How AT&T Got Here, and What’s Next: Live Updates

AT&T is painting a rosy picture for the future of its media business, which it will spin off and merge with Discovery. That new streaming giant is a formidable stand-alone competitor to Netflix and Disney. The move leaves AT&T to focus on its telecom business, which looks less bright after being overshadowed by its expensive — and ultimately futile — deal-making binge in media and entertainment under its previous chief, Randall Stephenson.

The DealBook newsletter explains how AT&T got here, in three key deals:

• A $39 billion bid to buy T-Mobile. After regulatory pushback, in 2011 AT&T walked away from an effort to become the country’s largest wireless company. T-Mobile paired up instead with Sprint, and the two went on to buy huge amounts of spectrum in the high-stakes battle for 5G, leaving AT&T behind as it lobbies regulators to step in. The failed deal hit AT&T with a $3 billion dollar breakup fee, at the time the largest ever.

• The $67 billion acquisition of DirectTV. In 2015, AT&T bet on cable TV as a way to amass customers whom it could eventually convert to streaming. But DirectTV bled subscribers as customers cut the cord, and AT&T unloaded a stake in the company last year to TPG that valued DirectTV at about a third of its acquisition price. The deal also cost AT&T about $50 million in advisory fees, according to Refinitiv.

• The $85 billion acquisition of Time Warner. In 2018, Stephenson called the deal a “perfect match,” but the combined group struggled to invest in its telecom business while also spending enough to compete with the entertainment specialists at Netflix and Disney. Three years later, AT&T is now spinning off the company so it can (re)focus on its quest for 5G market share. AT&T paid $94 million in advisory fees to put the two companies together and an estimated $61 million to split them apart.

After all of that deal-making, AT&T is sitting on more than $170 billion in debt. As part of the deal with Discovery, AT&T will get $43 billion to help reduce its debt load. (The spun-off media business will begin its independent life with $58 billion in debt.)

AT&T also said it would reduce its dividend payout ratio — effectively cutting the amount it pays in half, according to Morgan Stanley. “You can call it a cut, or you can call it a re-sizing of the business,” said John Stankey, AT&T’s chief executive, in an interview. “It’s still a very, very generous dividend.” AT&T’s shares closed down 2.7 percent on Monday.

Market watchers expect the deal to kick off more consolidation among content providers as they race for scale to compete against another giant. Candidates include what John Malone, Discovery’s chairman, calls the “free radicals” — like Lionsgate, ViacomCBS and AMC, as well as NBCUniversal and Fox. Meanwhile, Amazon is in talks to buy another independent studio, MGM.

In a sign of the pressure that players face to spend big to bulk up, shares in Comcast, the telecom company that owns NBCUniversal, fell 5.5 percent on Monday.

Walmart reported a strong first quarter on Tuesday, as its e-commerce business continued to drive sales and customers were helped by stimulus checks.

The retail giant said its sales in the United States in the first quarter increased 6 percent to $93.2 billion, while operating profit grew about 27 percent to $5.5 billion.

“Our optimism is higher than it was at the beginning of the year,” Walmart’s chief executive, Doug McMillon, said in a statement. “In the U.S., customers clearly want to get out and shop.”

Walmart is among a group of larger retailers that have experienced blockbuster sales during the pandemic, particularly for online groceries. The company’s e-commerce sales increased 37 percent in the first quarter.

The question now is whether Walmart can continue its pace of growth as shopping habits start to normalize.

Mr. McMillon said although the second half of the year “has more uncertainty than a typical year, we anticipate continued pent-up demand throughout 2021.”

Sales in the company’s international division declined 8.3 percent in the first quarter, as Walmart divested from some of its subsidiaries in places like Japan and Argentina. The company’s total revenue increased 2.7 percent to $138.3 billion.

Walmart raised its financial guidance for the rest of the year, projecting “high single digit” growth in operating income in its United States operation, with sales up in the single digits.

Long working hours are leading to hundreds of thousands of deaths per year, according to a new study by the World Health Organization and the International Labour Organization.

Working more than 55 hours a week in a paid job resulted in 745,000 deaths in 2016, the study estimated, up from 590,000 in 2000. About 398,000 of the deaths in 2016 were because of stroke and 347,000 because of heart disease. Both physiological stress responses and changes in behavior (such as an unhealthy diet, poor sleep and reduced physical activity) are “conceivable” reasons that long hours have a negative impact on health, the authors suggest. Other takeaways from the study:

• Working more than 55 hours per week is dangerous. It is associated with an estimated 35 percent higher risk of stroke and 17 percent higher risk of heart disease compared with working 35 to 40 hours per week.

• About 9 percent of the global population works long hours. In 2016, an estimated 488 million people worked more than 55 hours per week. Though the study did not examine data after 2016, “past experience has shown that working hours increased after previous economic recessions; such increases may also be associated with the Covid-19 pandemic,” the authors wrote.

• Long hours are more dangerous than other occupational hazards. In all three years that the study examined (2000, 2010 and 2016), working long hours led to more disease than any other occupational risk factor, including exposure to carcinogens and the non-use of seatbelts at work. And the health toll of overwork worsened over time: From 2000 to 2016, the number of deaths from heart disease because of working long hours increased 42 percent, and from stroke 19 percent.

