which was covered in an earlier piece on some of the programs currently being run that offer incentives to farmers to make the transition to organic produce.

A component that complicates the “GMOs are safe” debate is that most all of the research is tainted because it is paid for by the corporations that stand to profit from the expanded use of genetically engineered or modified ingredients. That is certainly a conflict of interest that cannot be ignored in this matter.

The average consumer is more educated on ingredients and more health-conscious than ever before. The consumer has far more information readily available than at any other point in time, so the case for GMOs is an uphill climb already. The impact of the all of these recent developments will continue to shape the debate in the coming months.

Follow Up: CVS Merger With Aetna Looks Doomed

The CVS and Aetna mega-merger in the healthcare space is, according to many trusted sources of news, doomed to be rejected in federal court. This merger has been the subject of many other pieces here on Frank’s Forum and the many aspects of this potential deal have been scrutinized.

In a prior piece, the role of the federal judge, Judge Richard Leon, was detailed with the background that he oversaw the AT&T merger with Time Warner, where he dismissed the claims of the Justice Department that it would harm competition and disrupt equal access to content made by Time Warner media properties.

In a few short months, AT&T has tried to limit content to provide an advantage to DirecTV (also owned by AT&T). The decision by Judge Leon has been criticized by numerous groups within the industry.

Then, the news that this same judge would oversee the gigantic proposed deal between CVS and Aetna. The pressure that Leon applied to CVS/Aetna was seen by many to be similar to a “make up call” in sports; where the referee knows they made a mistake earlier, so they make a different call to make up for the prior faulty ruling.

The $69 billion agreement between CVS and Aetna would be a rather landmark “make up call” and would certainly have repercussions across the industries of both healthcare and health insurance. The stock price for CVS took a tumble on Tuesday amid the reports that the court will likely submarine the planned merger.

In the center of the debate is the opinion of Judge Leon that CVS would be given an unfair advantage to their PBM business unit with the addition of over 20 million Aetna subscribers who would be pushed into an exclusivity with CVS for their prescription drug coverage. The secondary concerns have to do with prices on prescription drugs, and the Medicare Part D plans that Aetna offers.

Aetna has agreed to sell the Medicare Part D plans and has a deal in place for that which was a stipulation of the original merger agreement. The case certainly could go badly if the court reverses the ruling, and that will create uncertainty for the future of the merger.

The two parties could explore a recalibrated merger proposal making some types of concessions based on the feedback from the eventual court ruling this summer. The Department of Justice may also have some feedback in the process that would be taken under advisement by both CVS and Aetna. The DOJ could also appeal the decision of the court, though some experts feel that it could be hard to overturn the decision on appeal.

CVS is on a quest to become an elite healthcare company with the acquisition of Caremark and they seek to further transform themselves into with the merger with Aetna so that they are not reliant on just the traditional retail pharmacy channel. That is a smart strategic direction with the emergence of Amazon into the pharmaceutical and healthcare industries.

CVS was hopeful that gaining Aetna would help with the overall valuation of the company in the eyes of Wall Street. Aetna was hopeful that merging with CVS would provide them with a built-in base of consumers who would purchase healthcare products and who had a high brand loyalty to CVS.

The whole merger, and all of the time and money poured into it, which is a significant cost, is at stake. The ruling of Judge Leon will have a dramatic impact on both companies, their stock value, and the entire healthcare industry.

(Some background information courtesy of Barron’s, New York Post, and CNBC)

Food Industry Trends: The Market For Alternative Meat

The introduction of new alternative meat products into the grocery aisle, the fast food drive-in, and the trend towards healthier eating patterns are all factors in the reports issued on Wednesday that Barclays, JP Morgan, and other analysts predict regarding plant-based alternative meat products.

Those major analysts predict that the market for plant-based products will grow to $140 billion in 10 years. The major players in the industry segment, Impossible Foods and Beyond Meat, are banking on getting their share of that revenue influx. The combined effect of consumers being more health-conscious along with dietary restrictions (gluten allergy, soy allergy, vegan) as well as supply issues with traditional beef have led to this trend toward alternative meat products.

The secondary impact of the supply issues with beef and chicken are rising costs for those commodities, which has a direct effect on the profitability of a restaurant, diner, or fast food outlet. The mainstream launch into the alternative meat market has been spearheaded by Burger King with a partnership with Impossible Foods which has produced the “Impossible Whopper” sandwich.

