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The $4.7 billion ruling against the NFL could shift power between the league and teams

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The NFL has rarely been a loser on the field, but a lopsided blowout in an antitrust lawsuit could change how the world’s richest sports league generates and distributes billions of dollars in revenue every year. 

A Los Angeles jury on Thursday sided with fans who claimed the league conspired with DirecTV to raise the price of subscriptions to watch games broadcast out of their team’s home market. The $4.7 billion in damages could be tripled under federal law.

That doesn’t mean the game is over.

The judge could potentially slash the verdict or even throw it out entirely and rule in the NFL’s favor. He didn’t look favorably on the fans’ arguments during the trial, and he dismissed the case back in 2019 before it turned into a class action. Post trial motions are set for July 31. 

“It’s a real serious problem, but there’s a long way to go,” said Patrick Crakes, a media consultant and former Fox Sports executive who helped to negotiate the network’s deals with the NFL. “As far as the bigger picture goes and the NFL’s place in the media landscape and their value, it’s not going to stop them. They are going to keep rolling on.”

If the verdict stands, the NFL said it will appeal all the way to the Supreme Court, prolonging a case that dates back to 2015. The Mucky Duck bar in San Francisco filed the original lawsuit, arguing that the NFL’s Sunday Ticket forced viewers to pay for out-of-market games even when their team wasn’t playing — and charged high prices for it. In other words, as a fan you must buy the rights to every game on a Sunday, not just when your team plays.

The jury took less than a day of deliberations to decide that was unfair. The verdict is a shock to how sports are offered to consumers, and a major blow to the NFL, so used to having the Midas touch. Even though it will appeal, the league has to plan for the potential costs of losing.

It’s hard to know how much cash the NFL has. As a private company, it doesn’t share its finances. Back in 2010, NFL Commissioner Roger Goodell set a revenue target of $25 billion by 2027. 

Right now, one way to estimate the NFL’s revenue puts it at about $12 billion, according to the annual statement of the Green Bay Packers, the only NFL team that publishes its finances. Each of the 32 teams get the same amount from the NFL, and the Packers got $374.4 million in 2022, the last available figures.

FIFA, the world soccer body, is the only other sports organization that competes with the NFL in terms of money, at least during a World Cup year. It made over $6 billion from the Qatar World Cup in 2022. It has about $4 billion in cash reserves.

If FIFA has that much cash, you can assume that the NFL at least has the ability to save up and pay the verdict, but it will take some time. So will the appeal.

Power Shift

The next issue – assuming the verdict isn’t overturned — could be a power shift between the NFL and its teams.

The NFL has kept its members happy by signing massive TV deals that makes everyone rich. The NFL will get $110 billion from its 11-year TV deal signed in 2021.

The NFL has always been special. In 1961, congress passed the Sports Broadcasting Act, after a US district court ruled the NFL was breaking antitrust rules by pooling rights in a deal with CBS.

The Act allowed the NFL to bundle all the teams’ rights together to make the league economically viable. But the Act focused on broadcast deals, while the Mucky Duck lawsuit focused on whether the NFL broke antitrust laws with the Sunday Ticket package offered by DirecTV, a satellite provider.

If the verdict stands, teams could be granted the opportunity to sell their local rights and out-of-market games on cable or even a streaming service. The temptation could be strengthened if the NFL tried to pass on the cost of the fine to each team — a potential hit that could be anywhere from $150 million to $450 million.

“Ultimately, it’s a free market, and the hope is that it will create more opportunity for people to view the NFL product,” said Sarah Hartley, a sports law lecturer at the University of Virginia School of Law and a partner at Bryan Cave Leighton Paisner. But she also cautioned that legal process is far from over.

YouTube

Starting in 2023, YouTube replaced DirecTV as the home of Sunday Ticket. It pays the NFL $2 billion a year and it charges customers $349. Even though the case didn’t involve YouTube, it’s hard to tell if the streaming platform will be better off giving more money to a team with a bigger fan base, and viewers. It’s also hard to know whether team owner thinks they can strike a better deal on their own.

Dallas Cowboys owner Jerry Jones admitted as much during the trial. “I’m convinced I would make a lot more money than the Bengals,” he said on the stand. It got some laughs.

Jones is arguably the architect for the NFL being funded by TV revenues. Back in 1992, CBS and NBC actually lost money on NFL broadcasts. The NFL broadcast committee wanted to give the networks millions in rebates. Jones said no, brought in a new network called Fox, and started a bidding war.

When Jones fought back against the rebate, he was a new owner after buying the Cowboys in 1989 for $140 million. It’s now worth billions. There are now new owners looking to make their own mark.

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Hong Kong’s IPO market is set to improve over the next five years

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Hong Kong Exchanges and Clearing celebrates the 24th anniversary of its listing on June 21, 2024.

