Bad at PR, EA is

Quote of the Day

We dead”

Market Snapshot

• The Dow and S&P posted their second week of losses.
• Bitcoin rallied past $8,000.
• Foot Locker shares surged 28% after earnings—its biggest one-day gain in 40 years.
• European markets continued to fall as investors awaited news on U.S. tax reform.



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Trying to Catch a Fox

Comcast spent no time waiting for Disney and 21st Century Fox to hash out a deal, approaching Rupert Murdoch’s media empire with a potential offer of its own.

And if that didn’t spice things up enough, 21st Century Fox is reportedly fielding offers from Verizon and Sony.

It’s a media moshpit and everyone’s invited. But Fox isn’t offering the entire company as a party gift: it’s looking to offload its production studio (20th Century Fox), U.S. cable networks (think Nat Geo), and international business (a 39% stake in Sky).

So if you’re reading this, Mr. President...Fox and Friends is safe.

Tell us something. Who would willingly get rid of National Geographic?

Fox would.

It spent the last few years trying to compete with 800-lb media gorillas (Comcast and Disney), but hardly made up any ground: a bid to takeover (the rest of) Sky has been in U.K. antitrust limbo for over a year, and it struck out on an attempt to buy Time Warner in 2014.

Now it’s realizing that tacking on mass isn’t the answer. A CBS-style, small-but-mighty media diet would allow Murdoch and Co. to refocus on Fox News and Fox Sports.

So naturally, we called in Joe Buck to give us the sound bites from Fox’s suitors.

Comcast: “Looking for the media stranglehold over here. We’ve got NBCUniversal in our back pocket, but just took our biggest hit in paid subscribers in three years. It’s time for a change.”

Verizon: “Hey, just trying to get our feet wet in media. Don’t mind us. The majority of our $126 billion in revenue comes from our cellular business.”

Disney: “ESPN is failing, we broke up with Netflix, media revenue is down 12% YoY...you tell us why we’re here.”

Sony: “No one has the details on us yet, but let’s be real...we like the idea of another $5 billion production studio.”

AT&T and Time Warner: “Good luck, suckers.” Longingly looks towards DOJ to approve $85 billion merger.

The HomePod Stays at Home

Apple threw Santa a curveball, announcing it would delay shipment of its HomePod smart speaker from this December to early next year.

Can’t say we’re surprised. With the postponement, the HomePod joins an esteemed list of other Apple products—AirPods, Apple Watch, iPad pencil—that have whiffed on hitting deadlines.

So what’s the excuse this time? Because “the ghost of Steve Jobs wanted to workshop it a little more” is getting old.

Minus the apparition, though, that’s...probably the case. Retailing at $349, the HomePod sits on the high end of the smart speaker market. The problem is, customers are opting for the low end: more than half of Amazon’s $1+ billion in smart speaker sales went to the $50 Echo Dot.

So we’re not too surprised Apple is taking its time. After all, Siri needs to be ready for primetime in order to compete with her voice assistant rivals from Google and Amazon.

Need Your (Stitch) Fix

E-commerce subscription clothing company Stitch Fix (known for its algorithmic approach to styling your wardrobe), raised $120 million at a $1.5 billion IPO. The fashion guru behind it all? CEO Katrina Lake.

The Harvard MBA grad always showcased an out-hustle-you attitude. In the early days of Stitch Fix (2011), she literally walked door-to-door draping clothing on her arms.

And it paid off.

The fashion-made-simple e-tailer rakes in $1 billion in revenue, boasts over two million customers, and is profitable after six short years.

But Fix isn’t in the clear. These “we’ll box it up and bring it to you” subscription models are extremely challenging to get right. Customer acquisition costs are through the roof, and said customers go almost as quickly as they come.

Need we remind you of Blue Apron? Acquisition cost per customer: $94. Avg life span: six months. Stock price: $14 $10 $3. Good luck, Katrina.

Bad at PR, EA Is

EA caved to internet gamer outrage and suspended in-game purchases in its upcoming Star Wars Battlefront II release...for now.

The fracas began when the game’s testers (world’s best job?) spread word that it took dozens of hours just to unlock basic characters like Darth Vader. That’s because EA’s gone all-in on “microtransactions,” where gamers can buy upgrades like greater speed and agility. These purchases have been a growing revenue stream for video game companies, bringing in $7.3 billion in 2017, up 30% from last year.

But this time, EA took it a step too far. If players don’t feel like forking over more cash after already dropping $60 on the game, they’ll be at a severe disadvantage...leaving them stuck as Jar Jar Binks far longer than anyone ever wants to be Jar Jar Binks. Cue internet firestorm.

This shouldn't be a fatal wound for EA, a company whose stock is up 42% this year. But it probably should take some advice from Yoda: “A Jedi uses the Force for knowledge and defense, never for attack.”

What Else Is Happening…

• The Nebraska Public Service Commission will vote today on whether to allow Keystone to extend its pipeline through the state.
• VW isn’t bowing to Musk just yet, announcing a $40 billion spending plan to become a leader in electric vehicles.
• Broadcom is staying busy while it tries to work some magic on Qualcomm, closing a $5.5 billion deal for Brocade.
• The NFL is close to inking a streaming deal with Verizon.

Economic Calendar

• Monday     Earnings: No Events

                    Economic Events: Leading Indicators

• Tuesday    Earnings: HPE, HPQ, Salesforce.com

                  Economic Events: Existing Home Sales

• Wednesday    Earnings: Deere

                        Economic Events: Jobless Claims

• Thursday   Earnings: Markets Closed

                   Economic Events: Markets Closed

• Friday       Earnings: No Events

                 Economic Events: PMI

From the Crew

Tyler—A bang for your buck

Then again…what’s the real value of your buck? What gives that slip of paper the purchasing power to obtain a cup of coffee? Charles Wheelan’s Naked Money opens the door to the world of the economy, currencies, inflation...

and it’s one of my favorite books this year.

Gretel—Yup, another book

My recommendation wouldn’t be for everyone and certainly not for the faint hearted—The Sellout by Paul Beatty. It tackles the issues of racism, segregation, slavery, and more. You’ll either love or hate the writing style but if you can stomach the bold narrative and are looking for something different...

this is the book to pick up.

The Breakroom

Question of the Day

Stacy ate a total of 100 peanuts in 5 days. Each day, she ate 6 more peanuts than she did the day before. So, how many peanuts did Stacy start with on the first day?

(Answer located at the bottom of newsletter)

Rank by Net Worth

Male Athletes: Tom Brady, LeBron James, Cristiano Ronaldo, Roger Federer

(Answer located at the bottom of newsletter)

Stat of the Day

$280,000—Average salary for 2,500 managers of the NYC subway. The mayor’s salary? $215,000.

Breakroom Answers

Question of the Day: Stacy ate 8 peanuts on day 1

Rank by Net Worth: Lebron James ($400 million), Cristiano Ronaldo ($400 million), Tom Brady ($180 million), Roger Federer ($104 million)