The alternative meat version of a classic American hamburger sold so robustly in the test market phase that it has been rolled out nationally by Burger King. This news has been met with speculation that their rival, McDonald’s , will introduce a plant-based alternative meat burger option in the near future. It is speculated that they will work with Beyond Meat as a partner in that project.

The alternative meat option for products such as The Whopper, will provide an option to vegetarians and others who do not eat meat to become fast food consumers, and it opens options for hardcore fast food customers who struggle with having red meat 5 times or more per week. Those customers can now eat the alternative product, which all reviews say tastes like the “real meat” Whopper version, that they can visit Burger King every day, or nearly every day and use the plant-based option two or three times per week.

The gains from the fast food offerings and the additions to the grocery aisle will provide significant growth in sales for both companies as well as the rest of the industry segment. It should be noted that none of the players in the alternative meat space have developed an alternative to chicken.

Chicken, as a commodity, is still priced competitively and comparatively cost effectively when compared to the other traditional proteins and the plant-based protein alternatives. It remains to be seen whether that will play a role in a further shift by the restaurant, fast casual, and fast food outlets toward even more menu items that feature chicken.

The medical community has produced data for years around the dangers of eating too much red meat. The alternative meat trend is a response both in the grocery store aisle and the fast food counter to offset the trend towards eating less red meat. It is also a way to maintain profitability as the alternative meat protein sources are less expensive than beef to produce.

The demographics of the U.S. have changed as well, with Baby Boomers retiring and becoming more health-conscious with the time to dine out more frequently. The other end of the spectrum is the Millennials who trend toward being healthier in their eating patterns than prior generations were at that age, and they are armed with endless dietary information that they use to make food choices. This younger generation is staring to come into its own and have more disposable income to dine out or spend more money on a product such as an alternative meat entrée.

The Beyond Meat product sells for about $12 per pound in comparison to ground beef which sells for $5 to $6 per pound depending on the supplier or your geographic area. That premium is something that certain consumers are willing to pay, or if their dietary needs dictate it, they will pay for the alternative meat compared to the standard ground beef option.

The Beyond Beef alternative product is also appealing to those who are looking to go GMO-free, if they have a soy allergy, or if they are gluten free due to celiac disease or another autoimmune disease that necessitates them to observe a gluten free diet.

The alternative meat trend is also gaining popularity because of the environmentally friendly benefits of producing plant-based meat products. A study by the University of Michigan found that the Beyond Beef burger used 99% less water to produce than beef, 93% less land, and 46% less energy than a beef burger.

In a time of increased environmental awareness and conservation of resources, the alternative meat products provide a “green” friendly option to consumers. All of these factors drive the formula which Barclays, JP Morgan, and other analysts used to determine the explosive growth of the plant-based alternative meat market in the next 10 years. It stands to reason that they may be correct, and in a time where health, dietary considerations, and environmental conservation are “hot button” topics this industry could be at the right place at the right time.

Red Nose Day 2019: Fight To End Child Poverty

Red Nose Day in the United States is today, May 23rd, and as I have done each year here on this blog, I wanted to try to spread awareness of this very important fundraising event to end child poverty.

Red Nose Day is run by Comic Relief USA in conjunction with major relief aid partners and national sponsors. The national sponsors again for the 2019 Red Nose Day event are: Walgreens, Mars Confectionary Company, Comcast NBCUniversal, and The Bill & Melinda Gates Foundation.

Since the first Red Nose Day event in the US in 2015, about $150 million has been raised to help fight child poverty. These funds have helped 16 million children in all 50 states, Puerto Rico, Latin America, Africa, and Asia. The funding has brought education to about 1 million children, essential medical services to 13 million children, and has helped 75,000 homeless children.

In addition, the funds raised by this event have provided 36 million meals to American children living in poverty, a major issue that is often overlooked because of the perception of our country’s wealth. In 2018, the Red Nose Day programs and events raised $47 million in the United States.

NBC is back as the main broadcast partner and will dedicate three hours of primetime television air time tonight to the Red Nose Day fundraising effort. The special program begins at 8 PM Eastern tonight with Kelly Clarkson and Blake Shelton among other stars that will highlight a two- hour block of coverage dedicated to raising awareness of childhood poverty. This includes a short film comedy sketch routine, and an appeals film by Milo Ventimiglia from “This Is Us”.

