The US-China tech rivalry will put Chinese language firms to the take a look at

Chinese companies will continue to face intense scrutiny as US-China tensions and competition are unlikely to ease anytime soon, an analyst told CNBC.

“There is this intense geopolitical competition. Chinese companies are under a ton of scrutiny, in part because of their ties to the Chinese Communist Party,” Lindsay Gorman, senior fellow for emerging technologies at the German Marshall Fund’s Alliance for Securing Democracy, told CNBC’s “Squawk Box Asia” Tuesday.

Last Thursday, TikTok CEO Shou Zi Chew was questioned by lawmakers for five hours about the app’s ability to operate independently of its Chinese parent company ByteDance.

The short-video app is facing a potential ban in the US over concerns that American user data could end up in the hands of the Chinese government. Chew said China-based ByteDance employees may have access to some US data from TikTok.

It’s really intense competition [between the U.S. and China]. This is why both sides are fighting so hard to ensure their own technologies are victorious.

Lindsay Gorman

Senior Fellow, Alliance for Securing Democracy of the German Marshall Fund

“I think it’s important to look at the broader context of the Chinese Communist Party’s efforts to interfere in democratic institutions to suppress free speech and democracies,” Gorman told CNBC.

China had said it would “strongly oppose” a forced sale of TikTok by its parent company ByteDance hours before Chew testified before the US Congress.

Under the sea

Both countries are also competing for control of undersea cables – the backbone of the internet. More than 99% of the world’s communications are carried over fiber optic cables, most of it under water.

Huawei and China Telecom have built underwater cable networks around the world.

The US and China are vying for technological dominance “because of this fundamental internet infrastructure,” according to Gorman.

“Whoever is building the infrastructure and gaining dominance in industries that we are building today and for the future — whether it’s artificial intelligence, undersea cables or quantum information systems, they’re going to be the leaders of the future and the world,” he said .

The battle for the internet, under the sea

“That’s why both sides are fighting so hard to let their own technologies win,” she added, noting that US-China technological competition “is really not going away.”

The US, concerned that China is spying on undersea cables, has obstructed several Chinese projects to build undersea cable networks since 2020, according to Reuters.

On Monday, the US Congress passed the Undersea Cable Control Act to prevent countries like China from acquiring “American-made goods and technology used in the development and support of undersea cables.”

This really speaks to how intertwined the technological ecosystems of the US and China are and have been.

Lindsay Gorman

Senior Fellow, Alliance for Securing Democracy of the German Marshall Fund

“Whether it’s TikTok or a spy balloon, the US has been caught flat-footed in its fight against Chinese influence. We cannot allow undersea cables to become another example of this trend,” US Congressman Brian Mast said in the release.

“We cannot empower the same China that wants to overthrow America and put communism on top to control one of the world’s most powerful communications tools. We must protect this infrastructure and technology that Americans rely on every day,” Mast said.

Responding to the passed law, Chinese Foreign Ministry spokesman Mao Ning said: “We oppose the US overextending the concept of national security to hinder foreign companies and abuse state power to enforce normal market rules and regulations disrupt edge’ does not legitimize bad behavior.”

‘intertwined’

After Thursday’s TikTok hearing in Congress Apple Chief Tim Cook visited China over the weekend, where the CEO praised China’s development and its long-standing relationship with the iPhone maker, according to local media reports.

The Tiktok hearing was an

“It really speaks to how intertwined the U.S. and China’s technology ecosystems are and have been,” Gorman said, adding that U.S. companies like Apple “rely on China for much of their business.”

This complicates the “decoupling of US tech ecosystems from Chinese tech ecosystems,” she said.

“These ties are obviously very tight. It’s not going to be a one-time decoupling,” Gorman said.

“It’s not going to be particularly smooth, and we’re seeing that with US and other multinationals that still have very strong ties to China.”

Lululemon shares surge as vacation quarter gross sales soar

A Lululemon sign is seen at a mall in San Diego, California, November 23, 2022.

Mike Blake | Reuters

Lululemon on Tuesday reported strong sales in the holiday quarter, suggesting that wealthier shoppers are still buying yoga pants and tops despite rising prices for essential commodities.

