DOJ Sues AT&T, DirecTV for Collusion



AT&T and DirecTV are the targets of an antitrust lawsuit recently filed the U.S. Department of Justice for their involvement in an unlawful plot that kept the Los Angeles Dodgers’ channel off air.

DirecTV, and its parent company AT&T, unlawfully shared private negotiation information with rivals such as Cox Communications and Charter Communications in 2014 in order to gain collective competitive advantage, according to the DOJ suit filed in the District Court for the Central District of California on Wednesday.

The pay TV provider, which was acquired by AT&T in 2014, provided sensitive information to these direct competitors to help them in their negotiations with the Dodgers’ SportsNet LA, a channel which has exclusive rights to almost all live telecasts of the baseball team in the LA area.

The Justice Department said these companies shared information on whether or not to carry the channel so as to have an upper hand over Time Warner Cable, which sold licenses to other networks for them to air the channel. The pay TV providers hoped to gain bargaining leverage by ensuring other companies would not carry live Dodgers games, so customers wouldn’t have to switch providers.

Many people in the Los Angeles area are without access to the Dodgers Channel – as many as 3 million homes, according to the Washington Post.

“Dodgers fans were denied a fair competitive process when DirecTV orchestrated a series of information exchanges with direct competitors that ultimately made consumers less likely to be able to watch their home team,” DOJ Deputy Attorney General Jonathan Sallet said in a release. “Competition, not collusion, best serves consumers and that is especially true when, as with pay-television providers, consumers have only a handful of choices in the marketplace.”

DirecTV, which was acquired by AT&T in a $49 billion deal, was described as the mastermind of the entire plot. Its chief content officer Daniel York was alleged to have intentionally traded information with Cox and Charter to cut the price TV providers would have to pay to air the Dodgers Channel. The DOJ said review of internal communications indicated CEO Mike White felt the companies could “have more leverage if we all stick together.”

Time Warner Cable, which paid $8.35 billion in 2013 for rights to air Dodgers games for 25 years, initially wanted to charge TV networks $4.90 a month per subscriber for licenses to air games of the LA Dodgers. It was forced to reduce the price to $3.50 in March as a result of opposition from pay TV providers, including DirecTV.

SportsNet LA is still not being aired on AT&T, DirecTV and Cox. But the channel is now available on Charter, which bought Time Warner Cable last year.

In a statement released after the announcement of the DOJ suit, AT&T defended its decision not to air Dodgers games. Its general counsel David McAtee said no other major pay-TV provider was ready to “force all their customers to pay the inflated prices that Time Warner Cable was demanding for a channel devoted solely to LA Dodgers baseball.”

The DOJ suit is a distraction AT&T could do without at a time it is trying to get regulators’ approval of its takeover of Time Warner. The telecom giant has argued that the illegal information sharing was done before it bought DirecTV.

Growing Number of Families Using Payday Loans to Buy Christmas Gifts


Christmas gifts

When people use payday loans, they primarily utilize the short-term, high-interest funds to cover a lighting bill, pay for an automobile repair or replace a broken down refrigerator. Although there might be a small number of borrowers who use it for shopping, a vast majority need the quick cash for financial emergencies and unforeseen events.

But, this year, many families are using payday loans for the wrong reason: Christmas shopping.

According to a new study from T. Rowe Price, a growing number of households are taking out payday loans and raiding savings accounts to ensure that they get everything their children want for Christmas and to show people that they are not an Ebenezer Scrooge when the holidays make their return.

The survey found that 25 percent of parents used a payday loan or withdraw from retirement or emergency savings accounts for Christmas last year. This is the worst thing you could for your net worth.

And most realize the errors of their ways. Nearly two-thirds (64 percent) felt remorseful that they spent more than they budgeted for; half concede they never meet their holiday budget.

Indeed, it does make sense that these people are using instant financing businesses because they are spending between $400 and $500 on gifts per child this year; most households in the United States, Canada or the United Kingdom are living paycheck to paycheck.

It isn’t just payday loans that parents are taking advantage of. They’re also pulling out their credit cards, whether it’s at the store or online. This isn’t any better because it takes three months to pay back.