The network will close out the night from 10 PM to 11 PM Eastern with a special edition of “Hollywood Game Night” for Red Nose Day. Please tune in tonight to NBC for this important event.

Walgreens returns as a key sponsor of this event and the drugstore chain has sold 40 million of the iconic red noses since 2015 across their over 9,000 US locations. The healthcare retailer has made Red Nose Day a major event through store signage and advertising campaigns.

Mars Confectionary Company and their ubiquitous American brand, M&Ms have again donated $1 million to Red Nose Day in 2019. The company also raises additional money and support for the program through a month of events across their corporate locations aimed at raising awareness, funds, and volunteer hours across several communities in America.

The Bill & Melinda Gates Foundation is among the most well known in the world. Their mission is focused on children, and they provide funding and programming support for the donations raised from the event and how they are utilized to provide the maximum benefit to children in poverty.

We live in the wealthiest nation in the world. We all can do something within our means to help support Red Nose Day. The amount of children living in poverty in America is staggering 15 million, or 21% of all children in our country live in poverty according to various census related sources. The need is great both here and in underdeveloped areas of our world in Latin America, Asia, and Africa.

We can help children, who cannot help themselves, to have their basic needs met. Please support this important event today by going to www.rednoseday.org and by following @RedNoseDayUSA on Twitter, Facebook, and Instagram. Please share this with your friends and family.
The eradication of childhood poverty is the goal of Comic Relief USA and is shared by the sponsors of this event. I think we all need to share that goal, and each do our part to help this important event to succeed. Thank you all for your support of Red Nose Day 2019 and may God bless you for your efforts to help children in need.

(Background information courtesy of RedNoseDay.org, NBC.com, Walgreens.com, and the 2010 US Government Census Department)

Content Wars: Disney Gains Full Control Of Hulu

The content wars in the media landscape, a frequent topic of past articles on this site, took a surprising turn on Tuesday with the news that Disney has obtained what the press release deemed as “full operational control” of streaming service giant, Hulu.

The analysts and other media experts had predicted that Comcast would try to oppose ceding full control of Hulu to Disney, especially given their contentious recent bidding wars for Sky TV and 21st Century Fox. Comcast owns 31% of Hulu through their subsidiary business unit, NBCUniversal.

The deal announced Tuesday between these two media goliaths is a “put/call”. The terms of the deal translate to provide mechanisms to both sides. Comcast could by January 2024 initiate the mechanism that would require Disney to purchase their 31% stake at a market valuation determined by independent analysts.

Furthermore, Disney could require Comcast to sell their stake if certain market factors are realized in the future. It depends upon the performance of the service and reports state that Disney has committed to a minimum value of $27 billion. Disney stock jumped Tuesday to over $130 per share and is nearing an all-time high based on the Hulu acquisition news.

The agreement also includes that Comcast will continue to stream Hulu over the X1 set top box and that Comcast has extended the rights to their NBCUniversal content to be streamed through Hulu for another three years. However, the fine print of the deal also allows for some of that content to be pulled in a year to be streamed through a Comcast streaming service at a later point.

The timing was very good for Disney as they needed to gain full control of Hulu at this point in time with the planned launch of the streaming service known as “Disney+” by the end of this year. Some analysts have predicted that the Hulu platform is where Disney will put some of their “non-family” content, which would make sense.

The deal makes sense for Comcast because the advertising revenue and the subscription bases for Hulu and Hulu Live TV services will both grow exponentially with the trend toward “cord-cutting” in the next four to five years. They will also have options on whether they want to pull their NBC and Universal based content in the future, once their streaming service is optimized. In the meantime, they will get a deal for sharing that content with Hulu from Disney. Comcast is going to get a big check from Disney in five years.

Disney has now stated that they plan to position a future offer to customers that “cord-cut” from cable and satellite a package to buy two or all three of their streaming services: Disney+, Hulu, and ESPN+ for a bundled rate. That is an interesting approach and signals the way of the future for television that is becoming increasingly customized and internet streaming reliant.