The company also issued an upbeat forecast for the new fiscal year.

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Shares of Lululemon are up about 11% in after-hours trading following the report. As of Tuesday’s close, the stock was roughly flat for the year, putting the company’s market value at $40.87 billion.

Here’s what the company reported for the three-month period ended Jan. 29, compared to Wall Street expectations based on a poll of analysts by Refinitiv:

  • Earnings per share: Adjusted $4.40 vs. $4.26 expected
  • Revenue: $2.77 billion versus $2.7 billion expected

Lululemon’s fourth-quarter net income fell to $119.8 million, or 94 cents a share, from $434.5 billion, or $3.36 a share, a year ago. Excluding impairments and other charges related to the Mirror acquisition and other items, earnings per share were $4.40.

Revenue increased to $2.77 billion from $2.13 billion last year.

The company expects fiscal 2023 revenue of between $9.3 billion and $9.41 billion, beating Wall Street’s expectations of $9.14 billion, according to Refinitiv estimates. The company expects full-year earnings per share of between $11.50 and $11.72, compared to Refinitiv estimates of $11.26 per share.

“Looking ahead, we remain optimistic about our ability to create sustainable growth and long-term value for all of our stakeholders,” Chief Financial Officer Meghan Frank said in a statement.

The Vancouver-based sportswear retailer said total comparable sales rose 27% in the fourth quarter. Also known as same-store sales, the metric includes sales from stores that have been open for at least 12 consecutive months.

“We believe it’s one of the few companies in the industry that has a very long growth path, and it’s a very visible one, too,” said Rick Patel, managing director at Raymond James.

Patel said his firm, which maintains a Strong Buy rating on the stock, sees upside in Lululemon’s international business and men’s business, and that the company’s worst camp struggles are in the past.

In December, Lululemon announced that inventories at the end of the third quarter were up 85% year over year. The company said on Tuesday that inventories were up 50% by the end of 2022.

With touring nurses making $150 an hour, hospital programs are progressive

Cassie Jupin grew up wanting to be a nurse. She sought a position at St. Peter’s Health Partners Hospital in Albany, New York and landed a position in the same maternity ward where she was born.

“Knowing that I can come back to work any day and work with a group of women and people who just make it so easy,” was gratifying, Jupin said. “Everyone is here to help you.”

When she graduated from nursing school last July, she and her classmates joked about taking traveling nurse jobs that paid much more than entry-level staff jobs.

“They were about $140 to $150 depending on the area you were looking in,” she explained. Payment was not per day. It was per hour.

According to a survey by the American College of Healthcare Executives last year, retaining nurses like Jupin was the most pressing staffing issue for 90% of CEOs at community hospitals like St. Peter’s.

staff shortage

The pandemic has exacerbated nursing staff shortages, causing contract nurse rates to skyrocket during successive waves of Covid infections. During the Omicron surge in winter 2022, national rates increased to an average of $150 per hour, according to consulting firm Syntellis. That was three times the national average for full-time nurses.

As hospitals increasingly rely on contract nurses, travel nurse spending has increased by more than 250% since the pandemic began.

“Hourly wages paid to registered nurses continue to experience significant volatility, which accounts for a significant portion of total labor costs,” said Flint Brenton, CEO of Syntellis Performance Solutions.

A nurse instructs a colleague in the care of a Covid patient in the Covid intensive care unit of the University Hospital Leipzig.

Sean Gallup | News from Getty Images | Getty Images

At the same time, the use of highly paid staff by travel nursing agencies also led to a vicious circle in staffing.

“The agency’s staff received high pay rates and had complete control over their hours,” explained Carol Boston Fleischhauer, executive director and chief nurse officer on the advisory board, and as a result, “more in-house nurses left permanent employment for outside opportunities, increasing revenue.”

