Business

(NEW YORK) — Vice Media, the youth-oriented publisher of prominent online outlets such as Vice and Motherboard, filed for bankruptcy on Monday, underscoring the fraught economic environment for digital media companies as economic growth slows and the advertising market softens.

The group of sites, which includes food outlet Munchies and fashion news brand Refinery29, will continue publishing as the Chapter 11 bankruptcy process unfolds and the site takes on new ownership, Vice Media said in a statement.

The bankruptcy announcement will facilitate the sale of Vice Media to a group of its top lenders led by Fortress Investment Group and Soros Fund Management — which has agreed to an acquisition of the company that values it at about $225 million, the statement said.

“This accelerated court-supervised sale process will strengthen the Company and position VICE for long-term growth, thereby safeguarding the kind of authentic journalism and content creation that makes VICE such a trusted brand for young people and such a valued partner to brands, agencies and platforms,” Bruce Dixon and Hozefa Lokhandwala, Vice Media’s co-CEOs, said in a statement.

“We will have new ownership, a simplified capital structure and the ability to operate without the legacy liabilities that have been burdening our business. We look forward to completing the sale process in the next two to three months and charting a healthy and successful next chapter at VICE,” they added.

The move comes weeks after Vice Media canceled its flagship TV program, Vice News Tonight, indicating the depth of layoffs and cost cuts already underway.

A string of layoff and closure announcements in digital media has arrived in response to cooling ad revenue that has punished balance sheets.

Vox Media cut 7% of its staff in January and Bustle Digital Group — the parent company of online media outlets like Bustle and NYLON — followed a month later with layoffs that affected 8% of its workforce.

BuzzFeed News, a brand synonymous with the rise of online news coverage, shuttered less than a month ago.

Founded by Shane Smith, Suroosh Alvi and Gavin McInnes in Montreal in 1994, Vice Media rose from an edgy print magazine to a plucky online news brand to a youth culture media empire, ultimately garnering an investment of more than $400 million from Disney. In 2017, Vice was valued at $5.7 billion.

However, the company fell into financial trouble as it struggled to convert a large readership into reliable digital ad sales, finding cold comfort in a volatile ad market where social media platforms reaped much of the revenue.

Vice Union, a labor organization that represents more than 320 employees at the company, said on Monday that it “stands strong in supporting our members through stressful and uncertain times — and is more than ready to fight tenaciously for our rights.”

“Regardless of who owns the company,” the union added.

Disney is the parent company of ABC News.

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(NEW YORK) — Ex-NBCUniversal advertising executive Linda Yaccarino will take over as CEO of Twitter, Elon Musk said on Friday.

Yaccarino “will focus primarily on business operations, while I focus on product design & new technology,” Musk said.

“Looking forward to working with Linda to transform this platform into X, the everything app,” he added.

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(NEW YORK) — The cryptocurrency industry, in recent months, has suffered some blows: high-profile bankruptcies, the arrest of wunderkind Sam Bankman-Fried and a regulator lawsuit against top crypto exchange Binance.

Despite it all, the price of the largest cryptocurrency, bitcoin, has surged.

Bitcoin has climbed 65% this year, far surpassing the S&P 500, which has jumped 7%. Even the Nasdaq, a tech-heavy index, has delivered just a quarter of bitcoin’s gains.

In fact, bitcoin has benefited from crises in the cryptocurrency arena, analysts said, since the unrest has pushed investors away from lesser-known coins and toward the sector’s household name.

Plus, the price has gained a boost from wider economic forces like trouble in the financial system and slowing interest rate hikes, they said.

But the coming months pose uncertainty, experts added, as a looming recession could test the performance of an asset less than 15 years old.

The blockbuster performance of bitcoin in 2023 comes after the digital currency’s price plummeted last year. In all, the price of bitcoin fell 65% last year, exceeding the losses suffered by the S&P 500, which dropped about 20%.

