adplus-dvertising
Connect with us

Media

Social Media and Investment Fraud – Investor Alert – SEC.gov

Published

 on


Fraudsters often use social media to scam investors.  The SEC’s Office of Investor Education and Advocacy encourages you to be skeptical and never make investment decisions based solely on information from social media platforms or apps.

Investors increasingly rely on social media for information about investing.  While social media can provide many benefits to investors, it also creates opportunities for fraudsters.  Social media allows fraudsters to contact many people quickly, cheaply, and without much effort – and it is easy for fraudsters to post information on social media that looks real and credible. 

Fraudsters may disseminate false information anonymously or while pretending to be someone else.  They may make up credentials, create entirely fake profiles, or impersonate legitimate sources.  It can be difficult to track down who is behind a social media account, and anonymity can make it harder for fraudsters to be held accountable.  

300x250x1
Testimonials and Celebrity Endorsements.  Do not be swayed by testimonials or celebrity endorsements when making an investment decision.  Fraudsters sometimes pay people – for example, actors to pose as ordinary people turned millionaires, social media influencers, and celebrities – to tout an investment on social media.

Investment information found in social media also may be inaccurate, incomplete, or misleading.  Social media may convey false impressions of consensus or legitimacy, making it look like large numbers of people are buying an investment when this is not the case.  Fraudsters may use social media to lure investors into a variety of schemes, including impersonation schemes, “crypto” investment scams, romance scams, market manipulation schemes, and community-based investment fraud.  Here are a few scams you should be aware of:

Impersonation Schemes

Fraudsters may impersonate legitimate brokers or investment advisers or other sources of market information on social media.  For example, fraudsters may set up an account name, profile, or handle designed to mimic a particular individual or firm.  They may go so far as to create a webpage that uses the real firm’s logo, links to the firm’s actual website, or references the name of an actual person who works for the firm.  Fraudsters also may direct investors to an imposter website by posting comments in the social media account of brokers, investment advisers, or other sources of market information.

When you receive investment information through social media, verify the identity of the underlying source.  Look for slight variations or typos in the sender’s account name, profile, email address, screen name, or handle, or other signs that the sender may be an imposter.  When contacting a company or attempting to access its website, be sure to use contact information or the website address provided by the company itself, such as in the company’s SEC filings.  Similarly, only contact a broker or investment adviser using contact information you verify independently – for example, by using a phone number or website listed in the firm’s Client Relationship Summary (Form CRS).  Carefully type the website’s url into the address bar of your web browser.

Some social media operators have systems that may help you to determine whether a sender is genuine.  For example, Twitter verifies accounts for authenticity by posting a blue verified badge (a solid blue circle containing a white checkmark) on Twitter profiles.  While a verified account does not guarantee that the source is genuine, readers should be more skeptical of information from accounts that are not verified.

Fraudsters may even impersonate SEC staff on social media.  Like many companies and agencies, the SEC maintains a list of verified social media accounts, which is available at www.sec.gov/opa/socialmedia.

Fraudsters have also found victims by hacking into social media profiles and sending fraudulent investment opportunities to the hacked person’s contacts.  Be wary if someone – even someone you trust – sends a social media message recommending an investment, and be sure to check with them “off-line” to make sure that person actually sent the message.

“Crypto” Investment Scams

Fraudsters may exploit investors’ fear of missing out to lure investors on social media into “crypto” investment scams.  “Crypto” assets are marketed using a variety of terms, including digital assets, cryptocurrencies, coins, and tokens. 

How do you know if an investment involving “crypto” assets is a scam?  As with any other type of investment product, if a crypto investment “opportunity” sounds too good to be true, it probably is.  Promises of high investment returns, with little or no risk, are classic warning signs of fraud.  Fraudsters may post fabricated historical returns on their websites showing high investment returns.  Depictions of investment accounts rapidly increasing in value and providing large returns are often fake.  

If you are considering a “crypto” asset-related investment, take the time to understand how the investment works and look for warning signs that it may be a scam.  Carefully review all materials and ask questions.  Check out the background (including license and registration status) of anyone offering you an investment in securities using the search tool on Investor.gov.

Learn more about investments involving “crypto” assets on Investor.gov.

