Green Shoots and Financial Burdens

Here’s What You Need To Know…

While yesterday’s jobs numbers suggest the economy may be seeing the first green shoots of recovery, there are several challenges still to come on the path to economic resurgence, including in the financial sector.

Throughout the coronavirus pandemic, the government and the public have called upon the financial services sector to make extraordinary accommodations. To contend with tens of millions of Americans out of work, some institutions readily waived fees and deferred debt collections. Later, policymakers began requiring banks to waive foreclosures on homeowners, while landlords were forbidden from evicting tenants who couldn’t pay. Meanwhile, credit card companies and auto loan lenders passed on penalizing their customers for missing payments.

While these efforts demonstrated good corporate citizenship, it left the financial sector bearing a significant burden during this unprecedented economic shutdown. To date, government has yet to alleviate this burden in relief packages, instead following public sentiment that the financial sector has plenty of money to sustain these hopefully temporary losses. Eventually, however, deferred payments will come due, even as businesses and the public need these financial institutions’ support to drive the economic recovery. Meanwhile, many businesses are surprised to learn that the insurance policies they pay for do not cover losses from pandemics.

From debt collections to insurance coverage, many of these financial issues will land in the legal system. While financial firms may have the law on their side, that will not help them in the court of public opinion. As progressive and populist attitudes rise against large financial institutions – #cancelrent is already gaining steam online – these institutions must be prepared to make the case that they have been an important part of not only helping Americans weather the coronavirus pandemic but also are equally crucial to the nation’s recovery.

To understand these challenges and what it means for your interests, here’s what you need to know.

The insurance safety net stopped at the pandemic’s door.

Business, Interrupted: For decades, organizations have assumed that their business interruption insurance would provide financial relief in the event that a catastrophic event prohibited them from conducting normal operations. In reality, since the 2003 SARS outbreak, these policies typically don’t cover global pandemics, to the surprise of many businesses now wondering why they purchased the coverage at all. Thousands of them have banded together to form BIG, the Business Interruption Group, to “insist insurers pay owed business losses caused by the coronavirus,” claiming they will punish any insurance company who “put millions on unemployment lines.” According to Claims Journal, companies across the U.S. had filed more than 100 lawsuits against insurers by mid-May. These federal filings cover a variety of industries, including restaurants, taverns, dental practices, day care centers, and hair salons, demonstrating just how widespread the coronavirus losses have been. Among the most famous of these is California-based In-N-Out Burger, which has filed a lawsuit against its Zurich American Insurance.

Richard Golomb of Philadelphia-based Golomb & Honik law firm believes the ultimate solution will come from a compromise reached by businesses, insurance companies, and the government. He tells Claims Journal that without a solution that provides financial relief to small businesses, upwards of 40 percent of American restaurants will not be able to survive. But, Capitol Weekly claims the courts will ultimately have the final say on whether or not these businesses will receive compensation from their insurers, and their decision would determine the allocation of “hundreds of billions of dollars.” Still, for insurers, all it takes is one judge susceptible to public anger to reject the pandemic exemption – not to mention the reputational damage caused by sympathetic small business owners left without their expected safety net.

There’s No Insuring a Pandemic: The 2003 SARS outbreak caused such extreme financial losses for insurers that subsequent business interruption insurance policies excluded viruses from its coverage events, curtailing their offerings to include only those that would render businesses physically incapable of operating, such as fires or floods. Still, some business advocates are calling for retroactive changes to these policies, arguing that they inadequately supported businesses during the coronavirus lockdowns. But, insurance industry leaders, like Chubb Chief Executive Officer Evan Greenberg, said that forcing them to cover financial losses connected to COVID-19 would bankrupt the industry. “Pandemics, unlike other catastrophes such as a hurricane or an earthquake, are not limited by geography or time,” Greenberg told Bloomberg News. “The loss potential from a pandemic, in practical terms, is infinite, and insurance companies have only finite balance sheets.”

Insurers also argue that, if forced to pay out business interruption claims for events they never covered in the first place, they would be rendered financially unable to fulfill claims from the general public. The Insurance Information Institute explains that, if successful, such efforts would curb insurers’ ability to pay out claims from homeowners, drivers, and injured workers. This money, they say, is allocated for disasters actually covered by their policies, like tornadoes, hurricanes, and wildfires. This puts insurers in an especially difficult position: do they make an exception and pay out business interruption claims not covered by the policies they have written, inhibiting their ability to cover losses sustained by other customers? Or, do they refuse to do so and face the reputational risks of appearing unsympathetic to businesses who have already sustained so much hardship during pandemic lockdowns and even risk potential government action in response to public outcry?

Landlords and lenders are on the hook, but are renters and homeowners?

Mortgage Forgiveness, But for How Long? Section 4022 of the CARES Act permitted homeowners to stop paying their mortgages for at least 180 days, and according to Norbert Michel of the Heritage Foundation, this has forced mortgage servicers to bear the burden of these non-payments. “Servicers are stuck in the middle, and they do not have unlimited funds,” Michel explains, arguing that they could be saddled with upwards of $100 billion in missed mortgage payments. Matters have been made worse for mortgage lenders, as federal lawmakers and policymakers purposefully excluded them from any coronavirus relief packages. Because the profits of standalone servicers – lenders who are not affiliated with large banks – are less than $10 billion combined, this homeowner reprieve could render servicers insolvent.

While many Americans may not exude sympathy for mortgage services, according to The New York Times, the failure of mortgage servicers could collapse America’s $11 trillion housing market, while The Wall Street Journal warns that inaction could result in an even greater housing crisis than that of 2008. This danger has brought both Democrats and Republicans in Congress together in support of different federal relief options for these institutions, though no measures have passed either chamber to date.

Rent Forgiveness or Survival? Many federal, state, and local authorities forbade landlords from evicting tenants due to an inability to pay during the coronavirus pandemic, and numerous landlords waived rent and otherwise worked with tenants both before and beyond these legal requirements. Still, these requirements may last too long for some landlords to survive. In California, for instance, landlords will have to wait at least six months to receive back rent before evicting tenants. While such measures have been heralded as humane, they have also set off a nationwide movement demanding rent forgiveness indefinitely. In addition, while many landlords were happy to provide temporary relief as a good will gesture, they will need to collect rent for their own mortgage payments when that relief comes to end.

Even as optimism mounts for a robust recovery, there are still many Americans struggling with job loss. So, landlords seeking to get paid by their tenants could face a real public backlash, including potential litigation, and tenants may be in for surprise billing when back rent comes due. Indeed, media are already directing readers to seek legal remedies against landlords hoping to collect rent. Experts urge landlords to work directly with tenants to develop solutions that are mutually beneficial to both parties, allowing them to avoid the inevitable costs and backlogs of the legal system. These tensions will last for a while and could also explode amidst the current rise in social unrest when temporary restrictions on evictions lapse.

New ways of doing business threaten the commercial real estate market.

Coronavirus Exacerbates Existing Problems For Commercial Real Estate: Over the past few years, technological improvements have brought about a dramatic increase in remote work, allowing more Americans to perform their jobs from home. Moreover, the introduction of shared workspaces from companies like Regus and WeWork have created cheaper alternatives to traditional office spaces, complete with short-term leases that, unlike the multi-year commitments of traditional commercial real estate, allow businesses to vacate with little notice. Americans are also turning more to technology for shopping and leisure activities, leaving shopping center owners with empty buildings. These radical transformations had alrady made the commercial real estate market especially volatile before the pandemic. Coupled with the inability of their tenants to pay rent due to the economic shutdown, the decision of lawmakers to exclude commercial real estate firms from relief packages only made matters worse.

Why Commercial Real Estate Matters: The commercial real estate industry is vital to the overall American economy, as it represents about $16 trillion in value. With recent downward trends and the disastrous economic consequences of coronavirus, a refusal by policymakers to fortify commercial real estate (Federal Reserve Chairman Powell has been noncommittal at best) could threaten more than just the companies themselves. In addition to serving as an important investment tool, commercial real estate has been an integral part of public-private partnerships in cleaning up blighted properties and revitalizing urban areas. With empty buildings and less activity, the failure of commercial real estate could create economic hardship in communities and increase crime in areas that had begun turning around.