In 2020, Aspen Tucker left his nursing job to become a traveling nurse, a move that came with a substantial pay rise.The 29-year-old traveling nurse jumped at the chance to make $187,000 and work just 9 months a year: ‘A once-in-a-lifetime opportunity’

Travel nurses in house

St Peter’s is part of the Trinity Health System, which has not been immune to the need for contract care. But Trinity has been able to better manage staff turnover by using its own traveling nurse program — an idea that originated with its own nurses over a decade ago.

“We realized that if you will, we could develop our own internal agency that could bring people to Trinity Health’s attention for all of our hospitals,” said Jennifer Misajet, chief nursing officer at St. Peter’s Hospital.

This internal program, called First Choice, tripled in size during the pandemic as older nurses sought to reduce their full-time employment and younger nurses sought higher pay and greater flexibility in their working conditions.

“It’s not like it used to be when nurses became in-patients for 30 years. Many recent graduates expect to work in an inpatient setting for just a few years, and then they want to pursue their master’s degree or become a registered nurse practitioner,” said Trinity CEO Mike Slubowski.

With nearly 90 hospitals in 26 states, First Choice has helped Trinity better control contract nursing costs while maintaining relationships with nurses who can help them maintain a consistent quality of care.

“If they wanted to work somewhere else, like Fresno, California, or Boise, Idaho to cover there, you know, we have the same clinical information system everywhere… and so it’s familiar with delivering care in that environment,” said Slubowski.

With more than 30,000 registered nurses in its system, nearly 1 in 10 of Trinity’s nurses currently work with First Choice. That now includes about a dozen senior executives like Misajet in St. Peter.

“We really tried to meet our nurses where they are and they are in different places,” Misajet said. In her case, she chose to work part-time rather than retire to spend more time with her family.

pay more

Analysts say more hospitals are following Trinity’s lead and launching their own in-house staffing programs to reduce labor costs on agency contracts. At the same time, they face higher costs to retain their full-time caregivers. According to its most recent financial statements, Trinity increased employee pay by 5.5% in 2022.

For new nurses like Jupin, who may be tempted by high-paying traveling nurse jobs, the message from hospital management is clear.

“They don’t want you to go away – especially our manager,” the maternity nurse said. “The first thing she always said to us is, ‘Please come to us if you need anything because we want you to stay here for the long haul.'”

According to a recent survey by the American Nurses Association, better pay and staffing conditions remain the top concerns for most nurses, but flexibility is also key for more than half of them. Increasingly, it is also proving to be key for hospital systems such as Trinity.

Rachel Maddow offers gorgeous context on the mass capturing epidemic

Rachel Maddow put into context the extent to which the mass shooting has spiraled out of control.

Video:

Maddo says:

Gun killings, mass murders with guns are so common in this country that it’s entirely possible for you to survive one mass shooting only to endure another. That’s a thing that’s happening in our country now. It is statistically possible. In fact, gun homicides are so common in this country that in one attack the gunman could shoot and kill 11 people, drive to a nearby parking lot, and kill himself at the site of another mass shooting just a few years earlier.

…

The family vacation is visiting Tennessee today when she and her family end up in the middle of another mass shooting. The fact that reporters cover shootings in their own children’s schools, that people survive multiple mass shootings before they’re legally allowed to drink, these aren’t crazy coincidences. This is a measure of the prevalence of this problem in our country. Things like this happen over and over again because mass shootings really do happen so frequently in the United States.

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If Republicans aren’t moved to act after the murders of kindergarten kids just before Christmas at Sandy Hook Elementary and the deaths of Parkland high schools that started a national gun safety movement and the slaughter of children and adults in Uvalde, Texas been, then there is no single incident that will move the needle for them.

The rest of the nation sees what Rachel Maddow described with their own eyes every day. The mass shooting just keeps getting worse.

The longer our nation allows these rampages to continue. The worse the problem gets.

Of course we must protect the Second Amendment, but most responsible gun owners do not plan or carry out mass shootings. There is a middle ground between the absolutism of the Second Amendment and measures to protect as many people as possible from the loss of their lives in mass shootings.

Traditionally, when the American people see a problem, they elect people to act to solve that problem. If voters make stopping mass shootings an electoral priority, they will save lives by electing candidates who take action in lieu of extra interest money.

