National News

Time Warner and AOL: The marriage that never took

Marketplace - American Public Media - Fri, 2015-01-09 11:02

Some deals are so bad (Time Warner + AOL, we're looking at you), it's not even worth trying to find something nice to say.

"Pretty much everything went horribly wrong with that deal," says Kevin Werbach, a professor of legal studies and business ethics at the Wharton School.

At the time – right before the dot-com bubble burst in 2000 – most everyone told Time Warner it needed to find a way in to the newfangled world of Internet media. The easiest way to do that? Merge with a company that already had it.

“We are the missing piece of each other’s puzzle," says a company executive in a news clip from 2000.

The idea, Werbach says, was synergy. If done correctly, one plus one can equal billions. Time Warner’s content plus AOL’s distribution network would somehow be more powerful together.

“It’s ironic in some ways, because Time Warner was really the desperate party," Werbach says. "They wanted to do the deal because they wanted to get access to this sexy go-go Internet dot-com magic, but in hindsight AOL is the company that was about to fall off a cliff.”

Alec Klein, a reporter investigating the company for the Washington Post, figured that out. He went on to write the book "Stealing Time: Steve Case, Jerry Levin, and the Collapse of AOL Time Warner." "The problem," he says, "is that AOL was not doing as well as it seemed.”

Klein uncovered a company improperly inflating its ad revenue. Dial-up modems were on their way out, broadband on its way in – and AOL had missed the high-speed connection boat.

They also had a legal problem. After the Post's investigation, the company was investigated by the Justice Department and the Securities Exchange Commission, Klein says, and "people were fired."

Rita McGrath, a professor of strategy and innovation at Columbia Business School, says "culture is usually to blame when these things go horribly wrong.” 

"In this day and age you’re not buying  the assets or the physical thing, you’re buying the talent and the goodwill and the engagement of the people," McGrath says. "So if you have a cultural misfit, those are the things that are going to get lost — not the hard core, the factory or the assets."

The anxiety and energy surrounding today's app market is not unlike the anxiety and energy experienced during the dot-com bubble, McGrath says.

Jobs are rebounding. Why are wages stagnant?

Marketplace - American Public Media - Fri, 2015-01-09 11:01

Job growth and unemployment ended 2014 on a strong note. The monthly Employment Situation report from the Department of Labor showed the U.S. economy added 252,000 jobs in December, compared to a revised 353,000 in November, and the unemployment rate fell 0.2 percent to 5.6 percent.

December’s employment report also provides full-year measures of the labor market. Unemployment declined by 1.1 percent in 2014, while job-creation averaged 246,000 a month over the year. Approximately 2.95 million jobs were added in 2014, the most since 1999.

However, average hourly wages fell in December by 0.2 percent after rising in November. Wages were up 1.7 percent for the year. That is very close to the multiyear inflation trend for consumer prices in the economy, says Elise Gould of the Economic Policy Institute. “Once you look at inflation, which has been around 2 percent, inflation-adjusted wage growth has been around zero for the last five years," she says.

Standard economic theory predicts this situation will produce more wage inflation. If the economy is creating a lot of job openings, and unemployment is falling, employers should be worried about finding enough people with the right skills to hire. So they should offer more money.

“If these factors are not enough to keep the economy growing with rising wages,” says Bernie Baumohl at the Economic Outlook Group, “then we really do have to go back to the drawing board and revisit everything we know about how economies work.”  

Baumohl is convinced this scenario will unfold later this year: Once labor shortages really settle in and companies can't meet demand in the economy, they will raise wages to attract good employees.

Conservative economist Peter Morici of the University of Maryland disagrees. “So many people have dropped out of the labor market," he says. "If wages started rising again, they would return. So there’s really  this large contingent supply of labor.”

Gould estimates there are as many as 6 million potential workers who have dropped out of, or never entered, the labor market because of the poor economy who would be ready to work if jobs were available. They create a shadow reservoir of potential workers, she says, helping to keep wages down and increasing the bargaining leverage of employers. 

Obama proposes free community college plan

Marketplace - American Public Media - Fri, 2015-01-09 11:00

President Barack Obama traveled to Knoxville, Tennessee, Friday to unveil a proposal to cover the cost of two years of community college for most Americans.

Under the plan, the federal government would cover three-quarters of the average community college cost, which could save one full-time student about $3,800 in tuition a year, according to the White House. States would have to pony up the rest if they choose to participate. Students would also have to maintain at least a 2.5 GPA and at least half-time enrollment.

The White House

Obama announced the program Friday afternoon at Pellissippi State Community College. Students in the audience cheered when he mentioned the idea of free tuition.

"I want to make it free," he said. "No one with the drive and discipline should be locked out of opportunity, or denied a college education just because they don’t have the money."

Obama said he wanted two years of college to be as free and universal as public high school is today. A degree, he said, is a sure ticket to the middle class. The plan is also being applauded in some academic circles. 

“Students who go to community colleges and get associates degrees as well as students who get bachelor’s degrees end up earning significantly more than, students who, say, stop at high school, ” says Thomas Bailey, director of the Community College Research Center at Teachers College, Columbia University.