Romance Scams

Romance scams through apps or websites have become increasingly pervasive as fraudsters take advantage of anonymity to mask their deceptive intentions.  The fraudster may be located in another country and communication may be exclusively through messaging due to language barriers.  Do not invest money based on advice from someone you have solely met online or through an app.  Do not share any information relating to your personal finances or identity including your bank or brokerage account information, tax forms, credit card, social security number, passport, driver’s license, birthdate, or utility bills. 

The FBI issued a Public Service Announcement about fraudsters using romance scams to persuade victims to send money allegedly to invest or trade cryptocurrency.  How these scams typically work is the fraudster establishes an online relationship with the victim through a dating app or other social media site.  The fraudster gains the victim’s confidence and trust, and then claims to know about lucrative cryptocurrency investment or trading opportunities. The fraudster directs the victim to a fraudulent website or app.  After the victim invests and sees a purported profit, the website or app allows the victim to withdraw a small amount of money, further gaining the victim’s trust.  The fraudster then instructs the victim to invest larger amounts of money and conveys a sense of urgency.  When the victim tries to withdraw funds again, the victim is instructed to pay additional funds, claiming that taxes or fees need to be paid or a minimum account balance must be met. When the victim can no longer pay the additional funds, the fraudster stops communicating with the victim and the victim cannot get the money back.

Other agencies and organizations also have issued warnings about romance scams, including:

Be careful if someone claims to offer you an investment opportunity that is exclusive or based on “inside” or confidential information.  Do not take comfort because someone encourages you to make an investment through what appears to be a third party website or app.  The fraudster may be behind the website or app, and it may be a scam.  Also, be wary of any “opportunity” that requires you to use “crypto” assets (for example, Bitcoin or BTC) to purchase an investment.

If you encounter any issues withdrawing your money from an investment, do not put in more money to try to get your money out, and submit a complaint to the SEC If you believe you have been the victim of an Internet crime, report it to the FBI’s Internet Crime Complaint Center IC3.

Do not be pressured to act quickly.  Take your time to research an investment thoroughly before handing over your money.

Market Manipulation Schemes

Fraudsters can manipulate the share price of a company’s stock (either positively or negatively) by spreading rumors on social media. Fraudsters then profit at investors’ expense.  Fraudulent stock promotions on social media can take various forms, including memes.

Fraudsters may promote a stock on social media anonymously or while pretending to be someone else.  Fraudsters can set up new accounts specifically designed to carry out their scam while concealing their true identities.  Be skeptical of information from social media accounts that lack a history of prior postings or that contain minimal original content.

Fraudsters may use social media to conduct schemes including: 

  • Pump and dump schemes – pumping up the share price of a company’s stock by making false and misleading statements to create a buying frenzy, and then selling shares at the pumped up price. 
  • Scalping – recommending a stock to drive up the share price and then selling shares of the stock at inflated prices to generate profits.
  • Touting – promoting a stock without properly disclosing compensation received for promoting the stock. 

In other instances, fraudsters start negative rumors urging investors to sell their shares so that the share price plummets and then the fraudsters buy shares at the artificially low price.

Exercise extreme caution if there appears to be greater promotion of the company’s stock than of the company’s products or services.  Be skeptical regarding new posts on your wall, tweets, direct messages, emails, or other communications you did not ask for that promote a particular stock (even if the sender appears connected to someone you know). 

Community-Based Investment Fraud

Fraudsters often use social media to perpetuate community-based investment fraud (aka affinity fraud), which targets members of groups with common ties, including based on ethnicity, nationality, religion, sexual orientation, military service, and age.  These scams exploit the trust and friendship that exist within groups. 

Many communities use social media as a way to stay connected and share information.  Fraudsters, who may be (or pretend to be) part of the group they are trying to cheat, may solicit potential victims on social media through posts or direct contact.  Fraudsters also may enlist group leaders, who then spread the word about the scheme on social media.  Those leaders may not realize the “investment” is actually a fraud, which means they too may be victims.

Know who you are dealing with and know what is being offered – even if you have something in common with the person.  Type the person’s name into the search tool on Investor.gov to do a background check.  Confirm that the person is currently registered or licensed, and find out if that person has any disciplinary history.  

