Raphael Stevens

The U.S. Consumer Product Safety Commission is recalling more than two million Peloton bikes for injury and fall concerns.
Peloton shares tumbled Thursday.
Peloton’s stated intent to collaborate with the CPSC marks a change of tune for the company.
The news arrives on the heels of a disappointing earnings report from Peloton.

Rafael Henrique | LightRocket | Getty Images

Peloton shares tumbled Thursday after the U.S. Consumer Product Safety Commission said it is recalling 2.2 million of the company’s bikes over injury and fall concerns.
The stock dropped nearly 9% on Thursday.

The seat post on Model Number PL01 bikes can detach and break unexpectedly during use, according to Peloton and the CPSC. Peloton has received 35 reports of unexpected seat breakages between January 2018 and this month. During that period, over two million units of the bike were sold in the U.S.
There were 12 reported injuries, including one wrist fracture, related to the part defect, according to an internal Peloton memo. 
The recall does not affect bike owners in the United Kingdom, Germany or Australia, the company added.
“Our commitment to Member safety is unwavering,” Peloton said in a statement. “For Peloton, it was important to proactively engage the CPSC to address this issue and to work swiftly and cooperatively to identify a remedy.”
The New York-based company will offer free, updated seat posts to anyone using the recalled model. Peloton noted that while only 35 breaks were reported, all models of the bike in the U.S. could potentially have the issue.

The latest recall adds to a growing list of issues with Peloton’s hardware. Peloton has disclosed several product recalls in recent years.
In 2021, the company halted sales on its Tread+ treadmill after a young child died after being swept under the treadmill. That product is still off the market and the company continues to issue refunds.
In past recalls, Peloton has expressed disagreement with the government when it identified potential flaws, and was slow to cooperate with officials. This time around, the company’s stated intent to proactively collaborate with the CPSC marks a change of tune for the company.
In a memo sent to employees, Peloton said it took swift action for the relatively small number of affected bikes as part of its efforts to be a “member-first company.” Peloton added it aims to work with regulators and follow their lead on safety matters.
The news comes a week after the company reported a wider-than-expected loss for its fiscal third quarter. Notably, Peloton also forecast its first-ever decline in subscribers, citing an uncertain economic environment.
Some analysts last week said the company had shown some signs of progress in its turnaround plan as it pushes new business initiatives. More

Bowlero is the subject of a sprawling federal investigation into age discrimination and retaliation that authorities want to settle for $60 million, CNBC has learned. 
Former employees allege mistreatment as the bowling center operator expanded rapidly in recent years, documents show.
Bowlero’s attorneys call accusations of discrimination meritless and deny any wrongdoing on the part of the company.
Following the publication of this report, Bowlero’s intraday losses accelerated, and the stock traded as much as 9% lower Thursday afternoon.

Illustration by Gene Kim

Bowlero, the buzzy bowling company that was one of the few successful stocks to emerge from the SPAC boom, is the subject of a sprawling federal investigation into age discrimination and retaliation that authorities now want to settle for $60 million, CNBC has learned.
Negotiations over the settlement, proposed by the U.S. Equal Employment Opportunity Commission in early January, failed in April and the case is being referred to the EEOC’s general counsel “for potential enforcement action,” a letter sent by the EEOC shows. 

If the EEOC decides to sue and if it prevails in court, the company could face even steeper fines, experts said. 
Before the agency can sue Bowlero in federal court, the EEOC’s commissioners need to vote on the matter. 
The $60 million resolution proposal has not yet been publicly disclosed and was revealed to CNBC by attorney Daniel Dowe, who represents more than 70 former employees with claims against Bowlero. The EEOC briefed him about the settlement proposal so he could obtain authorization from his clients before agreeing to settle, he said.  
The EEOC’s probe into Bowlero, the world’s largest owner and operator of bowling centers, is wide-ranging and has been ongoing since 2016, company filings with the Securities and Exchange Commission show. It involves at least 73 former employees who claim they were fired based on their age, or out of retaliation, according to the filings. 
The company disclosed in the filings that EEOC’s investigation resulted in a determination of reasonable cause that Bowlero has been engaging in a “pattern or practice” — a term that indicates systemic issues — of age discrimination since at least 2013, which Bowlero denies.

The agency typically finds reasonable cause in only a small fraction of cases each year, EEOC data shows. 
Experts say the settlement proposal is particularly large for the agency, especially when compared with the monetary benefits the EEOC secured for victims of age discrimination in previous years.
The company has repeatedly denied allegations of discrimination and other wrongdoing.
If Bowlero — which went public in late 2021 through a special purpose acquisition company, or SPAC — ends up settling the case or losing in court, it won’t be a major blow to the company’s balance sheet or operations now, experts said. But the indirect costs could plague Bowlero well into the future, they said.
Following the publication of this report, Bowlero’s intraday losses accelerated, and the stock dropped as much as 9% Thursday afternoon. Shares closed about 4% lower.

A Bowlero location at Chelsea Piers in New York City. 