The price struggles for bitcoin, which extended throughout much of the cryptocurrency sector, coincided with an aggressive series of interest rate hikes that put downward pressure on many assets, including the major stock indexes.

“There had been a big bubble,” James Butterfill, head of research at digital asset management firm CoinShares, told ABC News. “The bubble was pricked by the Fed.”

The distress in cryptocurrency helped trigger a slew of failures. Last May, a major coin, Terra, collapsed along with its sister coin Luna. Meanwhile, several crypto lenders such as Block Fi, Celsius and Genesis filed for bankruptcy last year.

In dramatic fashion, crypto exchange FTX filed for bankruptcy in November after a collapse in a matter of days that was followed by the arrest of Bankman-Fried, the company’s founder and former CEO. Bankman-Fried has pleaded not guilty to all 13 counts he faces, including fraud and conspiracy.

The unrest last year sent crypto investors toward well-known digital currencies, Callie Cox, an analyst at the investment company eToro who tracks cryptocurrencies, told ABC News.

“Bitcoin has been the beneficiary of a flight to quality within the crypto industry,” Cox said. “This is the crypto name that my mom and your family probably know.”

Butterfill, of CoinShares, echoed the point: “People are becoming a lot more discerning. There are 50,000 crypto coins out there and a lot of them are rubbish.”

Ethereum, the world’s second-largest cryptocurrency, has surged 52% this year, benefiting as well from the rush toward prominent coins, Butterfill said.

The rise in the price of bitcoin has coincided with favorable developments across the wider economy, since the Federal Reserve has slowed its interest rate hikes and unrest in the traditional banking sector has pushed some investors to seek a digital alternative, experts said.

Since March, three of the nation’s 30-largest banks have collapsed. Shares of regional lender PacWest Bancorp plummeted on Thursday after the bank said it lost 9% of deposits last week, suggesting that financial instability persists.

“When the banking system faced threats, a lot of investors saw reason to doubt the financial system,” said Cox, of eToro. “They went looking for alternatives.”

There is little data available that depositors pulled money out of banks and placed it in bitcoin, Butterfill noted, adding that he had heard anecdotes of bank customers transferring funds to crypto.

If the Fed halts its rate hikes, as many investors expect, bitcoin could continue its rise over the latter part of the year, experts said. However, they cautioned that a potential recession could bring volatility.

“There might be nervousness about bitcoin as we move closer to a recession,” Cox said, pointing out that interest rates would remain elevated even after a pause. “There are a lot of crosswinds for crypto right now.”

Butterfill acknowledged uncertainty about the outlook of day-to-day performance for bitcoin, but remained optimistic about the remainder of 2023, even if it involves a recession.

“Economic data continues to deteriorate,” Butterfill said. “In that environment, bitcoin would be volatile and perform quite well.”

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(SAN FRANCISCO) — Elon Musk has chosen a new CEO of Twitter and plans to step down from the role within about six weeks, the billionaire entrepreneur said on Thursday.

Musk, who runs Tesla and Space X, did not disclose the identity of the incoming chief executive. He said he plans to transition to a role as executive chairman and chief technology officer, in which he’ll focus on “overseeing product.”

The announcement comes months after Musk pledged in December to step down as the head of Twitter as soon as he found someone “foolish enough to take the job.”

Musk’s tentative resignation late last year followed a Twitter poll posted by Musk in which 57.5% of respondents called on him to stop leading the company.

After acquiring Twitter in October, Musk made major changes to the company and its platform. In an effort to significantly slash costs, the company has cut roughly 75% of its 7,500-person workforce, raising concerns about Twitter’s capacity to maintain its platform.

Twitter suffered a user outage in February that lasted for hours and required an emergency fix, prompting an apology from the company.

Musk has also sought to rejuvenate the platform’s subscription offering as a means of supplementing its advertising revenue. Under Twitter’s new subscription, users gain access to account verification — the site’s signature blue checkmark — for an $8 monthly fee, which amounts to $96 per year.

