Good morning.
I’ve never been a huge fan of the AT&T-Time Warner deal. The potential synergies that could come from merging a mobile phone company and a content provider are intriguing. But the track record of giant companies successfully achieving such synergies is dismal. AT&T’s Randall Stephenson is an impressive CEO, but has his work cut out for him.
Having said that, the Justice Department’s decision to appeal its lost case against the merger feels like a waste of government time and money. By all accounts, the government got a fair and thoughtful hearing from Judge Richard Leon. And it lost, conclusively. As Judge Leon himself put it: “It has been a herculean task for all the parties and the Court. Each side has had its proverbial day in Court. The Court has now spoken and the defendants have won.” Not sure what public interest is served by refighting the battle on appeal.
If the Justice Department is interested in advancing case law on vertical mergers, it might better use its resources looking at the more pressing problem of how to regulate the tech giants in today’s winner-take-most economy. AT&T and Time Warner are yesterday’s story.
More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
Trump Diplomacy
President Donald Trump marked his arrival in the U.K. yesterday by knifing Prime Minister Theresa May in the front. He gave an interview in which he said May's soft Brexit strategy would make a free trade deal with the U.S. unlikely. Trump also said May's political rival, Boris Johnson—who resigned as foreign secretary on Monday in protest of the soft Brexit plans—would make "a great prime minister." Even some of May's political enemies are appalled at Trump's conduct. Fortune
Wilbur Ross
Commerce Secretary Wilbur Ross has admitted that he should have sold some of his holdings under ethics agreements, and will now sell all of his equity investments, investing the proceeds in Treasury bonds. "Your failure to divest created the potential for a serious criminal violation on your part and undermined public confidence," read a letter from the Office of Government Ethics. Wall Street Journal
China Surplus
China's trade surplus with the U.S. rose to a record-breaking $28.97 billion last month, with exports also reaching a record high of $42.62 billion. This may be down to a rush from manufacturers to sell their products before President Trump's tariffs kicked in, but either way, it does demonstrate what has so infuriated him. And, thanks to a slowing Chinese economy, the imbalance could get heavier. Bloomberg
J&J Damages
Johnson & Johnson has been hit with its biggest-yet penalty over the alleged link between its talc-based products and cancer, after a Missouri jury awarded 22 women $4.69 billion—$550 million in compensatory damages and $4.14 billion in punitive damages. J&J, which has previously had success overturning such rulings, will appeal. There are around 9,000 of these cases. Fortune
Around the Water Cooler
Northrop Grumman
Wes Bush is stepping down as CEO of arms trader Northrop Grumman, to be replaced by the company's president and COO, Kathy Warden. Bush has been CEO since 2010 and chairman since the following year—he will relinquish the former role at the start of next year, and the latter in July 2019. CNBC
Fossil Fuels
Irish lawmakers have advanced a bill that would make the country the first to completely divest from fossil fuels. If the bill passes into law, as expected, Ireland's $10 billion national investment fund will "as soon as practicable" rid itself of its stakes in coal, oil, gas and peat. NPR
Clutching at Straws
Plastic and Styrofoam bans could actually harm the environment, claim Utah State University grad student Camille Harmer and professor William F. Shughart II. They write for Fortune that manufacturing paper alternatives uses more fossil fuels and power, with the products being less recyclable. They also argue that small businesses would find the added costs burdensome, and that private recycling options are the best. Fortune
Vaping Pilot
On Tuesday, an Air China flight suddenly started an emergency descent, with oxygen masks released to terrified passengers. Why? Investigators think it was the co-pilot, who was trying to hide the fact that he was smoking an e-cigarette and accidentally turned off the plane's air supply from outside. BBC
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
