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    Eli Lilly expects FDA decision on Alzheimer’s treatment donanemab by the end of the year

    Eli Lilly said it filed an application for full U.S. Food and Drug Administration approval of the company’s Alzheimer’s treatment, donanemab.
    The pharmaceutical company expects the agency to make a decision by the end of the year.
    Eli Lilly also presented the final results from an 18-month phase three trial on the monthly antibody infusion, which showed the drug significantly slowed disease progression.
    Eli Lilly is among the pharmaceutical companies racing to market new treatments for the mind-robbing disease after Eisai and Biogen’s drug Leqembi won FDA approval this month

    Eli Lilly on Monday said it applied for full U.S. Food and Drug Administration approval of its Alzheimer’s treatment, donanemab, and expects the agency to make a decision by the end of the year.
    The application is based on positive phase three clinical trial results on donanemab, which significantly slowed the progression of Alzheimer’s in patients at the early stages of the mind-robbing disease.

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    The results also showed that treating patients who are at the earliest stages of the disease can slow Alzheimer’s progression by around 40% to 60%.
    “The earlier you begin to use the drug perhaps the more slowing that can be,” Eli Lilly CEO David Ricks said in an interview Monday on CNBC’s “Squawk on the Street.”
    Eli Lilly is among the pharmaceutical companies racing to market new treatments for the disease after Eisai and Biogen’s drug Leqembi won FDA approval this month. The agency’s signoff on Leqembi was a milestone in the treatment of Alzheimer’s, even though the drug and donanemab aren’t cures.
    Both treatments are monoclonal antibodies that target amyloid plaque in the brain, considered a hallmark of the disease.
    An FDA approval of Eli Lilly’s donanemab would expand the treatment options for the more than 6 million Americans of all ages who have Alzheimer’s, the fifth-leading cause of death for adults over 65.

    The company did not disclose how it would price donanemab after a potential approval.
    But the Centers for Medicare & Medicaid Services has said Medicare will cover Alzheimer’s drugs – as long as they receive full FDA approval and health-care providers participate in a registry system that collects data on how the drugs work in the real world.
    Ricks said the registry requirement appears to be a “pretty light touch” that doesn’t “take a lot of effort.” But he noted that the data that will be collected seems “pretty low value” in the process.
    “So we hope to have that [requirement] rescinded in time and full coverage for donanemab when it’s approved,” Ricks told CNBC.

    Positive trial results for Lilly’s Alzheimer’s treatment

    Eli Lilly on Monday also presented the final results from the 18-month phase three trial of the monthly antibody infusion donanemab at the Alzheimer’s Association International Conference in Amsterdam. The results confirm the initial data the company released in early May. 
    The final results also address a previous concern of the FDA, which rejected Eli Lilly’s application for expedited approval of donanemab in January. At the time, the agency asked the company for more data on patients who received the treatment for at least 12 months. 

    Eli Lilly and Company, Pharmaceutical company headquarters in Alcobendas, Madrid, Spain.
    Cristina Arias | Cover | Getty Images

    The trial followed more than 1,700 patients in the early stages of Alzheimer’s who had a confirmed presence of amyloid plaque. Roughly half of participants received donanemab.
    Patients who received donanemab demonstrated a 35% slower decline in memory, thinking and their ability to perform daily activities at 76 weeks — roughly a year and a half of treatment — compared with those who received a placebo. 
    Patients at the earliest stage of the disease had a greater benefit after taking donanemab, demonstrating a 60% slower decline in cognitive function. 
    The trial also found that patients who took donanemab were almost 39% less likely to progress to the next stage of Alzheimer’s disease.

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    Almost half of patients – 47% – who received donanemab showed no disease progression a year after treatment began, according to the final trial results. That compares with 29% for those who did not receive the drug. 
    The Alzheimer’s Association, an organization that advocates for people who have the disease, said it “strongly supports” FDA approval of donanemab based on the positive results.
    “The results illustrate that initiating treatment as early as possible enables the possibility of a bigger beneficial effect, but also that there is potential for slowing of disease progression even when treatment is started later in the disease progression,” said Maria Carrillo, chief science officer of the Alzheimer’s Association, in a statement. 