China News Service | China News Service | Getty Images

BEIJING — The market for initial public offerings in Hong Kong is set to improve significantly over the next five years, starting in the second half of this year, George Chan, global IPO leader at EY, told CNBC in an interview Wednesday.

“I think it will take a couple years to go back to the peak [in 2021] but the trend is there,” Chan said. “I can see the light at the end of the tunnel.”

High U.S. interest rates, regulatory scrutiny, slower economic growth and U.S.-China tensions have constrained Greater China IPOs in the last three years.

EY said in a report that while the volume of IPOs and proceeds in the U.S. increased significantly in the first half of 2024 compared to the same period a year ago, mainland China and Hong Kong saw a sharp decline in listings.

Many of the macro trends are now starting to turn around, which can support more IPOs in Hong Kong, said Chan, who is based in Shanghai.

“We are seeing a reversing trend,” he told CNBC. “We are seeing more of these [U.S. dollar] funds, they are moving back to Hong Kong. The main reason is that Hong Kong has already factored in these uncertainties.”

The Hang Seng Index is up more than 5% year-to-date after four straight years of decline — which was the worst such losing streak in the history of the index, according to Wind Information.

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“Our HK cap markets team is very busy and has a strong pipeline for H2.  We expect to see many HKSE listings,” Marcia Ellis, global co-chair of private equity practice at Morrison Foerster in Hong Kong, said in an email Wednesday.

Many companies that were waiting for a listing in mainland China’s A share market have decided to switch to one in Hong Kong, she said. “Previously [China Securities Regulatory Commission] approval was slowing things down but recently our team has gotten CSRC approvals pretty quickly.” 

In June, China issued new measures to promote venture capital, and authorities spoke publicly about supporting IPOs, especially in Hong Kong. Investors and analysts said they are now looking at the speed of IPO approvals for signs of a significant change.

Chan said another supportive factor for Hong Kong IPOs is that many of the companies listed in the market are based in mainland China, where economic growth is “quite satisfactory.”

He expects consumer companies could be among the near-term IPO beneficiaries.

“As the economy slowly recovers, a lot of people in China are willing to spend,” he said, noting that was especially the case in less developed parts of the country.

Official national-level data have showed that retail sales are growing more slowly in China — up by just 3.7% in May from a year ago versus growth of nearly 10% or more in prior years.

Also significant for global asset allocation, the U.S. Federal Reserve and other major central banks are pulling back from aggressive interest rate hikes. High rates have made Treasury bonds a more attractive investment for many institutions instead of IPOs.

“I would say if the interest rate can be further cut down, 1% maybe, that would have a significant effect on the IPO market,” Chan said.

Hong Kong IPOs raised $1.5 billion during the first half of the year, a 34% drop from a year ago, EY said in a report released late last month. Back in 2021 and 2020, the Hong Kong Stock Exchange saw nearly 100 or more IPOs a year raising tens of billions of dollars, according to the report.

In comparison, mainland China IPOs raised $4.6 billion in the first six months of 2024 — a drop of 85% from the year-ago period, according to EY.

HKEX CEO aims for more large-scale IPOs this year

Bonnie Chan, CEO of Hong Kong Exchanges and Clearing Limited, said during a conference last week that so far this year, the Hong Kong exchange has received 73 new listing applications — a 50% increase compared to the second half of last year. She is not related to EY’s George Chan.

“The pipeline is building up nicely,” she said, noting about 110 IPOs in total are in line for a Hong Kong listing. “All we need is a set of good market conditions so these things get to launch and price nicely,” she added.

Improving post-IPO performance

“What we need is a strong pipeline,” EY’s Chan said. “We need an interested investor with the money to invest, and we need a good aftermarket performance.”

Hong Kong IPO returns are improving. The average first-day return of new listings on the Hong Kong stock exchange in the first half of 2024 was 24%, far more than the average of 1% in the same period last year, according to EY.

“The aftermarket performance of Hong Kong IPOs has been doing quite good compared to the past five years,” Chan said. “These things added together are projecting an upward trend for the Hong Kong market [in the] next 5 years.”

Chan said he expects the number of deals to pick up in the second half of 2024.

Goldman Sachs says it remains positive on Hong Kong capital markets activity

He said those will likely be medium-sized — between 2 billion Hong Kong dollars to 5 billion Hong Kong dollars ($260 million to $640 million) — but added he expects better market momentum in 2025.

Slowing economic growth and geopolitical uncertainty have also weighed on early-stage investment into Chinese startups.

Total venture funding from foreign investors into Greater China deals plunged to $19 billion in 2023, down from $67 billion in 2021, according to Preqin, an alternative assets research firm.

U.S. investors have not participated in the largest deals in recent years, while investors from Greater China have remained involved, the firm said in a report last month.