Jason is the managing editor. He is also a White House press pool and congressional correspondent for PoliticusUSA. Jason has a bachelor’s degree in political science. His thesis focused on public policy with a specialization in social reform movements.

Awards and professional memberships

Member of the Society of Professional Journalists and the American Political Science Association

Final 24-hour Flash Sale: 50% off Grande Cosmetics, Sunday Riley and extra

After facial cleansing, it’s time to tighten the skin. This toner contains ingredients that soothe and exfoliate the skin, in addition to cleaning pores, depending on the brand.

A fan of this toner said: “Best thing I have ever done for my skin. I have absolutely NO visible pores, my dark spots are SIGNIFICANTLY lightened and for the first time in ages I actually have a soft glow against my skin and feel confident enough to be seen with full coverage without foundation.”

Another reviewed: “Real results after one use. My skin is oily, sensitive and prone to acne. I have a lot of closed comedones and get cysts from time to time, especially on my jaw. After the first use I saw a big improvement in my skin the next day. Less greasy, the blackheads disappeared, and overall balanced skin. After using it for about 2-3 weeks now, I’ve noticed that my closed comedones have lessened, I can’t remember the last time I had a cyst, and I have very few (if any) blackheads. So far no more blackheads. Will definitely be a must for me.”

Virgin Orbit extends unpaid hiatus as deal collapses, talks resume

NEWQUAY, ENGLAND – JANUARY 9TH: A general view of Cosmic Girl, a Boeing 747-400 aircraft carrying the LauncherOne missile under its left wing while last at Cornwall Airport Newquay on January 9th, 2023 in Newquay, UK preparations are made. Virgin Orbit launches its LauncherOne rocket from the Cornwall Spaceport, marking the first-ever orbital launch from the UK. The mission was named “Start Me Up” after the Rolling Stones hit song. (Photo by Matthew Horwood/Getty Images)

Matthew Horwood | News from Getty Images | Getty Images

Virgo Orbit is again extending its unpaid pause in operations to continue investing a lifeline, CEO Dan Hart told employees in a company-wide email.

Some of the company’s late-stage deal talks, including with private investor Matthew Brown, fell through over the weekend, people familiar with the matter told CNBC.

According to an email sent to employees Sunday night, Hart previously planned to update employees on the company’s operational status at an all-employee meeting Monday afternoon at 4:30 p.m. ET. At the last minute, that meeting was rescheduled “no later than Thursday,” Hart said in the staff memo Monday.

“Our investment talks have been very dynamic over the past few days, they are ongoing and are not yet at a stage where we can provide a comprehensive update,” Hart wrote in the email to employees, which was seen by CNBC.

Brown told CNBC’s Worldwide Exchange last week he was in final talks to invest in the company. A person familiar with the terms told CNBC the investment was $200 million and gave Brown a controlling interest. But talks between Virgin Orbit and the Texas-based investor stalled and broke down late last week, a source told CNBC. As of Saturday, those talks ended, the person said.

Separately, another person said talks with another potential buyer ended Sunday night.

The individuals asked to remain anonymous to discuss private negotiations. A Virgin Orbit representative declined to comment.

Hart promised “daily” updates to Virgin Orbit’s 750+ employees this week. Most employees remain on unpaid leave, which Hart announced on March 15. Last week, a “small” team of Virgin Orbit employees returned to work in what Hart described as the “first step” in a “gradual resumption of operations.” ” with the intention of preparing a rocket for the next launch of the company.

Virgin Orbit shares closed at 54 cents a share Monday after falling below $1 a share following the company’s pause in operations.

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Virgin Orbit has developed a system that uses a modified 747 jet to send satellites into space by dropping a missile under the plane’s wing mid-flight. But the company’s latest mission suffered an in-flight failure, with a problem during launch causing the rocket to fail to reach orbit and crash into the ocean.

The company has been looking for new funds for several months, with majority owner Sir Richard Branson unwilling to continue funding the company.

Virgin Orbit was spun off from Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest shareholder with a 75% stake. Mubadala, the Emirates’ sovereign wealth fund, holds the second largest stake in Virgin Orbit at 18%.

