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Aug 26, 2016

DealBook | Today's Morning News - August 26, 2016: Car Trouble and a Retreat, Sort of, by Mylan


The New York Times

By Amie Tsang

It’s been a tough year for Volkswagen’s car dealers. Cheered by the German automaker’s ambition to become a bigger player in America, they had invested millions of dollars into their franchises. As recently as 2014, dealers were paying premiums of $3 million to $4 million to buy franchises in the United States.
And then the emissions scandal erupted.
Sales plunged. Franchises were worth little more than the land they stood on and the basic inventory of cars.
But Volkswagen will try to make amends by paying as much as $1.2 billion to offset the loss in value for 650 dealers in the United States — on top of whatever amount it will have to spend on buying back unsold and unfixable diesels.
More Car Problems
Uber may not own the cars chauffeuring its customers, but it has a $1.2 billion problem that it can call its own.
That’s the amount of money the company lost in the first half of this year. Recruitment, marketing, and its continuing tussles with regulators and established taxi companies have added to spending. Still, its battle with Didi Chuxing in China took a major toll, and not even a fund-raising tear was able to make up for the billions of dollars it poured into subsidizing rides in the hope of gaining market share.
That particular fight has come to an end, as Uber sold its China subsidiary to Didi. But Uber still faces plenty of competition elsewhere that could prove costly.
Mylan Bows to Political Pressure
The public spoke and the pharmaceutical company backed down. Sort of.
Mylan has lowered the out-of-pocket costs of its EpiPen allergy treatment to some patients, like the uninsured. But it did not lower the list price.
That means that Mylan’s revenue will take less of a hit — and that the cost borne by insurers, the federal government, school districts and others in the health care system won’t change. The company also blamed insurers for placing a greater burden on patients through higher out-of-pocket costs. It said that of the $608 list price for an EpiPen, it gets only $274, while the rest goes to pharmacy benefit managers, insurers, wholesalers and retail pharmacies.
Robert Cyran at Breakingviews points out that eliminating direct expenses for customers can make price increases invisible, as most people have insurance. There may be middlemen making the system more complicated along the way, as Mylan argues, but with price increases falling largely on governments and insurers, society is likely to end up paying for the problems in the system.
Coming Up
Janet L. Yellen will speak at the Fed’s annual symposium in Jackson Hole, Wyo., and may give some indication as to whether the central bank will raise interest rates in September.
Deals
Carl Icahn Said to Have Considered Selling Herbalife Stake
By THE WALL STREET JOURNAL
The investment bank Jefferies has been seeking buyers for Mr. Icahn’s $1 billion stake, according to people familiar with the matter. One possible buyer was a group that included William A. Ackman, who has accused the company of being a pyramid scheme.
Ministry Brands Expects to Sell for $1.5 Billion or More
By THE WALL STREET JOURNAL
Ministry Brands, a software provider for faith-based organizations that is backed by private equity, has hired Bank of America to explore a sale and expects to sell for at least $1.5 billion, according to people familiar with the situation.
 
