According To Forbes Baseball Is Not Dying, Plus Time Inc. Might Finally Have a Buyer

By 04.13.17

morning brew

Time for your April 13th Brew. But first, if you were wondering how the heck we get you your Brew each and every morning, the process goes something like this

QUOTE OF THE DAY

“Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing” — Amazon CEO Jeff Bezos in his annual shareholder letter, reaffirming Amazon’s commitment to customer service.

Market Snapshot

  • Stocks closed slightly lower again on Wednesday with investors possibly anxious about Secretary of State Tillerson’s meeting with Russian officials
  • U.S. treasury yields fell to their lowest levels since November, and the dollar fell too after President Trump said he felt the greenback was “too strong

Walmart Is Desperate for Foot Traffic

Walmart might be the world’s largest retailer, but transitioning from a 55-year-old briack-and-mortar chain to an e-commerce powerhouse isn’t easy.

The Arkansas-based company is hoping to lure online shoppers back into stores by giving them a discount—if they’re willing to pick the item up at a store. Once inside, Walmart hopes you’ll grab a few more non-discounted items. Sneaky. It’s all a strategy to leverage Walmart’s vast retail footprint in the face of leaner, all-online operations like Amazon.

Enter Marc Lore

When Walmart bought e-commerce startup Jet for $3.3 billion last summer, it not only gained the infrastructure of a successful e-tailer, but also its innovative founder, Marc Lore. He now runs Walmart.com, which posted a 35% increase in online sales last quarter—and you guessed it, Marc’s the mastermind behind this latest discount scheme.

So what does Marc bring with him from Jet? A unique algorithm that calculates the lowest price based on things like item location—ie: the more you buy with Jet’s “Smart Cart,” the cheaper your total becomes. This is the pricing strategy Walmart needs more of if it’s going to keep up with Amazon, which it’s been locked in a price war with for months. It also doesn’t hurt that Lore has some prior beef (thanks to Quidsi) with “he who must not be named” over at Amazon.

But wait, there’s more

Getting people into stores is great, but to compete in a digital world, Walmart has got to shift its entire way of thinking. Last month, Walmart announced “Store8,” a tech incubator in Silicon Valley.

By partnering with startups, Walmart could end up on the forefront of innovation from the very beginning, rather than buying up innovation after the fact as with Jet (and indie clothing retailer ModCloth earlier this year). Brick-and-mortar retailers might be struggling, but in a price war like this, consumers can only win.

Time Inc. Might Finally Have a Buyer

The publisher of Sports Illustrated, People, Southern Living and dozens of other media brands might finally have a buyer. Meredith Corp., which owns magazines and local TV stations across the country, is said to be in preliminary talks to buy Time. Oh boy.

Before you get too excited, let’s be honest with ourselves here: “in talks” is a euphemism for haggling, and Time has been on the losing side of a price war for a while now. The New York-based publishing conglomerate is having trouble getting anyone to cough up the $20 per share that it wants. Last year, an investor group led by Edgar Bronfman Jr. withdrew its $1.8 billion offer. It’s a tough time for print magazines across the industry, and Time’s print ad revenue, a major component of its total sales, fell 10% in the third quarter of its last fiscal year.

Swiss Watchmakers Are Ticked

Swiss watches are expensive, well-crafted and known worldwide, but Switzerland’s horological prowess could be its own downfall. A massive “grey market” for Swiss watches is rapidly growing, with used or otherwise unsold models turning up en masse online—at steep discounts. Did Switzerland create its own problem? Sure, many of the watches last basically forever (meaning supply only grows larger as demand stagnates). But a new government regulation imposed in January isn’t helping either.

Prestige is everything in the luxury watch market—one does not simply walk into Switzerland. And what does “Swiss Made” mean, anyway? Simple: the product must be made of at least 60% Swiss parts and fully assembled in Switzerland. Large luxury brands lobbied for the new rules after a 9% drop in revenue from watch exports. Tightening up the definition didn’t help all that much, and expensive Swiss labor is further complicating things. Bottom line: there’s a lot of moving parts to this thing.

Airbnb Buddies Up to Local Governments

The home-sharing platform announced yesterday it has signed tax agreements with 275 local governments. Under the agreements, Airbnb will collect local hotel taxes and transfer them to the respective governments, streamlining the collection process—something it had come under fire for not doing in places like Paris and New York. The company claims it will have collected over $240 million in taxes by May. You’re welcome, government. Friends in high places could be a smart move given recent developments: last month, Brian Chesky, founder of the $31 billion company, hinted at an IPO. Airbnb needs as many people on its side as possible if it wants to expand. Time to make some friends.

What Else Is Happening…

  • Whole Foods’ stock spiked yesterday on news that Amazon had mulled a bid before Jana’s investment
  • The artist behind Wall Street’s “Charging Bull” is angry about “Fearless Girl
  • Burger King’s latest ad was briefly under fire for activating Google Home speakers before Google could roll out a fix
  • Uber reportedly used secret software to track Lyft drivers and lure them to Uber

Economic Calendar


Water Cooler

Who Said Baseball is Dying?

If it was you, take a moment to shame yourself. As slow-moving as it is, baseball is doing just fine. Better than fine, in fact: according to the latest study from Forbes, Major League Baseball is raking in the dough. The average MLB team is now worth a cool $1.54 billion, a 19% increase from last year and good for second-highest of all major sports (behind the NFL). Here are some more quick hits from Forbes:

  • Of the 30 MLB teams, the average operating income for the 2016 season was $34 million—52% higher than that of 2015. Much of this growth was driven by lucrative TV deals and the rising value of MLB Advanced Media.
  • Unsurprisingly, the most valuable team for the 20th straight year was the New York Yankees. The team is valued at $3.7 billion. Rising quickly behind them are the Chicago Cubs. The World Series Champions were valued at $2.7 billion after being bought for $845 million by the Ricketts family in 2009. Not a bad return on investment.
  • But not every team is feeling so lucky after 2016. The biggest loser: the Detroit Tigers. The organization had the largest operating loss ($36.4 million), by far the most in the league, and was one of only five teams to end up in the red. Get out there and watch some baseball, Detroit.

The Breakroom

Question of the Day

A merchant can place eight large boxes or 10 small boxes into a carton for shipping. In one shipment, he sent a total of 96 boxes. If there are more large boxes than small boxes, how many cartons did he ship? (Answer #6)

Stat of the Day

2.5 million: that’s how many lines of code companies like Google, Facebook, Microsoft, IBM and others have contributed to open source machine learning databases—the equivalent of 650 human years of work.


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