Previously, Twitter verified celebrities, politicians, journalists and prominent figures on a case-by-case basis in an effort to authenticate their identities and prevent impersonation.

Twitter partially reversed the subscription change last month by reverifying some legacy accounts, including accounts affiliated with basketball star Lebron James and author Stephen King.

Musk has defended his actions at Twitter as part of an aggressive effort to rescue the company from financial peril, which he described in a Twitter Spaces interview in December as an “emergency fire drill.”

This is a developing story. Please check back for updates.

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(NEW YORK) — Shares of PacWest Bancorp plummeted more than 20% in early trading on Thursday after the regional lender said it faced a sizable withdrawal of deposits last week, renewing concern over financial trouble in the aftermath of a string of major bank collapses.

The sharp decline of PacWest stock prompted a pause in trading of the company’s shares minutes after the market opened on Thursday morning, but trading later resumed.

PacWest said in a securities filing on Thursday that the bank lost 9.5% of deposits last week, marking a turnabout after the company said at the outset of this month that deposits remained stable.

While noting the deposit flight, PacWest said that as of Wednesday it retained $15 billion in immediately-available cash if needed to fulfill further withdrawals. The liquidity far exceeds total uninsured deposits, which amount to $5.2 billion, the bank said.

PacWest did not immediately respond to ABC News’ request for comment on the stock decline.

The Los Angeles-based midsized lender said last week that it is exploring “all options” as it weighs offers from potential investors as well as the sale of a $2.7 billion loan portfolio.

In the statement last week, the company rejected concern about a sudden run on deposits, saying it had “not experienced out-of-the-ordinary deposit flows” after the seizure and sale of First Republic two days prior.

The significant withdrawal of deposits mostly took place in the days following the announcement last week, PacWest said on Thursday.

In all, PacWest stock has fallen more than 80% this year, erasing hundreds of millions of dollars in value.

The financial distress at PacWest follows the collapse within weeks of three of the nation’s 30-largest banks.

As the Fed aggressively hiked interest rates over the past year, the value of long-term Treasury and mortgage bonds dropped, punching a hole in the balance sheets at some regional banks.

The failure of Silicon Valley Bank in March sent shockwaves through the financial system that days later helped bring down New York City-based Signature Bank. Last Monday, First Republic fell under government control before a sale to JPMorgan Chase.

While high interest rates contributed to the collapses, each of the banks also retained a sizable portion of uninsured depositors, who tend to panic without a government backstop for their funds.

Addressing concern about deposits that lack government protection, PacWest said last week that insured deposits make up 75% of its holdings, which marks a sharp increase from the end of last year, when just 48% of its deposits were insured.

Stock prices at some other regional banks held steady or increased in early trading on Thursday, suggesting that the financial fallout remained limited to PacWest. Phoenix-based Western Alliance Bancorp shares rose about 5%; while Salt Lake City-based Zions Bancorp inched down less than 1%.

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(NEW YORK) — Peloton is recalling over two million bikes, warning that the bike seat post assembly could break and cause users to fall.

The Peloton Bikes Model PL01 is the one being recalled. Users are told to immediately stop using the bike and call Peloton for a free repair.

There have been 35 reports of people falling off their bikes with 13 injuries, according to the Consumer Product Safety Commission.

Story developing…

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(NEW YORK) — Uber will soon allow customers to book plane tickets directly through its app.

The new feature powered by online travel agent Hopper will roll out for users in the United Kingdom this summer. Customers can enter their destination and travel dates, select their desired flights and then pay directly on the Uber app. The company said users will also be able to choose their seat assignments in the app on flights with major carriers.

U.K. users can already book cars, buses, trains and boat transportation through the app.

Uber would not say if the program will be launched in the U.S.

“For now, we’re focused on piloting this ticketing feature in the U.K. and we’ll be closely monitoring customer engagement before we commit to a timeline to expand the feature to other markets,” a spokesperson from Uber told ABC News.

