It was another of those varied days on the stock market today, and that variety has shifted into the after-hours scene. We've got news coming in about consumer goods stocks, big names in entertainment, acquisitions... everything, really, including the kitchen sink.
Let's take a closer look at two of the more intriguing news items: Uber (NYSE:UBER) and Lyft's (NASDAQ:LYFT) new plan to intensify a legislative battle in California, plus Walt Disney's (NYSE:DIS) divestment of a rich sports and entertainment asset.
Uber and Lyft vs. California and labor
Uber and Lyft have deepened their commitment to fight off a proposed labor law in California, various media reported after market hours on Thursday. The two companies have made a fresh promise to spend a minimum of $60 million combined to mitigate the effects of AB5.
This is a bill in the state's assembly that would classify "gig economy" workers, such as those who drive for the two rideshare companies, as employees rather than independent contractors. Employees are guaranteed more protections under the law.
If AB5 is passed into law, Uber and Lyft would each chip in $30 million to enact a ballot initiative exempting them from its provisions. (Ballot initiatives are proposed laws voted on by the state's residents). Currently, the two companies are attempting to negotiate with unions and legislators on modifying the current bill.
"We are working on a solution that provides drivers with strong protections that include an earnings guarantee, a system of worker-directed portable benefits, and first-of-its kind industrywide sectoral bargaining, without jeopardizing the flexibility drivers tell us they value so much," an unnamed Lyft spokesman was quoted as saying by TechCrunch.
"We remain focused on reaching a deal, and are confident about bringing this issue to the voters if necessary," the Lyft official added.
Both Uber and Lyft have promised to set a base hourly rate of $21 for their drivers.
The California Labor Federation was sharply critical of the two companies' plan to invest in fighting the legislation.
"This announcement lays bare the real motivation of multi-billion dollar gig companies," the Federation wrote on its website. "They never cared about their drivers or workers. The only thing they care about is their bottom line and making their executives even richer than they already are."
Uber and Lyft are likely fighting a tough battle in one of the most worker-friendly states in the U.S. On top of that, the assembly is slated to vote on the bill before the current California legislative session ends in mid-September. Also, the measure enjoys strong support from labor organizations and many gig workers.
The market might be resigned to an eventual defeat for the two companies. Both are trading sideways tonight.
Disney does a deal
Walt Disney has signed an agreement to sell its 80% stake in the Yankee Entertainment and Sports (YES) Network, it was revealed after market close today.
YES Network is a pay TV company centered on New York sports teams such as the New York Yankees and the Brooklyn Nets. The buyer is a consortium centered around privately held Yankee Global Enterprises, the current holder of the remaining 20% stake and owner of the Yankees.
The other members of the consortium are Amazon.com (NASDAQ:AMZN) and Sinclair Broadcast Group, and the total enterprise value of the deal is $3.47 billion.
The transaction comes in the wake of Disney's absorption of key entertainment assets of Twenty-First Century Fox. In a move to seemingly curry favor with regulators, Disney previously agreed to divest Fox's regional sports networks. The YES Network stake had been acquired as part of the Fox deal.
Disney and Sinclair issued separate press releases on the sale; Amazon has not yet issued a public statement.
Regardless of regulator scrutiny, Disney probably had little desire to retain ownership of YES Network. The company has long struggled in the sports segment, with declining subscriber count at cable channel ESPN, which remains an albatross around its corporate neck.
In its statement, Sinclair said that it will obtain a stake of 20% in YES Network through the arrangement. The company added that "under the YES Network management team, Sinclair will direct the YES Network's traditional and virtual distribution relationships."
It was not immediately clear what ownership stakes Yankee Global Enterprises and Amazon would hold. There was also no indication as to when the deal might close.
Although the YES Network broadcasts games from one of the top franchises in North American sports and the deal is pricey, investor reaction is muted tonight. The stocks of Disney, Amazon, and Sinclair are all trading flat at the moment.