A Georgia high school expelled two students for making a racist video on the social media site TikTok.
“They are no longer students at Carrollton High School,” said District Superintendent Mark Albertus in a statement.
The video is highly offensive, and the two students responsible for it—a teenage boy and girl—exercised exceedingly poor judgment. But in punishing them so severely for conduct that took place entirely outside of school, Carrollton education officials have exercised poor judgment as well.
In the video, the two students place a piece of paper that reads “niggers” in the bathroom sink and proceed to fill it with cups of water representing “don’t have a dad,” “rob people,” and other racist tropes. The pair made no effort to hide their identities, and their names are publicly associated with the video, which quickly went viral. TikTok eventually deleted it.
According to Insider, the girl offered an extremely weak apology “to any blacks that got offended,” placed the blame on her boyfriend, and asked her critics to stop trying to get her “cancelled.” No doubt, the video will be associated with their names for a long time, severely harming their college and job prospects, perhaps deservedly.
In any case, the school’s handling of the incident is troubling. Indeed, school officials probably violated the First Amendment, though court decisions have limited the free speech rights of K-12 students so egregiously that the matter is not completely clear.
Keep in mind that the video was filmed at a home—not on school property or during school hours. It didn’t name or threaten any specific individuals associated with the school. And it did not advocate or involve illegal behavior. Racists statements, loathsome though they are, qualify as protected speech in most cases.
These are all important considerations, because courts have generally limited students’ free speech rights only when necessary to prevent substantial interference with a school’s educational functioning. The landmark 1969 Supreme Court decision in Tinker v. Des Moinesheld that action taken by schools to punish speech must be “caused by something more than a mere desire to avoid the discomfort and unpleasantness that always accompany an unpopular viewpoint.”
Subsequent rulings have been less favorable to K-12 students’ free speech rights. In the well-known “bong hits for Jesus” case, Frederick v. Morse (2007), the Supreme Court upheld a school’s decision to censor students whose speech was construed as promoting illegal drug use at a school function. A more recent decision from the U.S. Court of Appeals for the Fifth Circuit, Bell v. Itawamba County Board (2012), sided against a student whose offensive speech was directed at a school employee.
In a statement, Carrollton officials acknowledged that the racist speech took place outside of school but nevertheless asserted that they had the authority to punish the students for it.
CHS Principal David Brooks, who began investigating the incident Thursday night after the release of the video, said even if the offending incident was recorded after-school hours, it doesn’t alleviate the students’ responsibility to uphold a high standard of behavior.
“It is our priority to keep our schools safe, and there is no doubt this incident has caused significant tension at Carrollton High School, across the district, state and nation – even the world,” he said.
It seems like a stretch to argue that the racist video was a safety matter—again, it did not threaten violence or name a specific individual. It may have caused tension, but that is a thin rationale for giving education officials virtually unlimited power to punish any action that upsets someone at school.
I don’t know if a civil liberties group would have any interest in taking this case given how deeply unsympathetic its subjects are, but it strikes me as worth it, if only for the sake of defending even minimal free speech rights for school-aged young people.
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United Airlines Stock Slides After Massive Secondary Offering
One word – “Bravo”… a publicy-traded firm that chooses to raise its own capital rather than rely on government bailouts to save it from its historically bad decisions.
United Airlines shares are sliding after hours – though not devastatingly…
United Airlines Holdings, Inc. today announced an underwritten public offering of 39,250,000 shares of its common stock, subject to market conditions and other factors. Morgan Stanley and Barclays are acting as the underwriters of the offering.
The Company has also granted to the underwriters a 30-day option to purchase up to 3,925,000 additional shares.
The proceeds from the offering will be used for general corporate purposes.
This will mean a dilution of approximately 16%.
In context, the drop is de minimus…
Spirit, American, Jetblue, and Delta shares are all falling after hours as hope of a massive bailout fades (whether by peer pressure or UAL simply highlighting how capitalism is supposed to work).