Bowlero CEO Thomas Shannon is accused of hosting “obvious beauty contests” with prospective hires over brief video calls to evaluate a candidate’s appearance as part of the hiring process, according to a complaint filed by a former employee and a sworn affidavit filed by another staffer to the EEOC.
At times, Shannon even screened candidates for lower-level, customer-facing roles at the company, which had nearly 10,000 employees across more than 300 bowling centers as of July, documents filed by former employees say. Shannon directed staff to replace aging employees with candidates perceived as young, hip and attractive, documents say.
CNBC sent a detailed message to Bowlero outlining the allegations of discrimination and retaliation made to the EEOC included in this story. When asked for comment, the company’s lawyers sent the same response for each: “This is a meritless claim.”
“Defamatory statements about Mr. Shannon will not be taken lightly,” the attorneys warned.
The 73 EEOC claims brought by individual former employees against the company sparked the larger pattern or practice investigation into age discrimination.
The EEOC has found reasonable cause in 55 of the cases and in the pattern or practice probe, Bowlero has said in filings. The other 18 individual claims remain under investigation, according to a February filing.
Only a fraction of EEOC age discrimination complaints — 2.8% in fiscal 2021 — resulted in reasonable cause determinations, EEOC data show. 
Robert Levy, an employment law attorney who has filed hundreds of EEOC claims on behalf of his clients over the last 20 years, said he was struck by the number of reasonable cause determinations the EEOC made in the complaints against Bowlero. 
“It’s sort of the difference between the organism being sort of rotten to the bone and, you know, a piece of a large organization maybe having some bad actors who handled a individual situation poorly or unlawfully,” Levy, who is not involved with the Bowlero case, told CNBC. 
“I think it cuts right to the heart of the way a company is alleged to be doing business,” he said.
Levy added that the findings raise concerns about “institutional disregard for the anti-discrimination laws.”
The EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex, gender identity, sexual orientation, national origin, age, disability or genetic information. 
When people face such discrimination in the workplace, they can file complaints with the EEOC, which has the authority to investigate the charges and works to settle the cases with employers.   
When settlement negotiations with the EEOC fail, the agency can decide to file suit against the company. If it chooses not to file suit, the victim can typically pursue their own private lawsuit. 
The EEOC declined to comment, citing federal law.
In filings, Bowlero informed investors about the reasonable cause determinations and said the company “contests such determination and intends to defend vigorously.”
While the proposed $60 million settlement with Bowlero was just a proposal, the number stands out when compared with other claims the EEOC has successfully settled out of court. 
EEOC data from fiscal 2021, the most recent available, shows the agency secured a total of $83.8 million in monetary benefits for victims of age discrimination across hundreds of cases over that entire year.

‘Fresh young faces’ to fuel a growth boom

In mid-February, Bowlero wowed investors when it announced what it called a record-breaking $273.4 million in sales in the three months that ended Jan. 1 — a 33.2% year-over-year increase. It posted a net income of $1.4 million.
A little over a month before its second-quarter earnings report was released, Bowlero announced its trailing 12-month revenue had topped $1 billion and its same-store sales had grown about 48% in the period. 
The stock, which started trading around $10 a share in December 2021, has climbed as high as $17 a share this year. It is now trading around $13 a share with a market cap of about $2.2 billion.
Bowlero’s ascent to becoming a profitable public company, which has caught the attention of big bank analysts and even CNBC’s Jim Cramer, started some 26 years ago in a rundown bowling alley in downtown Manhattan.
In 1997, Shannon was in his early 30s and living in New York City when he attended a party at a Union Square bowling alley and immediately saw potential in the pins and smoke-stained walls, he has said.
“It was the very traditional, warm beer, cold food, smelly bathroom, scary person on the lane next to you bowling center,” Bowlero Chief Financial Officer and President Brett Parker said during a presentation at the Raymond James Institutional Investors conference in March. Parker is leaving his role as the company’s chief financial officer later in May to focus on what Shannon called “strategic relationships,” the company announced Tuesday. Parker will remain as vice chairman of the board and president. 
“But thank you to Tom, because he had the vision to see that and know that it could and should be something more,” Parker said. 

The Bowlero location at Chelsea Piers in New York City.

With a $3,000 cash down payment and “$2 million borrowed,” Shannon bought the bowling alley and transformed it from a “dingy” hole in the wall to an “upmarket experience” with elevated food and drink offerings, sleek renovations and world-class customer service, the company has said. 
Shannon would spend the next two decades replicating that model in tired bowling alleys across America and building an empire that embodied his vision of cool. 
The company reached a turning point in 2013. It went from running six bowling alleys to 272 overnight after it acquired AMF, which was then the largest bowling company in the world and was in bankruptcy.
The following year, Shannon’s company acquired the Brunswick Corporation, the second-largest bowling company in the world, and changed his company’s name to Bowlero.
As aging alleys across the country began to get the Bowlero makeover, another part of the plan was unfolding behind closed doors, former employees say. Not only did the centers need a refresh, but Shannon determined its staff did as well, according to complaints filed to the EEOC. 
Between 2013 and 2015, at least 287 managers from 351 bowling centers were fired, according to employment data filed to the EEOC compiled by Dowe from former employees. 
Senior managers who survived the purge told the EEOC they were pressured to replace longtime staffers because “they were too old” and the company wanted “fresh young faces,” according to an affidavit filed by a former employee.