***

Check the background of anyone selling or offering you an investment and confirm that the person is currently registered or licensed.  It only takes a few minutes using the free and simple search tool on Investor.gov.  

Before making any investment, research the company thoroughly.  Make sure you understand its business and carefully review publicly disclosed company information

Never feel pressured to buy an investment right away.  It can be tempting to jump on the band wagon and follow whatever the crowd seems to be doing on social media.  Sometimes, however, following the crowd may lead you to fall victim to an investment scam. 

Additional Resources

SEC Charges Siblings in $124 Million Crypto Fraud Operation that included Misleading Roadshows, YouTube Videos

SEC Charges Social Media Stock Promoter with Penny Stock Fraud

SEC Obtains Asset Freeze and Other Relief in Halting Penny Stock Scheme on Twitter

Protect Your Social Media Accounts

Investor Alert: Thinking About Investing in the Latest Hot Stock? Understand the Significant Risks of Short-Term Trading Based on Social Media

Investor Bulletin: Social Sentiment Investing Tools —Think Twice Before Trading Based on Social Media

Social Isolation and the Risk of Investment Fraud

Report possible securities fraud to the SEC online at www.sec.gov/tcr.

Protect your hard earned money – learn more tips on investing wisely and avoiding fraud at Investor.gov.

Call the SEC’s Office of Investor Education and Advocacy (OIEA) at 1-800-732-0330, ask a question using this online form, or email OIEA at Help@SEC.gov.  Receive Investor Alerts and Bulletins by email or RSS feed.

Follow OIEA on Twitter @SEC_Investor_Ed. Like OIEA on Facebook at facebook.com/secinvestoreducation.

This Investor Alert represents the views of the staff of the Office of Investor Education and Advocacy. It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This Investor Alert, like all staff statements, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Media

Ontario school boards take social media giants to court for disrupting student learning – CBC.ca

Published

 on


Four major Ontario school boards are taking some of the largest social media companies to court over their products, alleging the way they’re designed have negatively rewired the way children think, behave and learn and have thus disrupted the way schools operate.

The public district school boards of Toronto, Peel and Ottawa, along with Toronto’s Catholic counterpart, are looking for about $4.5 billion in damages from Meta Platforms Inc., Snap Inc. and ByteDance Ltd., which operate the platforms Facebook and Instagram, Snapchat and TikTok respectively, according to statements of claim filed Wednesday.

“The influence of social media on today’s youth at school cannot be denied. It leads to pervasive problems such as distraction, social withdrawal, cyberbullying, a rapid escalation of aggression, and mental health challenges,” said Colleen Russell-Rawlins, director of education at the Toronto District School Board, in a release Thursday.

300x250x1

“Therefore, it is imperative that we take steps to ensure the well-being of our youth. We are calling for measures to be implemented to mitigate these harms and prioritize the mental health and academic success of our future generation.” 

The school boards, operating under a new coalition called Schools for Social Media Change, allege students are experiencing an “attention, learning, and mental health crisis” because of “prolific and compulsive use of social media products.”

Trying to respond to this has caused “massive strains” on the group’s funds, including in additional mental health programming and staff, IT costs and administrative resources, the release states. The boards call on the social media giants to “remediate” the costs to the larger education system and redesign their products to keep students safe.

Neinstein LLP, a Toronto-based firm, is representing the school boards in their lawsuit. The boards will not be responsible for any costs related to the lawsuit unless a successful outcome is reached, the release states.

“A strong education system is the foundation of our society and our community. Social media products and the changes in behaviour, judgment and attention that they cause pose a threat to that system and to the student population our schools serve,” said Duncan Embury, a partner and head of litigation at Neinstein.

CBC Toronto has reached out to the companies named for comment.

The latest lawsuit comes after a large civil suit against Meta Platforms Inc. was initiated in the U.S. last fall. Over 30 states accused Meta Platforms Inc. of harming young people’s mental health and contributing to the youth mental health crisis by knowingly designing features on Instagram and Facebook that cause children to be addicted to its platforms.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Media

Four Ontario school boards sue social-media giants for products that harm students' behaviour and education – The Globe and Mail

Published

 on


Open this photo in gallery:

Colleen Russell Rawlins, Director of Education with the Toronto District School Board, talks to students at Selwyn Elementary School on Mar 27.Fred Lum/The Globe and Mail

Four of Canada’s largest school boards are suing the companies behind social-media platforms Facebook, Instagram, SnapChat and TikTok, accusing them of negligently designing products that disrupt learning and rewire student behaviour while leaving educators to manage the fallout.