Watch Live: White House Coronavirus Task Force Holds Tuesday Briefing
After using yesterday’s press conference to share his thoughts about the unprecedented move in front-month oil futures well below $0, we suspect we’ll hear more on the subject Tuesday evening, as talk about a possible energy industry bailout as the financial press has spent most of the afternoon discussing a potential energy-industry bailout.
Trump tweeted on Tuesday that he would “help” the energy industry.
We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!
Will he throw some numbers around tonight? Will reporters imply that his administration is putting the energy industry before the nation’s working poor?
Find out more tonight starting at 5pmET (or more likely some time after that):
There seems to be growing optimism that we’re nearing the end of the coronavirus lockdown. Stocks have rallied despite dismal economic numbers. But Peter Schiff says there are some important questions nobody is asking, especially when it comes to the insane Federal Reserve monetary policy.
The US stock market ended last week on an upswing and gold was down as optimism and risk-on sentiment returned. The optimism was due to a possible treatment for coronavirus along with some movement toward reopening the US economy. There seems to be some sentiment that the market has found its bottom.
Peter doesn’t think so.
I still am doubting this rally. I don’t think the bear market is over. I don’t think the bear market ends with stocks like Netflix and Amazon making new all-time record highs. I still think those stocks have to have some kind of comeuppance. I think they have to take those out and shoot them. So, I am looking for another sell-off in the broad markets.”
Peter said there is one thing the market has going for it — the Federal Reserve. In fact, a lot of people seem to think that’s all you need.
As long as you’ve got the Fed on your side and they’re going to keep on printing money, which they’re going to do and they’re going to print more and more of it, people are going to make a bet. And they’re going to bet on the Fed by buying stocks. What they should be doing is buying gold.”
Gold stocks have been strong in recent weeks, but some of the bigwigs on Wall Street are already talking like the gold rally is over. Peter said it’s barely begun.
For people to say, ‘Hey, it’s time to get out, the gold rally is over,’ I mean, these are people who really have no clue what’s going on in the gold market trying to convince people the gold rally is over when the fundamentals have never been better. I mean, it’s not like the Fed is about to stop printing money. No! They’re going to print more than ever before. In fact, because they have printed so much money so quickly, because the balance sheet has exploded, and because of all these new programs that are on the deck, not only the ones that have been enacted, but the programs that are on the deck, they’re going to be printing money like crazy. So, you have the most bullish environment you can imagine for the mining sector yet they’re saying we should sell these stocks.”
The Federal Reserve balance sheet grew by another $284.7 billion. To put that into some perspective, during QE3, the balance sheet was growing by $80 per month. The balance sheet now stands at just under $6.4 trillion. That raises a question: how is the Fed ever going to shrink the balance sheet?
Maybe people have decided they’re never going to shrink it. But then what does that mean? Because, the Fed has to shrink the balance sheet at some point, which is going to be very, very disruptive to the economy, much more disruptive than when they tried to shrink the balance sheet before, which eventually blew up.”
Remember, the Fed had to call off quantitative tightening long before coronavirus. The Fed cut interest rates three times last year.
So, it’s not like the Fed was able to keep shrinking the balance sheet and keep raising interest rates and it had to abort that process because of the coronavirus. They had to abort the process before anybody heard of the coronavirus. So, it was already imploding. The bubble was already deflating before this pin, this other pin came and put another hole in it. So, if we couldn’t unwind the four-and-a-half trillion-dollar balance sheet, if we couldn’t normalize the debt levels that existed before the coronavirus, think about how much more difficult, if not completely impossible that process is going to be after the coronavirus. So, nobody is asking: what is the implication of a balance sheet that is so enormous that it would be so disruptive to shrink, or because it’s so enormous and can’t be shrunk? What does that mean about future inflation and the value of the dollar?”
There is still this persistent myth that everything is going to be fine once we solve coronavirus. In the meantime, we’re piling on trillions of dollars in new debt. That debt doesn’t just go away after the coronavirus lockdown is over.
We still have to deal with that problem long after the coronavirus problem is over. … It’s not like all of a sudden we’re going to go back to this booming economy. We’re going to go back to a busted bubble.”
A Georgia high school expelled two students for making a racist video on the social media site TikTok.
“They are no longer students at Carrollton High School,” said District Superintendent Mark Albertus in a statement.