    Benefits and side effects of donanemab

    More than half of patients completed the treatment in the first year, and 72% completed it in 18 months due to clearance of amyloid plaque. 
    The Alzheimer’s Association said that data point is “notable for patients, families, prescribers and payers because patients may not need to receive this treatment on an ongoing basis for the rest of their lives.” 
    Donanemab cleared amyloid plaque at six months in 34% of patients who had intermediate levels of a protein called tau, which can become toxic and kill neurons.
    At 76 weeks, donanemab cleared the plaque in about 80% of patients with the same tau levels. That compares with 0% plaque clearance among those who took the placebo over the same time period.
    But donanemab’s benefits will have to be weighed against the risks.
    Drugs that target and clear amyloid plaque can cause brain swelling and bleeding in patients that in some cases can be severe and even fatal.
    The trial results said nearly 37% of people on donanemab had these side effects, called amyloid-related imaging abnormalities, compared with nearly 15% who received a placebo. Three trial participants died from those side effects, according to Lilly.
    Those side effects have also been observed in Leqembi. More

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    China’s floundering economy is a test for Xi Jinping

    When janet yellen visited Beijing this month she did her bit for the local restaurant trade. America’s treasury secretary dined with her team at an establishment known for Yunnanese dishes, which subsequently unveiled a “God of Wealth” menu in her honour. She also hosted a lunch with female entrepreneurs and economists (including a representative of The Economist). Although restaurants have prospered since China dropped its covid controls at the end of last year, the gods of wealth have been less kind to the rest of the country’s economy—as gdp figures released on July 17th revealed. They showed that the economy grew by 6.3% in the second quarter compared with a year earlier. That looks impressive. But it was slower than expected. And the figure was flattered by a low base in 2022, since Shanghai and other cities were locked down last year. The economy grew by only 0.8% in the second quarter compared with the first three months of the year, an annualised rate of merely 3.2% (see chart 1).Obstacles to growth were both foreign and domestic. The dollar value of China’s exports, for example, shrank by more than 12% in June, compared with a year earlier—the sharpest drop since the height of the pandemic in February 2020. “The recovery of the world economy has been sluggish,” said Fu Linghui of the National Bureau of Statistics, by way of explanation. Meanwhile, the recovery of China’s property market is lost in the vegetable patch. Sales of flats fell by 27% in June compared with a year earlier. They are now running well below the pace economists think would be justified by underlying demand, given China’s urbanisation and the widespread desire for better accommodation. China’s “nominal” growth, before adjusting for inflation, was also weaker than the inflation-adjusted figure; something that has happened only four times in the past 40 quarters. It suggests that the price of Chinese goods and services is falling. Indeed, it implies they fell by 1.4% in the year to the second quarter, which would be the sharpest drop since the global financial crisis (see chart 2). Consumer prices did not rise at all in June compared with a year earlier, and producer prices—charged at the factory gate—fell by 5.4%. China’s statisticians have blamed this weakness on changes in global commodity prices, such as the falling cost of oil. That is an unconvincing explanation for the weakness of China’s nominal growth, because gdp should count only the value added to a good in China itself, thus excluding the value of imported commodities. Perhaps deflationary pressures are spreading. Or perhaps China’s statisticians have got their sums wrong. Some members of the public feel the economy is doing even worse than the official figures suggest. There is a “temperature difference” between the macroeconomic data and “micro feelings”, as one commentator put it. In response, Mr Fu of the National Bureau of Statistics pointed out that macroeconomic data is more comprehensive and reliable than “micro feelings”—prompting a netizen to joke that if state statisticians say you are okay, you should adjust your feelings accordingly. The government’s own feelings towards the economy are hard to read. During the global financial crisis, after world trade fell off a cliff, China’s authorities swooped in with vast stimulus, which propelled economic growth and spilled over to the rest of the world. Today they seem in no such rush. The country’s central bank has cut interest rates a little. Tax breaks on the purchase of electric vehicles have been extended. Yet those hoping that the State Council, China’s cabinet, would release a detailed fiscal stimulus plan after its meeting on Friday 14th were disappointed. This lack of urgency may reflect the government’s enduring confidence in the recovery. Officials may believe that the economy still has enough momentum to meet their targets for the year, including for gdp growth of around 5%. The government’s restraint may also betray its misgivings about additional stimulus. Policymakers do not want a lending and spending spree to erode the profitability of state-owned banks or undermine financial discipline among local governments.China’s economic reopening so far has been led by services industries, such as restaurants, that tend to be labour-intensive. China’s cities have added 6.8m jobs in the first six months of the year, more than half of the government’s 12m target for the year. Although unemployment among urban youth increased to 21.3%, the overall jobless rate remained steady at 5.2% in June, below the target of 5.5%.But the labour market can be a lagging indicator of economic momentum. If growth remains weak, unemployment will eventually edge up. In such a scenario, the government may be forced to do more to revive the economy. Officials can tolerate a temperature difference between data and people’s feelings. They will be unwilling to tolerate a glaring gap between the economy and their targets. ■ More

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    How much trouble is China’s economy in?