The agreement today puts pressure on the other players in the industry, especially CBS, which has to figure out how they will grow to compete in a world that is being dominated by Disney and Comcast. The DirecTV Now service is losing subscribers already to Hulu Live and You Tube Premium because DirecTV changed their packages for channel offerings and increased prices.

These changes alienated long-time customers and drove them to seek alternative service providers with better rates and packages. This deal today is only going to strengthen Hulu and their tiered offerings: $5.99 per month for commercials, $11.99 per month for commercial-free streaming, and $44.99 per month for Hulu Live television service which is a 60 channel package.

Disney took another step toward dominating the relatively new industry space of the subscription streaming services. It remains to be seen how the rest of the industry will respond, how it will impact the NBCUniversal streaming service set to launch in 2020, and what Comcast will do with the money it will receive for their stake in the “put/call” arrangement they made in five years.

One thing is clear: times are changing in the television programming industry.

(Some industry background information courtesy of: Fox Business, USA Today, and CBS Market Watch)

XFL 2020 Announces Broadcasting Deal

The XFL reboot of the professional football league founded by Vince McMahon of World Wrestling Entertainment (WWE) fame, also known as XFL 2020, announced today a major broadcasting deal.

The burgeoning league will broadcast games on Saturday and Sunday primarily on both network television and cable television outlets. The XFL agreed to terms with ABC/ESPN and FOX on a three- year contract on Tuesday. The networks will broadcast the eight-team league with four games each weekend: two on Saturday and two on Sunday.

The Saturday games will be back-to-back and start at 2 PM Eastern and the Sunday games will be in the afternoon hours as well. The broadcast partners will feature games on broadcast television on ABC and FOX nationally and will broadcast on ESPN and FS1 as the primary cable outlets. However, the press releases seemed to indicate that some games would also air on secondary cable outlets ESPN2 and FS2.

The opening game of XFL 2020 will be held on February 8, 2020 and the season will span 10 weeks with two weeks of postseason games. The top two teams from each four-team division will move into the playoffs. The championship game will be broadcast on ESPN.

The scale of this broadcasting deal is impressive for a new league and will certainly help grow the interest in the league by having regular time frames for games and two highly visible broadcast partners. It will be easy for fans to access the games and to ultimately drive the excitement around this new league.

Some people, myself included, were very surprised that the XFL was able to leverage a broadcasting deal that was so extensive with network broadcasts of games on major networks such as ABC and FOX. This is especially profound given the recent failure of the AAF (Alliance of American Football) which had a broadcasting deal in place with CBS, Turner Sports, and NFL Network.

The AAF folded and ceased operations before the end of their first regular season. The ratings for the broadcasts were abysmal. The risk is certainly there for the broadcast partners of any new league, but the “ x factor” no pun intended, in this deal is McMahon who is seen by many as an outstanding marketer and businessman.

The XFL Commissioner, Oliver Luck, is also a mastermind of marketing the sport of football. The league chose larger media markets than the AAF as well. The AAF went with small markets that had no NFL presence. The XFL took on the approach of being in large markets to grow the game and reach a larger audience.

The rebooted XFL will have teams in: Dallas, Houston, Tampa Bay, Washington D.C., New York/New Jersey, Los Angeles, St. Louis, and Seattle. Those locations all make sense from a strategic business sense and from the fan base perspective. The sport of football has a tremendous amount of support in states such as Florida and Texas. The New York, D.C., and Los Angeles markets make sense from a media and population/demographic perspective.

The St. Louis market makes sense because they lost their NFL team to relocation, and Seattle is a great sports city that gives them a major market in the Northwest. The broadcasting agreement today also indicates that with the trends in media moving toward the importance of content, live sports content is still so highly desirable for the networks. It is especially important in reaching the key demographics of men age 18 to 34 and also for men in the 25 to 54 and over 55 age demographics.
These groups of men tend to spend more money than the other demographic groups as well as demonstrated the willingness to be more likely for an impulse purchase. The broadcasts of the XFL games will most certainly feature sponsorships with heavily male product areas.

In a personal note, I remember the first XFL iteration which debuted back in 2001. I recall the night of the inaugural game and watching that game with my father. I remember all my buddies were watching it too. The first XFL failed because they tried too many gimmicks.

I also recall watching the New York Hitmen who played at the former Giants Stadium in the Meadowlands complex in New Jersey, and they drew a good-sized crowd to those games. The league back then just had too many trick plays, off the wall rules, and they did not have enough star players.