The video is highly offensive, and the two students responsible for it—a teenage boy and girl—exercised exceedingly poor judgment. But in punishing them so severely for conduct that took place entirely outside of school, Carrollton education officials have exercised poor judgment as well.
In the video, the two students place a piece of paper that reads “niggers” in the bathroom sink and proceed to fill it with cups of water representing “don’t have a dad,” “rob people,” and other racist tropes. The pair made no effort to hide their identities, and their names are publicly associated with the video, which quickly went viral. TikTok eventually deleted it.
According to Insider, the girl offered an extremely weak apology “to any blacks that got offended,” placed the blame on her boyfriend, and asked her critics to stop trying to get her “cancelled.” No doubt, the video will be associated with their names for a long time, severely harming their college and job prospects, perhaps deservedly.
In any case, the school’s handling of the incident is troubling. Indeed, school officials probably violated the First Amendment, though court decisions have limited the free speech rights of K-12 students so egregiously that the matter is not completely clear.
Keep in mind that the video was filmed at a home—not on school property or during school hours. It didn’t name or threaten any specific individuals associated with the school. And it did not advocate or involve illegal behavior. Racists statements, loathsome though they are, qualify as protected speech in most cases.
These are all important considerations, because courts have generally limited students’ free speech rights only when necessary to prevent substantial interference with a school’s educational functioning. The landmark 1969 Supreme Court decision in Tinker v. Des Moinesheld that action taken by schools to punish speech must be “caused by something more than a mere desire to avoid the discomfort and unpleasantness that always accompany an unpopular viewpoint.”
Subsequent rulings have been less favorable to K-12 students’ free speech rights. In the well-known “bong hits for Jesus” case, Frederick v. Morse (2007), the Supreme Court upheld a school’s decision to censor students whose speech was construed as promoting illegal drug use at a school function. A more recent decision from the U.S. Court of Appeals for the Fifth Circuit, Bell v. Itawamba County Board (2012), sided against a student whose offensive speech was directed at a school employee.
In a statement, Carrollton officials acknowledged that the racist speech took place outside of school but nevertheless asserted that they had the authority to punish the students for it.
CHS Principal David Brooks, who began investigating the incident Thursday night after the release of the video, said even if the offending incident was recorded after-school hours, it doesn’t alleviate the students’ responsibility to uphold a high standard of behavior.
“It is our priority to keep our schools safe, and there is no doubt this incident has caused significant tension at Carrollton High School, across the district, state and nation – even the world,” he said.
It seems like a stretch to argue that the racist video was a safety matter—again, it did not threaten violence or name a specific individual. It may have caused tension, but that is a thin rationale for giving education officials virtually unlimited power to punish any action that upsets someone at school.
I don’t know if a civil liberties group would have any interest in taking this case given how deeply unsympathetic its subjects are, but it strikes me as worth it, if only for the sake of defending even minimal free speech rights for school-aged young people.
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The Bureau of Prisons (BOP) abruptly changed its policy yesterday for which inmates are eligible for early release into home confinement because of the threat of COVID-19, advocates and family members of inmates say, crushing the hopes of some inmates who had already been moved into pre-release quarantine.
According to multiple accounts from family members and the criminal justice advocacy group FAMM, the BOP informed inmates on Monday that it would not be waiving a requirement that inmates serve 50 percent of their sentence before they can become eligible for home confinement, despite earlier indications that it would.
It’s unclear how many inmates who were approved for early release were disqualified. The BOP did not immediately respond to a request for comment.
“The BOP is playing with people’s lives,” Kevin Ring, president of FAMM, said in a statement. “It’s nothing short of cruel to tell hundreds of people they are going home, notifying their families and quarantining them for days, only to change your mind afterward.”
Attorney General William Barr issued a directive on March 26 expanding compassionate release and home confinement transfers of elderly and at-risk inmates to mitigate potentially deadly COVID-19 outbreaks. Politicoreported on April 9 that the BOP quietly expanded the directive and waived the 50 percent requirement as the virus spread through several federal prisons.