In four separate statements of claim filed on Wednesday in Ontario’s Superior Court of Justice, the Toronto District School Board, the Toronto Catholic District School Board, the Ottawa-Carleton District School Board and the Peel District School Board accused social-media companies of employing “exploitative business practices” and choosing to “maximize profits” at the expense of the mental health and well-being of students.

The addictive nature of social media means that educators spend more classroom time trying to have students focus on their lessons, the boards say in the statements of claim. They say the compulsive use of social-media platforms has also strained limited school board resources: Schools require additional mental health programs and personnel; staff spend more time addressing aggressive behaviour and incidents of cyberbullying; and information-technology services and cybersecurity costs have increased.

300x250x1

“The Defendants have acted in a high-handed, reckless, malicious, and reprehensible manner without due regard for the well-being of the student population and the education system,” according to the statements of claim.

Similar lawsuits against social-media companies have been filed in the United States in recent months by individual states and school districts. This would mark the first time it’s being done by school boards in Canada.

The four boards filed their lawsuits against Meta Platforms Inc., which is responsible for Facebook and Instagram, Snap Inc., the parent company of SnapChat, and ByteDance Ltd., owner of TikTok.

The school boards are advancing combined claims of around $4.5-billion. They are also asking that the social-media giants redesign their products to keep students safe.

None of the allegations have been proven in court.

In an e-mailed statement, Tonya Johnson, a spokeswoman for Snap, said the platform was “intentionally designed to be different from traditional social-media” so that users could communicate with friends. “While we will always have more work to do, we feel good about the role Snapchat plays in helping close friends feel connected, happy and prepared as they face the many challenges of adolescence,” she stated.

Meta and ByteDance did not immediately respond to requests for comment.

Social-media use by children and young people has been the topic of widespread discussion among parents, policymakers and educators. Earlier this week, Florida Governor Ron DeSantis signed a bill that bans social-media accounts for children under 14 and requires parental permission for 14- and 15-year-olds.

In Canada and elsewhere, there are growing concerns over the role social-media platforms play in cyberbullying, disrupted sleep patterns, brain development, and the inability of young people to focus.

A survey from the Centre for Addiction and Mental Health in 2021 found that 91 per cent of students in Grades 7 to 12 use social media daily, and about a third spend five hours or more daily on it. Researchers surveyed more than 2,000 Ontario students. Almost one-third reported being cyber-bullied at least once in the past year.

In their lawsuits, the four school boards said the companies “knew, or ought to have known, that the deliberate design of addictive and defective social-media products would interfere with students’ access to an education, negatively impact the learning environment, and create a public nuisance within the education system.”

Colleen Russell-Rawlins, education director of the Toronto District School Board, the country’s largest school board, said in an interview on Wednesday that social media has affected the education system in “very significant ways.”

“Students are not present,” she said, describing the addictive nature of social-media platforms. Educators are hearing about more incidents of cyberbullying. They are witnessing the rapid escalation of aggression that starts online. And they are helping students who are coping with anxiety and other mental health challenges.

The lawsuits, she said, are not just about raising awareness, but about protecting children by calling for safeguards and ensuring that school boards have the resources to help address the negative effects of increased social-media use.

“I think there’s no other childhood addiction that’s impacting children’s futures through education that we as educators and leaders would be expected to remain silent about. We feel compelled to act on behalf of our young people,” Ms. Russell-Rawlins said.

Pino Buffone, the education director at the Ottawa-Carleton District School Board, echoed the sentiment, adding that the compulsive use of social media has further strained the finite resources of the school board. Educators and other school staff are being forced to manage behaviour that stems from social-media use.

“It has become clear that we need to hold social-media giants accountable,” Mr. Buffone said.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Media

Is the US media layoffs phenomenon the next housing crisis?