Lauren Asher, president of the Institute for College Access and Success, says she wishes Obama had targeted just for the neediest students.

“You’re spreading available resources across many that don’t need them, and leaving those with the  greatest need still facing substantial affordability barriers,” she says.

The plan was inspired by a similar program that went into effect last year in Tennessee, called Tennessee Promise. The state was the first in the nation to pay for every student to go to community college for free. In that program, students must first apply for federal financial aid and the state pays whatever tuition is left over. Inspired by the program, Obama named his initiative America's College Promise.

Since the funding would come out of the federal budget, the president still faces opposition from Congress. Republicans, who are now in the majority, aren't likely to approve the president’s plan. Still, there’s optimism.

"The headline 'free community college' is valuable in itself, if it sort of plants the seed that, you can do this," says Matt Reed, vice president of academic affairs at Holyoke Community College.

Just the publicity generated by the president's proposal could make low-income students more aware of financial aid that’s already available, Reed says. Obama says he plans to spell out his plan further in his State of the Union address later this month.

"Here in America, we don’t guarantee equal outcomes ... but we do expect that everybody gets an equal shot," Obama said in his announcement.

Details about the $60 billion federal cost will be included in the 2016 budget Obama will send to Congress Feb. 2, according to a statement from Eric Schultz, deputy White House press secretary.

America's College Promise, by the numbers

$80 billion

Total cost for the proposed program over the next 10 years.

3/4

The portion of the average cost of community college the federal government will cover, with states funding the rest.

$3,800

Average tuition savings per year for a full-time community college student.

9 million

Students who will benefit every year, if all 50 states implement the plan.

35%

Estimated percent of job openings that will require at least a bachelor's degree by 2020.

2.5

GPA students must maintain to be eligible for free tuition.

1,100

Total number of community colleges nationwide.

President Obama announces free community college plan

Marketplace - American Public Media - Fri, 2015-01-09 11:00

President Barack Obama traveled to Knoxville, Tennessee Friday to unveil a proposal to cover the cost of two years of community college for most Americans.

Under the plan, the federal government would cover 3/4 of the average community college cost, which could save one full-time student about $3,800 in tuition every year, according to the White House. States would have to pony up the rest if they choose to participate. Students would also have to keep their grades up to be eligible, with a 2.5 GPA and at least half-time enrollment.

The White House

Obama announced the program Friday afternoon at Pellissippi State Community College. Students in the audience cheered when he mentioned the idea of free tuition.

"I want to make it free," he said. "No one with the drive and discipline should be locked out of opportunity, or denied a college education just because they don’t have the money."

Obama said he wanted two years of college to be as free and universal as high school is today. A degree, he said, is a sure ticket to the middle class. The plan is also being applauded in some academic circles. 

“Students who go to community colleges and get associates degrees as well as students who get bachelor’ s degrees end up earning significantly more than, students who, say, stop at high school, ” says Thomas Bailey, director of the Community College Research Center at Teachers College, Columbia University.

Lauren Asher agrees. She’s president of the Institute for College Access and Success. But, she wished Obama had targeted the money just for the neediest students, instead of making everybody eligible.

“You’re spreading available resources across many that don’t need them, and leaving those with the  greatest need still facing substantial affordability barriers,” she says.

The plan was inspired by a similar program that went into effect last year in Tennessee, called "Tennessee Promise." The state was the first in the nation to pay for every student to go to community college for free. In that program, students have to first apply for federal financial aid and the state pays whatever tuition is left over. Obama, inspired by the program, named his initiative "America's College Promise."

But since the federal funding would need to be budgeted for, the president still faces opposition from Congress.Republicans, who are now in the majority, aren't likely to approve the president’s plan. Still, there’s optimism.

"The headline 'free community college' is valuable in itself, if it sort of plants the seed that, you can do this," says Matt Reed, vice president of academic affairs at Holyoke Community College.

Reed says just the publicity from the president could make low-income students more aware of financial aid that’s already available. Obama says he'll spell out his plan further in his State of the Union address later this month, including more on what it would cost.

"Here in America, we don’t guarantee equal outcomes ... but we do expect that everybody gets an equal shot," Obama said in his announcement.

Details about the $60 billion federal cost will be included as part of the 2016 budget Obama will send to Congress Feb. 2, according to a statement from Eric Schultz, deputy White House press secretary.

America's College Promise, by the numbers

$80 billion

Total cost for the proposed program over the next 10 years.

3/4

The portion of the average cost of community college the federal government will cover, with states funding the rest.

$3,800

Average tuition savings per year for a full-time community college student.

9 million

Students who will benefit every year, if all 50 states implement the plan.

35%

Estimated percent of job openings that will require at least a bachelor's degree by 2020.

2.5

GPA students must maintain to be eligible for free tuition.

1,100

Total number of community colleges nationwide.

Former Florida A&M Student Sentenced To 6 Years In Hazing Death

NPR News - Fri, 2015-01-09 10:48

The judge said Dante Martin, who was convicted in the death of his fellow band member, Robert Champion, was a "willing participant" in the ritual.