Inmates who are approved for early release are put into quarantine for two weeks. However, Ring tweeted yesterday that family members of inmates traveled to FCC Coleman, a federal prison complex in Florida, expecting to pick up their incarcerated loved ones, only to be told the policy had been changed.
At a town hall meeting today, they were told BOP is insisting on 50% requirement and people who don’t qualify had their dates revoked. Families had to return without their loved ones. Hard to imagine how you could jerk someone around worse than that. But it keeps happening.
Reason received a message yesterday from a family member of a man incarcerated at FCI Elkton, a federal prison in Ohio that has been hit particularly hard by the virus.
“Last week, my Dad was told that he would be going to home confinement based on AG Barr’s memo,” the family member wrote. “They made him sign numerous documents on multiple occasions. Today, they told him that he was denied for home confinement because he hasn’t served 50% of his sentence yet. The 50% threshold is explicitly NOT a criteria, yet they have still done this to him. Not to mention the sentence in the first place is way above the guidelines. What they are doing to people is cruel and unusual. It isn’t right.”
“They just posted a new BOP Bulletin a few minutes ago, reversing the Barr decision and requiring that those released to home confinement must have served 50% of their sentence,” Stephen Donaldson, son of an inmate at a prison in Georgia, wrote in an email to POLITICO. “I was hoping to have my father home. He tells me a number of other inmates had started the quarantine pre release and then were told of the reversal.”
The notifications appear to have gone out throughout the federal prison system:
Yes I got a call from my wife today in tears because they put her back into the general population and last week they moved her into a quarantine room to prepare for home confinement. I’m a medical provider. COVID-19 doesn’t care if you have served 25% or 50% of your sentence.
Yesterday Judge Alison Nathan of the U.S. District Court for the Southern District of New York called the BOP’s quarantine policies “illogical” and “Kafkaesque” and said they put inmates at greater risk of contracting COVID-19.
According to the BOP’s most recent numbers, there are 497 federal inmates and 319 staff infected with the virus. So far, 22 inmates have died from COVID-19 complications. There are roughly 20,000 federal inmates over the age of 55.
FAMM sent a letter today to BOP Director Michael Caraval today requesting more information and transparency from the agency.
“Tens of thousands of families across the country are deeply and understandably frightened for the health and safety of their incarcerated loved ones,” Ring wrote. “The people inside BOP’s facilities are confused, frightened, and vulnerable. They deserve maximum transparency from the BOP.”
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WTI Maintains Losses As Crude Inventories Rise For 13th Straight Week
Oil’s collapse is deepening and spreading across the entire complex as a massive supply glut brought on by the pandemic (and not helped yet by OPEC+ production cuts) and a worldwide shortage of storage space have touched off relentless rout that has shifted the entire forward curve for oil.
As we detailed earlier, with settlement now come and gone, the May contract soared back higher today…
…and adjustments to the USO allocation (to June, July, and August) prompted a bid in each ahead of the settle which all then plunged back after…
The collapse is reverberating across the oil industry, with prices trading below zero across America on Monday. WTI Midland in Texas – a flagship marker for the U.S. shale industry – was at -$13.13 a barrel, while crude in Alaska was at -$46.63.
Oil is a “dangerous market to trade in right now,” said Pierre Andurand, founder of Andurand Capital Management LLP, in a Bloomberg TV interview. The market needs oil production to fall immediately for prices to recover, he said.
And all eyes will be on the inventory data to see just how fast this glut is building. Crude stockpiles at Cushing – America’s key storage hub and delivery point of the WTI contract – have jumped 48% to almost 55 million barrels since the end of February. U.S. nationwide inventories are estimated to have increased another 14 million barrels last week, according to a Bloomberg survey.
API
Crude +13.226mm (+13.8mm exp)
Cushing +4.913mm (+14mm exp)
Gasoline +3.435mm (+4.4mm exp)
Distillates +7.369mm (+3.9mm exp)
This is the 13th weekly crude build in a row, 7th weekly build at Cushing
Source: Bloomberg
The June contract traded around $13.00 ahead of the API data and lifted very modestly after the print…
“If you start to look at the actual supply-demand situation for oil, it’s not so obvious that by the time those contracts expire, the storage situation around Cushing will be very different than what it is in May,” said Martijn Rats, Global Oil Strategist at Morgan Stanley, in a Bloomberg Radio interview.