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(NEW YORK) — Consumer prices rose 4.9% last month compared to a year ago, extending a monthslong slowdown and bolstering hopes that inflation will continue its return back to normal levels.

The fresh data aligns with the Federal Reserve’s effort to slow the economy and slash prices while averting a recession.

The Fed last week escalated an aggressive series of interest rate increases with a quarter-point hike as it aims to slash inflation by slowing the economy.

The move came days after the seizure and forced sale of First Republic Bank, the latest spasm of banking unrest that has arisen in part from the Fed’s rate hikes.

Consumer prices rose 5% in March compared to a year ago, recording inflation well below a summer peak, but leaving it more than double the target rate of 2%.

Economists expect year-over-year inflation to have stood flat at 5% in April, halting the progress in inflation reduction and placing pressure on the Fed to further hike its benchmark interest rate even as it risks deepening the financial unrest and plunging the economy into a recession.

Data released earlier this month showed that economic growth slowed at the outset of this year, suggesting the rate hikes have helped put the brakes on business activity.

U.S. gross domestic product grew by a 1.1% annualized rate over the three months ending in March, according to government data.

A better-than-expected jobs report on Friday, however, defied fears that rate hikes have substantially weakened the economy.

Instead, the U.S. added 253,000 jobs in April, marking a slight decline from an average of 290,000 over the previous six months. The unemployment rate fell to 3.4%, matching a 54-year low, government data showed.

Meanwhile, U.S. retail sales have fallen moderately but remained solid over the course of this year, suggesting that households still retain some pandemic-era savings.

While resilient economic measures offer policymakers some leeway as they weigh further rate hikes and invite a deeper slowdown, an extension of the Fed’s series of rate increases could worsen banking distress.

As the Fed aggressively hiked interest rates over the past year, the value of long-term Treasury and mortgage bonds dropped, punching a hole in the balance sheets at some banks.

Three of the nation’s 30-largest banks have failed since March. While high interest rates contributed to the collapses, each of the banks also retained a sizable portion of uninsured depositors, who tend to panic without a government backstop for their funds.

Last week, in response to a question about additional rate hikes, Fed Chair Jerome Powell noted the removal of a sentence that appeared in the Fed’s previous rate hike announcement in March that said “some additional policy increases might be appropriate.”

Powell described the omission in the announcement on Wednesday as “meaningful,” saying a decision about any additional rate hikes would be “data dependent.”

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(NEW YORK) — Fresh inflation data on Wednesday will show whether price hikes slowed for the tenth consecutive month in April, easing financial pain for U.S. households and bolstering hopes that price increases are on their way back to normal levels.

The data arrives one week after the Federal Reserve escalated an aggressive series of interest rate increases with a quarter-point hike as it aims to slash inflation by slowing the economy.

The move came days after the seizure and forced sale of First Republic Bank, the latest spasm of banking unrest that has arisen in part from the Fed’s rate hikes.

Consumer prices rose 5% in March compared to a year ago, recording inflation well below a summer peak, but leaving it more than double the target rate of 2%.

Economists expect year-over-year inflation to have stood flat at 5% in April, halting the progress in inflation reduction and placing pressure on the Fed to further hike its benchmark interest rate even as it risks deepening the financial unrest and plunging the economy into a recession.

Data released earlier this month showed that economic growth slowed at the outset of this year, suggesting the rate hikes have helped put the brakes on business activity.

U.S. gross domestic product grew by a 1.1% annualized rate over the three months ending in March, according to government data.

A better-than-expected jobs report on Friday, however, defied fears that rate hikes have substantially weakened the economy.

Instead, the U.S. added 253,000 jobs in April, marking a slight decline from an average of 290,000 over the previous six months. The unemployment rate fell to 3.4%, matching a 54-year low, government data showed.

Meanwhile, U.S. retail sales have fallen moderately but remained solid over the course of this year, suggesting that households still retain some pandemic-era savings.

While resilient economic measures offer policymakers some leeway as they weigh further rate hikes and invite a deeper slowdown, an extension of the Fed’s series of rate increases could worsen banking distress.