Legal and Regulatory
Common Sense
Philippe Dauman, left, and Sumner Redstone in 2007.
How Philippe Dauman Lost the Battle for Viacom
By JAMES B. STEWART
The daughter of Sumner Redstone achieved almost total victory in her fight to control the vast media empire, and Mr. Dauman was the biggest casualty.
Couples along the beach in California, where a mandatory, state-run retirement plan will call for employers to automatically enroll workers, then start deducting 3 percent from each paycheck.
California Aims Retirement Plan at Those Whose Jobs Offer None
By MARY WILLIAMS WALSH
The plan would cover an estimated six million people and could make the state the first to require companies to take part in such a system.
Public Health
In an emergency room in Peoria, Ill.
How Expanding Medicaid Can Lower Insurance Premiums for All
By MARGOT SANGER-KATZ
A new government study finds that middle-class people paid less for health insurance in states that offered Medicaid to the poor.
A branch of ITT Technical Institute in Tampa, Fla.
ITT College Chain Barred From Enrolling Students With U.S. Aid
By GRETCHEN MORGENSON
The for-profit chain also faces a series of other measures, including a payment of $153 million to the Department of Education.
Gov. Jerry Brown of California in Sacramento on Wednesday, discussing a measure to extend the state’s landmark climate change law.
California’s Emissions Goal Is a ‘Milestone’ on Climate Efforts
By JENNIFER MEDINA AND MATT RICHTEL
Lawmakers passed, and Gov. Jerry Brown promised to sign, bills requiring the state to reduce greenhouse gas emissions to 40 percent below 1990 levels.
The Great Unraveling
By THE WALL STREET JOURNAL
After more than a decade of economic disappointment, the Federal Reserve confronts hardened public skepticism and growing self-doubt about its own understanding of the United States economy.
Europe Plans News Levy on Search Engines
By THE FINANCIAL TIMES
Under copyright reforms being finalized by the European Commission, European news publishers will be given the right to levy fees on internet platforms like Google if search engines show snippets of their stories, according to officials.
Inspectors in Yangpyeong, South Korea, on Friday examined the car owned by Lee In-won, the vice chairman of the Lotte Group. Mr. Lee’s body was found on Friday and a note was recovered from inside the car.
South Korean Executive Dies Before Questioning in Corruption Inquiry
By CHOE SANG-HUN
The body of the vice chairman of the Lotte Group, Lee In-won, was found on Friday in what the authorities were said to consider a suicide.
Ahmed Mansoor, a prominent human rights activist in the United Arab Emirates, has been tracked by surveillance software several times.
IPhone Users Urged to Update Software After Security Flaws Are Found
By NICOLE PERLROTH
Apple has patched its mobile operating system after investigators found flaws that were exploited to spy on dissidents and journalists.
Jan Koum, one of the founders of the WhatsApp mobile messaging service. When Facebook bought WhatsApp in 2014, Mr. Koum vowed that the deal would not affect the digital privacy of the service’s millions of users.
Relaxing Privacy Vow, WhatsApp Will Share Some Data With Facebook
By MIKE ISAAC AND MARK SCOTT
The mobile messaging service, which Facebook bought in 2014, says it will disclose users’ phone numbers and analytics data.
Theranos Will Appeal Regulatory Sanctions
By THE WALL STREET JOURNAL
The blood-testing company plans to appeal a decision by regulators to revoke its license to operate a lab in California.
 


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Short Sellers
Muddy Waters Claims a Firm’s Pacemakers Are Vulnerable to Hackers
By THE FINANCIAL TIMES
The hedge fund Muddy waters claimed that devices made by St Jude Medical are vulnerable to hackers, the first time a short seller has publicly used cyber security vulnerabilities to put pressure on a stock to fall.
Hong Kong Tribunal Says Short Seller Guilty of Misconduct
By BLOOMBERG
A Hong Kong tribunal said that Andrew Left, an American short seller, was guilty of misconduct over a report that Citron Research Firm published about a stock listed there.
 
Business
Jay S. Fishman before a speech at the United States Chamber of Commerce in Washington in 2010.<br /><br />
Jay Fishman, Who Led Travelers in Fiscal Crisis, Dies at 63
By NATASHA SINGER
He weathered the recession by investing Travelers’ insurance premiums in stable vehicles, like fixed-income securities.
William Pickens III, 80, has lived in Sag Harbor Hills, a subdivision of the Long Island village of Sag Harbor, for 66 years. Some residents have grown wary of an increasing number of investors sweeping up properties in the area.
Investors Move Next Door, Unsettling a Black Beachside Enclave
By JOHN LELAND
Residents of Sag Harbor’s African-American neighborhoods on Long Island worry that an influx of investors who are sweeping up properties will forever alter the community’s character.
Cyclists in a group formed by Greg Gretsch of Jackson Square Ventures paused during a ride through the Marin Headlands near San Francisco.
Cycling Matches the Pace and Pitches of Tech
By SARAH MAX
In the highly competitive and communal tech industry, cycling is taking the place of golf as both an individual obsession and a camaraderie builder.
Frank Ocean’s ‘Blonde’ Amplifies Discord in the Music Business
By BEN SISARIO
The album’s release, through an exclusive deal with Apple, surfaced long-simmering tensions between record labels, streaming services and artists.
Jim Yong Kim in June.
World Bank President Jim Yong Kim Is Nominated for a Second Term
By JACKIE CALMES
Despite persistent complaints from staff members about Jim Yong Kim’s leadership, the United States has tapped him for another five-year term.