T-Mobile Prepares to Take on Cable and Satellite TV Providers

T-Mobile has spent the past four years attacking wireless industry rivals to great success. But the wireless industry is not growing as fast as it once was, so the carrier has focused on an entirely new market: the $100 billion cable and satellite TV business. The public kickoff of the effort came when T-Mobile recently announced it was acquiring a startup TV service in Denver called Layer3 TV. The carrier plans to use some of Layer3’s technology and relationships with TV programmers to launch its own nationwide cable competitor next year. Taking on the entrenched cable monopolies will not be easy, but no one should underestimate the carrier and its CEO John Legere considering T-Mobile’s prior success in wireless. The cable market “looks a lot like wireless from a few years ago,” Legere said recently.

T-Mobile has not announced exact details about what will be included in its TV service or how much it will charge, but it has given some general outlines. The new service will be a hybrid between a traditional cable TV subscription from Comcast or Charter, and Internet-based services like Dish Network’s Sling TV, or Google’s YouTube TV.

T-Mobile says it wants to offer something like Layer3 TV’s current 256 channel service, and not a so-called skinny bundle that features fewer channels like plans from the Internet players. T-Mobile’s service will also integrate popular Internet streaming services like Netflix and Hulu. T-Mobile also plans to offer multiple options to add channels, instead of just one or two packages. But just like the streaming services, T-Mobile’s will also be delivered online, not through dedicated cable wires.

Many cable competitors have come and gone over the years, done in by the expense of wiring every customer’s home. Verizon’s Fios service largely stopped expanding years ago and the carrier sold off a big chunk of the business in 2015. Google also found it costlier than expected to roll out its Fiber service, and has cut back on expansion. Both companies are looking at shifting to cheaper wireless delivery in the future.

T-Mobile says that by relying on Internet-based delivery, it will not need to wire millions of homes with new connections. Customers will be able to use whatever provider they have. “It will work on your Comcast Internet connection,” chief operating officer Mike Sievert says. The carrier also plans to leverage its base of 71 million wireless subscribers and 16,000 retail stores to help attract customers. And in addition to the usual service fees, T-Mobile sees the possibility of selling TV ads using targeting technology that is more precise than what is possible through cable networks. Whatever the cost of rolling out the new TV service, the carrier said it is not changing its three-year forecast for increasing its free cash flow by 45% to 48% annually.

Layer3 TV will continue providing its service in the handful of markets where it already operates. All of the company’s employees will join T-Mobile, including CEO Jeff Binder and two key cable industry veterans, chief content officer Lindsay Gardner and chief technology officer Dave Fellows. Gardener, a 30-year industry veteran, led sales, marketing and distribution at Fox Network before joining Layer3, while Fellows was the chief technology officer at Comcast, where he helped develop the “triple play” bundle.

The Federal Communications Commission this week is expected to gut its 2015 rules that protected Internet services like T-Mobile’s new TV offering from being blocked, slowed, or otherwise discriminated against. T-Mobile executives dismissed concerns that the lack of net neutrality protections would be a problem. “We’re not worried about that,” COO Sievert said. But cable TV providers are also the leading providers of home Internet service. Though they likely could not get away with blocking the T-Mobile service outright, they could make life hard on the competition by imposing data caps on customers, charging extra fees or degrading the quality of video delivered over the Internet.


  1. http://for.tn/2AIzPZW – Fortune
  2. http://tcrn.ch/2o38BHI – Tech Crunch

Hollywood Revamps its Insurance for Actors Who Behave Badly

The Sony film All the Money in the World seemed to have everything going for it: a gripping story about the kidnapping of John Paul Getty III; an experienced director in Ridley Scott; and a bankable cast including Mark Wahlberg, Michelle Williams—and Kevin Spacey as Getty’s grandfather. Then, accusations by actor Anthony Rapp of sexual misconduct by Spacey 31 years earlier, when Rapp was 14, prompted Sony Corp. and Scott to drop the Oscar winner from the cast in November, even though the film had already been shot and the trailer had been viewable for weeks online. Imperative Entertainment LLC, which produced the film, proceeded to spend $10 million—a quarter of the movie’s original budget—to hire Christopher Plummer as a replacement and reshoot Spacey’s scenes. “You can’t tolerate any kind of behavior like that,” Scott told Entertainment Weekly. “We cannot let one person’s action affect the good work of all these other people.”