The company hired bankruptcy firms to draw up contingency plans in case it couldn’t find a buyer or investor. Branson is top priority over Virgin Orbit’s assets as the company has raised $60 million in debt from Virgin Group’s investment arm.

The same day Hart announced to employees that Virgin Orbit was ceasing operations, the board approved a “golden parachute” severance plan for top executives if they are terminated “following a change of control” of the company.

BioNTech shares slide on bleak Covid vaccine gross sales outlook

Vials of the Pfizer/BioNtech coronavirus disease (COVID-19) vaccine are displayed before being used at a mobile vaccine clinic in Valparaiso, Chile, on January 3, 2022.

Rodrigo Garrido | Reuters

shares of BioNTech on Monday slipped more than 6% in morning trade after the German drugmaker shared a gloomy 2023 sales outlook for its jointly developed Covid vaccine Pfizer.

BioNTech delivered solid quarterly results earlier this morning that beat expectations, but said sales were down slightly from a year earlier due to lower demand for the company’s Covid vaccine, its only product on the market. The drugmaker expects demand to fall further this year and projects Covid vaccine sales of 5 billion euros, or $5.4 billion. That’s a sharp drop from 2022’s 17.3 billion euros, or more than $18 billion.

The stock initially fell 6.4% to an intraday low of $119.98 per share before rebounding in late morning trading. By midday, the stock was down about a percentage point.

BioNTech noted in an earnings announcement that its efforts to adapt the Covid vaccine to new strains of the virus are expected to boost demand for the product this year. Last fall, the company launched the world’s first Omicron-adapted Covid booster with Pfizer and sold around 550 million doses by mid-December.

However, the company added that it expects fewer primary immunizations and lower uptake of booster shots this year. BioNTech also said it is renegotiating its supply deal with the European Union’s executive body, which could potentially spread vaccine shipments over several years and reduce volume.

The company’s bleak prospects didn’t seem to weigh on it Pfizer Stocks that were relatively flat on Monday morning.

BioNTech is the latest company to forecast a slump in demand for Covid products as the world emerges from the pandemic. Its partner Pfizer told investors in January that it expects sales of its Covid vaccine to fall 64% this year and sales of its antiviral treatment for Covid, Paxlovid, to fall 58%.

BioNTech and Pfizer became household names during the pandemic after developing one of the first vaccines to become globally available using messenger RNA technology. BioNTech hopes to strengthen its own drug pipeline and outlines efforts to use mRNA technology to treat cancer and other diseases.

“Looking into 2023 and beyond, we plan to continue investing in our transformation, focusing on building commercial capacity in oncology and working toward pivotal trials,” the company said in the earnings release. BioNTech added that its “mid-term goal” for the year is to file for approval of several cancer products.

Netanyahu survives no-confidence vote on judicial reform

JERUSALEM – MARCH 27: Israelis carrying Israeli flags and anti-government placards gather in front of the Knesset to protest the Israeli government’s plan to introduce judicial changes.

Anadolu Agency | Anadolu Agency | Getty Images

The government of Israeli Prime Minister Benjamin Netanyahu survived a no-confidence vote in the Knesset, the country’s parliament, amid what may be the largest wave of demonstrations in Israel’s history.

Mass protests are rocking Israel, and the country’s largest labor union on Monday announced a major strike against Prime Minister Benjamin Netanyahu’s months-long attempt to push through widely derided judicial reforms that opponents say would pull the country toward autocracy.

“Stop this court case before it’s too late,” Arnon Bar-David, Israel’s leader of the Histadrut union, said in a televised address, addressing Netanyahu directly. The Histadrut – which, with 800,000 members, represents the majority of Israeli trade unionists – declared a “historic” general strike to “stop this judicial revolution, this madness,” Bar-David said.

Security Minister Itamar Ben Gvir said Monday the government must proceed with reforms.