To avoid such a perilous outcome, experts at McKinsey say commercial real estate firms must do more than merely adapt: “As the crisis affects commercial tenants’ ability to make lease payments, many operators will need to make thousands of decisions for specific situations rather than making just a few, broad-based portfolio-wide decisions.” Those decisions will have more than a financial impact under heightened public and government scrutiny.

What Comes Next?

Throughout the pandemic, the government has asked financial institutions to take special steps to provide relief to American workers grappling with joblessness. While many lenders and landlords were happy to make concessions to help their fellow Americans, this forbearance without accompanying aid is unsustainable if these firms are to provide needed support to a recovering economy. These financial industry sectors must carefully prepare for the tough choices that lay ahead and consider the policy and reputational challenges to come. A competitive intelligence advantage from Delve can help guide their path.

The Public Market Disconnect

Here’s what you need to know.

In a late April letter, Citigroup’s global head of credit strategy marveled that “the gap between markets and economic data has never been larger.” Even as stocks are on-pace to exceed previous peaks, 7.5 million small businesses face the prospect of permanent closure and 41 million Americans are out of work. Indeed, the true picture of job losses may be far worse than the unemployment number indicates. Yet major stock market indices are well on their way to regaining pre-pandemic and historic highs. As The Washington Post noted this week, “[M]any market players … remain stumped by the speed of the rebound in stocks amid the wider economic wreckage wrought by the pandemic shutdowns.”

This disconnect illuminates the reality that the stock market no longer serves as a reliable indicator of the strength of the American economy. In recent years, radical transformations in how investments are made have increased the unpredictability of the market, while long-term investors – who often hold funds tied to market indexes or targeting retirement dates – are less reactive to the highs and lows of such volatility. Meanwhile, the introduction of greater regulatory burdens has discouraged companies from going public, with many instead relying upon cash injections from private equity and venture capital to meet their funding needs until well after their companies mature.

This new reality now pervades the investment industry, and it puts private equity and venture capital firms in an important position for the economic recovery. While they long have been the subject of animus and scrutiny, particularly from their unfailing detractors in politics and the media, they now hold a far different place in the economic landscape than many policymakers or the market participants themselves realize. Although these firms might operate in private markets, they now serve a vital public purpose, which means policymakers must see them as the vital economic actors they have become, while the firms must ensure they act as good corporate citizens who can withstand this heightened public scrutiny.

To adapt this new reality and what it means for your interests, here’s what you need to know:

The stock market used to tell us how the economy is doing. Not anymore.

There’s No Business Like Big Tech Business: On March 20, 2020, the U.S. stock market made its deepest dive since the Great Depression, erasing years’ worth of gains and plummeting to fewer than 19,200 points. Today, the Dow Jones Industrial Average (DJIA) is already nearly 6,000 points above its position when President Trump took office on January 20, 2017 and has recovered a great deal of its coronavirus losses. This gain is due in large part to tech giants like Facebook, Amazon, Apple, Netflix, and Google – known colloquially as the FAANG stocks – soaring. Since the March 20th valley, Facebook has grown 57 percent, Amazon is up 31 percent, Apple has risen by 39 percent, Netflix is up 24 percent, and Google has grown 28 percent. Even in the midst of a global pandemic, the stock value of all FAANG companies remains at their highest-ever. The Economist chalks it up to investors “despairing[ly] reaching for the handful of businesses judged to be all-weather survivors.” In this case, those all-weather survivors make up one-fifth of the value of the entire S&P 500 Index – and they have given the rest of the stock market reason to breathe a sigh of relief and start investing again.

Balance of Trade: Over the past several years, significant changes in how and when Americans invest have transformed the economy. Thanks to the creation of 401(k) plans in 1978, average Americans now ride the stock market long-term, directing much or all of their retirement savings to the stock market. In 1990, 401(k)s controlled $384 billion in assets. In just thirty years, that amount has risen to $4.8 trillion, a more than 1200 percent increase in value. Much of these investments are dedicated to index funds or target date funds rather than individual stocks, leaving these funds with a large supply of incoming dollars that must find an investment home, regardless of then-current market conditions. Meanwhile, experts say that high-frequency trading has changed the algorithm of investing, making the markets more volatile and creating exceptionally high peaks– and in the case of coronavirus, exceptionally low valleys – in the stock market. This shift is due to expanded access to technology that has replaced expert traders with computerized models, which some analysts argue can ignore legitimate analysis and common sense.

The American economy is now built in private markets.

The “Listing Gap”: In recent years, the American marketplace has seen fewer Initial Public Offerings (IPOs). In fact, only 3 percent of venture-backed companies went public in the last decade. As Business Insider’s Bob Bryan noted, a 2015 study “found that the US had developed a ‘listing gap’ between the number of firms that should be listed based on the country’s economic development and the shrinking number that are. … At the peak in 1996, there were 8,025 publicly listed US companies; as of 2012 that number was down to 4,102.” This drop came even though historic U.S. economic data suggested “9,538 should have been listed,” leaving “a ‘gap’ of 5,436 listings.” This massive split is due in large part to the imposition of more stringent regulatory frameworks like Sarbanes-Oxley Act in 2002 and Dodd-Frank in 2010, both of which made going public increasingly unattractive to entrepreneurs and investors alike.

The New Business of Big Business: This listing gap has shifted the balance of financial power toward venture capital and private equity, which has allowed start-ups to maintain more autonomy, and investors to avoid added disclosures, all while creating wealth and growing companies without tapping public markets. Indeed, as entrepreneurial financial expert Greg Crabtree explained in a Growth Institute blog post: “Entrepreneurs used to need the public markets for liquidity. That is not the case anymore. There is so much money in the market looking for a place to go that liquidity is easily solved. In every deal we have seen in the last couple of years, the private equity firms have been offering as good of a deal as any public company has in a purchase or investment scenario.”

Private Equity’s Role: These days, companies are often delaying going public as long as they can, thanks to greater funding availability made possible by private equity. There is perhaps no greater example of the powerful role of private equity in transforming this dynamic than with Uber. Bain & Company calls the rideshare company the “poster child” for private equity, as it rode $21 billion in venture capital to a private valuation of approximately $72 billion. Although it had been in business since 2009, Uber Technologies, Inc. took a decade to go public and only did so to access enough capital to pay out investors and shareholders. Bain & Company argues Uber’s examples shows “the advantages of going public no longer outweigh the considerable disadvantages,” as private equity frees up companies to borrow at historically low rates while avoiding the “myriad costs and hassles of going public.” 

Even Public Markets Are Focused on Private Enterprise: Further demonstrating this shifting dynamic is the keen interest in Special Purpose Acquisition Companies (SPACs), which are often and sometimes derisively called “blank-check” companies, which can raise money through an IPO for the sole purpose of buying other companies. According to Pitchbook, SPACs have “accounted for 38 percent of U.S. IPO filing and raised $6.5 billion as of May 20 – more than the total capital raised by institutionally-based IPOs during the period.” Experts attribute some of this interest to the coronavirus pandemic, because “as private companies’ valuations fall and they look for liquidity, SPACs could fill a void left by traditional IPOs,” but like many pandemic-connected observations, the trend began beforehand and has been accelerated by the virus.

As private equity’s role grows, so will public scrutiny.

Leading the Way:  As millions of American businesses face coronavirus lockdown-induced closures, private equity will take center stage to reinvigorate the country’s emblematic entrepreneurship. Private equity will continue to give entrepreneurs the unique space to be creative and to take risks in ways that more traditional investing models do not. As Bloomberg News quipped late last year, “everything is private equity now.” With growing numbers of American businesses from pet shops to real estate agencies already relying upon private equity firms to fund their growth, PE will help reshape the new American economy.

Changing the Narrative: With a crucial role to play in the recovery, private equity must face its reputational challenges head-on. For decades, leftwing policymakers have vilified the private equity industry as reckless gamblers, relying upon the investments of ordinary people to place risky bets and saddle enterprises with unsustainable debt. The media have echoed these claims, with some insisting private equity should be pushed out in the recovery. As private equity’s role in the economy continues to take center stage, that scrutiny will grow with it – but it also means policymakers will need to reach an uneasy peace with private equity. Whether policymakers like it or not, cutting PE-backed firms out of pandemic relief programs and other such measures will not be tenable if the country is to regain its economic momentum.