Commissioner Luck has stated that XFL 2020 will not have the gimmicks and they will provide a highly visible platform for players who are looking to make the leap to the NFL especially at positions where real-time game reps are what is needed for scouts to evaluate their talent.

The XFL 2020 took a big step forward today with this broadcasting deal. The team names, uniforms, and schedules will be the next big news from this new league. It remains to be seen if McMahon is a great salesman or if the product on the field will back up the expectations being set for this reinvented football league.

(Some background info courtesy of Fortune, Wall Street Journal, and ESPN.com)

Viva France: Amazon & Casino Group Announce Partnership

Amazon took a significant step in growing their foothold in the grocery market in France by announcing a partnership with Casino Group on Tuesday. The strategic deal will integrate Amazon pickup lockers into Casino owned grocery store locations. This will allow for customers to order products on Amazon and then pickup in the store.

Amazon will also start carrying more of the grocery products carried by Casino and their stable of grocery store chains. The agreement will also allow for Amazon to expand their Prime Now grocery delivery service, which they began with Monoprix (Casino Group’s grocery store chain which is comparable to a French version of Whole Foods) in Paris with great success. The delivery service will expand beyond Paris into surrounding areas in the next twelve months.

The Casino Group is currently in the middle of a cost cutting scenario which has fueled speculation that the chain might be poised for a consolidation with Amazon. These types of business deals could potentially lay the groundwork for that type of scenario to take place. The company is one of the largest retailers in France with grocery stores under the names: Hyper Casino, Casino Supermarche, Leader Price, Vival, Monop, Monoprix, and Spar among others.

The retail grocery business in France is the third largest market in the E.U. behind the United Kingdom and Germany. However, Amazon has a very small share of the overall market in France with some estimates around 17% of the retail grocery channel business.

Amazon has made the strategic business direction of entry into the grocery channel a priority. A recent post on this site detailed the online retail giant’s decision to launch brick and mortar grocery stores besides Whole Foods, to compete with the mainstream retail grocery players in key cities as a test market for the concept.

Amazon could be making a play here for Casino Group to enter the French grocery market more aggressively. That would certainly have an impact on that business and would benefit the consumer with lower costs on many products because the other players would have to compete with Amazon on price.

Amazon is currently the dominant ecommerce player in France and this agreement with Casino Group will strengthen that position for them and allow for some new conveniences in the shopping experience for the French consumer. The Casino Group, in their press release, indicated that the partnership will allow them to reach a wider demographic of customers as well as provide customers with an enhanced service.

This partnership, if proven successful, could be a harbinger of things to come with Amazon potentially looking into similar agreements with major grocery retailers in Germany and the UK in the months ahead.

It will remain to be seen if Amazon does present a formal bid to purchase Casino Group, and how that scenario would be perceived by the French government regulatory personnel and the public at large.

In my view, it could be seen as another disconcerting way that Amazon is growing to have too much control over many areas of industry. It is getting to the point that it could be very problematic for several key areas of industry throughout the world if Amazon failed at some point. That should give society some cause for seeking a pause on some of their growth activity.

They do provide the consumer with a great service, and they are efficient at what they do in the ecommerce area, but they are pushing their influence into everything and that should at least cause us to start to question where this will all eventually lead, and the possible ramifications of a single company growing to that level of influence.

(Some background information and statistical data provided by CNBC, Yahoo! Finance, and Reuters)

Follow Up: CBS – Viacom Merger Talks Intensify Again

This follow up piece seems like a recurring dream, something you remember doing and then find yourself doing again, the CBS-Viacom merger talks are back in full swing. The earlier work on this site about the merger focused on a variety of angles: the business implications of the deal, the consumer impact of the deal, the changes in the media industry, the inner workings of the CBS feud with National Amusements, the power struggle at the top of the company, and finally the potential for CBS to be purchased by a tech company.

This piece will look at the current situation as well as why some of those other aspects did not ultimately come to fruition. The power struggle and the resistance of CBS from being merged with Viacom has shifted since Les Moonves was dismissed as CEO last Fall after sexual misconduct allegations mounted against him.