“Judicial reform must not be stopped and we must not give in to anarchy,” he said on Twitter, according to a Google translation.

stroke paralysis

Flights from Israel’s Ben Gurion Airport in Tel Aviv have been suspended as airport workers go on strike and workers at the port of Haifa – the largest in Israel – have also suspended work. McDonald’s Israel says it has closed stores as part of the strike action.

Protests have taken place across Israel for the past four months, sparked by anger over controversial judicial reforms being pushed by Netanyahu’s government, the most right-wing in Israel’s history. The planned restructuring would significantly weaken the country’s judiciary and make it more difficult to remove Netanyahu, Israel’s longest-serving prime minister, from power.

The proposed reforms would give the executive branch control over the appointment of judges to the Supreme Court and give the government the power to overturn court decisions by parliamentary majority.

Monday’s demonstrations took on a new fervor and are said to have been the largest yet, sparked by Netanyahu’s sacking of his defense minister, Yoav Gallant, for speaking out against the proposed measures. Local news outlets report that a whopping 600,000 people across the country have come out to protest.

“600,000 demonstrators is an extraordinary number. That means about 6.5% of the Israeli population is demonstrating tonight, many literally waking up from their beds to hear Bibi Gallant fired,” said Monica Marks, Middle East politics professor at NYU Abu Dhabi . wrote on Twitter. “When was the last time 6+% of a country protested? Real question.”

Netanyahu has described the protests as an attempt to “create anarchy” and trigger new elections. A deeply divided Israel has held five snap elections since April 2019.

“We’ve never been this close to falling apart,” Israel’s former Prime Minister Yair Lapid told lawmakers Monday.

“What has happened here in the last 24 hours is madness, it’s a loss of control and a loss of direction… It’s proof that this government has lost its brakes,” he said, urging Netanyahu to roll back his shots at his defense minister.

“It’s a threat to the State of Israel, it’s a threat to Israel’s security. Our home is in danger,” added Lapid.

Earlier Monday, President Isaac Herzog – whose position is largely ceremonial and apolitical – took to Twitter to urge the government to pause its judicial review.

“For the sake of the unity of the people of Israel, for the sake of responsibility, I urge you to stop the legislative process immediately,” he said, according to a Google translation.

“I appeal to the leaders of all Knesset factions, coalition and opposition alike, to put the country’s citizens above all else and act responsibly and boldly immediately. Come to your senses now! This is not a political moment, this is a moment for leadership and responsibility.”

On Sunday, Netanyahu’s office announced the sacking of Defense Secretary Yoav Gallant, who opposed the motion, prompting escalating protests.

“We must all stand firm against denials,” Netanyahu said on Twitter around the time of the announcement, without directly referring to Gallant.

Reese Witherspoon proclaims divorce days earlier than wedding ceremony anniversary

Reese Witherspoon and her husband jim toth, go separate ways. Days before their 12th anniversary, the estranged couple announced their “difficult decision” to divorce. Their announcement was made on Friday (March 24) via social media.

“We have some personal news to share. With a lot of care and thought, we made the difficult decision to divorce. We have enjoyed so many wonderful years together and we move forward with deep love, kindness and mutual respect for all we have created together,” the statement said.

Less than an hour after the announcement was published, the post received over 183,000 likes. However, Reese turned off the comments section.

RELATED: Marvin Gaye III files for divorce from his wife two months after domestic violence arrest

According to PEOPLE, Toth and Witherspoon were first romantically linked in February 2010 after they were spotted having dinner. In 2012, she told Elle in an interview that she met Jim at a friend’s house after her breakup with Jake Gyllenhaal.

“It happened out of the blue. This really drunk guy hit on me, made such a fool of himself and yelled at me,” Resse said. She added, “Jim came over and said please excuse my boyfriend, he just broke up with someone.”

The 47-year-old actress called Jim “a really good friend” for coming to the rescue of his drunk friend. In her words, “That’s just the way he is, a really good person.”

By December 2010, Jim proposed and Reese accepted. A few months later, on March 26, 2011, Reese and Jim married in California.

At the time, Witherspoon was already the mother of two children, Deacon and Ava, from her previous marriage to Ryan. Then, over a year after their wedding, Witherspoon and Toth welcomed their first child together, Tennessee James, in September 2012.