Published

 on

In the past few months, the media sector in the United States has gone through one of its worst rounds of layoffs in decades, with some voices within the sector even asking if journalism is a viable career path despite surging subscriptions at publications like The New York Times.

Most recently, outlets like Vice and the sports blog Deadspin were decimated in a massive round of job cuts. Vice ended its online publication, and Deadspin laid off its entire editorial team.

These are the latest in a slew of headcount reductions at countless newsrooms around the US over the past decade at the hands of wealthy owners. The latter overwhelming have the backing of some of the biggest private equity and wealth management firms in the US like Apollo Global Management, Fortress Investment Group and Alden Capital, to name a few. These institutions are also called shadow banks.

A surge in private equity investments in media, experts said, has led to decisions that benefit investors but not always the companies and their employees, similar to the 2008 housing crisis and private equity’s ability to flourish during that time.

300x250x1

While the media business is in the spotlight now, it is a microcosm of a bigger challenge across the US economy. What makes it stand out is that it’s been a long and high-profile battle.

One such moment came with tech’s control (overwhelmingly led by Meta, then Facebook) in 2018 over audience traffic, which made newspapers, magazines and news portals beholden to the algorithmic choices of social media giants like Facebook and Twitter, which ultimately hurt the sector.

That was an optimal entry point for private equity to get a stronger foothold in the media business.

“Media companies were struggling at the time but not nearly enough as the journalism community was led to believe,” explained Margot Susca, the author of How Private Investment Funds Helped Destroy American Newspapers and Undermine Democracy.

“Funds use these market conditions to justify the gutting of these American institutions,” said Susca, who is also a professor of journalism at American University in Washington, DC.

‘Liquidating the entire industry for profit’

Like in the housing market, financial institutions capitalised on someone else’s misfortune to make money from it. In the 2008 recession, it was lenders and big investment banks ranging from Lehman Brothers to Washington Mutual, a move that ultimately led to their collapse.

The key is real estate. In the housing crisis, banks seized foreclosed homes for pennies on the dollar after homeowners defaulted on subprime mortgages.

In the case of the media sector, shadow banks are going after physical newsrooms and selling them. For instance, in 2018, Gannett sold the headquarters of the Asheville Citizen Times to Twenty Lakes Holdings, a real-estate affiliate of Alden Capital. Gannett sold the building for $3.2m. Alden then sold it to developers for $5.3m.

A comparable move happened at Vice last year. Only months after Fortress Investment Group acquired the publication, it left its office in Brooklyn, New York.

There’s a lot of real estate at shadow banks’ disposal. Private equity, hedge funds and other comparable firms control roughly half of all daily newspapers in the US.

“The problem with the news media sector is not its viability. The problem with the news media sector are these locust funds that are liquidating the entire industry for profit,” Susca said.

But where do shadow banks go once physical assets like real estate have been liquidated?

They squeeze out revenue where they can for as long as they can. That often means cutting staff.

G/O Media, formerly known as Gizmodo Media Group, sold off Deadspin, its sports blog. The new owner, Lineup Publishing, said it would not bring over any existing editorial staffers even though it aimed to “be reverential to Deadspin’s unique voice”, G/O CEO Jim Spanfeller said in an email to employees.

Great Hill Partners acquired the media brand in 2019 and drastically shifted Deadspin’s editorial vision. The publication was a sports-centric one that also housed vibrant cultural commentary on a variety of topics. At the direction of the new owner, the publication was directed to “stick to sports”. The announcement led to mass resignations.

This week, G/O Media sold two more publications from its portfolio — The AV Club and The Takeout.

G/O is not in a financially dire position, according to Spanfeller, who told Axios this year, “We’re not strapped for cash.”

Unionized staff at Condé Nast walk the picket line during a 24-hour walk out amid layoff announcements
Unionised staff at US publishing company Conde Nast walk the picket line during a 24-hour walkout amid layoff announcements in New York City in January [File: Angela Weiss/AFP]

According to the Writers Guild of America East, which includes various unions representing editorial staff from multiple media firms, Great Hill Partners made an estimated $44m in revenue in 2023. The guild suggests that Great Hill Partners has enough money to make decisions that do not undermine the financial security of its staffers.