U.S. IPO outlook

As for IPOs of China-based companies in the U.S., EY’s Chan said he expects current scrutiny on the listings to be “temporary,” although data security rules would remain a hurdle.

In early 2023, the China Securities Regulatory Commission formalized new rules that require domestic companies to comply with national security measures and the personal data protection law before going public overseas. A China-based company with more than 1 million users must pass Beijing’s cybersecurity review to list overseas.

“As time goes on, when people are more familiar with the Chinese [securities regulator] approval process and they are more become comfortable with geopolitical tensions, more of the large companies … would consider [the] U.S. market as their final destination,” Chan said.

“When the time comes I think the institutional investors would be interested in these sizeable Chinese companies, as they pretty much want to make money.”

He declined to comment on specific IPOs, and said certain high-profile listing plans are “isolated incidents.”

Chinese ride-hailing company Didi, which delisted from New York in 2021, has denied reports it plans to list in Hong Kong next year. Fast-fashion company Shein, which does most of its manufacturing in China, is trying to list in London following criticism in the U.S., according to a CNBC report.



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Microsoft hack affected Veterans Affairs and State Departments, government says

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The US Department of Veterans Affairs and an arm of the US State Department are among a growing list of Microsoft Corp. customers that have acknowledged they were impacted by a breach of the technology giant that was blamed on Russian state-sponsored hackers.

The US Agency for Global Media, part of the State Department that provides news and information in countries where the press is restricted, was notified “a couple months ago” by Microsoft that some of its data may have been stolen, a spokesperson said in an emailed statement. No security or personally identifiable sensitive data was compromised, the spokesperson said.

The agency is working closely with the Department of Homeland Security on the incident, the spokesperson said, declining to answer additional questions. A State Department spokesperson said, “We are aware that Microsoft is reaching out to agencies, both affected and unaffected, in the spirit of transparency.”

Microsoft disclosed in January that a Russian hacking group it calls Midnight Blizzard had accessed corporate email accounts and later warned that they were attempting to use secrets shared between the technology giant and its customers. The company has declined to identify the customers who were impacted.

“As our investigation continues, we have been reaching out to customers to notify them if they had corresponded with a Microsoft corporate email account that was accessed,” a Microsoft spokesperson said on Wednesday. “We will continue to coordinate, support and assist our customers in taking mitigating measures.”

In addition, the Department of Veterans Affairs was notified in March that it was impacted the Microsoft breach, officials for the agency said.

A one-second intrusion

The hackers used a single set of stolen credentials — found in the emails they accessed — to break into a test environment in the VA’s Microsoft Cloud account around January, the officials said, adding that the intrusion lasted for one second. Midnight Blizzard likely intended to check if the credentials were valid, presumably with the larger intention of breaching the VA’s network, the officials said. 

The agency changed the exposed credentials, along with log-in details across their Microsoft environments, once they were notified of the intrusion, they said. After reviewing the emails that the hackers accessed, the VA determined that no additional credentials or sensitive email was taken, the officials said.

Terrence Hayes, the VA’s press secretary, said an investigation is continuing to determine any additional impact.

The Peace Corps was also contacted by Microsoft and notified about the Midnight Blizzard breach, according to a statement from its press office. “Based on this notification, Peace Corps technical staff were able to mitigate the vulnerability,” according to the agency. The Peace Corps declined further comment.

Bloomberg News asked other federal agencies for comment, and none of the others disclosed that they were impacted by Midnight Blizzard’s attack on Microsoft. Bloomberg previously reported that more than a dozen Texas state agencies and public universities were exposed by the Russian hack.

Midnight Blizzard, also known in cybersecurity circles as “Cozy Bear” and “APT29,” is part of Russia’s foreign intelligence service, according to US and UK authorities. 

In April, US federal agencies were ordered to analyze emails, reset compromise passwords and work to secure Microsoft cloud accounts amid fears that Midnight Blizzard may have accessed correspondence. Microsoft has been notifying some customers in the months since then that their emails with the tech giant were accessed by the Russian hackers.

The Midnight Blizzard breach was one in a series of high-profile and damaging security failures at the Redmond, Washington-based technology company, which has drawn strong condemnation by the US government. Microsoft President Brad Smith appeared before Congress last month where he acknowledged security failures and vowed to improve the company’s operations. 



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Lebanese farmers dig for answers on Israel’s white phosphorus use By Reuters

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By Maya Gebeily

Qlayaa, LEBANON (Reuters) – The last time Lebanese farmer Zakaria Farah stepped onto his fields outside the southern town of Qlayaa was in January – but it was not to plant. With shelling in the distance, he swiftly dug his hands into the soil to gather samples that could determine his family’s farming future.