Dr. Maria Neira, a director at the W.H.O., put the conclusion bluntly: “It’s time that we all, governments, employers and employees wake up to the fact that long working hours can lead to premature death.”

Investment in new oil and natural gas projects must stop from today, and sales of gasoline- and diesel-powered vehicles must halt from 2035. These are some of the milestones that the International Energy Agency said Tuesday must be achieved for the global energy industry to achieve net-zero carbon emissions by 2050.

These conclusions seem surprisingly stark for the agency, a multilateral group whose main mandate is helping ensure energy security and stability. But it has increasingly embraced a role in combating climate change under its executive director, Fatih Birol.

In a news conference, Mr. Birol said he wanted to address the gap between the ambitious commitments on climate change that government and chief executives have been making and the reality that global emissions are continuing to rise strongly.

Just a year ago, the agency was deeply concerned about the disruptive implications of the collapse of the oil market from the effects of the pandemic. At the time, Mr. Birol referred to April 2020 as “Black April.”

Now Mr. Birol’s analysts are outlining in a report what looks like decades of disruption for the global energy industry. Oil production, for instance, will need to fall from nearly 100 million barrels a day to around 24 million a day by 2050, the report says.

The agency acknowledges that the disruption for the global energy sector, which produces three-quarters of greenhouse gas emissions, could threaten five million jobs. “The contraction of oil and natural gas production will have far-reaching implications for all the countries and companies that produce these fuels,” the Paris-based group said in a news release.

Oil-producing countries may see different affects. This report, for instance, is likely to lead to further calls from environmental groups for the British government, which heads the United Nations Climate Change Conference (COP26), to end new oil and gas drilling to set a global example. A halt would threaten jobs in Britain’s declining but still large oil and gas industry.

On the other hand, members of the Organization of the Petroleum Exporting Countries are likely to see their share of a much-reduced market rise from about a third to more than 50 percent, the agency said, as nations with less efficient, higher-cost oil industries cut back.

At the same time, Mr. Birol said, there would be major economic benefits from the trillions of dollars in investment in wind, solar and other sources of renewable energy. Doing so could create 30 million jobs,and add 0.4 percent year to world economic growth, he said.

Foxconn, the Taiwanese electronics heavyweight best known for making Apple’s iPhones, has found a big new partner for its auto-industry ambitions: the European-American car giant Stellantis.

The two companies on Tuesday announced a joint venture for building in-car digital systems and software, which automakers believe will be an increasingly important selling point for consumers in the coming decades.

“This is core to the future of Stellantis,” the automaker’s chief executive, Carlos Tavares, said during a conference call with reporters. The new partnership, he said, “is about putting software at the core of the company.”

Stellantis was created in January from the merger of Fiat Chrysler Automobiles and PSA, the French maker of Peugeot, Citroën and Opel cars. The tie-up was motivated in part to put the companies in a stronger position to develop electric cars as fossil fuel-burning vehicles become history.

The 50-50 venture with Foxconn, which is called Mobile Drive, will supply so-called digital cockpits not only to Stellantis brands like Jeep and Maserati, but to other automakers as well, the two companies said on Tuesday. Mobile Drive will make digital systems for gas-powered cars in addition to electric ones.

Foxconn is moving rapidly to claim a bigger role in the car business, betting that its expertise in gadgets will give it a leg up as auto making fuses with electronics.

In October, the company unveiled a kit of technology and tools aimed at helping automakers develop electric vehicles. Last week, it finalized an agreement with the California-based automaker Fisker to develop a new electric car that the companies aim to begin manufacturing in the United States in 2023.

During Tuesday’s call, Stellantis and Foxconn executives declined to say whether the two companies would also explore contract car manufacturing as part of their cooperation.

• Wall Street was poised for an upbeat opening on Tuesday, following a strong day for stocks in Asia and Europe. Despite regional outbreaks of the coronavirus, traders appeared to be bolstered by the power of vaccines and some positive economic data.

• S&P 500 futures were 0.2 percent higher after the benchmark index slumped 0.3 percent on Monday. European indexes were higher, with FTSE 100 in Britain gaining 0.4 percent and the Stoxx Europe 600 up 0.3 percent.

• In Asia, the Nikkei in Japan gained 2.1 percent the same day the government reported the economy contracted in the first quarter, after two consecutive quarters of growth.

• In Taiwan, the stock market jumped more than 5 percent following a slump after the government recently imposed restrictions to control an outbreak of Covid infections. Reuters reported that Taipei’s top official in Washington was in talks with President Biden about securing doses of vaccine from the United States.

• Oil jumped higher, with Brent crude, the global benchmark, gaining 1 percent to reach above $70 a barrel for the first time since early March. The U.S. benchmark, West Texas Intermediate, was 0.8 percent higher, to $66.78 a barrel.

• Shares in AT&T, which fell 2.6 percent Monday after it announced it was spinning off its WarnerMedia division and becoming more of a strictly telecommunication company, continued its slide in premarket trading, down a further 4.4 percent. Shares of Discovery Inc., which will absorb WarnerMedia and become a new company, also slipped on Monday, ending the day down 5.1 percent. It was unchanged in premarket trading on Tuesday.