Still, private equity firms will also need to appreciate their new public purpose. That must begin with refuting its persistent negative image. As The Economist explained in a recent analysis, the PE industry is vital not only for its investors but also for the overall recovery of the global economy. This requires them to engage in efforts long understood by publicly traded companies to bolster public trust. Doing so will require understanding and anticipating the accompanying political and reputational risks and getting ahead of them. That’s where Delve offers them – and anyone looking for competitive intelligence support – a real advantage.

Government Loans Bear Unexpected Public Interest

Here’s what you need to know…

In late April, Allied Progress, a project of activist group, launched, a website calling out public companies that have received federal funds as part of relief efforts for businesses impacted by COVID-19 and the governmental response to the pandemic. The website, which outlines how much these firms received, how much their executives make, the value of their most recent stock buyback, and their 2019 net income, was just the latest indication of efforts to shift public attitudes and perceptions regarding economic aid for businesses hit by the pandemic and accompanying lockdowns.

In March, lawmakers passed historic spending legislation that dedicated trillions of dollars in benefits to remedy coronavirus shutdown losses for businesses large and small alike. Companies had to make a decision: accept loans from the federal government whose terms were unclear, or risk closing forever, leaving behind millions of unemployed workers and their families who relied upon income from these businesses to live?

As the country reopens, there is now more space for media and activists to examine just who got federal relief dollars and how was it spent, leaving companies vulnerable to attacks for their decision to prioritize their survival and care for their employees. Fueled in part by activist efforts such as Allied Progress’ website, the media is feverishly seeking to unearth anyone who receives a loan, with NBC News’ Senior Business correspondent, Stephanie Ruhle, tweeting she will “search … until my last breath on Earth” to match the publicly disclosed EINs of loan recipients with those of hedge funds and private equity firms because, she believed, “these loans aren’t for you.”

The competing pressures on firms will only increase as time goes on and the pandemic, hopefully, dissipates, particularly in sectors that were already boogeymen for partisan actors and many in the media. To ensure public affairs professionals can anticipate what comes next, here’s what you need to know.

There’s no such thing as free money.

Your Receipt of Taxpayers Dollars Will Be Public: Because they’re benefiting from a taxpayer-funded loan, no business will be able to conceal its receipt of the funds. Sen. Marco Rubio (R-Fla.) who chairs the Small Business Subcommittee in the U.S. Senate, has already promised the public will be able to find out who exactly received coronavirus relief loans, and if the Trump Administration won’t do it, his subcommittee will. In fact, concerns regarding fairness and transparency of the programs are already mounting with major media corporations suing the Small Business Administration (SBA) to secure access to government records of the administration of the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Advance.

Prepare For A Potential Audit – By the Government and the Press: Businesses who receive rescue loans related to the coronavirus will experience extra scrutiny, with Treasury Secretary Steve Mnuchin telling Fox Business that the IRS will perform a full investigation of any company that received $2 million or more in loans before forgiving them. If the agency discovers loans were not properly managed by recipients, these organizations may be subject to criminal liability. Meanwhile, the Securities and Exchange Commission (SEC) has launched a “PPP Loan Sweep” of public companies, documenting what qualifications businesses believe enables them to receive a loan. And of course, the press and the public will do “audits” of their own, and organizations must be prepared for what they might find.

As public sentiment shifted, so did the loan terms.

State of Confusion: At first, loans like the Small Business Administration-managed PPP and EIDL were articulated as stopgaps meant to stimulate the economy and keep American workers paid. But as time went on, the Treasury Department and the Small Business Administration issued more than 40 pieces of guidance in the form of “frequently asked questions,” often providing new or conflicting information to overwhelmed businesses trying to make sense of the terms of their loans. New direction on the loan terms just kept coming, even after the federal government had granted up to $500 billion in aid.

In an effort to curb the issuance of loans to those who might not need them, the Trump Administration issued a rule in late April that would require PPP loan recipients to certify that they couldn’t access any other sources of capital without significantly damaging their “ongoing operations.” Other guidance confirmed PPP funds had to be dedicated mostly to payroll, but often varied on how that payroll could be paid and to whom. This persistent ambiguity left business owners confused and countless others excluded from the aid all-together. As The Washington Post noted, some were holding the money or returning it because they couldn’t figure out the rules.

Easier to Opt Out: For some businesses, the money they’d receive from an SBA loan wasn’t worth the confusion surrounding its administration. In particular, many start-ups in Silicon Valley say they don’t have the time to parse through the intricate and ever-changing regulations governing the loans. For others, opening themselves up to liability in the form of potential audits and media opprobrium isn’t worth the risk. Still others say that the loan is too restrictive, limiting the benefits of its intended purpose of economic support while tying the hands of businesses. The result is increased unemployment claims the loans were intended to curb and businesses left to struggle under lockdowns and other restrictions that prevent them from operating during the pandemic. Already, nearly 100,000 small businesses have shut down since the pandemic began.

Public pressure on organizations meant workers lost.

Pressure Point: As Americans return to normal life, increased scrutiny of who took advantage of their eligibility for these loans is inevitable. We are already seeing stories of small businesses who shuttered because they couldn’t receive critical assistance while others the American people never considered could be eligible received them. The Washington Post reports $1 billion in small business loans went to public companies, while Forbes senior contributor Erik Sherman claims many of those corporations had plenty of cash in reserves. Even the Catholic Church, which runs tens of thousands of schools and hospitals across America, came under fire for receiving a PPP loan to pay its employees.

Politicians are also getting in on the blame game, with House Speaker Nancy Pelosi (D-CA) demanding a San Francisco-based property management company return its $3.6 million PPP loan. On the right, conservatives successfully forced Harvard University, which enjoys an endowment of nearly $41 billion, to pay its dining hall employees after furloughing them due to coronavirus lockdowns, even as the college obtained a $9 million loan it ultimately returned under pressure.

Return to Lender: Dozens of major corporations have already returned the money they received in small business loans – to the tune of hundreds of millions of dollars. While food service corporations like Potbelly and Ruth’s Chris were among the more notable names to do so, small businesses also chose to return their loans, citing a desire to avoid public scrutiny and potential audits. These range from think tanks like the Aspen Institute to mattress fabric manufacturer Culp. Experts lament that pressure from lawmakers, media, and the public have shamed impacted companies from receiving a needed benefit that would keep their employees paid. As Allyson Baker, a partner at Venable law firm who has been working with companies to secure government loans, explained to Politico, “There’s another side to it, which is, ‘If I don’t take, I might be laying people off, I might be hurting my business, I might be hurting the people I employ. It is something that a lot of people are struggling with right now.”

In the case of the restaurant industry, their decision to forego federal funds might have spared them the pain of a temporary public relations crisis, but it might have prolonged their financial woes and further endangered the jobs of those they employ. Nowhere is that more apparent than Shake Shack, which caved to public pressure after receiving a $10 million PPP loan they obtained to cover lost wages for their hourly workers. In addition to lockdowns artificially depressing their sales, restaurants like Shake Shack now face skyrocketed costs of meat due to production plant shutdowns – exactly the time of “economic uncertainty” contemplated in the PPP application – which makes the cost of doing business even higher even as consumer demand plummets.

Stay ahead of the scrutiny

Coronavirus forced a lot of organizations to make a lot of tough decisions. While things are reopening, they’re not out of the woods yet. Smart public affairs professionals have anticipated the operational and reputational risks associated with receiving federal funds, and they’re planning their response. A competitive intelligence advantage from Delve is the best tool they have.

Enabling A Successful Multibillion-Dollar Telecommunications Merger


A major telecommunications company was seeking federal and state regulatory approvals for a highly publicized, multibillion-dollar merger while defending the deal against a well-organized opposition. Another company had made a similar merger attempt that ended in spectacular and costly failure, and public sentiment seemed broadly against this large-scale consolidation. This problem was compounded by a preexisting network of opponents looking to hobble the approval process at every opportunity.


