Sears Is Saved Again; MoviePass Restructures; Les Moonves Wants His Severance From CBS

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THE HEADLINES

 

GROUNDHOG DAY

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Eddie Lampert is the kind of guy who just can’t let sh*t go. I’m talking going full Uncle Rico. Reliving leading his high school team to states. All. The. Time.

In what has been a slow-motion car crash scene straight out of ‘Groundhog Day’, Eddie Lampert has yet again revived the retail equivalent of the living dead: Sears. With his last minute, $5.2B bid accepted by Sears, Lampert, and ESL are one step closer to saving the company whose likeness has become synonymous with “retail apocalypse.”

The deal includes a $1.3B credit bid which more or less forgives debt owed to ESL, Lampert’s hedge fund. Unsurprisingly, unsecured creditors are not in love with the idea that Lampert, who many blame for the company’s demise, will be at the helm yet again, and plan to sue in hopes of blocking a February 1st approval by a judge who is eerily vested in Sears’ success.

Much to Lampert’s chagrin, a clause that spared him and his cronies from legal action related to the downfall of Sears was stripped from the final bid.

So what’s in it for Lampert?

Believe it or not, hedge fund managers don’t typically do things for the well-being of employees in middle America. Much of Lampert’s wealth is tied up in Sears and its assets, including a 2.7% stake in a real estate investment trust that bought $2.7B worth of Sears and Kmart storefronts in 2015.

Plus ownership of the company could help him avoid, or at the very least delay, creditor lawsuits.

 

WE’LL PASS

If there’s anything that’s true about the entertainment industry, it’s that spinoffs always work.

In this case, it has to. Helios and Matheson Analytics, owners of MoviePass, plan to spin the company off into MoviePass Entertainment Holdings Inc. in some half-hearted effort to make back all the money they’ve lost on the service. Moviepass Entertainment will distribute a minority of its shares to Helios & Matheson holders as a dividend.

Since buying MoviePass Helios and Matheson saw almost all of its market value evaporate, as investors grew worried that the service wouldn’t be able to sustain its $9.95 theater subscription service. Apparently paying full price for movie tickets and then selling them at a loss isn’t great for the bottom line. Who knew?

Initially, Helios planned to sell user data to the box office in order to sell ads and drive revenue, but that never panned out. Between that, changing terms of service seemingly at a whim, and a July service interruption stemming from an inability to pay vendors, it seems that the writing has been on the wall for MoviePass for quite some time.

Now what? 

Since announcing the spin-off, Helios & Matheson has seen a 3.6% rise in its stock price, which isn’t saying much, but it’s a start. MoviePass Entertainment, on the other hand, is hoping to be featured on the Nasdaq, but whether or not its listing will be approved remains to be seen.

 

SHOOTING THE MOON(VES)

Former CBS head Leslie Moonves wants his severance. The accused sexual harasser is challenging the company’s decision to deny a $120M severance payout back in September when a CBS board investigation determined that he had violated company policies, breached his contract, and intentionally failed to cooperate with the investigation.

This is just the latest, but expected, chapter in “Moongate.” The company overhauled its board and performed an investigation of its culture after the allegations came to light. At this time, Moonves has yet to be replaced thanks to the shakeup in leadership, and a potential merger with Viacom.

Toxic masculinity

Leslie Moonves could be one of the many poster boys for the so-called toxic masculinity that Gilette’s controversial ad is seeking to expunge from the earth. At least six women claimed that he sexually assaulted or harassed them at one point or another.

That doesn’t mean he is going to back down from getting his severance money. Both parties will have to agree on arbitration parameters. The $120M remains in escrow.

 


IN OTHER NEWS

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  • Shares of Netflix fell roughly 4% after hours following an earnings report best described as “meh.” Despite beating subscriber expectations in the US (1.53M vs. 1.51M) and abroad (7.31M vs. 6.14M), the streaming service came up just short on revenue for the quarter ($4.19B vs. $4.21B).

 

  • Private jet company NetJets reached an agreement with its pilot’s union to increase pay and extend contracts for another three years. This wrapped up six weeks of negotiations that started in late 2018. The Berkshire Hathaway subsidiary’s US fleet has grown from 400 to 450 aircraft over the past four years.

 

  • Gymboree has filed for Chapter 11 bankruptcy … for the second time in two years. The chain will close more than 800 Gymboree and Crazy 8 stores and sell off their high-end line Janie and Jack. Which is a damn shame because how cute are trust fund babies in pastels at a garden party in Greenwich?

 

  • Juuust a bit outside. Morgan Stanley’s fourth-quarter figures fell short of analysts expectations. MS posted a profit of $1.53B, or 80 cents per share, on revenue of $8.55B, compared to analysts estimates of $1.6B, or 89 cents per share, on revenue of $9.3B. This is lower still compared to last year when MS earned 84 cents a share on $9.5B in revenue (excluding the tax cut).

 

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