“The prices of these futures will need to connect to the physical reality, and they are likely to crack lower.”
As Bloomberg’s Javier Blas concluded: ” Yesterday was scary. Today is a lot more scary. The whole oil market is screaming oversupply simultaneously.”
Netflix Adds Record 15.77MM Paid Subs, Crushing Estimates But Offers Disappointing Outlook
While recent earnings reports from streaming giant Netflix have been a mixed bag, missing badly three quarters ago when US subs declined and forecasting the first annual drop this decade, then smashing expectations two quarters ago, and finally last quarter when it beat on new subs but disappointing in its guidance, none of that mattered today when the company reported earnings for its first “post Corona” quarter, when the only thing investors cared about was not whether the company would beat or miss expectations, but rather if Netflix, whose stock price has soared in the past month, is really a pandemic-proof company?
As Bloomberg notes, the company is riding a wave of optimism, its stock soaring 50% in the past month, with investors pushing the shares to new highs and analysts seeing people download its app in record numbers. And while there’s no doubt that viewership has surged during the Covid-19 lockdowns in the U.S. and much of the world, there are complications: the virus has brought TV and film production to a halt, a situation that may only get more dire for Netflix as the months wear on.
The world’s largest paid streaming service is also facing more intense and cutthroat (or rather cut-price) competition than ever. Comcast’s Peacock platform began its rollout this month, along with the short-form video service Quibi. And AT&T Inc.’s big bet on streaming, HBO Max, debuts in May, while Disney+ has already reportedly hit 50 million subs.
So was this that unleashes a new growth trajectory for Netflix? Judging by the company’s blockbuster report, the answer – and the reason why stocks are surging after hours – is a resounding yes.
Here is what the company reported:
Q1 revenue $5.768BN; beating the estimate of $5.74 billion (range $5.36 billion to $5.89 billion)
Q1 GAAP EPS of $1.57, missing the estimate $1.64 (range $1.20 to $1.74)
In short, bit of a mixed bag, but the number everyone is focusing on after hours and the reason why the stock is soaring is the company’s blockbuster addition in net subs:
Q1 streaming paid net change 15.77MM, smashing the estimate +8.47 million new adds and more than double the company’s own forecast of 7.00 million.
The corona-quarter hardly needs to be highlighted in the chart below:
“With lockdown orders in many countries starting in March, many more households joined Netflix to enjoy entertainment,” Netflix said, adding that Netflix subscriber growth in the first two months of the year was “similar to the prior two years.”
Then things took off in March with the global virus lockdown. Netflix doesn’t expect this kind of growth to continue with Q3 and Q4 net additions lower than last year, in part because there won’t be new seasons of “Stranger Things” and “Money Heist.”
And summarized:
Or maybe just call it the Tiger King quarter. As Bloomberg points out, it should surprise no one that’s spent any time online in recent weeks that Netflix’s “Tiger King” was a smash hit. The weird docuseries about a zookeeper that is now in prison for attempted murder attracted 64 million viewers. That’s still far behind the Mark Wahlberg film “Spenser Confidential,” which garnered 85 million viewers.
In any event, the forced lockdowns were all that matters, and Netflix admitted as much saying it was seeing “temporarily higher viewing and increased membership growth” during the lockdown, but that’s being “offset by a sharply stronger U.S. dollar, depressing our international revenue, resulting in revenue-as-forecast.”
But how is it possible to blow out your own subscriber forecast yet revenue barely beats? The company explains that despite paid net additions that were higher than forecast, “revenue was in-line with our guidance due to the appreciation in the US dollar vs. other currencies. Excluding a -$115m impact from F/X, streaming ARPU grew 8% year over year.”
Meanwhile, operating margin of 16.6% (vs. 10.2% in the prior year quarter) was lower than its 18.0% forecast as the company incurred $218m in incremental content costs due to paused productions and hardship fund commitments (a 3.8 percentage point impact to operating margin).