The business landscape has changed as well with Disney obtaining the 21st Century Fox subsidiary units and movie studio, and AT&T merging with Time Warner to create Warner Media. These maneuvers have certainly put some pressure on Shari Redstone and National Amusements to determine how CBS is going to stay competitive in an ever-changing media dynamic.

Furthermore, the situation at CBS has changed since the talks began a few years ago, where the network side of the business was home to huge ratings hit shows. The viewership has moved away from network broadcast programs to the streaming and premium cable channels. This has seen series from Netflix, Amazon, and other streaming providers take ratings share away from the “Big Four”.

In addition, the hit series from HBO such as “Game of Thrones”, Epix, Starz, Showtime, and other premium networks all have produced original content that have siphoned viewership away from the networks, and with that goes a portion of the advertising revenue.

It is not like CBS does not have series programs that capture viewers. However if you look at the ratings for the 2018-19 television season, CBS series have performed at a downward trend. The following data supports that and is most definitely driving CBS and Viacom back to the negotiating table:
“Big Bang Theory” 18 to 49-year-old demographic down 17% year-over-year and down 8.2% of viewers overall.
“Young Sheldon” 18 to 49-year-old demographic down 21.7% year-over-year and down 11.3% of viewers overall.
“NCIS” 18 to 49-year-old demographic down 11.1% year over-year and down 6.6% overall viewers.
“Mom” 18 to 49 -year-old demographic down 15.2% year-over-year and down 7.7% of overall viewers.
That is alarming when the top four shows on the network are down in the coveted 18 to 49 and overall metrics. The network has other shows in the top ten shows of their lineup including “NCIS : Los Angeles” and “Man With A Plan” that are also down significantly in both categories.

The other issue is that aside from “Big Bang Theory”, which is in its final season, all of the other series mentioned have been renewed for next season. The network introduced just eight new series this TV season so far, and most of those concepts are cancelled already. The reality is that CBS has had a great run at the top of the ratings book for a while, but they need fresh new concepts. The whole lineup needs to be revamped.

The business is changing and they have to adapt with that in order to stay relevant. The network has also been struck with a stretch of bad luck. The Super Bowl this past February was the lowest scoring championship game in history, and viewers checked out of it, so ratings were down for the biggest television event of the year.

The network also has the rights to the NCAA men’s basketball championship and those ratings were down because the two teams in the championship (Virginia and Texas Tech) were not a ratings draw for the average viewer.

The internal politics of the dynamics there, which has been covered previously on this site, adds another layer of turmoil. The parent company of both CBS and Viacom is National Amusements International (NAI). The dismissal of Moonves means that CBS needs to appoint a new CEO, these new negotiations over the Viacom merger will hold up that process.

The speculation is that the merged CBS and Viacom would most likely be run by Bob Bakish, who currently runs Viacom because he has a close relationship with Shari Redstone who runs NAI in place of her father who is ill and not in the picture. The combined company would either continue to grow using the content and synergies between the two entertainment entities, or they could fetch interest by a larger investor who could buy the whole combined company.

In prior coverage of this topic, CBS was reluctant to merge with Viacom because they were hopeful that a larger “new media” company would purchase them from NAI. They even had a window negotiated to get that type of deal done. In my view, I had speculated that CBS would be purchased by Verizon to propel their expansion into the content that every media company is looking to capture.

There were others who speculated that Amazon would purchase CBS because of their existing business relationship/partnership for streaming of certain content on Amazon Prime Video. That also did not materialize. The fact is that the “new media” or tech companies are focusing on developing their own content and they are not interested in purchasing the assets of another company.

It is similar to football and getting a quarterback, most teams do not want to acquire another team’s guy that has already been in another system, the team would rather draft their own guy and build them up from the foundation according to the principles and techniques that they coach as an organization. The tech companies do not want someone else’s productions, they want to build up their own productions.

It is in this light that the jump-started negotiations between CBS and Viacom should be viewed. The reality is that CBS would have been purchased already if a potential buyer was interested. The combined unit would bolster the content holdings of the company as a single entity with much more cable television content from BET, MTV, CMT, Comedy Central, Nickelodeon, among others.

The reality is that while this merger might not be the ideal one for either side because of all of the history and the bad blood between the two companies (made complicated by the fact that they are both underneath the same parent company in NAI) it is the only deal on the table right now. Both entities are heading toward a scenario where they will not survive as separate units.