In their divorce announcement, Witherspoon and Toth both agreed that their child and extended family are priorities now.

“Our number one priority is our son and our entire family as we navigate this next chapter. These matters are never easy and very personal. We really appreciate everyone’s respect for our family’s privacy at this time.”

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The digital media rollup plan is useless

BuzzFeed CEO Jonah Peretti stands outside the Nasdaq marketplace in Times Square as the company goes public through a merger with a special purpose entity on December 6, 2021 in New York City.

Spencer Platt | Getty Images

In the case of marriage or engagement fails, it is common for participants to take time to work on themselves.

This is where the digital media industry can be found today.

After years of focusing on consolidation to better compete Google And Facebook for digital advertising dollars, many of the most well-known digital media companies have abandoned consolidation efforts to focus on differentiation.

“What you find is that companies are trying to find an irreplaceable core,” said Jonathan Miller, CEO of Integrated Media, which specializes in digital media investments. “The era of trying to bring these companies together is over and I don’t think it’s coming back.”

A 90% drop BuzzFeed Stocks since the company’s 2021 IPO, a failed Vice sale process, the collapse of special purpose vehicles and a choppy advertising market have prompted digital media executives to reassess the future of their companies. For now, executives have decided that more focused investments are better than attempts at scale.

“Right now, everyone is trying to get through a tougher market by focusing on their strengths,” BuzzFeed CEO Jonah Peretti said in an interview with CNBC. “We are now at a stage where we should only focus on innovating for the future and building more efficient, stronger and better companies.”

What’s happening in the digital media space reflects trends from the biggest media companies, including Netflix, Disney And Warner Bros. Discovery. Having lost nearly half or more of their market value in 2022, these companies, after years of global expansion and mega-mergers, have emphasized what sets them apart, be it distribution, brand, or programming quality. Disney CEO Bob Iger said the word “brand” more than 25 times at a Morgan Stanley media conference this month.

“I think brands are important,” Iger said. “The more choices people have, the more important brands become because of what they convey to consumers.”

Making strategic decisions based on consumer demand, not investor pressure, is a linchpin for the industry, said Bryan Goldberg, CEO of Bustle Digital Group, which has acquired and developed a number of women’s brands and websites, including Nylon , Scary Mommy and Romper and Elite Daily.

“Too many of the mergers were driven by investor needs and not consumer needs,” Goldberg said in an interview.

The Rise and Fall of the Rollup Dream

From late 2018 to early 2022, the digital media industry shared a common goal. Fueled by venture capitalists and private equity investors who made significant investments in the industry in the 2010s, companies like BuzzFeed, Vice, Vox Media, Group Nine and Bustle Digital Group or BDG, in various combinations, were talking to each other, about bringing together, to gain in size.

“If BuzzFeed and five of the other biggest companies were combined into one bigger digital media company, you could probably make more money,” Peretti told the New York Times in November 2018, kicking off a multi-year consolidation effort.

The justification was twofold. First, digital media companies needed scale to compete with Facebook and Google for digital advertising dollars. Adding websites and brands under one corporate umbrella would increase overall advertiser attention. Cost reductions through M&A synergies were an additional benefit for investors.

Second, longtime shareholders wanted out of their investments. Big legacy media companies like Disney and Komcast‘s NBCUniversal invested hundreds of millions in digital media in the early and mid-2010s. Disney invested more than $400 million in Vice. NBCUniversal put a similar amount into BuzzFeed. By the end of the decade, after the value of those investments had fallen, legacy media companies were making it clear to digital media executives that they were not interested in becoming buyers.

Vice Media offices display the Vice logo in Venice, California.

Mario Tama | Getty Images

With no strategic buyer available, the merger using publicly traded shares could allow VC and PE shareholders to withdraw money from investments well past the typical seven-year holding period. Digital media companies are eyeing special acquisition companies — also known as SPACs, or blank check companies — to quickly go public. The popularity of SPACs increased in 2020 and peaked in 2021.

