By Walt Hickey
A lawsuit that’s had every Hollywood studio on edge has ended in a settlement. In 2015, the actors and producers of the television show Bones alleged that Fox was underpaying them by selling the air rights (which they get a share of) to Fox distributors with a sweetheart deal, thus screwing the profit participants. An arbitrator agreed, and awarded a breathtaking $179 million in damages in February. An L.A. judge cut that down to $51 million, and a forthcoming appeal would have determined whether Fox was on the hook for that $128 million. That appeal has been set aside after the parties reached a significant settlement to end the litigation. As the industry consolidates, new vertically integrated companies will have a lot more of these perilous self-dealing negotiations to handle.
I don’t mean to alarm you, but there’s new evidence that the horse-racing business — a paragon of integrity and honest-dealing if there ever were one — may not exactly be on the level. Justify, a horse which was crowned the 13th Triple Crown winner in 2018, has been revealed to have failed a drug test that was suppressed by California racing authorities connected to the owner. Justify was caught red-hoofed with large quantities of scopolamine in his system, but in the horse’s defense I think he’s almost certainly an innocent here. After winning the crown, his breeding rights were sold for $60 million, an enormous sum that the buyers have absolutely made back, as a roll in the hay with Justify costs as much as $150,000 and happens up to three times per day over a five-month breeding period. Is there any crime lower than drugging a horse so as to artificially inflate the price you’ll receive for its genetic material?
Dentists Hate Them
SmileDirectClub, a company that offers cheaper orthodontics by cutting out the whole “actually having an orthodontist” expense of the procedure, has raised $1.35 billion in the fifth largest IPO of the year. The company is now worth about $8.9 billion, and it’s one of just seven listings of over a billion this year. The company lost $14 million on revenue of $107 million for the year ending June 30, 2018, and I get that sounds bad, but you should know they subsequently lost $32 million on revenue of $196 million the year ending this past June.
The SAT is an enormously stress-inducing high school right of passage, which is non-ideal because it’s also predominantly used by wealthier families with better access to tutoring to juice the appeal of their kids’ applications over poorer applicants without such resources. For two-thirds of the two million students who take the SAT annually, the score they get is completely in line with their high school grades, which is to say that all that effort and expense added no new information to the application whatsoever. Among the third of test-takers where there is an asymmetry, the ones with higher SATs than GPAs were more male and twice as likely to have wealthy or highly-educated parents than those who underperformed on the SAT compared to their GPA. Another study compared students with parents who made $40,000 to $80,000 per year with students whose parents made over $200,000. Their respective GPAs were basically the same, 3.63 and 3.66. But the middle-class kids had an SAT average of 1,624 out of 2,400, compared to 1,793 for the richer kids, a 169-point advantage.
A legal battle for the ages has concluded with StarKist Co., the canned tuna company, being ordered to pay $100 million in a penalty as part of a criminal price-fixing conspiracy. For two years, StarKist, Bumble Bee Foods and Chicken of the Sea collaborated to fix prices in the canned tuna business, which was falling on hard times. Per capita consumption of canned tuna fell 42 percent from 1986 to 2016. Chicken of the Sea blew the whistle on the whole cabal, and escaped financial penalties for ratting its competitors out to the feds. Bumble Bee, sensing early that the jig was up, pled guilty and paid $25 million in a fine in 2017. StarKist fought it out, agreed to plead guilty last year but balked in August at a $100 million fine, and has since requested a decrease to $50 million. The court informed them to promptly pound sand, and once again tuna fans can rest easy knowing an international cabal is not giving them the runaround.
A new study found that even the presence of corruption — without participants actually even taking part in it remotely — still makes those people more dishonest in later dealings. Corrupt exchanges are estimated to entail $1 trillion annually according to the World Bank, so that’s not great. In the studies, participants were offered the possibility of paying a $2 bribe to get into a higher-paying version of the game, which 85 percent of those offered a chance to bribe paid up. Those who paid up cheated 9 percent more than those who got into the higher-stakes game without bribery. A subsequent study was the scary one: they hiked the bribe up from $2 to $12, which made 82 percent decline to pay it. Nevertheless, those who had been asked for a bribe and declined still ended up cheating more than those who hadn’t been exposed.
Return on Investment
A new study from the Global Commission on Adaptation found that a $1.7 trillion investment in five areas with high returns on investment from 2020 to 2030 would have some $7.1 trillion in net benefits. For instance, each dollar invested in improving dryland agricultural crop production reaps five dollars in net benefits, with similar returns on investment in water resources, protecting mangroves, and making infrastructure resilient. Climate change is projected to depress global agricultural yields up to 30 percent by 2050 without adaptation.
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