Amazon snags 15% of the Yankees (network)

Friday, August 30, 2019 by Robinhood Snacks | Disclosures

When Amazon buys a sports channel

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Hey Snackers,

Invites to Apple's iPhone 11 reveal next month just went out. We didn't get one either. We're relaxing until Tuesday for Labor Day Weekend to get over it.

Stocks continued the rebound Thursday as China signaled it didn't want to escalate the trade war further.

1. Disney sells YES Network to the Yankees, Sinclair, and *Amazon*

Now batting, for the New York Yankees... Jeff Bezos. In one of the final chapters of the Disney-acquires-Fox saga, Disney officially sold the YES Network Thursday to the NY Yankees, Sinclair Broadcast Group, Amazon, and some other investors. Here's what they're buying:

  • YES is the TV channel with rights to broadcast the Yankees, Brooklyn Nets, NY Liberty, and NYC FC teams.
  • And it's worth $3.7B because New York sports have global appeal despite local frustration.

This Disney & Fox deal goes way back to 2017... That's when Mickey started a bidding war against Comcast to acquire 21st Century Fox, which included X-Men, Fantastic Four, The Simpsons, Avatar, 22 regional sports networks, and the YES Network. The Justice Department allowed the merger on 1 big condition:

  • The requirement: Disney can add all those big names, but only if it sells the sports channels and YES — otherwise it would have too much media power.
  • Sports translation: LeBron and Kobe can be on the same team, but only if they trade away Steph to another one.

Amazon's now the proud 15% owner of YES Network... It hasn't said what it will do with that — But we're all hoping for the Yankees to be a #PrimePerk. Amazon Prime Video has already done deals with the NFL's Thursday Night Football and the Premier League. CEO Bezos won't offer up details yet, but it's already generating HQ2-style speculation.


Because you need that fall transitional cropped sweater ASAP... "fast fashion" became a thing: it's the art of catching new trends and pumping out styles quick with efficient supply chains — and the big 3 have been H&M, Zara, and Forever 21. Now Forever 21 and its satin belted 800 stores are reportedly filing for bankruptcy.

Travel back to 1984... Mock turtlenecks were in and a South Korean immigrant couple with $11K founded a store in LA committed to chambray, bomber jackets, and anything that had staying potential (fyi, Forever 21 is still private — you can't buy the stock). That fast fashion trend it rode hit a peak this decade, but now the leaders are feeling pains. Fast.

  • H&M lost half its market value in just the last 5 years — and it's stuck with $4.3B in unsold clothes, some of which it burns to get rid of.
  • Zara just missed full-year earnings expectations.
  • Fast fashion has now faced the f-word: "Fad" — it's become one.

Fast Fashion's losing to its opposite... sustainable fashion. Sure, Forever 21 is also dependent on physical stores and malls that are struggling — but overall, the used fashion industry is now suddenly expected to pass the fast fashion one within a decade. Here's who's out-dressing fast fashion:

  • Rent the Runway literally rents you daily clothes now (not just fancy wedding weekend gowns).
  • Urban Outfitters launched its own rental copycat look.
  • Stitch Fix sends monthly boxes and uses AI to better tell what you'll actually like (and not waste).
  • TheRealReal IPO'd this year committed to reusing and reselling that authentic Gucci getup so it doesn't end up in a landfill.

Free bread's not enough... The CFO of Panera told CNBC that he's suffering through 100% employee turnover every year. With 100K employees, this stat means the carbo-loaded chain needs to hire 100K people every year because about 100K quit every year. Let that sink in. And get this:

  • The "turnover rate" is even higher in the rest of fast food — up to 150%.
  • That means more than 1 person quits from the same position each year, and the company just has to keep on rehiring.

Different industry, same problem... To keep employees from leaving, Citigroup just increased its minimum wage to $15/hour, finally catching up with Wells Fargo ($15/hour), but still trailing JP Morgan ($15-18) and Bank of America ($20).

  • High turnover is driven by our ridiculously low unemployment rate (3.7%) that puts workers in high demand, more able to switch jobs and make more money.
  • The response is to do nothing or pay more to preempt a cook from bouncing to Chipotle for an extra buck or two an hour.

Companies can save money by paying workers more... To replace a Panera employee, it has to hire (+ paperwork/interviews), train (that takes time), and wait until the worker is actually good (many mis-flipped eggs later). Paying more could prevent those costs by keeping workers around. But wages are still not growing fast on average, forcing some states to push minimum wage increases.

What else we’re Snackin’
  • Future: Nike unveils a new shoe that can tighten when you tell Siri to make that happen
  • eSafe: Tesla announces a new car insurance product for its drivers
  • Un-popped: Abercrombie plummets 15% because of the tariffs about to hit footwear and apparel
  • Huge: Saudi Aramco, the not-yet-publicly-traded massive oil company, is considering a 2-part IPO in Hong Kong and London — but geopolitical issues in both may completely change that
  • GDP: The US economy continued its 11-year expansion by growing at a 2% rate last quarter, a tad below the 3.1% we enjoyed in the 1st quarter
Snacks Daily Podcast

More on fast fashion losing to sustainable fashion, the Yankees trade deal, and the minimum wage paradox

  • The Consumer Sentiment poll tells us how we're all feeling about the economy right now
  • Earnings from Campbell Soup
  • FYI, markets are closed Monday for Labor Day, so we'll be back in your inbox Tuesday morning

Disclosure: Authors of this Snacks own shares of Amazon and Tesla


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