Customers arrive at a Bowlero location in Eden Prairie, Minnesota, March 18, 2017.
Andy King | Getty Images Entertainment | Getty Images

One top-performing employee in his mid-50s was fired “shortly after being stricken with a medical condition that caused his face to become disfigured,” a former member of the human resources team told the EEOC in a sworn affidavit.
Among staff, the top executive was also known to make condescending jokes about women, off-handed remarks that were “racially motivated” and negative comments about LGBTQ people, the affidavit says. Some female employees didn’t openly disclose their marital status or their pregnancies out of fear of losing their jobs, the former HR employee told the EEOC.
“It was well-known within the company that motherhood is the end of your career at the company if you work for Shannon,” said the employee. “Pregnancy was totally against Shannon’s practices of having attractive, sexually appealing persons at the forefront of his company, regardless of merit and competence.”
The employee recalled an instance where a “highly-qualified pregnant woman … was denied future opportunities because she ‘was showing.'” 
Bowlero called all of those allegations “meritless.”
In March 2022, the EEOC made its finding of reasonable cause that Bowlero has been engaging in a pattern or practice of age-related discrimination since 2013, which coincides with the company’s acquisition of AMF and its expansion, securities filings show.

Bowlero goes public

In July 2021 — nearly five years into the EEOC’s investigation into Bowlero — the company announced it would merge with Cayman Islands-based blank check company Isos Acquisition Corporation and go public at a valuation of $2.6 billion. 
The SPAC’s two CEOs were George Barrios and Michelle Wilson, who served as co-presidents of WWE until their departure from the company in January 2020. They are now back at the wrestling giant. 

Bowlero CEO Thomas Shannon, center, at the New York Stock Exchange, Dec. 16, 2021.
Source: NYSE

In its first S-4, filed to the SEC on July 21, 2021, Bowlero said, “there are currently a number of claims and legal proceedings pending against us.” It noted any potential liabilities were “not expected to have a material effect on our consolidated financial condition, results of operations or cash flows.” But Bowlero did not disclose the scope of the EEOC’s probe. 
The company used the same language under the heading “legal proceedings” in its next three amended S-4s until it received a letter from the SEC asking about the EEOC probe. 
“We are aware that certain former employees of Bowlero have filed charges with the U.S. Equal Employment Opportunity Commission alleging certain unlawful employment practices and discrimination,” says the SEC’s letter, dated Nov. 5, 2021. “Please advise what consideration you have given to disclosing these charges pursuant to Item 103 of Regulation S-K.”
Three days later, the company filed another amended S-4 and disclosed the scope of the EEOC’s probe. Bowlero reiterated in the edited filing that it did not expect the probe to have a “material effect” on its financial health.
The filing said that “management believes such claims to be in the ordinary course and without substantive merit.”
The SEC flagged the omission before Bowlero’s stock started trading, and correspondence with the agency is a routine part of the process. Still, experts questioned why the investigation was not disclosed at first.
“If the EEOC was investigating you, why didn’t you disclose this initially?” said Anthony Sabino, a longtime business attorney and law professor at The Peter J. Tobin College of Business at St. John’s University.
“Why did it take four tries?” he asked. “The bottom line is, it’s got to be disclosed.”
Bowlero, through attorneys, said it did not withhold material information at the time.
“The Company believed in 2021 and continues to believe that the EEOC claims at issue are without merit, is defending the claims aggressively and is confident that it will prevail,” the company’s lawyers said.
The attorneys said “there was no need” to disclose the probe when Bowlero went public, but the company later did so and has “updated its disclosures as appropriate since its IPO.”

Preplanned stock sales

In the midst of Bowlero’s settlement negotiations with the EEOC, which began Aug. 22, 2022, and failed in April, Shannon entered into a prescheduled trading plan, or a 10b5-1, to sell some of his holdings, filings show.
Between Jan. 6 and March 3, Shannon sold 2.4 million shares of his stock for about $35 million, securities filings show. The shares represent a fraction of Shannon’s overall holdings and the sales didn’t affect his over 80% voting power, which largely comes from his holdings in “super voting shares” of class B common stock.
Bowlero’s lawyers said the timing of the stock sales was set in November 2022 and that Shannon entered into the plan “at a time when he had no material non-public information about the company.” They added he “had no discretion over the timing or magnitude of sales” once the plan was established.
In December, the EEOC made 42 more reasonable cause determinations after the stock sale plan was enacted. Bowlero did not disclose the update until it filed a quarterly report on Feb. 15. 

The Bowlero location at Chelsea Piers in New York City.

The company’s lawyers said that although “disclosure of the additional [reasonable] cause filings may not have been required, [Bowlero] elected to do so in its quarterly filings—precisely as is contemplated by the securities laws. [Bowlero] has been, and will continue to be, in full compliance with its disclosure requirements.” 
There is no evidence that Bowlero broke federal law in regard to its disclosures, experts said.
Most executives receive stock as part of their compensation and the plans are a way for them to safely sell those holdings without spooking shareholders or arousing suspicion that they are engaging in insider trading.
They serve an important purpose, because without them, executives could face liability for selling their holdings, which they are entitled to do. 
However, in general, 10b5-1 plans have also come under criticism for the shield they could provide to executives — and how the plans could allow them to time the release of positive or negative information. 
For example, executives could wait to disclose negative information until after sales from a 10b5-1 are complete, to avoid a drop in the stock price, experts said. They may also release positive information prior to the start of the sale plan so they can benefit from any boost in the share price, according to experts. 
In a December 2020 white paper, Joshua Mitts, a law professor at Columbia University and one of the leading experts on securities laws and 10b5-1 plans, found that public companies disproportionately disclose positive news on days when executives sell shares under predetermined 10b5-1 plans.  

