October 23, 2020

Business Doesn’t Stop for the Election

The Cinderella Castle at Walt Disney World in Lake Buena Vista, Fla., Sept. 30.



Photo:

Joe Burbank/Associated Press

Readers understand why the Trump furies have been center stage in this column but here are some business controversies for those who have missed them.

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Get ready for an unlooked-for sideshow in the presidential election in coming days, in the form of a patent dispute between two South Korean battery giants before the deservedly obscure U.S. International Trade Commission.

This underappreciated fight could be a wild card in the must-win Trump state of Georgia, where a ruling on Oct. 26 could scuttle 2,000 jobs and a $2.6 billion lithium-ion battery plant. It could also have spillover in reddish Tennessee, where VW needs the batteries to produce a slate of electric vehicles starting next year.

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It could even influence the up-for-grabs state of Michigan, where Ford is depending on batteries for a promised electric F-150 pickup truck. Electric vehicle batteries “cannot simply be swapped like batteries in a flashlight,” Ford griped to the U.S. trade tribunal, which can block the import of items and technology subject to patent disputes.

The commission, apparently with an eye for the main chance, rescheduled the ruling from Oct. 5, when the world was preoccupied by Donald Trump’s Covid case, to a week before the election. A preliminary “default judgment” has already gone against the plant’s owner,

SK Innovation,

allegedly because it destroyed documents involved in its dispute with fellow South Korean rival

LG Chem.

A final judgment could put the plant out of business.

If this story starts popping up on your news screen, here’s why. Everybody knows Donald Trump would likely overrule a harsh decision that jeopardizes U.S. jobs (as a president is entitled to do). A flurry of news reports in coming days may be aimed at reminding LG of its incentive to settle this game of chicken before a presidential intervention takes away the leverage the company has won so far by exploiting U.S. trade law.

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Is anything more implausible than a major bureaucratic organization pledging that it just transformed itself?

Disney’s

reorganization this week is meant to signal an “all in” bet on streaming and yet the announced changes don’t simplify its mélange of streaming offerings in Disney+, Hulu, ESPN+ and a forthcoming international outlet called Star. Unresolved is the conundrum of how Disney-produced content will be prioritized for streaming vs. sale to others or delivery in theaters or via Disney’s cable and broadcast channels.

Most of all, as outside agitator Dan Loeb has been proselytizing, the changes don’t provide money to create enough new shows for Disney to be anything but ancillary in a streaming market dominated by

Netflix,

Amazon

and YouTube.

Don’t we still get the feeling Disney is just praying for the pandemic to end and revive theme-park attendance, resurrect ESPN’s traditional sports franchise, and make possible again blockbuster opening nights for Disney’s theatrical releases?

And yet a bigger, more disruptive tidal wave might be just a year or two behind the pandemic. This is the long-heralded arrival of virtual and augmented reality, online gaming and role playing, which promises to push aside the traditional passive entertainment experience that’s already losing the battle for our attention against our smartphones.

AT&T’s

struggles with its own legacy media business, acquired through the giant Warner Media merger, seem more interesting in this light. The company has also announced entertainment-related layoffs and restructurings. If it succeeds in rationalizing its own mélange into a sensible streaming proposition, video will still remain a mere add-on to AT&T’s core connectivity business, which seems destined to become only more central to society and consumers in the dawning virtual-reality age.

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Which brings us to a second reason late October will be a red-letter moment in the annals of the administrative state. Ajit Pai, chief of the Federal Communications Commission, has scheduled an Oct. 27 vote to finalize repeal of a politicized Obama-era order turning the internet into a regulated utility. Has any furor in the history of the republic proved more fraudulent and illusory than the “death of the internet” hysteria whipped up by HBO twit John Oliver, Democrats and left-wing interest groups?

Since the Trump FCC acted, internet speeds have doubled in the U.S. The rate of new wireless cell site construction has increased sevenfold. The absence of utility-like regulation is a reason our internet, unlike Europe’s, has survived the pandemic without having to throttle speeds to accommodate millions working at home during the day and bingeing on Netflix at night.

For 20 years, a bipartisan consensus favored a light touch to encourage internet innovation. Expect the Oct. 27 vote to be 3-2 as Democratic commission members reproduce the mindlesspartisanship that overtook internet regulation in the late Obama era and threatens to return under a Joe Biden presidency.

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Appeared in the October 14, 2020, print edition as ‘Biz Doesn’t Stop for the Election.’

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