    When janet yellen visited Beijing this month she did her bit for the local restaurant trade. America’s treasury secretary dined with her team at an establishment known for Yunnanese dishes, which subsequently unveiled a “God of Wealth” menu in her honour. She also hosted a lunch with female entrepreneurs and economists (including a representative of The Economist). Although restaurants have prospered since China dropped its covid controls at the end of last year, the gods of wealth have been less kind to the rest of the country’s economy—as gdp figures released on July 17th revealed. They showed that the economy grew by 6.3% in the second quarter compared with a year earlier. That looks impressive. But it was slower than expected. And the figure was flattered by a low base in 2022, since Shanghai and other cities were locked down last year. The economy grew by only 0.8% in the second quarter compared with the first three months of the year, an annualised rate of merely 3.2% (see chart 1).Obstacles to growth were both foreign and domestic. The dollar value of China’s exports, for example, shrank by more than 12% in June, compared with a year earlier—the sharpest drop since the height of the pandemic in February 2020. “The recovery of the world economy has been sluggish,” said Fu Linghui of the National Bureau of Statistics, by way of explanation. Meanwhile, the recovery of China’s property market is lost in the vegetable patch. Sales of flats fell by 27% in June compared with a year earlier. They are now running well below the pace economists think would be justified by underlying demand, given China’s urbanisation and the widespread desire for better accommodation. China’s “nominal” growth, before adjusting for inflation, was also weaker than the inflation-adjusted figure; something that has happened only four times in the past 40 quarters. It suggests that the price of Chinese goods and services is falling. Indeed, it implies they fell by 1.4% in the year to the second quarter, which would be the sharpest drop since the global financial crisis (see chart 2). Consumer prices did not rise at all in June compared with a year earlier, and producer prices—charged at the factory gate—fell by 5.4%. China’s statisticians have blamed this weakness on changes in global commodity prices, such as the falling cost of oil. That is an unconvincing explanation for the weakness of China’s nominal growth, because gdp should count only the value added to a good in China itself, thus excluding the value of imported commodities. Perhaps deflationary pressures are spreading. Or perhaps China’s statisticians have got their sums wrong. Some members of the public feel the economy is doing even worse than the official figures suggest. There is a “temperature difference” between the macroeconomic data and “micro feelings”, as one commentator put it. In response, Mr Fu of the National Bureau of Statistics pointed out that macroeconomic data is more comprehensive and reliable than “micro feelings”—prompting a netizen to joke that if state statisticians say you are okay, you should adjust your feelings accordingly. The government’s own feelings towards the economy are hard to read. During the global financial crisis, after world trade fell off a cliff, China’s authorities swooped in with vast stimulus, which propelled economic growth and spilled over to the rest of the world. Today they seem in no such rush. The country’s central bank has cut interest rates a little. Tax breaks on the purchase of electric vehicles have been extended. Yet those hoping that the State Council, China’s cabinet, would release a detailed fiscal stimulus plan after its meeting on Friday 14th were disappointed. This lack of urgency may reflect the government’s enduring confidence in the recovery. Officials may believe that the economy still has enough momentum to meet their targets for the year, including for gdp growth of around 5%. The government’s restraint may also betray its misgivings about additional stimulus. Policymakers do not want a lending and spending spree to erode the profitability of state-owned banks or undermine financial discipline among local governments.China’s economic reopening so far has been led by services industries, such as restaurants, that tend to be labour-intensive. China’s cities have added 6.8m jobs in the first six months of the year, more than half of the government’s 12m target for the year. Although unemployment among urban youth increased to 21.3%, the overall jobless rate remained steady at 5.2% in June, below the target of 5.5%.But the labour market can be a lagging indicator of economic momentum. If growth remains weak, unemployment will eventually edge up. In such a scenario, the government may be forced to do more to revive the economy. Officials can tolerate a temperature difference between data and people’s feelings. They will be unwilling to tolerate a glaring gap between the economy and their targets. ■ More

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    FDA approves AstraZeneca, Sanofi shot that protects infants and toddlers against RSV

    Nirsevimab is the first shot approved by the FDA to protect all infants against RSV regardless of whether they are healthy or have a medical condition.
    Nirsevimab is administered either before or during an infant’s first RSV season.
    RSV is the leading cause of hospitalization among children less than a year old, according to scientists.

    Blood sample for respiratory syncytial virus (RSV) test
    Jarun011 | Istock | Getty Images

    The Food and Drug Administration on Monday approved AstraZeneca and Sanofi’s shot that protects infants and toddlers against respiratory syncytial virus, which is the leading cause of hospitalization among babies in the U.S.
    Nirsevimab is the first shot approved by the FDA to protect all infants against RSV regardless of whether they are healthy or have a medical condition.