After bagging up the earth, Farah, 30, sent half-a-dozen samples to a laboratory at the American University of Beirut (AUB) to be tested for residues of white phosphorus from Israeli shelling, hoping he’d learn whether he can plant his fields once hostilities end.

“I want to know what I’m feeding my son, what I’m feeding my wife, what I’m eating,” he told Reuters in June. “We’re afraid for the future of our land. What can we eat? What can we drink?”

Farah told Reuters he fears his fields have been poisoned by the Israeli military’s use of white phosphorus since October, when exchanges of fire erupted between Israel and Lebanese armed group Hezbollah in parallel with the Gaza war. He said there are dozens of farmers in south Lebanon as worried as he is.

According to the Lebanese National Council for Scientific Research, there have been 175 Israeli attacks on south Lebanon using white phosphorus since then, many of them sparking fires that have affected over 600 hectares (1,480 acres) of farmland. 

White phosphorus munitions are not banned as a chemical weapon and can be used in war to make smoke screens, mark targets or burn buildings – but since they can cause serious burns and start fires, international conventions prohibit their use against military targets located among civilians. 

Lebanon is a party to those international protocols, while Israel is not.  

In June, Human Rights Watch said it had verified the use of white phosphorus in at least 17 municipalities in southern Lebanon since October, including five “where airburst munitions were unlawfully used over populated residential areas.”

In response to questions from Reuters, the Israeli military said the “primary smoke shells” it used do not contain white phosphorus. It said smoke shells that do include white phosphorus can be used to create smokescreens, and that it “uses only lawful means of warfare.” 

According to a December report on Lebanon by the U.N. Development Programme, white phosphorus is extremely poisonous and poses “ongoing and unpredictable hazards due to its prolonged and difficult-to-control burning, creating serious risks to human health, safety, and the environment.” 

The agency said that soil quality in the conflict area of southern Lebanon had been affected by the spread of heavy metals and toxic compounds, with “white phosphorus usage further reducing fertility and increasing soil acidity.”

SOIL SCIENCE

Farah and other farmers estimate they have already lost up to $7,000 each in potential income, as continuing bombardment has made it too risky for them to plant or harvest the usual seasons of wheat, tobacco, lentils and other greens. 

Oday Abou Sari, a farmer from the southern town of Dhayra, said white phosphorus had also burned hay he had gathered for livestock and even plastic irrigation pipes across his fields. 

“I have to start all over – but first, I need to know if it’s safe for planting,” said Abou Sari. 

To find out if the white phosphorus has left a lasting impact on their soil, farmers are digging in – literally – and sending samples to Dr. Rami Zurayk, a soil chemist at AUB.

Zurayk developed a research protocol to collect and examine the samples. First, soil is gathered at various distances from the impact site, including a control sample from 500 meters away – which would not have been directly affected by the strike. 

Once in his lab, the soil is sifted, mixed with acid and exposed to high heat and pressure. A solution is added to show the concentration of phosphorus, with the intensity of colour in the result matching the concentration of the phosphorus. The sample is then compared to the control, which sets the benchmark of naturally-occurring phosphorus in the soil. 

“What we’re looking for is what happens to the soils and to the plants in locations that have received white phosphorus bombing. Does the phosphorus remain? In what concentrations? Does it disappear?” Zurayk told Reuters. 

His assistant, doctoral student Leen Dirani, told Reuters she had thus far tested samples from four towns this way – but they need more samples to “obtain a conclusive outcome.”  

But the steady pace of Israeli shelling on southern Lebanon – particularly agricultural fields that Hezbollah fighters are accused of using as cover – has made farmers unwilling to venture out to gather more samples. Some, like Abou Sari, have left Lebanon altogether. He is waiting out the war abroad and so for now is unable to obtain soil samples.

Others are documenting through video footage. Green Southerners, a collective of ecologists and nature lovers in Lebanon’s south, have filmed several incidents of shelling showing the tell-tale signs of white phosphorous attacks: dozens of streams of white bursting out of a munition over farmlands.

The group’s chairman Hisham Younes told Reuters the attacks’ “frightening density” amounts to ecocide – mass destruction of a natural environment by humans, deliberately or by negligence.

Given the possible impacts on soil, water reserves and even ancient trees, “we are talking about a profound injury to the natural system. The repercussions are multiplied,” Younes said.

Lebanon’s ministries of environment and agriculture are working with UNDP to determine the extent of those repercussions, and hope to use any documentation or lab results to stand up complaints to the United Nations.

© Reuters. Lebanese farmer Zakaria Farah, sits on his land during an interview with Reuters in Qlayaa, southern Lebanon June 12, 2024. REUTERS/Aziz Taher

“This is an act of ecocide, and we’ll take it to the U.N. Security Council,” Lebanese environment minister Nasser Yassin told Reuters. 

In response to questions from Reuters, the Israeli military said the accusation of ecocide was “completely baseless.” 





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