Business News at a Glance
Posted July 16, 2018 10:43 p.m. EDT
The Astonishingly High Administrative Costs of U.S. Health Care
As anyone who has glanced at a hospital bill can attest, U.S. health care costs are high. A study published in The New England Journal of Medicine estimated that about 30 percent of U.S. health care expenditures were the result of administration, about twice what it is in Canada. A more recent study found that U.S. hospital administrative costs were over 25 percent of total spending on hospital care, exceeding that of seven other places — Canada, England, Scotland, Wales, France, Germany and the Netherlands. Canada and Scotland were at the low end, both spending about 12 percent.
In Blow to Sinclair, FCC Chief Says He Has ‘Serious Concerns’ With Tribune Deal
The Sinclair Broadcast Group’s plan to buy Tribune Media for $3.9 billion was dealt a potentially crippling blow Monday. Federal Communications Commission Chairman Ajit Pai said he had “serious concerns” and wants a judge to review aspects of the deal. The purchase could put Sinclair in control of broadcasters reaching 7 in 10 households across the country. Rules forbid a single company to control airwaves that reach such a large swath of the nation, so Sinclair proposed selling off 23 stations. But Pai said certain divestitures "would allow Sinclair to control those stations in practice ... in violation of the law.”
Prolonged Trade War Could Set Off a Market Slide, BlackRock’s Fink Says
BlackRock CEO Laurence D. Fink warned Monday that a sustained trade war could cause markets to tumble. During a discussion of the fund manager's second-quarter earnings, Fink said that investors in Europe and the United States were either withdrawing money from the markets or choosing not to increase their positions substantially. "If we do see these tariff increases come to pass and if they are sustained over time, I think it would be proper to recalibrate forecasts of GDP and earnings growth,” he said. “And then the markets would probably fall.”
Are False Statements Enough to Prove Fraud?
The Supreme Court will soon take up whether false statements are enough to prove a person engaged in a scheme to defraud. The justices’ decision in Lorenzo v. Securities and Exchange Commission could result in cutting back the scope of the primary federal securities fraud prohibition and affect how the SEC pursues cases. Francis V. Lorenzo, the director of investment banking at a brokerage firm, sent emails to investors of an energy company's bond issue but failed to disclose its technology was not working. The SEC found that Lorenzo had violated the rule and barred him from the securities industry.
Uber Is Target of Federal Sex Discrimination Inquiry
Federal officials are investigating allegations that Uber discriminated against women in hiring and pay, another federal inquiry into a company that has been rocked by scandals. Sources said the Equal Employment Opportunity Commission is examining whether Uber systematically paid women less than men and discriminated against women in the hiring process, among other matters. The Wall Street Journal first reported the investigation. Last week, The New York Times reported that Uber’s new chief operating officer was under scrutiny for making racially insensitive comments, while its chief people officer resigned amid accusations she improperly handled complaints of racial discrimination.
Netflix, the Stock Market’s Big Hope, Disappoints
Netflix disappointed investors with news that it added fewer subscribers in the second quarter than expected. The company’s stock, which had more than doubled this year, plunged 14 percent after the close of regular trading. Netflix had forecast that it would add 1.2 million new U.S. subscribers in the second quarter, but it signed up only 674,000. Internationally, the company gained 4.5 million new subscribers, below Netflix’s expectations for 5 million. While its revenue and profits are still surging, the shortfall in subscriber growth is a reminder that companies priced for perfection can disappoint when optimism seems at a peak.
Deutsche Bank Surprises Investors With Estimate-Busting Profit
Deutsche Bank, Germany’s biggest lender, surprised investors Monday when it announced that it expected to report about 400 million euros ($467 million) in profit for its second quarter. That is more than double the 159 million euros that analysts had been expecting. Shares in the bank were up nearly 7 percent in afternoon trading in Europe, at 10.28 euros. The earnings preview — mandated by German financial rules because of the gap between estimates and reality — suggested a promising start for Deutsche Bank’s CEO, Christian Sewing, who has only been in the job since April.