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    The FDA approval of nirsevimab, sold under the brand name Beyfortus, comes ahead of RSV season this fall. The Centers for Disease Control and Prevention’s panel of independent experts will meet in August to make recommendations on how the shot should be administered by doctors.
    Another shot called palivizumab is already on the market, but it is given mainly to infants who are preterm or who have lung and congenital heart conditions that put them at high risk of severe disease. Nirsevimab is also administered as a single injection. This is a major advantage over palivizumab, which is administered monthly throughout RSV season.
    Nirsevimab is administered either before or during an infant’s first RSV season. Toddlers up to two years old who remain vulnerable can also receive the shot during their second RSV season.
    RSV is a major public health threat that kills nearly 100 infants annually, according to a study published in the medical journal JAMA Open Network last year. The virus is the leading cause of hospitalization among children less than a year old, according to a study published in the Journal of Infectious Diseases.
    A surge in RSV infections last fall overwhelmed children’s hospitals across the U.S. and led to calls for the Biden administration to declare a public health emergency in response.

    Nirsevimab was up to 75% effective at preventing lower respiratory tract infections that required medical attention among infants and 78% effective at preventing hospitalization, according to a FDA review.
    The FDA did not identified any safety concerns in its review of nirsevimab, though other monoclonal antibodies have been associated with allergic reactions such as skin rashes.
    Nirsevimab is a monoclonal antibody that has a similar function to a vaccine. Vaccines stimulate the immune system to produce protective antibodies, while shots like nirsevimab deliver those antibodies directly into the bloodstream.
    The fact that nirsevimab is regulated as a drug has created some uncertainty about whether the federal Vaccines for Children program will provide the shot for free to families who face financial difficulties. The CDC advisors are expected to discuss this issue at their August meeting.
    Families might have two options to protect their infants this fall. Pfizer has developed a vaccine that protects infants by administering the shot to the mother while she is pregnant. The FDA’s independent advisors recommended Pfizer’s vaccine in May. The agency is expected to make a final decision on whether to approve the shot in August. More

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    Private investment in space firms shows ‘signs of stabilization’ in Q2 after steady decline

    Private investment in space companies, especially from venture capital, showed “signs of stabilization” in the second quarter after steady declines over the past year, according to a new report.
    The report by New York-based Space Capital on Q2 investment pointed to indicators that the space market looks to be near a bottom.
    Space Capital noted that growth-stage investments are outstripping late-stage, “signaling a healthy top-of-funnel” in the sector’s economy.

    Senior satellite technician Chris Summers completes the final pre-flight checks on satellites Kepler-16 and Kepler-17.
    Kepler Communications

    Private investment in space companies, especially from venture capital, showed “signs of stabilization” in the second quarter after steady declines over the past year, according to a report Monday by New York-based Space Capital.
    Investment in space companies had dropped steadily since its peak in 2021, as companies felt the macroeconomic effects of a tightened funding environment and rising interest rates. Layoffs and cost-cutting arrived at many space companies in recent months, and M&A activity in the sector is expected to heat up as valuations come down.

    But Space Capital’s Q2 report pointed to indicators that the space market looks to be near a bottom, highlighting the return of hiring for space jobs to 2020 levels.

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    “The reset in the financial markets has brought about healthier market dynamics, enabling disciplined investors to identify opportunities and invest in high quality companies at lower valuations,” Space Capital managing partner Chad Anderson wrote in the report.
    Space infrastructure companies brought in $4.9 billion of private investment in the second quarter, including the close of Maxar’s recent go-private sale at a $4.1 billion equity value.
    Though the Maxar deal made up the bulk of the Q2 total, Space Capital noted that growth-stage investments are outstripping late-stage, with raises in the former category making up 74% of total equity rounds, “signaling a healthy top-of-funnel” in the sector’s economy.
    The quarterly Space Capital report divides investment in the industry into three technology categories: infrastructure, distribution and application. Infrastructure includes what would be commonly considered as space companies, such as firms that build rockets and satellites. More

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    Ford cuts prices on its electric F-150 Lightning pickups by as much as $10,000

    Ford on Monday announced significant price cuts for all versions of its electric F-150 Lightning pickup.
    The cheapest version of the Lightning will now start at about $50,000, a roughly $10,000 cut.
    All versions of the EV will get price cuts of at least $6,000 as Ford works to boost production this fall.