Failed negotiations, court battle could come

In an April 11 letter sent by the EEOC to Bowlero and the plaintiffs’ attorney Dowe, the agency said efforts to settle the allegations had been “unsuccessful” and the matter was being referred to the EEOC’s Office of General Counsel “for potential enforcement action.”
Dowe said negotiations fell apart when Bowlero countered the EEOC’s $60 million settlement proposal with a proposal of $500,000. 
Patrick Boyd, a labor and employment law attorney with The Boyd Law Group, said Bowlero could benefit from fighting the case in court, if the EEOC sues.
“They get a chance to really scrutinize the individual plaintiffs and the claims that they have and maybe lop off some of the claims or scare some plaintiffs away,” Boyd said. 
On the other hand, it can be very “advantageous” for discrimination victims if the EEOC decides to prosecute their case and it could result in higher settlements, said Levy, the employment law attorney who has worked on EEOC claims.
In Levy’s experience, settlements obtained through litigation tend to be higher than the amounts decided on during EEOC mediation, he said. Further, victims’ damages and attorneys fees accrue more the longer the case goes on, which also contribute to higher settlements, he said. 

The Bowlero location at Chelsea Piers in New York City.

Regardless, Bowlero appears to be well-situated to pay damages if it loses in court. Raphael Duguay, an assistant professor of accounting at Yale University’s School of Management, reviewed Bowlero’s balance sheet and said a multimillion-dollar settlement or verdict wouldn’t have a major impact on its operations or cash flow and would represent a loss of only a few cents per share. 
Analysts who cover the company agreed. They told CNBC they weren’t concerned about the EEOC’s probe or any potential settlements.
Steven Wieczynski, a managing director at Stifel who initiated coverage of Bowlero at a price target of $26 in late March, said he doesn’t care about the ongoing EEOC case and its settlement proposal. He said if Bowlero was ordered to pay a settlement “it would have no impact” on his view of the company “even if they had to pay $100 million.”
Still, Duguay said that the indirect costs of the EEOC’s investigation, while hard to calculate, could be damaging in the long term and larger than the agency’s proposed settlement given the rise in consumer activism. 
“That indirect cost would take the form of reputational damage because there’s public shaming; this comes out and then people don’t go to their bowling alleys anymore, so they’re losing a lot of revenue,” Duguay said. “I think that’s the key concern.”
“If the EEOC conveys the message that Bowlero is a serious offender in terms of discrimination and lack of inclusion, the indirect effects of that can be very significant,” Duguay said. 
In response, Bowlero’s attorneys reiterated that the company expects to withstand any outcome of the probe.
“Most importantly, the Company believes the EEOC claims are meritless and that it ultimately will prevail,” the lawyers said. “Second, the Company has more than sufficient resources to resolve the matter if it chooses to do so.”
Disclosure: “Mad Money with Jim Cramer” airs on CNBC. More

The Senate is holding its first hearing Thursday on the Secure and Fair Enforcement Banking Act.
Last month, a group of bipartisan lawmakers reintroduced the SAFE Banking Act in the House and Senate.
The legislation will free up banking services for the cannabis industry.

Aaron Smith, CEO of the National Cannabis Industry Association, speaks during a news conference on the Safe Banking Act outside the U.S. Capitol in Washington, Sept. 14, 2022.
Ting Shen | Bloomberg | Getty Images

The Senate banking committee is holding its first-ever hearing Thursday on a bipartisan bill that would allow the cannabis industry to access traditional banking services, which marijuana businesses see as critical to their survival.
The meeting, titled Examining Cannabis Banking Challenges of Small Businesses and Workers, will hear testimony from lawmakers on both sides of the aisle, including Sens. Jeff Merkley, D-Ore., and Steve Daines, R-Mont., who reintroduced the stand-alone bill last week. The committee will also hear from witnesses including the Cannabis Regulators of Color Coalition, Drug Policy Alliance and the United Food and Commercial Workers International Union.

Thursday’s hearing will determine next steps in getting the bill to the Senate floor for a vote, as Senate Majority Leader Chuck Schumer and other key lawmakers express support for it. It comes as the marijuana industry, which is facing a downturn even as more states approve legal markets, has pushed Congress to take action on the issue.
“Without full access to the banking and payments system, legal cannabis businesses are forced to operate in the shadows,” said Sen. Sherrod Brown, D-Ohio, who is also chair of the committee.
Many business owners also rely on funds from friends and family in lieu of small business and bank loans because “they might go through all the cost and effort, only to be denied,” Brown said.
Echoing Brown, committee ranking member Sen. Tim Scott, R-S.C., said “Congress has a responsibility to ensure all legal industries have access to financial institutions and services.”
But he added lawmakers must eliminate the possibility of loopholes in money laundering laws before the act becomes law. Any loopholes could make it harder for law enforcement to catch drug and weapons traffickers, Scott said.