Q1 UCAN streaming paid net change +2.31 million vs. +550,000 q/q
Q1 EMEA streaming paid net change +6.96 million, +57% q/q
Q1 LATAM streaming paid net change +2.90 million, +42% q/q
Q1 APAC streaming paid net change +3.60 million vs. +1.75 million q/q
Q1 operating margin 16.6% vs. 8.40% q/q
Looking ahead the company expected a drop in the coronavirus surge, and expected 7.5MM subs in Q2, a roughly 50% decline from the current quarter. Specifically, Netflix expects viewing to decline and subscriber growth to decelerate as home confinement ends, “which we hope is soon.”
Additionally, Netflix expected the following:
Q2 revenue of $6.05BN, above the estimate $5.96 billion
Q2 GAAP EPS of $1.81, above the estimate of $1.55
The company hired 2,000 agents to boost customer support levels
Summarized:
To summarize the coronavirus impact on the company (via BBG):
Subscriber growth accelerated due to home confinement.
International revenue will be less than forecast due to the dollar rising sharply.
Due to the production shutdown, some cash spending on content will be delayed, improving free cash flow.
As Bloomberg Intelligence Senior Tech Analyst Geetha Ranganathan notes: “a strong 2Q outlook lends credence to our view that Covid-19 will create tailwinds for Netflix, accelerating the shift away from linear TV. The record 15.77 million additions in 1Q blew past guidance and came in almost 85% higher than consensus estimates.”
Commenting on the quarter, Reed Hastings said that “in our 20+ year history, we have never seen a future more uncertain or unsettling. The coronavirus has reached every corner of the world and, in the absence of a widespread treatment or vaccine, no one knows how or when this terrible crisis will end. What’s clear is the escalating human cost in terms of lost lives and lost jobs, with tens of millions of people now out of work.”
With cinemas closed, Netflix said it was taking the opportunity to acquire titles that might not have otherwise gone straight to streaming. It said it recently bought Paramount Pictures’s “The Lovebirds” and Legendary Pictures’s “Enola Holmes.”
While Netflix has tried to focus more on original content in recent years, making sure there’s enough on the platform to fulfill demand will be important to retain its subscribers, according to Bloomberg. A tricky thing to do when most Hollywood productions are shut down because of the virus.
In terms of its content organization, Netflix said its daily top-10 most-watched films and series lists will be a regular feature, available in almost 100 countries. Some more content notes from the letter to shareholders:
As people shelter at home, our hope is that we can help make that experience more bearable by providing a diverse range of high quality content for our members. While our productions are largely paused around the world, we benefit from a large pipeline of content that was either complete and ready for launch or in post-production when filming stopped.
For Q2, we’re looking forward to releasing all of our originally planned shows and films (with some language dubbing impacts on a few titles). We’re also finding ways to bolster our programming this year – including the recent acquisition of Paramount’s and Media Rights Capital’s The Lovebirds, a comedy starring Issa Rae and Kumail Nanjiani, for Q2’20 and Legendary Pictures’ Enola Holmes starring Millie Bobby Brown, Helena Bonham Carter, Henry Cavill, and Sam Claflin, for Q3 ‘20. So, while we’re certainly impacted by the global production pause, we expect to continue to be able to provide a terrific variety of new titles throughout 2020 and 2021.
Our Q1 slate highlighted the variety of content that people enjoy en masse all over the world on Netflix: scripted English language series like Ozark season 3 (a projected 29m member households will have chosen to watch this season in its first four weeks), the riveting docu-series Tiger King: Murder, Mayhem and Madness (64m), our breakthrough unscripted dating show Love is Blind (30m), original film Spenser Confidential (85m), and season four of the Spanish language hit La Casa de Papel, aka Money Heist (a projected 65m), which debuted in early April.