You may personally scoff at these findings, but no one wants to be viewed as a Scrooge, says Marty Allenbaugh, a financial planner, who argues that you need to have a balanced approach.

“Between our inclination to be generous during the holiday season and the blockbuster retail deals, playing Santa can be kryptonite for even the savviest budgeters,” Allenbaugh told M2Now.

“But splurging a little shouldn’t turn into indulgence at the expense of financial well-being. Retirement accounts are meant to fund retirement. Emergency funds are meant to fund emergencies. Payday loans should be the last of last resorts. Nothing that comes wrapped in a ribbon is worth the consequence of bending these rules.”

Allenbaugh added that Christmas can come with a financial and an opportunity cost. This means that you can prioritize and make trade-offs, which can then teach kids important money lessons “that are missed if parents take an everything-or-bust approach to holiday shopping.”

Financial experts and payday loan businesses often warn that using a payday loan primarily for shopping is the worst thing you could ever do in both the short- and long-term. This is especially important for those who can borrow an immense sum of funds that are more than what they can afford.

Unfortunately, it’s these types of stories that are hurting the overall payday loan industry.

Critics argue that payday loans send borrowers into debt cycles and debt traps, but sometimes it’s the consumers who get themselves into pecuniary difficulties because they wanted to spoil their kids at Christmas time. The opponents are given more ammunition, while the proponents of this alternative financial product are left scratching their heads at the lack of personal responsibility.

Credit Suisse Profit Beats Estimates, But Outlook Remains “Challenging”


Credit Suisse

Credit Suisse fared better than analysts expected in the third quarter by posting a surprise profit, but its CEO warned that tough times are still ahead.

Net profit for the quarter came in at 41 million Swiss francs ($42 million), the Zurich, Switzerland-based lender said on Thursday. It was significantly down from $779 million francs posted in the same period a year, but it smashed expectations of analysts.

Analysts polled by Reuters had predicted a loss of 120 million francs.

The unexpected profit, the second in successive quarters, was mainly attributed to the sale of a historic building near the bank’s Zurich headquarters as well as reduction in costs. The lender reported a gain of 346 million francs from the sale of real estate and a 5 percent drop in operating expenses.

Chief Executive Officer Tidjane Thiam has been working to shift the bank’s focus away from investment banking to wealth management business, which has been receiving good inflows, since assuming the position last year. But like other lenders in Europe, Credit Suisse has been hurt by low and negative interest rates, which have suppressed revenue growth.

Revenue slumped 10 percent to $5.4 billion. The Swiss bank’s investment banking divisions saw its net revenue dip to 2.4 billion francs, down 6.5 percent from the year before.

“Looking ahead, we expect market activity to continue to be influenced by geopolitical and macro-economic uncertainty over the next several quarters and the outlook to remain challenging,” Thiam said in a statement.

The bank’s shares were down about 4 percent Thursday morning following the announcement of the results.

Investors think Credit Suisse still has a lot of work to do to guarantee steady profits despite impressive inflows in its wealth management unit. Analysts observed that net margins have been dropping since the beginning of the year.

Analysts at Morgan Stanley pointed out Credit Suisse’s return on tangible equity which stood at 0.4 percent during the quarter, compared to 8.9 percent a year ago.

The bank said it has cut 5,400 jobs out of the 6,000 targeted in its restructuring plan. It had announced in March that it was shedding 2,000 more positions in its investment banking division. Total head count in the third quarter dropped 1 percent.

The private banking division’s net new assets plunged to 200 million francs, from 3.1 billion francs a year ago, with greater emphasis now placed on the International Wealth Management unit.

Credit Suisse is also planning to sell up to 30 percent of its subsidiary in Switzerland to raise as much as 4 billion francs next year.

The wealth management operations of the bank posted a 24 percent jump in pretax profit during the third quarter, although net revenue declined by 1 percent.

Credit Suisse set aside additional 357 million francs to cover legal costs, mainly resulting from mortgage-backed securities cases. This follows similar action by fellow Swiss bank UBS which last week raised its legal reserves by $417 million to cover possible penalties from similar cases.

The bank said its common equity Tier 1 capital ratio, which is considered an important measure of capital strength, climbed to 12 percent in the third quarter, up from 10.2 percent a year earlier.