    A Ford F-150 Lightning electric truck is on display at the 2022 North American International Auto Show NAIAS in Detroit, the United States, on Sept. 14, 2022. 
    Michael Strong | Xinhua News Agency | Getty Images

    Ford Motor on Monday cut prices for its electric F-150 Lightning pickup, saying its efforts to boost production and lower costs for battery minerals have paid off.
    Ford said prices for some of the least expensive versions of the Lighting would fall by nearly $10,000. Prices for all versions, including the top-line Platinum trim, will drop by at least $6,000 from levels set in March.

    The company had increased the Lightning’s prices several times since its 2021 debut, citing supply constraints and sharply higher prices for the minerals used in the electric truck’s batteries. Ford has worked to increase production of the truck in recent months, with factory upgrades that are expected to triple its output set to be in place by fall.
    The Dearborn, Michigan factory that makes the Lightning will be closed for several weeks while the production upgrades are put in place, Ford said Monday.
    Increasing production of the Lightning and other Ford EVs has been a key priority for CEO Jim Farley this year. But the effort to boost production hasn’t been a smooth one. Ford sold just 4,466 Lightnings in the second quarter after a fire in a just-completed truck in February led it to shut down production for five weeks.
    At the time of its 2021 debut, the lowest-priced version of the Lightning – the work-truck Pro trim – was about $40,000. That price was increased several times, hitting about $60,000 in March; Monday’s cuts reduce the entry-level truck’s sticker price to about $50,000.
    The most expensive version of the Lightning, the extended-range Platinum trim, will now start at about $92,000, down from just over $98,000.
    Ford is scheduled to report its second-quarter earnings after the U.S. markets close on July 27. More

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    As student loan payments restart, can employers be a firewall for borrowers? Some groups hope so

    The Supreme Court struck down the Biden administration’s student loan forgiveness program on June 30.
    Debt payments, paused for more than three years, will restart this fall.
    Some groups are calling for policymakers to expand student loan-related tax breaks offered at work.
    Many employers don’t offer workplace benefits to borrowers. Those that do often tie them to retirement savings in a 401(k).

    Kate_sept2004 | E+ | Getty Images

    As Americans with student loan debt brace for their monthly payments to restart and recover from the recent sting of the Supreme Court’s ruling against loan forgiveness, some groups are looking to the workplace as a firewall to funnel aid to borrowers.
    SHRM, a group representing human resources professionals, called on Congress and state legislatures “to pass policies that support employees and employers,” according to a June 30 statement issued after the Supreme Court nixed the Biden administration’s debt cancellation plan.

    Specifically, they want bigger tax breaks for workplace education benefits and an entrenchment of tax policy that’s otherwise slated to end in a few years. Advocates argue such tweaks would help put education on a more equal footing with mainstay benefits for retirement and health care, for which employers also get tax breaks.
    More from Personal Finance:What to know about Biden’s new plan to forgive student debtFederal student loan repayment is about to change in a big wayIt’s official: Student loan payments will restart in October
    SHRM also called for businesses to “support their workers as they navigate their student debt challenges.” Debt payments, which have been on pause for over three years, are poised to restart in October.
    Cody Hounanian, executive director of the Student Debt Crisis Center, said he isn’t surprised to see an “all-hands-on-deck approach” given the current environment for borrowers, which he called “a recipe for a disastrous situation.”

    17% of employers offer some kind of student loan aid

    Few employers offer student loan benefits, which can take many forms.

    Seventeen percent offer some type of student loan assistance, according to a 2021 survey by the Employee Benefit Research Institute. Another 31% planned to offer some type of assistance in the next year or two, the poll found.
    The most popular workplace programs don’t offer direct relief for student loan payments.
    For instance, about four in 10 employers that offer assistance do so via contributions into the 401(k) accounts of borrowers who are paying off student debt.

    There are two other popular routes: debt payment counseling or education, and granting access to 401(k) loans — in essence, allowing an employee to borrow against their retirement savings to repay student debt.
    “It seems like retirement savings is the constant here,” said Will Hansen, executive director of Plan Sponsor Council of America, a group that represents employers offering workplace retirement programs. “We’re now being used as the vehicle to assist with other financial habits, from student loans to emergency savings.”
    Many workers, especially younger ones, prefer student loan payment assistance over more traditional benefits such as a 401(k) match, according to a Lending Tree survey.
    More than half, 54%, of workers ages 18 to 24 held that opinion. The share declined to 45% for those ages 25 to 34, and to 39% for 55- to 64 year-olds, according to the poll, conducted in 2016.

    There should be some type of assistance and support for employees to get out of this debt.

