AT&T's Plans For Time Warner, Plus Ashley Madison Is Finally Paying For Their Massive Data Breach

“It’s almost an embarrassment to be an American citizen traveling around the world and listening to the stupid shit we have to deal with in this country.”

JPMorgan CEO Jamie Dimon on an earnings call with analysts. Tell us how you really feel, Jamie. (We’ll actually get to that, keep reading).

Market Snapshot

Major U.S. indexes finished up despite a slump in financials.
The dollar fell on weak consumer prices and retail sales.
China’s Q2 GDP grew 6.9% from a year earlier.
Ethereum dropped 20% Sunday morning before rebounding midday.

Let’s Take Things Slow

AT&T (+0.25%) plans on maintaining two distinct operating groups following its $85 billion acquisition of Time Warner (+0.67%).

This includes a communications division (AT&T) and a media group (Time Warner).

As a quick refresher: Time Warner is the entertainment company, which introduced you to a few of your favorite acronyms including CNN, HBO and TNT.

This all seems like common sense

But, remember the deal raised eyebrows among regulators—and even President Trump—who feared AT&T would jack up the price of Time Warner’s content offerings to other wireless providers.

By establishing these two groups, CEO Randall Stephenson is suggesting that we won’t be seeing Hollywood producers and Dallas-based network engineers play footsie anytime soon.

And just to be clear, AT&T isn’t reinventing the wheel here—Comcast has a similar arrangement with its NBCUniversal division.

So where does this leave us?

Well, pretty much where we started. While President Trump and a disgruntled troupe of antitrust regulators might be wagging their finger at the deal, AT&T is simply adjusting to the times.

The traditional phone business is going extinct. Let’s face it—when was the last time you used a landline? But, Time Warner’s powerhouse media brands stands to alleviate some of that pressure.

In addition to $28 billion more in yearly revenue, the newly-minted network conglomerate would benefit from $1 billion in annual cost savings.

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Let’s Settle the Affair.

It’s hard to put a price on love, but Ashley Madison is giving it a shot.

Ruby, the parent company of the anonymous adultery dating website, is settling a class action lawsuit for $11.2 million as millions of exposed users look to trade in their Scarlet Letter for green dollar.

If you don’t remember, Ashley Madison opened the floodgates for millions of “thrill seekers” with its infamous tagline “Life is Short. Have an Affair.” The result was…well, you can use your imagination.

But, one massive Yahoo-esque data breach later and 37 million users were doing a lot less flirting and a lot more “honey…I can explain.” Now, the media group is putting the mess behind it.

In true Ashley Madison fashion, the parent company (Avid Life Media), changed its name to Ruby Corp as part of its post-hack re-branding efforts.

This also includes other very progressive promises. For starters, there will no longer be so-called fembots—female message bots luring men to the site…now, they’ll just use real women.

Money in the Bank?

JPMorgan (-0.91%), Citigroup (-0.45%) and Wells Fargo (-1.10%) kicked off second quarter earnings for the big banks Friday by beating analyst expectations, but watching shares fall.

The reason? Washington’s perennial game of What Policy Should We Disagree on Next? has businesses hesitant to borrow money (in addition to Jamie Dimon dropping a hard S to a group of analysts).

And it’s making investors uneasy. Just take a look at JPMorgan—net income grew 13% YOY (up $7 billion), but shares were down 1% due to a weak interest income report.

Reminder: A bank’s net interest income is the difference between interest it receives on loans given out and interest paid to customers’ on their deposits.

Loan profits are expected to miss their $4.5 billion mark by about $500 million, while industry loan growth is 6% slower than this point last year.

That’s not to say the financial sector hasn’t been a market MVP this year.

This week’s star-studded lined up of BofA, Morgan Stanley and Goldman should offer similarly promising results, but expect compressed interest income to steal the show.

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Don’t Gripe Just Swipe

Visa (+1.03%) unveiled its new “Visa Cashless Challenge,” hoping to lure small businesses away from the traditional greenback.

You might think mom and pop shops have been getting hip with the times, but there’s been hesitation with credit card transaction fees eating up as much as 5% of a small business’ revenue.

And it shows: cash remains the most frequently used method of payment at 32% (debit—27%; credit—21%; electronic (aka Apple Pay, PayPal)—11%; check—6%; other—3%).

To get more customers swiping, Visa is offering $10,000 towards tech upgrades for businesses taking the 100% cashless-transaction plunge.

The hurdle might seem intimidating, but brew on this: Visa claims that small businesses could generate $6.8 billion more in revenue, while saving 186 million labor hours a year.

What Else Is Happening…

Uber’s Southeast Asia rival, Grab, is raising up to $2 billion from SoftBank and Didi.
Honda (+0.55%) is recalling 2.1 million vehicles worldwide due to potential battery issues.
A U.S. lawmaker is raising concerns about Amazon’s (+0.12%) $13.7 billion purchase of Whole Foods.
Wells Fargo will pull the plug on a number of its smaller business efforts.

Economic Calendar

Friday (July 14th): JPMorgan (+), Citigroup (+), Wells Fargo (+) Earnings
Monday:
Earnings: BlackRock, Netflix
Economic Events: Empire State Manufacturing Survey
Tuesday:
Earnings: Bank of America, Goldman Sachs, Harley-Davidson, Johnson & Johnson
Economic Events: Housing Market Index
Wednesday:
Earnings: American Express, M&T Bank, Morgan Stanley, Qualcomm Inc, T-Mobile
Economic Events: Housing Starts
Thursday:
Earnings: American Airlines, Capital One, E*TRADE, Microsoft Corp, Ruby Tuesday, Visa, eBay
Economic Events: Jobless Claims
Friday:
Earnings: General Electric
Economic Events: Baker-Hughes Rig Count

From the Crew

From Lauren:

Whether you’re currently getting through your internship or have “been there done that,” you’ll appreciate this viral video an intern at Markable made this summer. Watch this 90-second clip if you want to laugh, to learn about a company’s vision for AI in retail and, most importantly,

to help Matthew get that #ReturnOffer.

From Austin: Born A Crime

I just finished listening to Trevor Noah’s NYT Best Seller, which details his life growing up impoverished in South Africa. The book contains crazy story after story, as he explains how he was literally born a crime. I highly recommend listening to it, so you can hear Trevor narrate.

Listen here

From Alex: The 33-year-old Travel King

About six months ago, I met Rob Sanchez, the co-founder of MouthMedia Network, a podcast network covering the business-side of several lifestyle industries. My favorite episode covers the story of Eli Ostreicher, a serial entrepreneur, who started with nothing and now runs eleven travel businesses that rake in a combined $500 million in annual revenue.

Overcoming adversity at its finest

From Josh:

This past week I moved to NYC and convinced my roommates to let me set up Alexa around the apartment (thanks, Prime Day). It sparked discussion and reminded me of a thought-provoking WIRED article about voice assistants and sexism. Ever wonder why all of the assistants from Siri to Ava in Ex Machina default to female voices?

Give it a read