When Spanfeller was appointed in 2019, the private equity firm said he was a significant investor in the company but did not disclose the specifics of the financial agreement. Spanfeller’s appointment came directly from the firm suggesting that it intended to oversee day-to-day editorial operations across G/O’s portfolio.

Great Hill Partners did not respond to Al Jazeera’s request for comment.

G/O is the latest in a string of companies laying off workers in the last few months alone.

Last month, Engadget, a brand owned by Yahoo, had a series of layoffs including of high-profile editors. It came amid a reported refocus on traffic growth. But how can you drive more traffic with high-quality reporting with fewer people to make the product?

Meanwhile, Apollo Global Management, which now owns Yahoo, is doing very well. The asset management firm’s stock is up nearly 250 percent over a roughly five-year period – 80 percent this past year alone. The firm acquired Yahoo in 2021 and also has a significant stake in several other large media companies, including Gannett, which owns hundreds of newspapers around the US, including USA Today, the fifth largest. In 2019, Apollo provided $1.8bn to finance the acquisition of the newspaper giant and merge it with GateHouse Media.

‘Layoffs were the core strategy’

Once Gannett’s acquisition of GateHouse was complete, it scrapped hundreds of jobs immediately. In 2022, the newspaper group slashed roughly 600 more jobs in two rounds of cuts in August and November.

Apollo also acquired both Northwest Broadcasting and Cox Media Group, which included 54 radio stations, and 33 TV stations.

“After funds became owners, layoffs were the core strategy to try to maximise revenue. [These are] firms that just had profit as the sole motivation,” Susca said. “Layoffs are the stark reality of hedge fund ownership and private equity investment.”

Historically, private equity firm involvement has led to layoffs – an average of 4.4 percent of job losses in two years as well as a 1.7 percent decrease in pay, according to a study from the University of Chicago.

That is what happened at Cox Media Group. Almost immediately after its acquisition, talent from local TV and radio stations across the country was laid off.

Apollo Management did not respond to Al Jazeera’s request for comment.

New York-based Alden Capital operates a similar job-cutting strategy and is one of the most infamous hedge funds in the sector for decimating a number of newspapers around the country.

In 2020, Vanity Fair referred to the firm as the “grim reaper of American newspapers”.

Vanity Fair’s stern critique is because of the massive slate of layoffs at the papers Alden Capital owns, including the Denver Post, even as one of the company’s executives said “advertising revenue has been significantly better”, according to reporting from Bloomberg in 2018.

Alden bought Tribune Publishing and gutted many of its newsrooms. At the time, Tribune was profitable, but Alden still moved forward to strip down its papers to make more profits.

Alden often pushed to beef up subscriptions even after shedding physical assets like office space and social assets like its people, which, Tim Franklin, senior associate dean at Northwestern University Medill School of Journalism, suggests is a losing strategy.

“It’s like charging for 16 ounces of Coca-Cola and putting it in a 12-ounce bottle. You’re giving people less and then expecting people to pay. The problem is that you end up in this doom loop. You’re getting less digital subscription revenue because you are providing less content, so then you make cuts and then you see even less revenue and you make more cuts. It’s this never-ending cycle of rinse and repeat,” Franklin said.

Alden Capital did not respond to Al Jazeera’s request for comment.

Doomed to failure

Shadow banks and big banks have made risky investments and hoped they would work out financially.

They sold the idea that someone could very well make payments on a subprime mortgage. Now, the idea is that a media company can create quality reporting on a shoestring budget and a fraction of its headcount. But those are unrealistic expectations and doomed for failure.

During the 2008 housing crisis, big banks essentially created an insurance plan for themselves: sell the debt and make money off the interest. Now private equity is employing a comparable strategy for media.

In the housing crisis, the banks bundled the mortgage loans in a package and sold them to the bond market to random investors. The banks had protections. If a lender defaults, they sell the debt on the secondary market for a profit. The strategy was to bet on the homeowners who were most likely not going to be able to afford the mortgage payments. But ultimately, that backfired, and the resultant housing crisis has been well documented.

“The only people there [who] were able to buy homes at the point could do so with cash or with Wall Street financing because that cash was still flowing,” said Aaron Glantz, author of Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream.

“Private equity is not depending on that credit system,” Glatz added.