In Q2, we are looking forward to the launch of Space Force, our new original comedy series created by Greg Daniels (The Office) and Steve Carell, starring Carell, John Malkovich and Lisa Kudrow. We just launched our latest buzzy unscripted series Too Hot to Handle, #BlackAF from Kenya Barris and, outside the US, the Michael Jordan documentary The Last Dance, which we co-produced with ESPN (launching on Netflix in the US on July 19). We will also premiere Hollywood from Ryan Murphy, and, later this week, Extraction, a large scale action film starring Chris Hemsworth and directed by Sam Hargrave, who was the stunt coordinator and choreographer on films like Avengers: Endgame, Avengers: Infinity War, Deadpool 2, and Captain America: Civil War.
* * *
What is perhaps most remarkable was the dramatic reversal in Netflix cashflow: net cash used in Q1 operating activities was +$260 million vs. -$380 million in the prior year period. Free cash flow totaled +$162 million compared with -$460 million in the year ago quarter.
As the company stated last quarter, our FCF profile is beginning to improve due to growing operating margin and profits and “as it digests its big move into the production of Netflix originals (which requires more cash upfront vs. later-window content) that started five years ago.”
Or perhaps there is less here than meets the eye: as Netflix admits, with its productions currently paused, this will shift out some cash spending on content to future years. As a result, the company now expecting 2020 FCF of -$1 billion or better (compared with our prior 2020 expectation of -$2.5 billion and -$3.3 billion actual in 2019). This dynamic may result in more lumpiness in its path to sustained FCF profitability. However, there has been no material change to its overall time table to reach consistent annual positive FCF and we believe that 2019 will still represent the peak in our annual FCF deficit.
The company ended the quarter with cash of $5.2 billion, while its $750m unsecured credit facility remains undrawn. Combined with improved FCF outlook for 2020, the company has more than 12 months of liquidity and “substantial financial flexibility.”
And while the company’s surge in Q1 subs was enough to initially send the stock sharply higher, perhaps as a result of the company’s cautious Q2 guidance where it sees a drop of 50% in new subs, the stock is virtually unchanged after hours.
The Bureau of Prisons (BOP) abruptly changed its policy yesterday for which inmates are eligible for early release into home confinement because of the threat of COVID-19, advocates and family members of inmates say, crushing the hopes of some inmates who had already been moved into pre-release quarantine.
According to multiple accounts from family members and the criminal justice advocacy group FAMM, the BOP informed inmates on Monday that it would not be waiving a requirement that inmates serve 50 percent of their sentence before they can become eligible for home confinement, despite earlier indications that it would.
It’s unclear how many inmates who were approved for early release were disqualified. The BOP did not immediately respond to a request for comment.
“The BOP is playing with people’s lives,” Kevin Ring, president of FAMM, said in a statement. “It’s nothing short of cruel to tell hundreds of people they are going home, notifying their families and quarantining them for days, only to change your mind afterward.”
Attorney General William Barr issued a directive on March 26 expanding compassionate release and home confinement transfers of elderly and at-risk inmates to mitigate potentially deadly COVID-19 outbreaks. Politicoreported on April 9 that the BOP quietly expanded the directive and waived the 50 percent requirement as the virus spread through several federal prisons.
Inmates who are approved for early release are put into quarantine for two weeks. However, Ring tweeted yesterday that family members of inmates traveled to FCC Coleman, a federal prison complex in Florida, expecting to pick up their incarcerated loved ones, only to be told the policy had been changed.
At a town hall meeting today, they were told BOP is insisting on 50% requirement and people who don’t qualify had their dates revoked. Families had to return without their loved ones. Hard to imagine how you could jerk someone around worse than that. But it keeps happening.
Reason received a message yesterday from a family member of a man incarcerated at FCI Elkton, a federal prison in Ohio that has been hit particularly hard by the virus.
“Last week, my Dad was told that he would be going to home confinement based on AG Barr’s memo,” the family member wrote. “They made him sign numerous documents on multiple occasions. Today, they told him that he was denied for home confinement because he hasn’t served 50% of his sentence yet. The 50% threshold is explicitly NOT a criteria, yet they have still done this to him. Not to mention the sentence in the first place is way above the guidelines. What they are doing to people is cruel and unusual. It isn’t right.”