Ever since the New York Times published an exposé on Oct. 5 about women charging Harvey Weinstein with sexual assault and harassment, Hollywood has seen a barrage of claims involving prominent actors, producers, and executives. While studios have always had to deal with talent on occasion overindulging or landing in some peccadillo, the number of incidents, along with risk that now goes back decades, is forcing some in Hollywood to reconsider how they do business.

“How do you insure for the whole of someone’s life?” asks Steve Ransohoff. His company, Film Finances Inc., originated the business of selling completion bonds, which kick in to pay for a movie that’s blown through its funding and is in danger of not being finished. He has backed independent films and blockbusters such as La La Land and Slumdog Millionaire, a best picture Oscar winner.

Ransohoff says the industry is looking at a new insurance product that would cover producers and distributors if a scandal emerges, whether during production or after a film has wrapped. This would go beyond standard employment-practices liability insurance and cast insurance—the latter pays out when an actor dies or leaves a production over an injury or illness. Brian Kingman, who leads a team of entertainment specialists at insurance brokerage Arthur J. Gallagher & Co., says his phone has been ringing off the hook with TV and movie executives looking for a solution. What the industry needs, he says, is an insurance product akin to the “death and disgrace” policies in the advertising world, which cover the cost of removing billboards or pulling TV spots when a spokesman can’t keep his hands off the bottle or the interns.

Kingman says he is talking to Lloyd’s of London and other underwriters about the product. Given the string of high-profile incidents, “the rates will be high, and carrier capacity will be limited,” he says. Lauren Bailey, global head of entertainment at insurer Allianz Global Corporate & Specialty, says the risks are daunting even for the insurers. “This area is very challenging to predict, as occurrences that happened over decades are now just coming to light.”

A contract term that is getting a second look is the so-called morals clause, which was first used after a sex scandal in 1920s Hollywood. It’s commonly used in contracts for athletes making endorsements but has not been used as widely in Hollywood. Such a clause would allow for a star to be instantly fired without pay if he or she engages in objectionable behavior, some entertainment lawyers and agents say. Additional provisions could be added to contracts to hold actors financially liable for their conduct. “We anticipate new contracts will place added emphasis on morals clauses and the language on all nondisclosure agreements will be highly scrutinized,” says Chris Silbermann, a managing director at talent agency ICM Partners.

For now, studios and their financial partners will probably be stuck haggling over who pays when calamity strikes. The Orchard, an independent film distributor based in New York, paid as much as $5 million for the rights to distribute Louis C.K.’s film I Love You, Daddy earlier this year. That was before the comedian was accused of sexually harassing fellow performers. The distributor canceled a scheduled November release. Louis C.K. agreed to buy back the film and reimburse the Orchard for as much as $1 million already spent on marketing. Says insurance specialist Kingman: “These are uncharted waters.”


  1. https://bloom.bg/2j4C1iY – Bloomberg
  2. http://bit.ly/2Co4skI Wikipedia

The Good News Is . . .

Good NewsU.S. retail sales increased more than expected in November as the holiday shopping season got off to a brisk start, pointing to sustained strength in the economy. The Commerce Department said that retail sales rose 0.8% last month. Data for October was revised to show sales gaining 0.5% instead of the previously reported 0.2% rise. Last month, sales at gardening and building material stores jumped 1.2% which helped to offset a 0.2% drop in receipts at auto dealerships. Retail sales were also lifted by a 2.8% gain in sales at service stations, which reflected higher gasoline prices. Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.8% last month. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

        • Costco Wholesale Corp., an international chain of retail membership warehouses, reported earnings of $1.45 per share, an increase of 16.9% over year-earlier earnings of $1.24 per share. The firm’s earnings topped the consensus estimate of analysts by $0.11. The company reported revenues of $31.1 billion, an increase of 13.3%. Management attributed the results to strong pre-Thanksgiving and Back Friday holiday sales.
        • The Walt Disney Company said that it had reached a deal to buy most of the assets of 21st Century Fox, the conglomerate controlled by Rupert Murdoch, in an all-stock transaction valued at $52.4 billion. The acquisition promises to reshape Hollywood and Silicon Valley and means Disney now has enough muscle to become a true competitor to Netflix, Apple, Amazon, Google and Facebook in the fast-growing realm of online video. Disney, which owns ABC and ESPN, hopes 21st Century will supercharge its plans to introduce two Netflix-style streaming services. As part of the deal, Disney will also get the FX and National Geographic cable networks, and stakes in two behemoth overseas television-service providers, Sky of Britain and Star of India.