Senate action on the bill is welcome news to executives across the industry, including Craig Sweat, owner of Uncle Budd NYC, the company that first brought mobile dispensary trucks to New York City. 
“I’ve been held up for so long that I have product that is sitting and getting old,” said Sweat, who after years of operating his mobile dispensary company and then a delivery service, has entered into a lucrative manufacturing and licensing partnership with Omnium Canna to produce his products.
“I have no way of transferring funds, I can’t pay staff, I’m just sitting on my hands,” Sweat said, adding his latest business venture hasn’t been able to launch as banks, fearful of federal prosecution, have been giving him the ‘runaround.'”

The Secure and Fair Enforcement Banking Act, also known as SAFE, hit a wall in Congress last year after lawmakers excluded it from a $1.7 trillion government funding bill. It was the seventh time the legislation, which has always had strong bipartisan support, failed to get through the Senate after passing in the House of Representatives.
Last month, the bill, which has been tweaked since last session, was reintroduced by Sens. Merkley and Daines, and Reps. Dave Joyce, R-Ohio, and Earl Blumenauer, D-Ore. The bill has strong bipartisan support with 38 additional co-sponsors in the Senate and eight more co-sponsors in the House.
Under federal law, banks and credit unions face federal prosecution and penalties if they provide services to legal cannabis businesses since it is still a Schedule I substance, along with heroin and LSD. Schedule I substances, according to the federal Drug Enforcement Administration, are defined as drugs with no currently accepted medical use and a high potential for abuse. 
Without access to traditional banks, legal marijuana businesses can’t access loans and capital, or even use basic bank accounts. As such, businesses are forced to operate in a cash-only model, which can result in robbery, money laundering and organized crime.
Cat Packer, chair of the Cannabis Regulators of Color Coalition, told senators small cannabis businesses and workers are forced to operate in a “gray market” dealing in cash-only transactions. The term “black market” has negative connotations for Black and brown business operators disproportionately affected by funding access.
“We don’t want to equate black with illegal,” Packer, who is Black, said. A Black man behind her nodded enthusiastically.
“I want to just emphasize this: the only way to eliminate the criminality of small businesses and workers is to completely remove cannabis from the Controlled Substances Schedule,” Packer added.
Key components of the bill protect banks that work with state-legal cannabis businesses. The legislation would shield them from being penalized by federal regulators, creating a safe harbor from criminal prosecution, liability and asset forfeiture for banks, their officers or employees. 
The latest version of the plan also extends safe harbor to organizations that assist underserved communities, including the Community Development Financial Institutions and Minority Depository Institutions, smaller institutions tailoring to communities that have often lacked access to banking services.
This week, the American Bankers Association, which represents banks of all sizes from every state in the country, sent a letter thanking the committee for taking up the matter and urging senators to “markup and advance the legislation as soon as possible.”
In a joint statement released after the hearing, Schumer and Sens. Cory Booker, D-N.J., and Ron Wyden, D-Ore., said they were “encouraged” to see the bill reintroduced after key improvements to the legislation. The lawmakers co-authored the Cannabis Administration and Opportunity Act together, which would remove marijuana from the federal list of controlled substances.
“We look forward to watching this legislation progress through the banking committee and working with bipartisan partners to include additional improvements, such as the Harnessing by Pursuing Expungement (HOPE) Act, which would support states that want to expunge cannabis record with grants,” they said. More

Sony’s Pure Flix, a faith-based streaming service, will merge with Great American Media, the owner of two cable networks.
Content will cross both platforms as both look to beef up their viewership base. Pure Flix has about 1 million subscribers.
Great American launched its cable TV networks in 2021, which prominently feature holiday content, as a rival to the Hallmark Channel.

Actress Maria Conchita Alonso attends the Los Angeles premiere of “God’s Not Dead: We The People” at Hilton Los Angeles/Universal City on September 21, 2021 in Universal City, California.
Paul Archuleta | Getty Images

Sony Pictures Entertainment and its streaming service Pure Flix are making room on the cable TV dial. 
The company’s streaming service, known for faith-based content, is merging with Great American Media, a recent upstart cable rival to the Hallmark Channel. 

The combination will give Pure Flix’s content a place in front of traditional TV viewers. It will also beef up the slate for Great American’s TV networks Great American Family and Great American Living. 
As part of the deal, which has yet to close, content from both Pure Flix and Great American Media will cross each other’s platforms. 
Sony acquired Pure Flix in December 2020 for an undisclosed sum. The service, which features content such as the “God’s Not Dead” film franchise and “The Chosen” series, costs $7.99 a month and has approximately 1 million subscribers in the U.S. and Canada. 
The deal will also give Great American’s fledgling TV networks a streaming home. 
Great American Media and its two cable TV networks were launched in 2021 by Bill Abbott, former CEO of Crown Media, the parent of the Hallmark Channel. During his tenure at Hallmark, he helped turn the network into a Christmas movie behemoth, which continues to beckon some of the highest cable TV ratings during the holiday season. 

Lori Loughlin is seen on December 31, 2018 in Los Angeles, California.
SMXRF | Star Max | GC Images

Abbott left Hallmark in 2020 after backlash involving commercials featuring a same-sex wedding ceremony. The network pulled the ads after facing pressure from a conservative group, then reversed its course shortly after a gay rights advocacy group attempted to launch an advertising boycott. 
Soon after, Abbott launched Great American Media and signed deals with some of the top stars known for their Hallmark Channel movies and series.