The impact for the consumer if the two companies should merge could go either way because CBS/Viacom could potentially negotiate better deals with advertisers and for cable rights carriage fees which could lower the cost of some cable or satellite packages.

However, it could go the opposite direction and the combined entity could decide to park streaming content into CBS All Access, which is a subscription based streaming application and they could hike up the membership fee. The combined CBS/Viacom could also create their own apps for each network or put them all on a combined stand-alone streaming application for the Viacom properties and then charge a membership fee for that content.

In the end, the next few weeks to the next couple of months could yield some big news in the media industry. The board members opposed to this deal have been removed, these negotiations seemed poised for a completed merger between two companies with a deep history of resentment. The dust will settle and then we will know whether this combined company will help or hinder the average viewer. We will also know whether this merger will have limited or significant impact on the industry overall.

Stats, some background information courtesy of Fox News, TV Series Finale.com, Nielsen)

Follow Up: CVS Merger With Aetna Under Scrutiny

The recent developments with the Federal court system and Judge Richard Leon have the potential to rollback the $70 billion merger of CVS with Aetna. In other posts on this site, this merger has been detailed from the beginning.

The renewed scrutiny from Judge Leon centers on the condition of the sale went it was originally approved which states that Aetna would be required to sell Medicare prescription drug plans that they currently administer. That was the deal made with the anti-trust regulatory bodies involved in this blockbuster merger.

The hearing is set for Thursday, when Judge Leon plans to hear testimony from various entities including representatives of the American Medical Association (AMA), who are opposed to the merger. Judge Leon is attempting to determine whether the sale of Aetna to CVS is within the public interest.

CVS is a large retail pharmacy chain and healthcare provider that also manufactures their own product lines. Aetna is a huge health insurance company with a Pharmacy Benefit Manager (PBM) arm as well. The deal from the beginning has struck some in the general public as a conflict of interest.

Earlier this week, another prominent judge called the potential for the CVS-Aetna deal to be reversed “catastrophic” to the industry. The merger is seen as lifeline of sorts for both companies amid a changing healthcare landscape that Amazon has shifted already and is looking to tilt completely in the coming years.

The move is seen as necessary to bring a stream of steady foot traffic through the CVS retail stores which they will need to compete with Amazon. This will be achieved by funneling those with Aetna health insurance coverage to have their prescriptions filled by CVS.

In an earlier piece, I detailed the potential pitfalls to that approach and I maintain that it is unfair to limit the choice of a consumer especially with healthcare related products that might put them into a scenario that is very inconvenient for them or a family member that is covered under their policy.

The proponents of this deal moving ahead will point to the recent struggles of Walgreens and their revised earnings adjustments as well as their recent adjustments to their overall annual forecast, which was revised down due to a decrease in customer traffic through the brick and mortar locations primarily. The industry media folks and the financial analyst types were speculating that Walgreens has to do something, they have to make a move to essentially “lock in” a customer base for prescriptions similar to the Aetna – CVS agreement.

The detractors will state that the insurance providers for healthcare should not be mingled with the retail pharmacy giants because of the changes it will bring to consumer choice, potentially to pricing of medications, and a host of other concerns. They would also maintain that Walgreens would be met with resistance if they tried a similar path to CVS.

It also should be noted that Walgreens expended time, energy, and money on a long-term pursuit of merging with Rite Aid, which met with so much push back that it was eventually disbanded by Walgreens. Then, Walgreens spent money to obtain many Rite Aid locations and transition them to the Walgreens brand in order to strategically grow their presence in certain markets.

The speculation will continue around United Health Care (UHC) being one of the last major health insurance players left that could become a partner for Walgreens, though it is difficult to see that they would sink money into a merger proposal until they have the precedent of the CVS-Aetna deal to utilize to their advantage.

The implications for this hearing today and the decision that rests with Judge Leon will have far-reaching consequences in either way he decides to proceed. The approval of the merger with the conditions would set CVS up to grow their customer base and could give Walgreens the proof it needs to move forward in a new direction of their own, given their current situation.

The deal could be scuttled which would send shockwaves through the industry and potentially give Amazon an advantage for entry into the market. It will be fascinating, so stay tuned.

(some background information courtesy of Reuters, Barron’s, and Fox Business)