    Derrick Johnson
    president and CEO of the NAACP

    There should be student-loan-related “enticements” in employee compensation packages, said Derrick Johnson, president and CEO of the NAACP, who called student loans “a personal crisis for far too many Americans.”
    “Just like 401(k) and health benefits, there should be some type of assistance and support for employees to get out of this debt,” said Johnson. “There’s a role for the corporate community to step up and offer that level of support,” he added.
    Of course, the best policy route would be for lawmakers to give financial assistance to student loan borrowers directly, instead of via workplace tax breaks, he added.  

    A valuable tax break for borrowers will end in 2026

    Luis Alvarez | Digitalvision | Getty Images

    Some of the most valuable workplace benefits, experts said, were created by the CARES Act pandemic relief law in March 2020.
    The law expanded an existing tax break for educational assistance by adding student loan repayment as a qualifying educational expense. That expansion — of Section 127 of the tax code — allows employers to pay up to $5,250 a year toward a worker’s student loans. The payments are tax-free for the employee and business.
    About 8% of companies offer a student loan repayment plan, according to SHRM. By comparison, 48% pay tuition assistance for those enrolled in undergraduate or graduate school.
    The expanded tax break for student loan payments is temporary, however. It will end in 2026, absent action from Congress.
    SHRM is calling on lawmakers to make this tax break permanent. It also called for higher annual limits on the tax-free payments.

    The American Federation of Teachers, a labor union, also hopes the tax break is extended, a spokesman said.
    “We’ve negotiated tax-free employer paid assistance in Albuquerque, New Mexico, and in several of our health-care affiliates in Washington state,” AFT President Randi Weingarten said in an emailed statement. “And we are making these proposals elsewhere, including in Orange County, Florida.”
    Starting in 2024, employers will also be allowed to pay a 401(k) match to borrowers making student loan payments, a provision enacted by a 2022 law known as Secure 2.0. Student debt payments are essentially treated like a 401(k) contribution, qualifying borrowers for a match.
    About 2% of employers sponsoring a 401(k) plan intend to implement the policy, while another 9% will likely add or consider it, according to a Plan Sponsor Council of America poll. Twenty-two percent are unsure.

    Retention tool or alienating policy?

    Advocates for more student loan assistance at the workplace say that, in addition to helping employees relieve financial stress, which ultimately makes them more productive workers, such policies can help employee retention.
    That may prove useful in a labor market in which job openings, which surged to record highs during the pandemic era, are still elevated and employers may have trouble hiring.
    “With such a tight labor market, companies want to be creative in their benefit offerings to attract top talent,” Hansen said.
    But there’s tension here: Such programs will appeal to certain employers and workforces over others, experts said.

    Luis Alvarez | Digitalvision | Getty Images

    Professional firms and others that hire large numbers of college graduates are likely to adopt the new 401(k) match provision as soon as possible, according to Fred Reish, a partner and retirement plan expert at law firm Faegre Drinker Biddle & Reath.
    “It will message a concern for the benefit of those employees and an acknowledgement of their circumstances,” he wrote. “On the other hand, companies who primarily employ blue collar workers may not see a need to add this provision to their plans and to incur the resulting administrative complexity.”
    Given that demarcation, individuals burdened most by student debt may not have access to any student-loan-related benefits at work, Johnson said.
    Additionally, having a program might “generate resentment” among workers who don’t have student loans, which “could divide the workforce and create morale problems,” Lisa Porro, a human resources consultant at Inspiring HR, wrote last year in a SHRM opinion piece.
    “Workers in jobs that don’t require a college degree won’t be helped,” Porro said. “Additionally, not all workers are able to attend college before starting their careers; some achieve success through experience and industry knowledge.” More

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    The media industry is in turmoil, and that’s not changing anytime soon

    Media companies are struggling with two Hollywood strikes, slumping ad revenue and money-losing streaming businesses.
    Disney CEO Bob Iger recently told CNBC that the company’s legacy TV operations may not be core to its business.
    Netflix, which is performing much better than its rivals, kicks off media earnings season Wednesday.

    Striking Writers Guild of America (WGA) members walk the picket line in front of Netflix offices as SAG-AFTRA union announced it had agreed to a ‘last-minute request’ by the Alliance of Motion Picture and Television Producers for federal mediation, but it refused to again extend its existing labor contract past the 11:59 p.m. Wednesday negotiating deadline, in Los Angeles, California, July 12, 2023.
    Mike Blake | Reuters

    Traditional TV is dying. Ad revenue is soft. Streaming isn’t profitable. And Hollywood is practically shut down as the actors and writers unions settle in for what is shaping up to be a long and bitter work stoppage.
    All of this turmoil will be on investors’ minds as the media industry kicks off its earnings season this week, with Netflix up first on Wednesday.