Our foundational research identified the key stakeholders and coalitions most likely to oppose to the merger, as well as what their motivations for and specific objections were. We then analyzed these opponents’ methods of operation, the communications channels they utilized, as well as their sources of funding, key personnel, and past activities. Based on this analysis, we outlined the strategies and tactics they would likely employ and the criticisms they would likely level at the deal.

Working seamlessly with the internal and external public affairs teams of the client, we utilized this foundational research to provide valuable insights throughout the regulatory approval process, ensuring the company, their government relations advisers, and other internal and external consultants were able to anticipate and overcome any and all public criticism with fact-driven messaging and rapid response. Digging deep into the network of opponents from the outset ensured that we knew what attacks to expect and allowed us to prepare pushback materials that guaranteed this criticism could not gain traction with regulators or the public.


By assessing the merger’s various opponents, we were able to determine the split between those stakeholders who objected over specific concerns or were seeking certain concessions, and ideologically-motivated opponents of corporate-owned media consolidation more generally. Utilizing this understanding allowed those working on regulatory approval to fracture the coalition of opposition as soon as it launched, cratering any potential momentum against the deal.

Monitoring the remaining opponents’ efforts in real time then allowed the client to expose and undermine their astroturf efforts. For example, we assessed public comments filed with the FCC and determined a large percentage were not only repeat messages driven by several opposition websites, but that a significant portion of those comments came from outside the areas affected by the merger. These efforts were effective in ensuring federal and state regulators did not succumb to opposition pressure and approved the merger.

TL;DR: What The EU Elections Mean For Business, Crypto-Mania, And Trouble In Y’allywood

Here’s what you need to know…

Last week, voters across the European Union (EU) went to the polls to select their preferences for the bloc’s parliament. While readers in the United States may feel that the events across the pond have little or no bearing on the day-to-day operations of their company and the policy and regulatory issues important to it, the results of the EU elections could not only impact your interests now (particularly if your firm does business in Europe) but also foreshadow key trends that may appear stateside in the near future. To help you prepare for the implications as the dust settles and a new EU emerges, here’s what the EU elections mean for your business interests:

  • First, What Are The EU Elections? The EU elections occur every five years for citizens of EU Member States to choose their representatives in the 751-seat European Parliament, which gives them a say in the political debate and decision-making process at the EU level. The European Parliament is the second-largest democratic legislature in the world after India. For a supranational organization that regulates key policies ranging from data protection and privacy to immigration to trade and more, and with five-year terms for the elected Members of the European Parliament (MEPs) in which major unforeseen developments can unfold and need to be dealt with, the makeup of the body is crucial to influencing the policy outcomes that will follow in the near-term for both the EU and its Member States.
  • The Pro-Business Middle Cedes Ground To The Populist Extremes: Approximately 50% of voters turned out in the bloc’s 28 countries (a 20-year high), and instead of the fear of many that the elections would result in a surge of far-right populists, the results were more “complicated.” Overall, there was a rise in the populist extremes with some countries seeing Eurosceptic parties gain ground to the detriment of more establishment parties such as in France, Italy and the U.K. In others, Greens and Socialists – just as the nationalist parties gained influence from the erosion of the traditional center-right parties – had strong showings, such as in Germany and Spain, to the detriment of the traditional center-right parties. For businesses, populist pressures from both ends of the political spectrum portend increased political risks from parties looking to deliver for their bases of support.
  • Tech Is In The Crosshairs: Among the first targets for the new EU parliament may be the tech industry, which unites populist critics from the left and right in their desire to see more regulation. Indeed, EU commissioner for competition Margrethe Vestager – who has called to regulate and hold Big Tech accountable – is attracting broad support from across the political divide and could become the EU’s first female president. Should this come to pass, she could surely leverage her experience to elevate and implement tech regulation matters on the EU’s policy priorities. Coupled with the U.S. government’s gearing up for an antitrust probe of tech giants, companies in this space are facing risks from both sides of the Atlantic.  
  • Broad Regulatory Levers May Shape Health Care Policy: Pharmaceutical companies and chemical manufacturers (and industry more broadly) are expected to face greater pressure from the new European Parliament. This could likely include a focus on lowering costs of medicines through coercive regulation, as well as attacks to weaken intellectual property rights. In addition, with victories by the Greens and others on the populist left, it is expected that there will be greater ties between environmental and public health issues to implement policies that explicitly target industrial farming, chemical producers, the energy industry, and the pharmaceutical sector in the name of improving health.
  • How Is The Outlook For Financial Services? With more chaos and more populists from both the left and the right in the EU Parliament, the financial sector can anticipate more uncertainty when it comes to the impacts they face from the policy and regulatory environment. The waning influence of the traditional centrist parties to ambitious newcomers ensures it. While calls for divestment from fossil fuels will continue to persist (and even grow stronger) and new regulations on industries and trade will require businesses to adapt, a range of other reforms and institutional adjustments, from financial literacy to transparency in financial products to post-Brexit rebalances, will need to be addressed and will almost immediately put pressure on companies also.

A common pattern we’ve noticed in the monitoring and analysis work we’ve done for our clients is that policies and regulatory frameworks pushed by influencers and stakeholders in continental Europe that take hold in the EU often make their way to other industrialized democracies, such as Canada, and then attempt to gain influence in the U.S. Because of this pattern, anticipating these trends stemming from the EU elections and other challenges will help companies operating globally navigate this uncertainty well and gain a competitive advantage. For those proactive firms focused on their businesses in the United States, this provides an opportunity to better stay ahead of developments that may be impacting operations domestically in the near future.

News You Can Use


You may have heard rumblings that French automaker Renault is considering merging with Fiat Chrysler—a rumor that caught many in the auto industry by surprise. But what if we told you the proposed merger is extremely politically calculated? By merging, Renault and Fiat Chrysler hope that their increased size will reduce the cost of complying with government mandates that require increasing electric-car production and improvements in battery technology.

Due to the added costs of compliance, many automakers (think: Toyota and Suzuki) have combined forces to take on Uncle Sam. Additionally, merging could allow Renault to avoid 25% tariffs on foreign autos that President Donald Trump has repeatably threatened. The potential Renault-Fiat Chrysler tie up is yet another example of politics and regulations driving companies in different industries to pursue mergers. And the result, of course, is less competition.


Netflix announced it will reconsider its “entire investment” in Georgia if a recently passed state law restricting abortion takes effect and has teamed up with the ACLU to fight the legislation in court. Georgia has recently become a hub for the film and TV industries and is the home of hit Netflix TV shows “Stranger Things” and “Ozark.” In fact, more than 450 film and TV projects were shot in Georgia last year, leading to over $4.5 billion in wagesfor an overall economic impact of $9.5 billion.

Prominent Hollywood stars such as Alyssa Milano, Amy Schumer, and Jason Bateman have already said they will “boycott Georgia” if the “heartbeat bill” goes into effect. It looks like Georgia could become the latest victim of America’s “boycott wars,” where people will gladly boycott a state or business over political differences. Netflix will keep filming in Georgia for now, but states and companies must realize it can only take a few activists to change the equation.


Representative Eric Swalwell (D-CA) recently became the second 2020 presidential candidate to begin accepting cryptocurrency donations, joining fellow presidential hopeful Andrew Yang. You read that right—presidential candidates are now accepting donations that cannot be traced back to the donor. Swalwell, who has been a fixture on cable news attacking the Trump campaign as “criminal” because of investigations into its inauguration spending, defended his campaign’s decision to accept difficult-to-track cryptocurrencies in a video claiming, “Government has to keep up with the times and the times have changed.”

Currently the cryptocurrency market in the U.S. is under very little oversight, but that could all change soon. Many U.S. regulators have called for a federal framework to oversee bitcoin and as more candidates accept cryptocurrency donations, Congress may be under increased pressure to act. For now, government transparency advocates and the public should be alarmed, and the cryptocurrency industry should worry about their reputational risk if foreign or corrupt sources use their systems to fund campaign activities illegally.