• In Britain, the latest reading on unemployment showed “some early signs of recovery,” the Office for National Statistics said. The jobless rate for January through March was 4.8 percent, 0.3 percentage points lower than the previous quarter. At the same time, the number of payroll employees increased in April for the fifth consecutive month, but remains 772,000 less than it was prepandemic.

• “The latest U.K. employment data provides further signs that the jobs market has begun to turn a bit of a corner since the turn of the year,” said James Smith, developed markets economist at ING. He noted that unemployment would undoubtedly rise in the fall and probably peak at about 6 percent, when the government’s wage-support program is scheduled to end, “though we think things are likely to be improving again by year-end.”

Turn on the news, scroll through Facebook, or listen to a White House briefing these days and there’s a good chance you’ll catch the Federal Reserve’s least-favorite word: Inflation. If that bubbling popular concern about prices gets too ingrained in America’s psyche, it could spell trouble for the nation’s central bank.

Interest in inflation has jumped this year for both political and practical reasons. Republicans, and even some Democrats, have been warning that the government’s hefty pandemic spending could push inflation higher. And as the economy gains steam, demand is coming back faster than supply, The New York Times’s Jeanna Smialek reports.

The Fed has big reasons to avoid overreacting: Inflation been a feature of the economic landscape since the 1980s.

But prices have stayed in control for so long partly because of muted inflation expectations. After decades of Consumers and businesses have learned to expect slow, steady gains year after year. Shoppers who don’t anticipate price increases may be reluctant to accept them, curbing a business’s power to raise them.

If consumers begin to anticipate faster gains, companies could regain their ability to charge more, locking in today’s temporary price bumps and calling into question the Fed’s plan to support the economy for months and even years to come.

Already, there are early signs that expectations could move higher as the economic backdrop changes dramatically. Were they to shoot up more than the Fed finds acceptable, it could force the Fed to react by dialing back support sooner rather than later.

• Japan’s economy shrank in the first three months of 2021, continuing a swing between growth and contraction as its plodding vaccination campaign threatened to stall its recovery from the pandemic even as other major economies appeared primed for rapid growth. Japan is suffering a resurgence in virus cases, with much of the country under a state of emergency and deaths climbing, especially in Osaka. The yo-yoing economic pattern, analysts said, is unlikely to stop until the country has vaccinated a significant portion of its population, an effort that has just begun and seems unlikely to speed up significantly in the coming months.

• Metro-Goldwyn-Mayer has been in talks to sell itself to Amazon, according to three people briefed on the matter. It was unclear how much Amazon might be willing to spend, and a timeline for a potential deal was unclear, according to the people briefed on the talks who spoke on the condition of anonymity because the sale process is private. If completed, a deal would turbocharge Amazon’s streaming ambitions by bringing James Bond, Rocky, RoboCop and other film and television properties into the e-commerce giant’s fold. In total, MGM has about 4,000 films in its library.

• Bob Garfield, a longtime co-host of WNYC’s popular program “On the Media,” has been fired after two separate investigations found he had violated an anti-bullying policy, New York Public Radio, which owns WNYC, said on Monday. Mr. Garfield’s employment was terminated “as a result of a pattern of behavior that violated N.Y.P.R.’s anti-bullying policy,” a spokeswoman said in a statement. In an email on Monday, Mr. Garfield said he was not yet able to speak fully about the circumstances surrounding his firing but defended his behavior as yelling.

Homes are selling quickly. About half sell in less than a week, usually after multiple offers, said Daryl Fairweather, the chief economist for the Redfin online brokerage.

The usual tips — like getting preapproved for a mortgage — apply more than ever, Ann Carrns reports for The New York Times. But competition in many cities is leading potential buyers to take steps they may not have considered even a few months ago, including offering tens of thousands of dollars above the asking price; agreeing to let the seller live, rent-free, in the house for several months after the closing; and waiving certain contingencies, like the right to inspect the house before buying.

Here are other measures buyers are going to to close the deal:

• Buyers will sometimes send personal notes to sellers to distinguish themselves. “It never hurts,” said Mark Strüb, a real estate agent in Austin, Texas, though some Realtors discourage the practice. Mr. Strüb once had a seller with a strong sentimental attachment to the house pass over the highest offer because the potential buyer failed to write a letter, while the others vying for the home had all done so.

• In some states, buyers may offer direct incentives to sellers outside of the purchase price, sometimes called “option” money, said Maura Neill, an agent with Re/Max Around Atlanta. “It works like a bonus,” she said. She cautioned that buyers and their agents should clarify their state’s laws, but “if you can make it work,” she said, “it’s a very strong tactic.”

• Shoppers need patience, plus a willingness to move fast. To snag a condo near Piedmont Park, Ga., one client Ms. Neill worked with offered a quick closing, which was important to the sellers, and agreed to waive the appraisal — also an increasingly common practice in competitive markets. That means that if a buyer is financing the purchase with a mortgage and offers more than the property appraises for, the buyer agrees to pay the difference in cash at closing.