Familiar faces at Great American Media

Danica McKellar, who starred as Winnie Cooper in the original “Wonder Years”
Candace Cameron Bure, the longtime queen of Hallmark holiday films who recently found herself mired in controversy over comments regarding same-sex couples
Lori Loughlin, the former “Full House” cast member, who had been fired from Hallmark for her role in the 2019 college admissions scandal

Abbott will remain as CEO of the merged companies, and report to the board of directors. Terms of the deal weren’t disclosed, but Great American Media will hold the majority interest in the merged company. 
Great American Media took the step of launching its content on traditional cable networks rather than a streaming service during a time when more and more customers are fleeing cable bundles in favor of streaming. Cable subscriber losses continued to accelerate in the most recent quarter. 
While the company’s networks are available in 50 million pay TV homes, and touts that it is the fastest-growing TV network based on Nielsen ratings, it has yet to start its own streaming service. 
Instead, the networks have been featured in internet TV bundles, such as Frndly TV and Fubo. Great American Media also has a free, ad-supported channel for its content.  More

CNN is trying to rebrand itself as a down-the-middle, facts-only network.
Trump’s Wednesday town hall performance felt more like a rally than an attempt to keep him tethered to the truth.
CNN allowed a pro-Trump cheering crowd to laugh and root on lies about election fraud and other comments.

Former President Donald Trump speaks at a campaign event at the DoubleTree Manchester Downtown on Thursday, April 27, 2023, in Manchester, NH.
Jabin Botsford | The Washington Post | Getty Images

CNN still has a Donald Trump problem.
Under the leadership of new CEO Chris Licht, the cable news network wants to reimagine itself as a no-nonsense, politically down-the-middle product since Discovery’s merger with WarnerMedia last year.

Wednesday’s 70-minute town hall with Trump, moderated by anchor Kaitlan Collins, was CNN’s first big opportunity since the change of ownership to showcase itself as a network of facts. Licht told CNBC last year the network wants to hear from both Democrats and Republicans, but it won’t allow people to come on and say it’s raining when it’s not.
Trump has a history of peddling election fraud lies — an example of saying it’s raining when it’s not. But instead of forcing the former president to stay within the bounds of the truth, the town hall set up a dynamic where Trump ran roughshod over Collins, who repeatedly attempted to keep him from lying throughout the hour-plus event.
Collins gamely pointed out throughout the event when Trump was veering into fantasy land. That may have worked journalistically – had it not been for the fact that CNN inexplicably allowed a partisan audience to cheer on Trump’s running commentary throughout the event. The effect of the raucous crowd turned the town hall from a potentially probing interview into a de facto Trump rally, undermining Collins’ attempts at holding him to task.
At one point, bothered by Collins’ consistent attempt to tether Trump to the truth, Trump called Collins “a nasty person.” The crowd cheered.
Collins spent the first 20 minutes of the town hall discussing his refusal to back off election fraud claims, which have been consistently debunked by courts, election experts and even several prominent Republicans. She took a question from an audience member who asked if Trump would “suspend polarizing talk of election fraud” during his run for president.

Trump seemed confused by the question.
“If I see election fraud, I think I have an obligation to say it,” Trump said. “But the answer is yes.”
Collins followed up, “So you will suspend talk, to his question, about the 2020 election on the campaign trail?”
Trump answered with a nonanswer: “Well, I guess we’re going to just win. We’re at a point now. We’re getting so close. Let’s just win it again and straighten out our country.”
About 10 seconds later, he followed with: “The Constitution says that we’re supposed to have legal and well-maintained and well-looked-at elections. And we didn’t have that.”
Collins again interjected that there’s no evidence of election fraud. Trump responded by saying he knows she has an agenda but “that was a horrible election” and “unless someone is very stupid” before trailing off and not finishing the thought.
In other words, Trump said he’d suspend talk about the 2020 election fraud and then, seconds later, spoke about 2020 election fraud. Moreover, he brushed off Collins’ attempt at keeping him within the bounds of reality as having an agenda.
This is the Trump problem in a nutshell. Live fact-checking Trump in an interview is extremely difficult because he will steamroll most interviewers with a torrent of words.