A view of a sign for NBC News at Rockefeller Center in New York
NBC and MSNBC laid off employees [File: Justin Lane/EPA]

In either situation, the protections afforded investors were not passed down to homeowners in 2008 or writers, editors, on-air talent and others in the media industry now.

While some savings and lending banks failed and were the recipients of massive bailouts, shadow banks flourished. Generally speaking, these companies make money during times of economic vulnerability, leading to an even more challenging situation for average people.

In the wake of the 2008 financial crisis, funds were largely criticised for buying up distressed housing across New York City and forcing out longtime residents – a move that brought rent-stabilised properties to market rate, which ultimately allowed them to drive up prices on their buildings and raise the value of the buildings around them.

“They’re reliant on cash that is just sitting around ready to be spent or credit lines that they can get from banks like JPMorgan Chase or they can leverage other assets. They own so many other assets,” Glatz said.

One of those assets over the past decade is a growing number of media companies.

But even then, it poses the question: If all these media companies are struggling, why are their executives so wealthy?

Behind a number of these mass layoffs are uber-wealthy executives. That’s the case for Business Insider, The Washington Post and Vice, just to name a few.

In January, Business Insider, owned by the German media giant Axel Springer, laid off 8 percent of its workforce. Axel Springer, however, is doing well financially. Its CEO, Mathias Doepfner, has a net worth of $1.2bn.

Executives on both the editorial and business side at the short-lived outlet The Messenger raked in close to million-dollar salaries. Meanwhile, editorial staffers launched a crowdfunding campaign to make ends meet because the outlet did not give them any severance packages.

NBC and MSNBC laid off 75 people this year. Brian Roberts, the CEO of NBC’s parent company, Comcast, raked in more than $32m in 2022.

Despite the recent layoffs, the network hired former Republican National Committee Chairwoman Ronna McDaniel as a contributor. Hiring McDaniel was met with swift backlash from high-profile talent across the news organisation and the NBC News Guild, the union representing journalists across the network.

The union in particular pointed out that McDaniel – who was known for helping to enable former President Donald Trump’s baseless claims that the 2020 presidential election was rigged – was hired after the company laid off more than a dozen unionised journalists. Amid the backlash, NBC cut its ties with McDaniel.

NBC is just the latest major network to make job cuts. At CBS, despite its high viewership during American football’s Super Bowl, parent company Paramount laid off staffers the following day at CBS News. Meanwhile, CEO Bob Bakish made $32m in 2022.

In November, Conde Nast laid off 5 percent of its workforce. The Newhouse family, which leads Advance Publications, the parent company of the magazine giant, has a net worth of $24.1bn, according to Forbes.

A VICE Media Group location
Vice Media, which was once valued at close to $6bn, has since filed for bankruptcy and ended publishing on its website [File: Eric Thayer/Getty Images/AFP]

In recent weeks, Vice laid off hundreds of employees and ended publishing on its website. It has been plagued with a nearly endless series of layoffs in the past few years. Prior to filing for Chapter 11 bankruptcy last year, the media company paid its executives roughly $11m – even though its executives were notoriously known for mismanagement.

Yet they were bailed out. Amid the Chapter 11 filing, Fortress Investment Group acquired Vice – a company that was once valued at $5.7bn – for $225m. Executives left with hefty paycheques while staffers were left jobless with little notice.

Fortress did not respond to Al Jazeera’s request for comment.

The Washington Post eliminated 240 jobs, yet it is owned by Jeff Bezos, the founder of Amazon, who is worth more than $200bn, according to the Bloomberg Billionaires Index, making him the second-richest person in the world.

In 2019, Senator Sherrod Brown sent a stern letter to Alden Capital, pressing the fund not to buy Gannett. Brown was unsuccessful.

In 2021, Brown, alongside Senators Tammy Baldwin and Elizabeth Warren, introduced the Stop Wall Street Looting Act, which would have reformed the private equity industry.

The bill never made it past committee, so it never had a vote in the full Senate.

Experts believe that Washington has not done nearly enough to curb the power of private equity.

“You have a government system, a regulatory, legislative system that has basically failed at every turn to stop the growth of these hedge funds,” Susca said. “And private equity firms in the journalism market, to me, is an institutional failure.”

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Trending