    Netflix, with a new advertising model and push to stop password sharing, looks the best positioned compared with legacy media giants. Last week, for instance, Disney CEO Bob Iger extended his contract through 2026, telling the market he needed more time at the Mouse House to address the challenges before him. At the top of the list is contending with Disney’s TV networks, as that part of the business appears to be in a worse state than Iger had imagined. “They may not be core to Disney,” he said.
    “I think Bob Iger’s comments were a warning about the quarter. I think they are very worrying for the sector,” said analyst Michael Nathanson of SVB MoffettNathanson following Iger’s interview with CNBC’s David Faber on Thursday.
    Although the soft advertising market has been weighing on the industry for some quarters now, the recent introduction of a cheaper, ad-supported option for services like Netflix and Disney+ will likely be one bright spot as one of the few areas of growth and concentration this quarter, Nathanson said.
    Iger has talked at length in recent investor calls and Thursday’s interview about how advertising is part of the plan to bring Disney+ to profitability. Others, including Netflix, have echoed the same sentiment.
    Netflix is scheduled to report earnings after the close Wednesday. Wall Street will be keen to hear more details about the rollout of its password sharing crackdown in the U.S. and state of its newly launched ad-supported option. The company’s stock is up nearly 50% this year, after a correction in 2022 that followed its first subscriber loss in a decade

    Investor focus will also be on legacy media companies like Paramount Global, Comcast and Warner Bros. Discovery, which each have significant portfolios of pay-TV networks, following Iger’s comments that traditional TV “may not be core” to the company and all options, including a sale, were on the table. These companies and Disney will report earnings in the weeks ahead.

    Strike woes

    Scene from “Squid Game” by Netflix
    Source: Netflix

    Just a week ahead of the earnings kickoff, members of The Screen Actors Guild – American Federation of Television and Radio Artists joined the more than 11,000 already striking film and television writers on the picket line.
    The strike – a result of the failed negotiations with the Alliance of Motion Picture and Television Producers – brings the industry to an immediate halt. It’s the first dual strike of this kind since 1960.
    The labor fight blew up just as the industry has moved away from streaming growth at all costs. Media companies saw a boost in subscribers – and stock prices – earlier in the Covid pandemic, investing billions in new content. But growth has since stagnated, resulting in budget cuts and layoffs.
    “The strike happening suggests this is a sector in tremendous turmoil,” said Mark Boidman, head of media and entertainment investment banking at Solomon Partners. He noted shareholders, particularly hedge funds and institutional investors, have been “very frustrated” with media companies.
    Iger told CNBC last week the stoppage couldn’t occur at a worse time, noting “disruptive forces on this business and all the challenges that we’re facing,” on top of the industry still recovering from the pandemic.
    These are the first strikes of their kind during the streaming era. The last writers strike occurred in 2007 and 2008, which went on for about 14 weeks and gave rise to unscripted, reality TV. Hollywood writers have already been on strike since early May of this year.
    Depending on the longevity of the strike, fresh film and TV content could dry up and leave streaming platforms and TV networks – other than library content, live sports and news – bare.
    For Netflix, the strikes may have a lesser effect, at least in the near term, Insider Intelligence analyst Ross Benes said. Content made outside the U.S. isn’t affected by the strike — an area where Netflix has heavily invested.
    “Netflix is poised to do better than most because they produce shows so well in advance. And if push comes to shove, they can rely on international shows, of which they have so many,” said Benes. “Netflix is the antagonist in the eyes of strikes because of how it changed the economics of what writers get paid.”

