Month / July 2016

by Frank Maduri

Collapsing Net: Verizon Swallows Up Yahoo

The news that media/telecom giant Verizon has obtained the core businesses of Yahoo for over $4 billion comes as no surprise. The deal had been in the works and the Verizon executive leadership had been interested and stated that interest for months regarding the potential acquisition of Yahoo.

The component that I think myself and others in the general public have with this deal is two-fold: the huge companies seem to just get even larger, and one of the last big names from the glory days of “the Net” has gone by the wayside.

This news is just further evidence that the world is changing and that the technologies and methods of communicating are shifting away from the traditional ways we had once utilized the internet (email, news sites, blogging) to an even faster paced use of social media sites, instant messaging applications, Instagram, and Snapchat.

In fact, part of the Yahoo business portfolio which was very attractive to Verizon in this transaction was the social media platform called Tumblr (which I have a blog site called “The Write Path”) which will be folded in to the stable of other Verizon owned websites with targeted advertising planned for that millennial demographic which frequents the platform.

Verizon, which purchased AOL previously, will most likely merge Yahoo with AOL in a combination of two former internet powerhouses to compete against Google and Facebook. That being stated, the expectation from Verizon and everyone else with knowledge of that industry is not that Verizon anticipates surpassing those two behemoths, it is the fact that being in that top tier with the amount of advertising dollars floating around is still a great spot to land in.
It is estimated that about one billion users a day visit some portion of the Yahoo family of websites. In my own experience, having written several contributing pieces for Yahoo through their freelance news division, the sites have a network of really devoted users. That was the main driver behind this deal for Verizon: the ability to get that many users looking at their mobile advertising. The number of loyal users for Yahoo properties enabled them to leverage a better deal from Verizon than was initially anticipated.

The other winner out of this deal is the NFL and football fans because Verizon streams games on Sundays and they can expand their reach with Yahoo as the NFL looks to sell streaming rights to their other live game packages. That is going to be an interesting development to watch closely in the coming months.

The demise of Yahoo is sad to me on a personal note because I have been a loyal user on their site since the beginning and have worked for them as a contract writer for a period of time as well. The concept for the company and the brand was very well thought out at one point, for many of us, Yahoo was our introduction to the wide world of the internet and to search engines.

It has now gone the way of so many other companies or brands in America, it has been consolidated by a bigger company. The company changed the way we all did things and it changed our collective lifestyles. It will now evolve into something else as the internet and social media makes a new turn into a new area of which is still yet to be determined. It is the nature of things, but it is still sad to see another iconic brand go away.

The internet has shaped how we get information: news, restaurant reviews, recipes, and stock market reports. It evolved into social media and the next step will probably be one of further customization and networking of people together in a unique platform. It will be interesting to see how Verizon reinvents Yahoo to adjust to those changes in the terrain.

by Frank Maduri

The Empty Shoes Memorial – Remembering 9/11

The 15th anniversary of the 9/11 terror attacks is upcoming which will serve, as it does each year since that terrible day, as a reminder of the lives lost and the dedication to make sure those lives are never forgotten. In that spirit of remembrance and honor for the victims of the largest terror attack in American history, the Christian music station in the New York/New Jersey Metro area, Star 99.1, is planning an Empty Shoes Memorial.

The memorial is going to be designed with an empty pair of shoes for each person lost that day in the World Trade Center, the Pentagon, and the planes involved in the attack. The total number of 2,996 pairs of shoes will be collected from the community around the entire NY metro area in the months leading up to the event in September.

The Star 99.1 crew was in Old Bridge, NJ today and will be in Brooklyn this weekend, and in two spots in New Jersey: Union and Jackson, next week. Please check their website at https://star991.com/index.php/events/empty-shoe-memorial for more information on this unique and compelling idea to honor those who tragically lost their lives on that fateful day in our nation’s history.

The events of 9/11 will be forever etched in my mind and for many of us we have similar sentiments and pain that has still not healed. This event will give our community the opportunity to join together to honor those victims and to celebrate their lives.