“They just posted a new BOP Bulletin a few minutes ago, reversing the Barr decision and requiring that those released to home confinement must have served 50% of their sentence,” Stephen Donaldson, son of an inmate at a prison in Georgia, wrote in an email to POLITICO. “I was hoping to have my father home. He tells me a number of other inmates had started the quarantine pre release and then were told of the reversal.”
The notifications appear to have gone out throughout the federal prison system:
Yes I got a call from my wife today in tears because they put her back into the general population and last week they moved her into a quarantine room to prepare for home confinement. I’m a medical provider. COVID-19 doesn’t care if you have served 25% or 50% of your sentence.
Yesterday Judge Alison Nathan of the U.S. District Court for the Southern District of New York called the BOP’s quarantine policies “illogical” and “Kafkaesque” and said they put inmates at greater risk of contracting COVID-19.
According to the BOP’s most recent numbers, there are 497 federal inmates and 319 staff infected with the virus. So far, 22 inmates have died from COVID-19 complications. There are roughly 20,000 federal inmates over the age of 55.
FAMM sent a letter today to BOP Director Michael Caraval today requesting more information and transparency from the agency.
“Tens of thousands of families across the country are deeply and understandably frightened for the health and safety of their incarcerated loved ones,” Ring wrote. “The people inside BOP’s facilities are confused, frightened, and vulnerable. They deserve maximum transparency from the BOP.”
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A New York Timesanalysis of mortality data from 11 countries suggests that deaths associated with the COVID-19 epidemic have been undercounted. The analysis, which counts 28,000 “missing deaths” in those countries, includes fatalities caused by other illnesses, on the assumption that hospitals overwhelmed by COVID-19 cases were unable to treat patients who might otherwise have been saved.
While this analysis adds to our understanding of the epidemic’s impact, the significance of the undercounting described by the Times should not be exaggerated. It has little bearing on the overall fatality rate among peopled infected by the COVID-19 virus or the number of life-years typically lost to the disease.
Comparing deaths during the last month to deaths during the same period last year, the Times finds a total of 193,000 “excess deaths,” of which 165,000 were recorded as COVID-19 fatalities. Based on that comparison, the death toll attributable to the epidemic (even if not to COVID-19 itself) was 17 percent higher than the official numbers indicate.
Since this analysis includes deaths that were not actually caused by COVID-19, it is not directly relevant to calculating the infection fatality rate. Even leaving that point aside, an undercount of this magnitude pales in comparison to the gap between total infections and official tallies of COVID-19 cases, which may be off by a factor on the order of 40 or so (judging from a recent study in Los Angeles County). The error in the denominator, in other words, is apt to be far bigger than the error in the numerator. And while the official tallies no doubt miss some COVID-19 deaths (especially those involving people with other serious medical conditions who die at home), they may also include fatalities caused by other illnesses among patients who tested positive for the virus.
The Times claims “these numbers undermine the notion that many people who have died from the virus may soon have died anyway.” That depends on what you mean by “many” and “soon.”
British epidemiologist Neil Ferguson, who led the Imperial College team responsible for dire COVID-19 projections that had a powerful impact on policy makers around the world, has estimated that “as much as half to two-thirds” of people who are killed by COVID-19 in the U.K. “would have died anyhow” by the end of the year. The Times analysis, since it is limited to a single month, does not address the accuracy of such predictions.
Even if Ferguson’s estimate is off, it is clear that COVID-19 deaths are concentrated among people who are elderly and/or have serious preexisting conditions. That means the impact of the disease, in terms of life-years lost, is bound to be much less dramatic than it would be if COVID-19 were primarily killing otherwise healthy children, teenagers, and younger adults. That observation remains true whether or not people who are especially vulnerable to the disease would have died in the same month or year in the absence of the epidemic.
“This is killing mostly older people,” observes Princeton bioethicist Peter Singer. “I think that’s really relevant. I think we want to take into account the number of life years lost—not just the number of lives lost. The average age of death from COVID in Italy is 79½. So you do have to ask the question: How many years of life were lost? Especially when you consider that many of the people who have died had underlying medical conditions. The economist Paul Frijters roughly estimates that Italians lost perhaps an average of three years of life. And that’s very different from a younger person losing 40 years of life or 60 years of life.”
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