CNN reaction

“Tonight Kaitlan Collins exemplified what it means to be a world-class journalist,” CNN said in a statement. “She asked tough, fair and revealing questions. And she followed up and fact-checked President Trump in real time to arm voters with crucial information about his positions as he enters the 2024 election as the Republican frontrunner. That is CNN’s role and responsibility: to get answers and hold the powerful to account.”
Licht followed up Thursday morning with an internal staff address, saying he thought the event “absolutely, unequivocally” served America.
“You don’t have to like the president’s answers but you can’t say we didn’t get them,” Licht said, according to a transcript obtained by CNBC. “That’s our job – to get answers. And we held him accountable like no other news organization in years.”
But even CNN executives must have realized Collins didn’t really hold Trump to account on Wednesday. Her attempts at keeping him on track were admirable but tantamount to an exhausted parent trying and failing to keep her children from eating their Halloween candy after trick-or-treating. Plus, CNN had added a crowd of hundreds to cheer every time a child ate a piece of candy.
“While it might’ve been uncomfortable to hear people clapping in response to some of the president’s answers, that audience represents the views of a large swath of America,” Licht said. “The mistake the media made in the past is ignoring that they exist.”
The town hall was successful as an event in that it allowed CNN’s audience to again see Donald Trump, who is leading polls as the Republican front-runner to win the nomination in 2024. Viewers can now make their own minds up about what they saw.
Warner Bros. Discovery Chief Executive David Zaslav told CNBC last week why CNN allowed Trump to participate in a town hall despite his history of election fraud lies.
“For us, the focus is let’s get the message right, let’s get the brand right, let’s the get the balance right,” he told CNBC’s “Squawk Box.” “There are a number of advocacy networks out there. Our focus is to be a network of facts, the best version of the facts, as Carl Bernstein would say, great journalism, and not just politics, but when we do politics, we need to represent both sides.”
From an event-planning perspective, the setup of the town hall didn’t allow for the best version of facts to be presented. That may be an olive branch for Trump supporters, but it isn’t the best journalism.
WATCH: Jury finds Donald Trump did sexually abuse E. Jean Carroll, awards her $5 million in total damages. More

The Biden administration’s decision to end the emergency comes as deaths and hospitalizations from Covid are at their lowest point since March 2020.
Hospitals will lose flexibility to add bed capacity if Covid surges, and the CDC will have less data to track the spread of Covid.
While public health experts agree the U.S. has many more tools to fight Covid today, they warn the virus will remain a persistent threat to the nation’s battered health-care system.

A sign outside of a hospital advertises COVID-19 testing on November 19, 2021 in New York City.
Spencer Platt | Getty Images

The U.S. public health emergency declared in response to Covid-19 comes to an end Thursday more than three years after the pandemic began.
The Biden administration’s decision to end the emergency comes as deaths and hospitalizations have declined dramatically due to the availability of vaccines, antiviral treatments and widespread exposure to the virus.

Deaths from Covid have fallen to their lowest point since March 2020, when the rapid spread of the virus in the U.S. overwhelmed the health system and lead to widespread shutdowns of schools, businesses and public venues.
Hospital admissions from the virus have also fallen to the lowest level since the U.S. started tracking the data in August 2020.
The end of the emergency will bring significant changes in how the U.S. responds to the virus. Hospitals will lose flexibility to rapidly add bed capacity if patient admissions surge, and the Centers for Disease Control and Prevention will scale back its efforts to track the virus.
After the emergency ends, the CDC will no longer be able to compel labs to report Covid test results. The agency does not have the authority to compel U.S. states to report new cases.
CDC Director Dr. Rochelle Walensky, who will step down at the end of June, warned Congress last week that the agency still has to negotiate data-sharing agreements with individual jurisdictions, a time-consuming process that puts the nation at risk.

“This should worry us all primarily because of what it says about the visibility we will have into the next outbreak,” Walensky told the Senate health committee. “We will be back to square one having to build and negotiate surveillance capacity while we fight a pathogen.”
While public health experts agree the U.S. has many more tools to fight Covid today, they warn the virus will remain a persistent threat to the elderly, the vulnerable and the nation’s fragmented, battered health-care system.
“I think we’ve passed the worst now, but there’s going to be a steady drumbeat of hospitalizations and deaths for many years to come,” said Lawrence Gostin, director of the O’Neill Institute for National and Global Health Law at Georgetown University.

The virus is still killing

The U.S. public health emergency has been renewed 13 times since the Trump administration first issued the declaration on Jan. 31, 2020, when there were just six known cases of Covid and no known deaths in the U.S.
In the three years since then, Covid has killed more than 1.1 million people in the U.S. and hospitalized millions more in the worst public health crisis since the influenza pandemic more than a century earlier in 1918.
The virus was the fourth-leading cause of death in the U.S. in 2022 – two years after Covid first emerged – behind only heart disease, cancer and unintentional injuries.
The World Health Organization declared an end to the global Covid emergency on Friday. But WHO chief Tedros Adhanom Ghebreyesus warned national governments against dismantling the systems they built to respond to the virus.
“This virus is here to stay. It is still killing, and it’s still changing. The risk remains of new variants emerging that cause new surges in cases and deaths,” Tedros said.

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More than 1,000 people are still dying a week from Covid in the U.S., the overwhelming majority of whom are age 75 or older, as the public has largely lost interest in staying up to date on vaccines.
Only 42% of seniors are up to date on their Covid vaccines, according to CDC data. Just 17% of the total U.S. population has gotten the latest booster.
“You need to remain up to date to have adequate protection,” said Dr. James Lawler, infectious disease expert at the University of Nebraska Medical Center.
“Similar to immunity from vaccination, surviving Covid gives you immunity, but that immunity doesn’t last,” Lawler said.
The Biden administration says the end of the emergency will not impact access to Covid vaccines and antiviral treatments, because there’s still a federal stockpile, but many consumers will have to start paying for Covid tests.
Gostin said a misinformation campaign against vaccines, particularly in conservative states, as well as a general vaccine fatigue has put the nation’s health at risk.
Meanwhile, millions of people are at risk of losing coverage through Medicaid, the public health insurance program for lower-income people, as states are now allowed to review eligibility for the first time in years. Congress basically banned states from kicking people off Medicaid during the pandemic, but these protections expired in April.
“We’re going to see the unravelling of the social and health-care safety net over the next months,” Gostin said. “There will be a surge in uninsurance and people lacking access to health care,” he said.