I will now share some poetry I wrote about that day:

“Sky Fall”
In the blue sky that fateful morning
It all came crashing down with no warning
Lives ended, innocence trampled, hope lost
Evil pervasive, good extinguished, society tossed –
Upside down, backwards, the towers collapsed
The entire world, everywhere, collectively gasped
Earlier that morning from the sky would fall –
My Dad throwing to me a white baseball
I was supposed to that day get on a flight
My Dad had a feeling something wasn’t right
The night before I had a bad feeling too
Throughout the morning that feeling grew
Though what happened I never anticipated
Instantly so much shock, sadness was created
My Grandpa was on a plane somewhere that day
From the sky it did fall safely landing in Raleigh
So many lives cut short, so many months of fear
Why are they gone and I’m still here?
So much rain like tears from the sky fall
So much has changed, yet nothing changed at all
From the sky will fall rays of the Sun
To show us all our journey has just begun
“Darkness Then Light”
Evil comes in all of its darkness
Hatred for those they’ve never met
An unspeakable act of destruction
Shattering the lives of so many at once
My mind cannot comprehend it
I wake up some days, think it’s –
A nightmare that it never occurred
Then I feel the warmth of the Sun
The light fills up the room
I realize that good will prevail
I rise to take advantage
Of the blessed gift of life
I move forward to honor those lost
I have time they did not receive
I have an obligation to do right
To love and serve all others
To inspire and to live in the light
The light of a blessed new day

“America No More”
You know what scares me?
It’s if America ceased to be
If I lost all of my freedom
If I lost all of my liberty
Someone told me when I could go and come
That is what truly scares me
If I couldn’t say what I feel
If I couldn’t offer God praise
If I was stripped of the American ideal
I would exist as if in a haze
If someone told me what I had to write
If I was told what I had to believe
I would rather just lose my sight
The loss of beloved America is more than I can conceive

Thank you for supporting this event and May God bless you!

(All poetry copyright protected by Frank J. Maduri – No copying or redistribution without express written consent of the author.)

by Frank Maduri

Dannon Launches GMO- Free Yogurt

Dannon announced today that the company has launched yogurt products which are free of GMOs in the United States. The changes have been made to the Dannon main brand product line and to the Oikos Greek yogurt brand product line. The company, according to industry and financial media reports, also plans on launching GMO free product versions of the Dannimals product line geared toward children.

The products that cannot be made with GMO free ingredients or GMO free milk will be labeled very distinctly that they contain genetically modified ingredients. The products that are now GMO-free have a new packaging and a distinct label indicating GMO-free.

I discovered this while shopping in my local grocery store today and picking up some Greek yogurt I noticed that the Oikos products had a new package that was clear plastic so that I could see the product. I picked it up to see what the new package indicated and noticed the GMO free label right away. I have advocated for GMO labeling on food products for a long time now, so I was very happy to see this change today.

Dannon is making an effort to source all of their milk from non-GMO sources by either late 2017 or 2018 depending on what reports you may see on this topic. I think that latitude in the time frame is also predicated on demand for the products potentially increasing and the need for more adequate supply to catch up and flatten out that curve.

Dannon is certainly going to gain customers from this change, even if it is incremental, because not all the products in the brand lines I mentioned above have hit the shelves with their GMO free versions yet. However, those that have certainly will get the attention of the consumer in a positive way.

The groups that advocate for GMO labeling and for a change to non-GMO sourcing in food products have been hammering Chobani and General Mills (Yoplait) for a long time now to make this change. The fact that Dannon was the first to market with this concept in this food product category that has exploded with the trend toward healthier eating in the U.S. bodes well for their brand image and reputation. That is all going to translate into increased sales and revenues for Dannon.

The decision to label the products that cannot be made GMO-free (at least at this point in time) is another constructive step that will push their competition to consider similar measures. The American consumer tends to look favorably upon transparency and this willingness by Dannon to comply by telling the consumer what is and what is not GMO free is a step in the right direction for proponents of stricter food labeling measures.

In the case of Dannon, my earlier article on their acquisition of White Wave Foods will only serve to enhance their capabilities in offering further GMO free product options across all their brand lines in the future, should that transaction be approved.

It is going to be interesting to see how the rest of the yogurt market responds to this move by Dannon today. It certainly sets the playing field on a bold new path. I know the consumer is going to find it favorable. In time we will know how the rest of the industry tries to respond to an ever growing trend of GMO free product demand.

by Frank Maduri

Bolting Ahead: The Chargers Downtown Stadium Update

The San Diego Chargers path to a playing in a new downtown stadium just took a detour with a decision by the judicial system in California regarding the voting mechanism for the November ballot referendum. The Supreme Court of California recently handed down a ruling which would require a two-thirds majority for the stadium initiative to pass on the ballot this fall rather than a simple majority.

The Chargers and the city officials in San Diego quickly countered that news with an announcement that they had anticipated that hurdle and were approaching this measure prepared to gain a two-thirds majority for success. The Chargers have a petition with over 100,000 signatures awaiting verification from the proper legal authorities regarding the stadium measure needed to keep the NFL franchise in that city.