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Are Teenagers Capable Of Making Life-Or-Death Decisions?

NPR News - Fri, 2015-01-09 10:31

The case of Cassandra, a 17-year-old who says she doesn't want chemotherapy for Hodgkin lymphoma, has sparked fierce debate. A medical ethicist says teenagers should be able to determine their fates.

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British Imam Convicted In U.S. On Terrorism Charges Gets Life

NPR News - Fri, 2015-01-09 10:23

Abu Hamza al-Masri was found guilty 8 months ago on charges stemming from plots to kill tourists in Yemen to a plan to open a jihadist training camp in rural Oregon.

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Ebola Vaccine Will Soon Be Tested In West Africa

NPR News - Fri, 2015-01-09 10:17

It's been tough to design tests because some people object to the idea that a comparison group won't receive the vaccine. But plans are moving ahead.

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Senator Asks Red Cross To Explain Its Finances

NPR News - Fri, 2015-01-09 10:07

Sen. Charles Grassley (R-Iowa) wants the Red Cross to explain inaccuracies in how it has said it uses public donations, citing questions raised by an NPR/ProPublica investigation.

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2015 Congress passes first bill: Terrorism insurance

Marketplace - American Public Media - Fri, 2015-01-09 09:49

The first bill passed by the new Congress in 2015 means the government will continue to be a backstop businesses that offer terrorism insurance. The U.S. got into that business after the Sept. 11 attacks out of fear insurers would stop offering it altogether.

The bill approved Thursday doubles the losses insurers must face to $200 million, before the backstop kicks in.

Why Pygmies Aren't Scared By The 'Psycho' Theme

NPR News - Fri, 2015-01-09 09:41

Deep in the Congolese rainforest, a group of Pygmies lives in near isolation from Western music. When a team of scientists played them music from Star Wars and Psycho, the results were surprising.

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My Money Story: Frugality and cheese

Marketplace - American Public Media - Fri, 2015-01-09 09:31

One of our listeners, Amelia Rosenman, wrote us about inheriting frugality, then taking that lesson and making it her own.

Tell us your own money story here

My Money Story: Waiting on Inheritance

Marketplace - American Public Media - Fri, 2015-01-09 09:19

As we know from everyone from Jane Austen to Henry James, an inheritance can do unexpected things to a family.

Kerry Reif is counting down the seconds, minutes, hours, and days to when she can access the inheritance her parents left her. 

Reif has been waiting quite awhile. She describes the day she found out what plans her parents had put in place, and how that has affected her life.

Vintage Beer? Aficonados Say Some Brews Taste Better With Age

NPR News - Fri, 2015-01-09 09:15

Aging in the bottle isn't just for wine anymore: It can also bring out sweet, caramel tones in some high-alcohol, smoky or sour craft brews. Don't believe us? You, too, can try this at home.

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Is Martin Luther King Jr.'s legacy public or private?

Marketplace - American Public Media - Fri, 2015-01-09 09:04

Some people whose lives and work leave an inheritance of for more than just their families. If you go to the movies this weekend, you may witness part of Martin Luther King Jr.'s legacy in the movie Selma, which goes into wide release this weekend. But it's only part. David Garrow wrote the King biography "Bearing the Cross: Martin Luther King, Jr., and the Southern Christian Leadership Conference", which won a Pulitzer prize.

Lizzie O'Leary speaks to Garrow about the version of Dr. King that moviegoers will see in Selma, and what part of his legacy is public.

Your Wallet: Financial Gaps

Marketplace - American Public Media - Fri, 2015-01-09 08:49

We're exploring gaps, in our economy and in our lives. We want to know, have you had a gap month, a year, or more?

Maybe you needed money before school, or you were unemployed for a while.

Tell us about that financial gap in time and how it affected your life.

Send us an email, or reach us on Twitter, @MarketplaceWKND

In France, Simultaneous Standoffs Erupt In Violence

NPR News - Fri, 2015-01-09 08:45

NPR's Eleanor Beardsley and Lauren Frayer speak to Renee Montagne about the standoffs between police and gunmen, both at a kosher market and in a warehouse north of Paris.

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A Review Of The Day's Violent Tumult In France

NPR News - Fri, 2015-01-09 08:38

Two standoffs involving armed men in and around Paris have ended with the deaths of three suspects. The violence concludes days of strain and tumult after shootings at a French satirical magazine.

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In The Midst Of A Violent Morning, Parisians Seek To Cope

NPR News - Fri, 2015-01-09 08:34

Sylvie Kauffmann, editorial director of the French newspaper Le Monde, speaks to Renee Montagne about the impact of the events unfolding in Paris and its nearby suburbs on the French people.

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Reports Of Boko Haram-Led Massacre In Captured Nigerian Town

NPR News - Fri, 2015-01-09 08:25

Baga, in the country's northeastern Borno state, was seized a week ago. Amnesty International says that as many as 2,000 people may have been killed by the Islamist extremists in recent days.

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