Accelerated deal flow. Vox acquired New York Magazine in September 2019. About a week later, Vice announced that it had acquired Refinery29, a digital media company focused on younger women. BuzzFeed bought news aggregator and blog HuffPost in 2020, then acquired digital publisher Complex Networks in a SPAC transaction in 2021 to go public. Vox and Group Nine agreed to merge later that year.

BuzzFeed, then widely regarded by industry executives as having the strongest balance sheet and best growth narrative, successfully went public through SPAC in December 2021. Shares plummeted immediately, falling 24% in the first week of trading. The coming weeks and months were even worse. BuzzFeed opened at $10 a share. The stock is currently trading at around $1 — a 90% loss in value.

BuzzFeed’s stunning performance coincided with the implosion of the SPAC market in early 2022 as interest rates rose. Other companies that wanted to follow BuzzFeed abandoned their efforts to go public altogether. Vice tried and failed. Now it’s trying to find a buyer for the second time in two years. BDG and Vox, meanwhile, gave up the idea of ​​an IPO. Vox instead sold a 20 percent stake in itself to Penske Media, which owns Rolling Stone and Variety, in February.

The industry is turning inward

Consolidation has always been a flawed strategy because digital media could never grow big enough to compete with Facebook and Google, Integrated Media’s Miller said.

“You have to be of sufficient size to play a role, but that alone isn’t a winning formula,” Miller said.

Vice’s deal for Refinery29 is an excellent example of a deal motivated by scale that lacked consumer rationality, said BDG’s Goldberg.

“Digital media rollup has only proven successful when assets are carefully combined with consumers in mind,” Goldberg said. “In what world did the combination of Vice and Refinery29 make sense?”

Vice is in sales discussions with a number of buyers outside of the digital media landscape, CNBC previously reported. It’s also considering selling itself in chunks if there’s more interest in parts of the business, such as: B. its TV production facilities and its advertising agency Virtue.

Vice is a cautionary tale about what happens to a digital media company when its brand loses its shine, Miller said. Vice, which was valued at $5.7 billion in 2017, is now considering selling for around $500 million, according to people familiar with the matter, who asked not to be named as the sales talks are private are.

A Vice spokesman declined to comment.

“In the old days of media, with TV stations, if you were down, you could revive yourself with a hit,” Miller said. “In the internet age, everything is so easily interchangeable. If Vice is out, the audience just switches to something else.”

Companies like BuzzFeed, Vox and BDG are now trying to find enduring relevance amid a multitude of information and entertainment opportunities. BuzzFeed has decided to lean on artificial intelligence and is promoting new AI-generated quizzes and other content that fuses the work of staff writers with AI databases.

BDG has chosen to primarily target female audiences across all lifestyle categories.

Vox has focused on journalism and information across multiple industries. That’s a strategy that hasn’t really changed, though the market has turned against digital media, giving Vox CEO Jim Bankoff an opportunity to continue looking for deals. Just don’t expect the partners to be Vice, BDG, or BuzzFeed.

“We aim to be the leading modern media company with the strongest portfolio of brands, serving audiences on modern platforms – websites, podcasts, streaming services – while building franchises through multiple revenue streams,” said Bankoff. “There is no doubt that M&A is part of our playbook and we expect it will continue to be so in the future.”

find exit

As executives make strategic decisions with a sharper consumer eye, the problem of finding an exit for investors remains. Differentiation can open up the pool of potential buyers beyond the media industry. BuzzFeed’s focus on artificial intelligence, for example, could attract the interest of technology platforms.

It’s also possible that there will eventually be a second wave of peer-to-peer mergers. While Integrated Media’s Miller doesn’t anticipate a future rollup in the industry, BuzzFeed’s Peretti hasn’t shut down the concept if market conditions improve. As executives invest in fewer ideas and fewer industries, the end result could be healthier companies that are more attractive merger partners, he said.

“If everyone invested in what they do best and put them back together, you would have this diversified digital media company with real scale,” Peretti said. “That helps drive trade for all parts of a unified company. I think it’s still possible.”

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

WATCH: Axios’ Sara Fischer on BuzzFeed’s ongoing problems