    Traditional TV doom

    The decline of pay-TV subscribers, which has ramped up in recent quarters, should continue to accelerate as consumers increasingly shift toward streaming.
    Yet, despite the rampant decline, many networks remain cash cows, and they also supply content to other parts of the business — particularly streaming.
    For pay-TV distributors, hiking the price of cable bundles has been a method of staying profitable. But, according to a recent report from MoffettNathanson, “the quantity of subscribers is falling far too fast for pricing to continue to offset.”
    Iger, who began his career in network TV, told CNBC last week that while he already had a “very pessimistic” view of traditional TV before his return in November, he has since found it’s even worse than he expected. The executive said Disney is assessing its network portfolio, which includes broadcaster ABC and cable channels like FX, indicating a sale could be on the table.
    Paramount is currently considering a sale of a majority stake in its cable-TV network BET. In recent years Comcast’s NBCUniversal has shuttered networks like NBC Sports and combined sports programming on other channels like USA Network.
    “The networks are a dwindling business, and Wall Street doesn’t like dwindling businesses,” said Nathanson. “But for some companies, there’s no way around it.”
    Making matters worse, the weak advertising market has been a source of pain, particularly for traditional TV. It weighed on the earnings of Paramount and Warner Bros. Discovery in recent quarters, each of which have big portfolios of cable networks.
    Advertising pricing growth, which has long offset audience declines, is a key source of concern, according to MoffettNathanson’s recent report. The firm noted that this could be the first nonrecessionary year that advertising upfronts don’t produce increases in TV pricing, especially as ad-supported streaming hits the market and zaps up inventory.
    Streamers’ introduction of cheaper, ad-supported tiers will be a hot topic once again this quarter, especially after Netflix and Disney+ announced their platforms late last year.
    “The soft advertising market affects everyone, but I don’t think Netflix is as affected as the TV companies or other established advertising streamers,” said Benes. He noted while Netflix is the most established streamer, its ad tier is new and has plenty of room for growth.
    Advertising is now considered an important mechanism in platforms’ broader efforts to reach profitability.
    “It’s not a coincidence that Netflix suddenly became judicious about freeloaders while pushing a cheaper tier that has advertising,” said Benes, referring to Netflix’s crackdown on password sharing. “That’s pretty common in the industry. Hulu’s ad plan gets more revenue per user than the plan without advertising.”

    Are more mergers coming?

    Last week’s ruling from a federal judge that Microsoft’s $68.7 billion acquisition of game publisher Activision Blizzard should move forward serves as a rare piece of good news for the media industry. It’s a signal that significant consolidation can proceed even if there’s temporary regulatory interference.
    Although the Federal Trade Commission appealed the ruling, bankers took it as a win for deal-making during a slow period for megadeals.
    “This was a nice win for bankers to go into board rooms and say we’re not in an environment where really attractive M&A is going to be shot down by regulators. It’s encouraging,” said Solomon Partners’ Boidman.
    As media giants struggle and shareholders grow frustrated, the judge’s ruling could fuel more deals as “a lot of these CEOs are on the defensive,” Boidman added.
    Regulatory roadblocks have been prevalent beyond the Microsoft deal. A federal judge shut down book publisher Penguin Random House’s proposed purchase of Paramount’s Simon & Schuster last year. Broadcast station owner Tegna scrapped its sale to Standard General this year due to regulatory pushback.
    “The fact that we are so focused on the Activision-Microsoft deal is indicative of a reality that deal-making is going to be an enormous tool going forward to solidify market position and jump your company inorganically in ways you couldn’t do yourself,” said Jason Anderson, CEO of Quire, a boutique investment bank.

    These CEOs won’t just do a deal to do a deal. From this point forward, it will take a higher bar to consolidate.

    Peter Liguori
    former Tribune Media CEO

    Anderson noted bankers are always thinking about regulatory pushback, however, and it shouldn’t necessarily be the reason deals don’t come together.
    Warner Bros. and Discovery merged in 2022, ballooning the combined company’s portfolio of cable networks and bringing together its streaming platforms. Recently, the company relaunched its flagship service as Max, merging content from Discovery+ and HBO Max. Amazon bought MGM the same year.
    Other megadeals occurred before that, too. Comcast acquired U.K. broadcaster Sky in 2018. The next year, Disney paid $71 billion for Fox Corp.’s entertainment assets – which gave Disney “The Simpsons” and a controlling stake in Hulu, but makes up a small portion of its TV properties.

    “The Simpsons”: Homer and Marge
    Getty / FOX

    “The Street and prognosticators forget that Comcast and Sky, Disney and Fox, Warner and Discovery —happened just a few years ago. But the industry talks as if these deals happened in BC not AD times,” said Peter Liguori, former CEO of Tribune Media who’s a board member at TV measurement firm VideoAmp.
    Consolidation is likely to continue once companies are finished working through these past mergers and get past lingering effects of the pandemic, such as increased spending to gain subscribers, he said. “These CEOs won’t just do a deal to do a deal. From this point forward, it will take a higher bar to consolidate.”
    Still, with the rise of streaming and its lack of profitability and bleeding of pay-TV customers, more consolidation could be on the way, no matter what.
    Whether M&A helps push these companies forward, however, is another question.
    “My kneejerk reaction to the Activision-Microsoft ruling was there’s going to be more M&A if the FTC is going to be defanged,” Nathanson said. “But truth be told, Netflix built its business with licensing content and not having to buy an asset. I’m not really sure the big transactions to buy studios have worked out.”
    – CNBC’s Alex Sherman contributed to this article.
    Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. NBCUniversal is a member of the Alliance of Motion Picture and Television Producers. Comcast is a co-owner of Hulu. More