By now many of us have already weighed in on the “paper straw debate,” but what about Goldman Sachs’ decision to banish paper cups or candy-maker Mondelez’s efforts to make all wrappers recyclable by 2025? It seems that many companies are spearheading initiatives that, in the words of The Wall Street Journal’s Allysia Finley, are “costly and often counterproductive.” But why? Some would argue that they are trying to show employees, customers, and shareholders that they care about the environment.

Yet, there’s little evidence that these gestures benefit anyone or the environment – plastic straws only account for about 0.025% of the eight million tons of plastic that flow annually into the ocean (most of it from five countries in Asia). Companies not wanting to appease activists and shareholders citing environmental concerns could proactively message with these facts to illustrate the little impact such gestures have, to say nothing of the negative consequences “costly and often counterproductive” green initiatives can have on jobs.

Activist shareholders seeking to expose financial and management improprieties


An activist shareholder had reason to suspect financial and management improprieties at an energy sector company that had quickly risen from an over-the-counter penny stock to a seemingly overvalued NYSE-traded company. The shareholder needed someone to dig deeper than their initial analysis and help them compile the research into a compelling narrative and easily understood materials for reporters to use.


After reviewing the client’s existing research, we dug further. Assets valued at $350 million on the company books were actually worth much less. The CEO lived in an extravagant mansion and had an overly generous compensation plan. The company plane was flying to places where there were no company operations, but where the CEO could entertain his girlfriend.

Working with an investigative reporter, we helped expose this questionable activity and put pressure on the company to release its long overdue annual financial report to the SEC. The company scrambled and produced the annual report, only to pull it back after it was determined that the auditing firm had never signed off on it and their signature had been used without their authorization on the report.


After the investigative journalism website published a lengthy piece detailing the information the shareholder and we had unearthed, we secured national press attention on the company including an article in Politico highlighting the political connections of one of their board members and multiple segments on CNBC. also published a follow up piece to their initial investigation.

Through this exposure, the company stock cratered more than 40% and several law firms filed class action lawsuits against the company, its executives, and the board of directors. As of August 6, 2015, the SEC has also filed charges against the company, “seeking to obtain cease-and-desist orders, civil monetary penalties, and return of allegedly ill-gotten gains.”

As we proved to our client, anybody can come up with 500 pages of research, but it is most important to hone in on the key pieces of information that can actually be used to make a difference.

Be Careful What Unicorn Wish For

TL;DR: Be Careful What Unicorn Wish For, Cheezy Lawsuits, And Bursting The Bubble

Here’s what you need to know…

The new year has begun, and some of the most valuable private tech companies – including Uber, Lyft, Airbnb, Slack, and other so-called “unicorns” valued at more than $1 billion – are preparing for their initial public offerings (IPOs) in the early part of 2019. Thirty-eight tech and internet companies, the most since the dot-com boom in 2000, took the plunge to go public last year and more are expected to test the market this year, despite the recent market downturn and the overall trend of fewer companies doing so.

These headwinds mean unicorns should be careful about going public, as other sectors appear to have weighed the added political and reputational challenges and decided against it, and 2019 comes with the expectation that the tech industry’s public affairs challenges will begin to have an impact on their bottom line. Here’s what you need to know about minimizing and mitigating these risks as we await this year’s big, newsworthy IPOs:

  1. How Did We Get Here? A strong stock market and cheap capital have allowed private tech companies to incubate and scale in a favorable climate, resulting in their ability to grow into large and valuable unicorns. Investors were patient with these companies as long as the economy continued to expand and interest rates stayed low, which is why some unicorns were putting off their IPOs, even as far out as 2020, hoping to continue growing, gaining value, and avoiding the scrutiny from shareholders, the press, and governments that comes with being a public company.
  2. Greater Scrutiny On Executives And Business Practices: Public companies are obligated to publicly disclose lengthy filings that detail their financials and operations, which can garner the attention of the media, analysts, and activist investors (of both the short-selling and political kind). Avoiding this additional scrutiny can be particularly beneficial for disruptive companies challenging the regulatory environment in areas where they operate, as insights into their tactics and business practices could be used against them in the public policy arena by legacy competitors and other opponents, making it all the more important to understand any vulnerabilities before going public.Also, executives of public companies have to answer to a greater number of shareholders and investors, which could lead to additional scrutiny of their professional and personal lives, with anything hinting of impropriety potentially being used as leverage against them and the company.
  3. Becoming A Target For Activism: Once public, companies must contend with an increased risk of activism in which current or potential shareholders and investors seek to influence the company’s operations. This could take the form of institutional investors sending governance-related proposals to companies recommending changes in management and compensation, a trend that has grown an average of 11% over the past four years. Additionally, such proposals could be the result of policy-related activism, in which companies are pressured to adopt measures on topics unrelated to their core business and often part of a politically-motivated agenda. Although such proposals have been found to increase a company’s costs and diminish shareholders’ returns, navigating the inevitable attention from such activism requires a strong understanding of a company’s values and business purpose. This can help ensure they align with business decisions, and that unrelated special interest agendas are opposed. Indeed, sometimes the shareholders pushing such agendas own just a few shares expressly for the purpose of pressuring the company on policy matters, or come from institutional investors being pressured by political interests.
  4. Time, Money, And Reputation: Taking a private company, let alone a unicorn, public is an expensive and time-intensive endeavor with high-stakes for the company’s reputation and bottom line, and even more so when activist shareholders are waiting to pressure companies. Current corporate governance rules have made it difficult to separate legitimate shareholder concerns about a company’s management and strategy from politically-motivated pressures, not to mention this lack of distinction heightens corporate risk. Both of these factors deter companies from going public – which in turn negatively impacts main street investors as well. While the Securities and Exchange Commission is expected to focus on corporate governance this year, investor pressure on public companies is likely to increase, as well as those pushing environmental, social and governance (ESG) practices that can put political and sustainability goals above business purpose and value, raising the costs of going public in the near-term.

Rather than the “orderly queue” of IPOs predicted in 2019 and 2020, the early part of 2019 may more resemble a stampede – unless, of course, the government remains shutdownand the SEC is not working on new filings. Yet, these unicorns may regret going public if they do not have a thorough understanding of their political and reputational vulnerabilities and the wide range of stakeholders who can influence perceptions about their company’s practices. Such an understanding is vital to ensure the company does not cede the public narrative to others who could damage their reputation – and worse, drive down the company’s value.

News You Can Use


Move over McDonald’s and its hot coffee case, Cheez-Its is going to court. Three women are suing Kellogg’s, the manufacturer of the orange snacks, claiming the company uses “false and misleading marketing” by labeling its crackers as “Made With Whole Grain,” which could trick consumers into thinking they are made with 100% whole grains when they are not.

In early December, the U.S. Court of Appeals for the Second Circuit appeared to agree, ruling that a reasonable consumer could think Cheez-It Whole Grain crackers were made with “predominantly whole grain,” thereby putting the company one step closer to legal discovery and a potential jury trial (!) about the contents of one of America’s most-beloved snacks. The suit demonstrates the extent to which frivolous lawsuits can run amok in an overly litigious society, in which companies can find themselves facing increased legal and reputational risks resulting from such “cheezy” lawsuits.  


An Amazon user in Germany recently requested data about his activities on the site and inadvertently gained access to 1,700 audio recordings of a random person he had never met. Following his request, the e-commerce giant sent the user a zip file that contained data related to his Amazon searches but also transcripts of Alexa’s interpretations of voice commands that were from an unknown person.

The user shared the Alexa transcript files with Germany’s C’t magazine, which listened to many of the files and was able to “piece together a detailed picture of the customer concerned and his personal habits,” including his identity and the name of his girlfriend, their jobs, and taste in music. Amazon blamed the “unfortunate case” on “human error” and described it as an “isolated incident.” Accident or not, this mishap could be used as another data point for proponents of increased tech regulation, which given support from industry executives and Congress, could become reality in 2019 in some form.


A recent report from Accenture Strategy found that consumers worldwide are increasingly supporting brands whose purpose aligns with their beliefs and rejecting those that don’t. The survey of nearly 30,000 consumers in 35 countries found that 62% of respondents want companies to take a stand on current social issues, and that nearly half of U.S. consumers who are disappointed by a brand’s words or actions on a social issue complain about it, with one in five vowing to never support the company again. Likewise, a Morning Consult study found that more than half of both Democrats and Republicans say that a brand’s “stance on a social or political matter is important when it comes to buying a product or service.”