Health system battered

Hospitals have been battered by repeated Covid waves over the past three years, with many health-care facilities facing staffing shortages as many doctors and nurses suffer burnout.
With the end of the emergency, hospitals will lose the flexibility to rapidly add beds in unconventional settings and tap doctors in training to help with surges in patient admissions.
Leading medical associations warned the Biden administration last fall that emergency departments were at a breaking point with patients forced to wait due to inadequate bed capacity and staffing.
And hospitals now face the persistent threat of Covid on top of disease from flu and and respiratory syncytial virus, which already strained capacity during bad respiratory virus seasons prior to the pandemic.
“We have really lost so much health-care capacity in this country by loss of beds, loss of health-care workers,” said Michael Osterholm, a leading epidemiologist and director of the Center for Infectious Disease Research and Policy in Minnesota.
“We better hope we’re not going to see a big surge in infectious disease cases of any kind in the months to years ahead,” Osterholm said.
Lawler, who advised the Bush and Obama administrations on biodefense and pandemic preparedness, said hospitals may need the flexibilities provided by the public health emergency if there are major Covid surges again in the future.
“I am not optimistic that once the public health emergency declaration goes away, that anybody in Washington is going to be eager to declare another, even if it’s warranted,” he said. More

A Republican law has slashed the average tax rates of Big Pharma companies by more than 40% since it was enacted in 2017, Senate Finance Committee Democrats said in a report.
The GOP bill allowed U.S.-based pharmaceutical companies to access lower tax rates on their foreign income.
The committee said drugmakers AbbVie, Abbott Laboratories, Amgen, Bristol Myers Squibb and Merck all report most of their tax income overseas.

(L-R) Richard A. Gonzalez, chairman and CEO of AbbVie Inc., Pascal Soriot, executive director and CEO of AstraZeneca, Giovanni Caforio, chairman of the board and CEO of Bristol-Myers Squibb Co., Jennifer Taubert, executive vice president and worldwide chairman of Janssen Pharmaceuticals, Johnson & Johnson, Kenneth C. Frazier, chairman and CEO of Merck & Co. Inc., Albert Bourla, CEO of Pfizer, and Olivier Brandicourt, CEO of Sanofi testify in front of the Senate Finance Committee on ‘Drug Pricing in America: A Prescription for Change, Part II’ on February 26, 2019 in the Dirksen Senate Office Building in Washington, DC.
Win McNamee | Getty Images

A Republican law has slashed the average tax rates of big pharmaceutical companies by more than 40% since it was enacted in 2017, Senate Finance Committee Democrats said in a report Thursday. 
“Democrats warned in 2017 that the Republican tax law was going to amount to a massive giveaway to multinational corporations, and here’s the proof that that’s exactly what happened,” Sen. Ron Wyden, D.-Ore., the committee’s chair, said in a press release on the report. 

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The GOP’s $1.5 trillion Tax Cuts and Jobs Act brought sweeping changes to the tax code, including a provision that essentially imposed a worldwide minimum tax on foreign earnings. 
That provision allowed U.S.-based pharmaceutical companies to access lower tax rates on their foreign income, the report said. 
It also created a “huge incentive” for those companies to put their profits, investments and jobs overseas, Democrats added in the report.
Pharmaceutical companies report 75% of their taxable income overseas, the report said.
The pharmaceutical industry paid a tax rate of about 20% on average from 2014 to 2016, the years right before the law passed, acccording to the commitee’s analysis.

The report said the average rate fell to 11.6% in 2019 and 2020, which resulted in billions of dollars in tax savings for pharmaceutical companies. 
“There’s no question that the tax system was broken prior to 2017, but instead of fixing it, Republicans gave Big Pharma a green light for some of the most aggressive tax gaming highly trained accountants can dream up,” Wyden said.
He called for significant tax reform to ensure huge corporations “pay their fair share, while helping to spur investment in the U.S., not in foreign countries.” 
The report is the latest in Wyden’s investigation into Big Pharma’s tax practices. The Oregon senator said the committee will release a final report on the probe later this year.
Lawmakers have long criticized the industry for its skyrocketing drug prices, which can shut out some patients from accessing life-saving medicines. Wyden’s probe only adds fuel to that fire.
In July, Wyden released a report detailing how drugmaker AbbVie used offshore subsidiaries to avoid paying billions of dollars in taxes on prescription drug sales. 
That report found that Chicago-based AbbVie generated 75% of its sales from U.S. patients in 2020, but reported only 1% of its taxable income in the country. 
That report alleged that AbbVie holds its intellectual property in a Bermuda-based subsidiary with no employees or other major operations. Bermuda imposed no taxes on that subsidiary’s profits, income, dividends or capital gains.
Wyden also obtained similar information about other U.S. pharmaceutical companies, including Abbott Laboratories, Amgen, Bristol Myers Squibb and Merck. 
For most of the companies, more than 80% of their taxable income was reported overseas.
Some of the companies have defended their tax approach in the wake of the committee’s investigation.
The companies did not immediately respond to a request for comment on Wyden’s findings. More