In the event that the referendum measure fails to gain approval from the voting majority, that would put the future of the team in San Diego in jeopardy. The team has an option on the table from the NFL and the Los Angeles Rams to play at the new Rams stadium being constructed in Inglewood outside of downtown LA.

The Chargers decision at the end of the 2015 season to put all their efforts into moving to Los Angeles left the people of San Diego very upset. The Chargers may not have enough votes to pass this stadium ballot initiative which is structured in a way that it would bypass the rigorous steps of environmental studies on the downtown site proposed for the stadium adjacent to the convention center. This method would expedite the completion date of the stadium.

The “Convadium” concept as it is known in San Diego is the project to build a new stadium for the Chargers and connect it to an expanded convention center for the city. This proposal has been rife with problems from the beginning and is basically still a mess at this point. The main issue of course is involving the financing of the project: nobody seems to be clear on who is paying for what portion and how the public financing component of the project will be structured.

The other sticking point is over who has the final approval of the design of the space, and whether the Chargers will include the playing surface as part of the convention space. The thought process being that they could potentially gain revenues for convention use of the stadium side of the expanded convention center, which some residents have taken issue with that portion of the potential plan for the site.

Mission Impossible

In my previous work on this topic I have compared the Mission Valley proposal to the downtown convention center proposal. This scenario came up again recently and Dean Spanos sent a letter to the city officials involved basically stating that the team will not consider the Mission Valley site under any circumstances. The letter basically spells out that it is either the downtown site or nothing at all.

The news that the team management will not consider Mission Valley as an alternative site has fueled speculation that the Chargers could eventually move to Los Angeles and relocate the franchise. I must admit that I was of the opinion that once the Chargers opted to remain in San Diego for the 2016 season that they would get a deal done with the city and remain there; now I am not so sure given the events of the past six weeks. The situation could get very negative between the team and the city and the residents hold the cards; and they are upset with the Chargers or skeptical of the value of the new stadium project. That is a bad combination.

There are rumors that certain city officials believe that if the initiative on the ballot for the downtown “Convadium” fails that they can move ahead with a plan to build a new stadium on the Mission Valley site and lure another NFL team to play there, assuming the Chargers bolt for LA. The most frequent team mentioned is the Jacksonville Jaguars in that relocation scenario, which is understandable because the Jags play in the smallest market in the league and have an uncertain future in Northern Florida – moving that team anywhere would be an upgrade over the market they are in from a metrics perspective – but I am not an advocate for relocating existing teams and alienating their respective fan base.

The Chargers management and some of the local political forces are fixated on the downtown site especially considering that would make San Diego a Super Bowl destination again which equates to big dollars in tax revenue and revenue for small businesses there as well. I understand having been to San Diego myself and being at both sites, Mission Valley and the Convention Center downtown, the differences in those areas are distinct. I also understand the trend for the NFL and other sports is moving to downtown stadiums attached to some other type of retail or commercial development property.

Opposition View

Furthermore I understand the opposition viewpoint regarding traffic on game days downtown and the environmental impact of a stadium in the convention center site. The situation is a total mess with no clear indication of how it will be resolved. The plans for the convention center and adjoining stadium development are controversial and have some definite down sides to it. The plan to raise hotel taxes to pay for the public funding portion of the stadium may or may not “play” well with the residents of San Diego in November.

In the end, the voters control the destiny of this project and hold the fate of the Chargers in their hands. It is a refreshing alternative to another stadium deal I have covered recently with the Atlanta Braves and Cobb County where the residents had little to no input and the decisions were made behind closed doors. The Tampa Bay Rays stadium quest is being closed to the public as well.

The Chargers and the city have to spend some time and resources on providing the residents with the facts and being transparent in the process for them to have success in November. The team will either be preparing to play in a new stadium downtown in a few years, or I believe if the vote goes against them they will relocate to Los Angeles. The decision has big implications for San Diego as well as for future stadium proposals that may go the way of public referendum voting and it is anybody’s guess how it will turn out.

by Frank Maduri

Doubling Up: Danone Purchases White Wave

The latest in the seemingly continuous cycle of food industry mergers and consolidations was finalized today with international dairy giant, Danone acquiring a leading American organic food maker, White Wave Foods, in an all cash deal. The details of the transaction put a valuation on White Wave of $56.25 per share which equates to about a 24% premium over their average share price in their 30 day outlook. The deal has a total value of $12.5 billion according to several mainstream media outlets covering the financial transactions of the day.