The results of these studies may explain why companies like WeWork, which announced in July 2018 it would no longer serve meat at company functions, are willing to take political stands. Companies are willing to mix business with politics when they feel their consumers are demanding it, but businesses must tread carefully or risk alienating customers who may disagree.


While the prevalence of filter bubbles is accepted by many as fact, new evidence suggests few people actually lock themselves in intellectual isolation. A new report from the Knight Foundation found that partisans actually tend to overestimate their use of partisan outlets and underreport the extent to which they consume nonpartisan or “ideologically misaligned outlets.”

According to the study, the results show that people are increasingly viewing their consumption of media as an “expressive political act” and a signal to others of who they are.  So, for companies and cause organizations hoping to achieve their objectives in policy debates, consider this new insight before crafting public affairs efforts to reach audiences that matter in the public arena, and never underestimate the importance of understanding the wide range of stakeholders engaged on an issue.

Is Universal Basic Income DOA?

TL;DR: Is UBI DOA, An “Arm” Up On The Competition, And The Last Straw

Is UBI DOA, An “Arm” Up On The Competition, And The Last Straw

Is Universal Basic Income DOA?

Here’s what you need to know…

Last week, the Finnish government decided not to continue funding its well-publicized trial of a universal basic income (UBI), opting instead to explore other avenues to experiment with welfare policies tailored to meet the needs of the increasingly fluid, dynamic 21st century economy. UBI has long been heralded as the policy answer to automation, and Finland’s experiment was thought to be the catalyst to demonstrate how such a program could really work. In today’s era of disruption, the future of work and its potential policies deserve more attention in the public debate because change is a constant, but it is now happening quicker. So, what does Finland’s delve into UBI mean for the future of work, and how can policymakers in the U.S. learn from it?

  • The Details Of Finland’s UBI Experiment: Since January 2017, a random sample of 2,000 unemployed people between the ages of 25 to 58 have been receiving a monthly payment of 560 euros through Finland’s two-year pilot program. This income replaces any existing social benefits, and the recipient continues to receive the monthly income even if they find work. The program is the largest state-sponsored UBI experiment to date, and one of its principal aims – in addition to alleviating poverty and compensating for jobs threatened by automation – is to reduce bureaucracy and test whether UBI is a more flexible policy for providing assistance and work incentives than existing welfare programs.
  • The Experiment’s Shortcomings: Finland’s experiment is being run by Kela, the country’s national welfare body, and although the hope was for it to gather new insights into logistics and consequences of a UBI system, poor planning has led to a small sample size that is not scientifically viable. In addition, the design of the experiment is flawed in that it only gives monthly income to unemployed persons rather than a universal income to everyone, and was further hindered at the time of implementation by a conservative government in power that was promoting economic austerity in the midst of economic hardship – hardly the ideal time to, as co-directors at a Finnish economic think tank wrote, “spearhead a leftist benefits program.” Olli Kangas helped design the experiment and is now running it for Kela, a process that in practice he labeled a “nightmare.” Given the experiment’s flaws and the difficulty in implementing it in a rich country with high levels of social spending, the final results should be viewed skeptically and serve as a cautionary tale on the challenges of a UBI system.
  • What Do UBI Experiments Look Like In The U.S.? Wired Ideas contributor Joi Ito considers UBI “a partisan issue that, paradoxically, has bipartisan support.” When it comes to UBI, views do not fall along traditional partisan lines, with those voicing support ranging from Milton Friedman and Charles Murray to Martin Luther King, Jr. and Bernie Sanders, and strange bedfellows like Joe Biden and Ben Sasse united in opposition. This range is largely because a UBI system can mean different things to different people, and actual policies can vary as to its theoretical implementation. Some current developments in the U.S. on this front include an experiment in Stockton, California where 100 families receive $500 a month for 18 months, funded through a grant from an organization started by Facebook co-founder Chris Hughes; legislation passed in Hawaii that explores making UBI a reality in that state; and a declared presidential candidate who is running solely on the issue of UBI.
  • Alternatives To UBI Going Forward: Finland’s experiment demonstrates the challenges of a UBI system, not least of which is the impact that a government check would have on the value of work and society at large. Even then, that assumes policymakers across the ideological spectrum could agree on what exactly such a policy entails, and garner the support of their constituencies, which seems unlikely. Policies focused on adaptability and continuous education, rather than an “inverted form of feudalism,” could instead provide a better way forward. Instead of more universal models, a cautious approach to “end of work” schemes – which recognizes the futility of predicting the future – may better serve the policy debate, as “a private economy is far more dynamic than the straight line projections … futurists can grasp.”

The largest state-sponsored UBI experiment appears to be dead-on-arrival, but the debate surrounding the future of work continues. As policymakers present solutions for technological disruption, whether a future valued on work over a government check, direct government intervention, the human capital side of the equation, or something else, Finland’s experiment serves as a cautionary tale for policymakers developing ideas for the 21st century economy.

News You Can Use


Venture capital may not be the first thing that comes to mind when thinking about your airline of choice, yet since 2016, JetBlue Technology Ventures (JTV) has been incubating, investing in, and partnering with “early stage startups at the intersection of technology and travel.” The Silicon Valley-based venture arm of the airline is a first-of-its-kind in its industry, aimed at “driving innovation in the travel and hospitality industries, [making] the airline some money, and [getting] it a seat at the table as some of the most exciting technologies come down the pike.”

Should infusing venture capital into its operations provide JetBlue with a competitive advantage such as that enjoyed by Southwest Airlines in the first decade of this century, when the latter famously loaded up on hedges against higher fuel prices, and which became a common practice among its competitors, in-house investment arms may become as common for airlines as lounges, credit cards, and phone apps.


Sunday was Earth Day, and the Chicago White Sox’s Guaranteed Rate Field celebrated by becoming the first Major League Baseball stadium at which customers will not automatically receive plastic straws in their drinks, and they will receive a biodegradable straw only upon request. This change comes on the heels of a meeting of the Commonwealth Heads of Government in London, where a proposal to do-away with single-use plastics was introduced, and U.K. Prime Minister Theresa May declared that “plastic waste is one of the greatest environmental challenges facing the world.”

Yet the facts of straw use being cited are nonsense, and the similar bans on single-use plastic bags may actually have the opposite impact intended on the environment. This reality has not dissuaded policymakers, though, who continue to forge ahead. Should interests seek to slow or disrupt these efforts, a public affairs strategy focused on sharing the facts with the public may be the most effective way to move the needle in the debate.


The season of annual corporate meetings is upon us, and companies are facing political and reputational challenges from both investor and professionalized activism. Recent guidance issued by the Securities and Exchange Commission may play a role in helping companies avoid putting proposals pertaining to everything from “greenhouse gas emissions to discrimination to wasteful K-Cups” on shareholder proxy ballots, but in the public debate, traditional public affairs and reputation management efforts are no longer enough to ensure these meetings, and the rest of a company’s corporate strategy, can be implemented in today’s Age of Activism.

Rather than “hire more lawyers or create more brochure-ware,” Managing Director at BSR and Adjunct Professor at Fordham Law Alison Taylor suggests the best reaction to this new environment is “to equip the corporate fortress with stronger bridges and moats,” a process that can in part be achieved through a competitive intelligence effort that wholly understands the makeup and motivations of an issue’s stakeholders.


Carb-lovers were rejoicing earlier this month when Newsweek shared a study suggesting that eating pasta was linked to weight loss. But a follow-up report by Buzzfeed discovered that Newsweek “and many other stories failed to note … that three of the scientists behind the study in question had financial conflicts … including ties to the world’s largest pasta company, the Barilla Group,” and listed “Big Pasta’s” ties to scientific conferences, academic studies, and even think tanks.

At Delve, we help our clients gain an information advantage so that they can understand their own vulnerabilities and the network of influence opposing them in the public arena, and both Big Pasta and Buzzfeed hit speed bumps on this front. The former should have anticipated this information becoming public and proactively prepared to push back. As for the latter, Buzzfeed should have been aware that it is difficult to have their critique taken seriously when they have aided and abetted similar efforts in the past, and have come under fire for how advertisers have influenced their editorial content in several noted controversies.