        1. http://reut.rs/2Bm7HLL – Reuters
        2. http://cnb.cx/2lwnm3s – CNBC
        3. http://bit.ly/2B1n49O – Costco Wholesale Corp.
        4. http://nyti.ms/2o2hoJI – NY Times Dealbook

Planning Tips

Guide to Understanding Annuitization

Several decades ago, life insurance carriers began offering packaged annuity products to retirement savers as a form of insurance against superannuation—the technical term for outliving one’s income. One of the key benefits annuities offer is their ability to provide a guaranteed monthly payment to the beneficiary until death, even if the total payout exceeds the value of the contract. In order to obtain this guarantee, however, the contract must be annuitized. But before you choose this option, you should understand the mechanics of this process, as well as its long-term consequences. Below is a brief guide to annuitization. Be sure to consult with your financial advisor when considering the purchase or structuring of an annuity to be sure it is appropriate for your situation.

What is Annuitization? – Annuitization is a single, one-time event that occurs between the accumulation and payout phases in an annuity. When the contract owner is ready to begin receiving annuity payments, the insurance carrier converts the accumulation units in the contract into annuity units and computes a mathematical monthly payout based upon several factors, including the value of the contract, the projected longevity of the beneficiary or beneficiaries and the type of payout selected.

Your Financial Objectives – The reason to choose annuitization is for the payout to be a source of monthly income. Wealthy investors who use annuities as tax shelters will typically opt for other forms of distribution. The majority of annuity owners typically choose either a straight systematic withdrawal or say they do not expect to withdraw funds unless an emergency arises. A key factor to consider here is how much money you have saved in assets outside the annuity contract. If, for example, you have another $100,000 in liquid savings elsewhere, annuitization may be an appropriate choice because you have other assets to draw upon in the event of an emergency. It is obviously not wise to convert all your savings into an irrevocable cash flow, even if doing so would provide the greatest possible return on investment.

Your Life Expectancy – Annuitization offers different options, allowing you to figure in your estimated lifespan and whether the annuity needs to provide for your heirs. Needless to say, the financial consequences of substantially under- or over projecting one’s life expectancy can range from detrimental to devastating. For example, say you choose a straight life payout of some sort with no period certain. If you opt for that straight life payout, you will forfeit the unpaid portion of your contract back to the carrier if there was any principal left when you died. (Had you chosen a contract with a “period certain” clause, that option guarantees payouts for a specific term and would have continued to pay your heirs had you died before the payout period ended.) On the other hand, retirees who chose not to annuitize their contracts and make it past their life expectancies may outlive their savings. Improve your odds of making the right decision by researching your projected statistical longevity and comparing this with your own estimate based on such factors as your family’s medical history and your own current health and lifestyle. Annuitization is a godsend for those who substantially exceed their projected lifespans. Married couples who want a higher payout without the risk of forfeiture may come out ahead by taking a straight joint-life payout with no period certain of any kind and then purchasing a joint first-to-die term insurance policy that will pay out a tax-free death benefit to the survivor.

Alternative Forms of Withdrawal – Annuity owners who choose not to annuitize their contracts have several other options. They can simply liquidate their contracts at no cost if they are at least age 59½ and the surrender charge schedule on their contract has expired. They can also pass the entire amount in the contract on to their beneficiaries after their death if they do not need to take distributions while they are living. Income-benefit riders have become perhaps the most popular alternative to annuitization because they provide a guaranteed stream of income that often exceeds the actual accumulation value of the contract without locking the annuity owner into an irrevocable payout schedule. Contract owners will, therefore, receive a fixed monthly payment that still permits them to withdraw any remaining balance minus any applicable surrender charges or fees.

Get Help with Your Decision – Annuity owners have several factors to consider if they are contemplating whether to annuitize their contract. Current health and projected longevity must be analyzed, as well as their financial circumstances, risk tolerance and investment objectives—for example, the need for liquidity. Some annuity carriers are also starting to offer a measure of flexibility for withdrawal from annuitized contracts, such as allowing the distribution of future payments within the period certain. For more information on annuitization and payout options, consult your life insurance agent or financial advisor.


  1. http://bit.ly/2AHn15V – InvestingAnswers.com
  2. http://bit.ly/2yuF49r – TheBalance.com
  3. http://bit.ly/2o6vn1j – Investopedia
  4. http://bit.ly/2j4C7qQ -com
  5. http://bit.ly/2C9a551 –  com