As the Fed aggressively hiked interest rates over the past year, the value of long-term Treasury and mortgage bonds dropped, punching a hole in the balance sheets at some banks.

Three of the nation’s 30-largest banks have failed since March. While high interest rates contributed to the collapses, each of the banks also retained a sizable portion of uninsured depositors, who tend to panic without a government backstop for their funds.

Last week, in response to a question about additional rate hikes, Fed Chair Jerome Powell noted the removal of a sentence that appeared in the Fed’s previous rate hike announcement in March that said “some additional policy increases might be appropriate.”

Powell described the omission in the announcement on Wednesday as “meaningful,” saying a decision about any additional rate hikes would be “data dependent.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Customers at the bakery Nothing Bundt Cake, in Memphis, Tennessee, choose items from snickerdoodle, red velvet and blueberry bliss, among other flavors. But patrons cannot avoid the surging prices.

Amy Lupo, who runs three Memphis-area company franchises, said a jump in the cost of ingredients over the past year has caused her to hike the price of an individual-sized cake from $4.50 to $5.25, a staggering 16% increase.

“It’s a tough choice to raise prices,” Lupo told ABC News. “Our customers, for the most part, have been understanding because people go to the grocery store and see it everywhere.”

Lupo is hardly the only baker lifting prices. The cost of baked goods has jumped 14% over the last year — a rate nearly double the pace of food inflation and triple the rate of overall price hikes, government data shows.

The soaring prices stem from supply shortages imposed by the Russia-Ukraine war and lower-than-expected crop yields, experts said, noting that resilient consumer demand in the face of high prices has exacerbated the problem.

“If all the stars could align in a bad way — it happened,” Naomi Blohm, a senior market advisor for Total Farm Marketing, told ABC News.

Consumer prices overall rose 5% in March compared to a year ago, extending a months-long slowdown of price increases, government data showed.

Bakery items and ingredients, however, have defied the slowdown. The price of margarine has jumped 33% over the past year, while the cost of flour has leapt 17%. Cookie prices are up 16% and bread costs have spiked 13%, the data said.

An avian flu outbreak, meanwhile, has sent egg prices up 36% over the past year.

In recent years, a weak yield of crops like wheat, soybeans and corn snarled the global supply, leaving the food system vulnerable last February when Russia invaded Ukraine, the world’s fifth-largest exporter of wheat, Blohm said.

“We have not had an abundant crop here in the U.S. and around the world,” Blohm said. “Then the Ukraine-Russia war just ignited the wheat price.”

The price of wheat rose to as much as $11 per bushel last June, far higher than the typical cost of between $5 and $6 per bushel, elevating prices throughout the baked goods supply chain, Blohm added.

“When you’re feeding a dairy cow high-priced grain, milk prices go higher and butter prices go higher,” Blohm said.

Rather than scoff at high prices for baked goods and ingredients, U.S. consumers have borne them, drawing on savings accumulated during the pandemic when hundreds of millions received stimulus checks but were stuck at home with little to buy, David Ortega, a food economist at Michigan State University, told ABC News.

The resilient consumer demand, as well as uncertainty about the duration of the Russia-Ukraine war and the avian flu outbreak, have left food price hikes “very sticky,” Ortega told ABC News.

“Food prices tend to rise up very quickly but take much longer to come down,” he said.

Price increases for baked goods and ingredients will likely remain high this year, since the time it takes for production and distribution means that consumers are currently encountering the results of previous disruption, Blohm said.

However, the prices could cool at the outset of next year if Ukraine and Russia agree to allow grain from the region to reach the global market, she said, emphasizing the added importance of strong global crop yields this summer.

“We need cooperation from Mother Nature,” Blohm said.

The easing of costs would be welcome news for Lupo, of Nothing Bundt Cake, who said she wants to pass along the potential savings to customers.

“I would love to be able to roll back prices,” she said. “That would certainly be my hope.”

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