TL;DR: Who Do You (Anti)Trust? Millennials #Adulting On Scams, And Friends In Low Places

Who Do You Anti(Trust)? Millennials #Adulting On Scams, And Friends In Low Places

Here’s what you need to know…

In the nation’s capital this morning, members of the public lined up early to get a prime seat, not at the theater but at the federal courthouse, for one of the most anticipated dramas of the year: the antitrust trial over AT&T’s $85.4 billion bid to acquire Time Warner. The outcome of the trial will have large implications beyond the Beltway, with media companies and other prominent industries watching closely the arguments on both sides, and hints to its possible conclusion, in order to stay ahead of the curve in today’s regulatory environment. Here’s what you need to know about the case:

  1. Why The Merger Came About: Ironically, AT&T’s efforts to compete against what it sees as an advertising duopoly has gotten it labeled a potential monopoly itself. With data now widely considered the world’s most valuable resource, AT&T’s move to acquire Time Warner is an effort to capture the data of millions of viewers who watch Time Warner’s content on channels like HBO, TBS, CNN, and TNT, as well as its blockbuster movie franchises like DC Comics and Harry Potter. This move could allow the conglomerate to “reinvent itself as one giant advertising network” that could rival tech giants Facebook and Google, who currently dominate the online ad industry and have been attracting dollars from television. The merger was not expected to be controversial because regulators have approved similar vertical mergers in the past.
  2. How The Merger Ended Up In Court: AT&T CEO Randall Stephenson initially went on a “charm offensive” to not only ease apprehensive executives within the Time Warner empire, but also to lobby the President and help influence easy approval of the merger. But it has not worked out that way. AT&T declined the Department of Justice (DOJ) condition that it sell Time Warner’s Turner unit, and the DOJ filed suit to stop the merger. While there has been speculation that Trump’s disdain of Time Warner’s CNN is responsible for the government’s stance against the merger, the DOJ argues that it would mean less competition for consumers, despite not being head-to-head competitors, and result in potential raised costs of $436 million for consumers.
  3. What Other Media Companies Are Watching: Earlier this month, the chief executive of the world’s largest advertising agency, WPP’s Martin Sorrell, told CNBC that consolidation is the future of the media industry – largely due to “certain pressures, technological changes in the long-term, and shorter-term pressure” from tech companies disrupting traditional media and consumers shifting to cross- and multi-platform content consumption. To compete with tech companies like Netflix, Amazon, and others, media companies are watching to see whether ambitious vertical integration will gain regulatory approval in this case. If so, Disney’s acquisition of 21st Century Fox and Sinclair Broadcasting’s purchase of Tribune Media will likely face less scrutiny on this front, and even encourage other deals – like a possible recombination of CBS and Viacom – to move forward.
  4. How The Outcome May Reverberate In Other Regulated Industries: Beyond media, this trial is viewed as a bellwether because mergers are on the rise. For example, one major pending deal before the DOJ includes CVS Health’s $69 billion merger with Aetna. Furthermore, a decision in favor of the DOJ will allow tech to continue to have an upper hand on traditional media, and will also help the tech industry determine regulators’ appetites at a time when policymakers are calling for increased regulation of their activities and business practices.
  5. How Companies Can Anticipate And Mitigate Similar Challenges: Precedent seemed to suggest that AT&T’s merger with Time Warner would be easily approved, but instead the merger is highlighting the fact that an easy process of regulatory approval cannot be assumed. Engaging an extensive network of lobbyists and unveiling a public relations “charm offensive” are no longer enough for companies thinking about mergers and acquisitions in today’s fluid and uncertain regulatory environment. Instead, companies need to operate from a place of knowing what they don’t know, ensuring that they fully understand the regulatory landscape – key personnel and stakeholders, any opposition, the network of influence whose interest align for and against it – and use that information to build their case and make well-informed business decisions.

A ruling on the AT&T-Time Warner antitrust case is expected sometime before the June 22 merger deadline. Until then, companies can only wait, watch closely, and begin anticipating and preparing for whatever comes next.

News You Can Use


In the throes of the 2016 presidential campaign, then-First Lady Michelle Obama delivered an impassioned speech at the Democratic Convention in Philadelphia that was widely seen as a “backhanded slap” at then-candidate Trump’s campaign, pronouncing that “when they go low, we go high.” How things have changed since then. Philippe Reines, a former aide to Hillary Clinton, shared his advice for Democratic presidential candidates in 2020 to beat Trump, which includes going “high when you can,” but largely using tactics that are for those “living in the real world,” imitate Trump’s penchant for boasting, gloating, and never apologizing, and shun hiring staff “who [say] they’d rather lose than stoop to [Trump’s] level.”

While some candidates in this cycle may be adapting to this cruder version of politics that is not big on social graces, and which failed to work for Reines’ candidate in 2016, an oasis made up of serious candidates in both parties – who campaign hard on policies and facts – may make for a more palatable and effective campaign in 2020. But if Democrats follow Reines’ advice to hurl more insults at Trump and his voters, the results in 2020 are unlikely to be much different than they were in 2016.


While older people are often warned to be vigilant of cons and scams, the Federal Trade Commission (FTC) released a report showing that younger Americans in their 20s and 30s are actually more vulnerable to falling for them. In fact, twice as many millennials lost money in reported fraud during 2017 as did people over the age of 60, although the latter often lost more money.

One prominent explanation for this surprising fact is that millennials are more comfortable sharing their personal information online, where scammers can then target online accounts and take stolen data and sell it on the dark web. So, while there may be an inclination to chalk up the FTC’s findings to the added wisdom of age or confirmation-bias against millennials, it may be correlated instead to the technologies in which younger generations are well-versed. 


Measures that enact plastic bag bans have become common in localities across the country as a way to become more green and minimize the environmental impact of single-use plastic bags used in retail stores and supermarkets. But what if policies that discourage plastic bag use are actually bad for the environment?

That appears to be the conclusion of a government study in the United Kingdom that was meant to inform policymakers on this issue before enacting plastic bag policies, which shows that alternatives to plastic – like paper, cotton, and low-density polyethylene – have a worse environmental impact than single-use plastic bags. Though these results did not stop UK policymakers from proposing to extend policies to tackle today’s “throwaway culture,” they suggest that ideology and intentions may be behind plastic bag policies that are ineffective and have the opposite impact desired.


Republicans’ failure to repeal and replace Obamacare with unified control of the federal government was a cause for anger and embarrassment, although Reason managing editor Peter Suderman argues in The New York Times that Republicans may “have succeeded anyway – just not in the manner they expected.” Suderman points to concrete steps such as Congress’s repeal of the individual mandate and the Medicare cost-control board as part of last year’s tax reform law, and the executive branch’s support of association health plans and limited-duration insurance. Yet, he notes that people who support market-driven health care, as opposed to those who want to amend health policy at the federal level by reforming Obamacare in their own image, are caught in a dynamic that cedes the “real debate about how health care should be financed, regulated and provisioned.”

The most plausible way to restore the debate to its crux may be through the courts. Several states are pursuing a lawsuit challenging Obamacare’s constitutionality after the individual mandate, which the Supreme Court ruled as constitutional only because the Court deemed it to be a tax rather than a questionable regulation of commerce, was repealed as part of tax reform. As such, this lawsuit may represent perhaps the final chance for actual full repeal of the 2010 law. Even if it fails, though, the foundational pieces of the law are crumbling, and the reforms underway may provide a path to a better, post-Obamacare future of care – that is, unless Republicans in Congress work to shore up the status quo.


Is a company’s decision to focus on college campus recruiting discriminatory? Middle-aged accountants who applied to PricewaterhouseCoopers and were rejected believe so, suing the firm and alleging that its focus on college recruiting discriminates against older applicants. This case and others are endemic of a new legal battleground focused on age discrimination over hiring, rather than firing. The Communications Workers of America recently filed a class-action lawsuit against T-Mobile U.S.,, and Cox Communications alleging that by using Facebook recruitment ads targeted by age, the firms were in violation of “the federal Age Discrimination Employment Act (ADEA), which protects individuals who are 40 years of age or older from employment discrimination based on age.”