My perspective on this situation comes from my time working for a food ingredient supplier that was partnered with Danone on numerous product lines. I have had direct involvement with Danone in the US which is more commonly known as Dannon. The statements released today announcing this transaction reflect the emphasis on values which are very important to Danone, in my experience. The focus on healthy food options for the consumer being a core value.

The transaction today essentially doubles the size of Danone’s North American business market share once the deal is finalized. The two companies have some great synergies with a common shared strategic specialty in the dairy segment of the industry. The proposed transaction will provide two major boosts to Danone with regard to their long term business strategy by obtaining White Wave: it provides a robust boost to their overall sales growth (Danone has had some issues with barriers to growth in emerging markets) and it will give them an entry point into the American organic foods segment which is poised for huge growth potential.

Danone has several well-known brands such as Oikos Greek Yogurt, Activia (yogurt), and Evian bottled water. This move to fold in White Wave will enhance their ability to compete with Nestle and General Mills, among other competitors.

White Wave has such notable brands as Horizon Organic and Silk. They possess some very valuable strategies and technologies with regard to the coveted organic/healthy food trend that is sweeping North America at this point. Their combination with Danone will result in an expansion of those brands and product lines as well as new business growth areas based on their shared expertise.

Both companies are committed to healthy lifestyles and sustainable product supply chains with shared focus on providing the consumer with healthy choices at cost effective price points. It will be interesting to see how the White Wave portfolio will be grown with Danone steering the ship.

In my view I know that Danone will seek to work with their select ingredient suppliers to eliminate redundancy in the supply chain for both companies wherever possible because that will directly enhance cost controls and maximize profitability.

It should not be lost that this move will also give Danone a position to compete with their yogurt lines against Chobani and Fage through the utilization of White Wave’s brand portfolio and organic milk production capabilities.

In the end, it is a smart move by Danone and it looks like a very fair valuation of the White Wave business at this point. In the event it gets finalized the consumer will reap the benefits of their collaborative strengths in the production of healthy and organic food offerings.

by Frank Maduri

Rebuffed: Hershey – Mondelez Merger Proposal Rejected

The proposed merger between Hershey and Mondelez at the end of last week was quickly rebuffed by The Hershey Trust which represents 81% of the voting power in the company. The trading of Hershey stock continued to climb due to an increased perception that, although the Mondelez deal was rejected, the chocolate giant would be acquired by another entity.

In my initial piece on this proposed deal last week, I was skeptical of the Mondelez offer for Hershey because it was being initiated because Mondelez had no room to grow, needed a branding makeover, and needed to grow market share in North America in their confectionary division. These three rationales are usually indicators which portend a poorly conceived merger of two organizations which generally ends badly.

Mondelez is now left to search for another potential partner so that they can attempt to gain a more stable foothold into the North American confection and snack marketplace. The former division of Kraft Foods has the cash to spend to make this acquisition eventually take place with the right suitor.

The merger proposal rebuffed by Hershey had some definite hurdles via the Pennsylvania state level regulatory bodies and through federal anti-trust regulations. Hershey remains an attractive target for another food company to pursue, and those suitors could line up in the weeks and months to come before the close of the calendar year.

However, that being stated, The Hershey Trust and the Pennsylvania Attorney General’s Office both have the ability to block the potential sale of Hershey and have done so in the past. The successful acquisition of Hershey would have to be a well-structured deal that accounts for all of the political and business implications involved; therefore that type of bid would have to be navigated by investment banks and M&A executives who have been involved in similar scenarios.

The way forward for Mondelez at this point is unclear, the executives and others there most probably felt that they put together an impressive offer to obtain Hershey. It now appears that the deal will never materialize.

In my view, the potential for a Mondelez bid for a company such as Mars Candy is not too far a stretch. That potential acquisition would provide the expanded market share in North America in strategic markets, it would provide a branding image makeover for Mondelez, and it would allow for the consolidation of resources to aggressively deal with rising commodity prices for cocoa as well as other staple ingredients in the confectionary industry.

In the case of Hershey, my opinion is that they could be merged with a larger food conglomerate such as ConAgra, which made news earlier this year with the announcement that they were moving their corporate headquarters from Omaha to downtown Chicago in order to be a more desirable employment destination for younger generations who desire to live and work in cities. They have an eye towards growth and Hershey could be a bold move into new territory for them.

In the end, the Mondelez – Hershey deal was a non-starter because Hershey did not want to sell to them and be merged with a company that has some other rather daunting issues. The right deal will come along for both companies to chart their respective future strategic growth and that is going to be interesting to see unfold in the months ahead.