Case precedent requires that plaintiffs prove that age was the decisive factor in their complaints, highlighting that companies will not only have to adapt to the new legal threat from increasingly common age discrimination litigation, but also the new political and reputational challenges that may result from the fallout from such allegations. As the judge in the PwC case asked, “How can I tell who is [recruiting on campus] for invidious reasons and who isn’t?” Firms will have to tread carefully, lest the court of public opinion decide for them.

Fifth Avenue Bank, NY 1900

TL;DR: Taking It To The Banks, Cali Housing Crisis, And Don’t Feed The Trolls

Taking It To The Banks, Cali Housing Crisis, And Don’t Feed The Trolls

Fifth Avenue Bank, NY 1900

Here’s what you need to know…

If you’ve checked your Facebook news feed or partisan news sites over the past week, you may be thinking that the sky is falling and that the Senate is singlehandedly tanking the American financial system, hurting American families, and letting big bankers run wild. So, will this Senate legislation herald in the next financial crisis? Maybe not. The legislation, which passed the Senate 67-31 on a bipartisan basis, was crafted by Sen. Mike Crapo (R-ID) to address shortcomings of the Dodd-Frank financial regulations passed by Democrats in 2010. Here are those facts of what this legislation does, and what it means for the financial sector:

  • Challenges In The Wake Of Dodd-Frank: After the global financial crisis in 2008, a unified Democratic government passed the so-called “Dodd-Frank” law for Wall Street reform in July 2010. The abundance of new rules, regulations, and government powers and agencies in the unwieldy, 848-page law tried to put an end to banks that were “too-big-to-fail,” restore faith in the banking system, and increase economic growth. However, it has done precisely the opposite of its initial goals, instead contributing to a decrease in smaller banks and the rate of new businesses created. Dodd-Frank was passed to increase regulation on the supposedly “unregulated” financial sector in order to “promote financial stability” and prevent another financial crisis. But the overly broad brush painted by Dodd-Frank, and the subsequent vast expansion of federal bureaucrats’ oversight of the economy, have led to a desire to pass reforms to address its shortcomings.
  • What The Senate Bill Does: The Dodd-Frank bill was a blunt instrument passed in the wake of a crisis, with federal regulators treating both small and community banks the same as big banks like Bank of America, Chase, Wells Fargo, and others. The focus of the Senate bill is to make regulatory changes that mainly aid these smaller banks, who have been seeing their numbers dwindle, resulting in less money available to lend to small businesses across the country because while big banks may be able to absorb the costs of complying with complex federal banking regulations, small banks cannot. As Rob Nichols, head of the American Bankers Association, noted, “Dodd-Frank isn’t scripture. It can be improved,” and the Senate bill was popular enough to garner the support of 12 Democratic co-sponsors for a filibuster-proof majority in the Senate.
  • The Political Peril Ahead For Banks: Contrary to the bipartisan nature of the legislation, particularly in support of smaller community banks across the country, a major rift on the Democratic side pits moderates against liberals and risks further politicizing banks at a time when they are increasingly being dragged into the political fray. Delve CEO Jeff Berkowitz wrote about the implications of today’s politicized environment on banks in a recent American Banker piece, and should it become politically-unpalatable to support bipartisan provisions that aid financial institutions on which many Americans depend for jobs and opportunity, further reforms to improve the regulatory environment will face an uphill battle.

Despite passionate opposition from the liberal side of the Democratic Party, the bipartisan coalition supporting the bill ensures that despite the brewing rebellion on the left, it will have momentum to be conferenced with the broader bill passed by House Republicans last year, and from there, may have a good chance to be signed by the President into law. The exposed Democratic rift heading into the 2018 elections highlights the different choices the Party faces in its messaging. With an increasingly liberal base, the Party’s path for success in elections where its moderate Senators are running is increasingly in conflict with its activist base.

News You Can Use


The nation’s most-populous state is facing the nation’s most serious housing crisis, thanks in part to a “perfect storm” of “unique geography, state politics, and activist culture combined with a poorly distributed economic boom.” But don’t worry: state politicians are ready to help, armed with a slew of housing-related bills and new regulations.

Ironically, these bills may make things worse given that the “policies, priorities, and principles” of those same politicians contributed to the crisis in the first place. If policymakers want to actually reduce the factors that contribute to sky-high housing costs, and the fact that California has one-quarter of the nation’s entire homeless population, they would be better off embracing pro-market policies that encourage new housing construction rather than those that make it more difficult to build.


Writing in the Harvard Business Review, partners at Oliver Wyman’s oil and gas and energy practices made the case that oil’s boom-and-bust cycle may be a thing of the past. The reasons for this shift include expanding domestic oil production in the U.S. due to fracking, increased investment in new services like pipelines, refineries, and other infrastructure close to their customers, diversification of oil suppliers and sources, and new efficiencies that allow producers to “respond nimbly and competitively to market shifts.”

One such efficiency that shows promise in the future energy landscape is carbon capture technology, which captures CO2 from power plants and then uses it to extract oil – turning carbon emission “into a financial commodity with an environmental co-benefit.” New innovations like carbon capture can help minimize the boom-and-bust cycle of the past and make this crucial sector more environmentally-friendly, although opposition from environmental groups and others to tax credits that would encourage carbon capture technology over wind and solar power may hinder its adoption.


In The New York Times, Reason magazine’s Katherine Mangu-Ward argues, “The problem [with today’s political discourse] isn’t just filter bubbles, echo chambers or alternative facts. It’s tone: When the loudest voices on the left talk about people on the right … it is with an air of barely concealed smugness. Right-wingers … increasingly respond … [by] doubl[ing] down on whatever politically incorrect sentiment brought on the disdain in the first place. These two terrible tendencies now feed off each other” in a never-ending loop “that is nearly irresistible to those on the inside and confusingly abhorrent to those on the outside.”

American Enterprise Institute’s Arthur Brooks appears ready to step outside this loop himself, announcing in a Wall Street Journal column that he plans to step down as AEI’s president this year. “No one has ever been insulted into agreement,” Brooks writes in response to what he calls “the holy war of derision on both left and right” in which some Americans would rather shut down debate using “half-baked 280-character opinions and tiny hits of click-fueled dopamine,” than participate in serious political discourse. To move beyond this state of affairs, both Brooks and Mangu-Ward suggest ways to return to a common reality through debate focused on substance and facts, but doing so will require changes by both the players (political actors) and the observers (the media).


Many small business owners can find themselves caught in red tape from federal regulations, and there may be some relief for them on the horizon due to pending lawsuits on behalf of the owners of e-cigarette “vape shops.” The suits focus on a 2016 regulation administered by an unelected career bureaucrat at the Food and Drug Administration (FDA) known as the “deeming rule,” which determined that vaping products would be subject to the same regulations as the tobacco industry under the Tobacco Control Act of 2009.

However, the Constitution requires Senate confirmation for rule-making power, meaning that should the outcome of the lawsuits favor vape shop owners, the decision may not only cut through the red tape impacting them, but reverberate throughout a variety of small businesses facing similar challenges across the country.


A motion passed by South Africa’s National Assembly late last month allowing for the expropriation of land without compensation continues to garner attention around the world and enable sensitive, uncomfortable conversations in a country that emerged from the shadows of colonialism and apartheid just over two decades ago. At the heart of the issue is the 1913 Native Lands Act, which restricted land ownership for South Africa’s majority black population, and whose effects remain impactful today.

The Constitutional Review Committee is now reviewing the motion to expropriate land and will announce its findings by August 30th, leaving the interregnum filled with both extreme rhetoric that channels racist sentiments and serious questions that need to be addressed about fulfilling the expropriation of land without destabilizing either the food supply or the economy. Nelson Mandela, the father of modern South Africa, supported a policy of national reconciliation to address apartheid-era land policies, and while an existing clause in South Africa’s Constitution does allow for expropriation of land both with and without compensation, the change being sought to Mandela’s approach may inflame passions rather than help South Africa continue to heal.