Corona Capital is a daily column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.
– U.S. movie theaters
Fear, embarrassment, greed. Men’s-health telemedicine specialist Hims may go public by selling itself to a blank-check company. Oaktree Acquisition could pay some $2 billion, according to Bloomberg. The deal would merge two probably overdone trends.
Closed doctors’ offices have left patients flocking to virtual medical services, sending valuations rocketing. Publicly traded Teladoc Health, for example, has seen its market capitalization triple over the past year to $16 billion. Meanwhile special purpose acquisition companies raised more cash going public so far in 2020 than in any previous full year, according to Dealogic.
Privately held Hims reveals little about its finances, but it offers a promising service given many men are embarrassed to talk about sexual problems, hair loss, and depression. Yet niche telemedicine outfits have proliferated of late. And Teladoc’s planned acquisition of rival Livongo Health, announced last week, suggested a possible slowdown in organic growth. Meanwhile, SPACs have multiplied, too. Greed may soon turn to fear. (By Robert Cyran)
Gone without the wind. A U.S. federal judge has cleared the way for movie studios to own theater chains. A ruling on Aug. 7 laid to rest rules enacted in the era that brought us “Gone with the Wind.” Known as the Paramount Decrees, they ended the dominance of a handful of Hollywood studios over the production and distribution of movies.
Walt Disney and others may now be permitted to snap up movie theaters. The question is whether they will want to. Exhibitors like AMC Entertainment were already under pressure before Covid-19 from the rise of Netflix and Amazon.com. Today’s digital distribution makes theater-only premieres far less relevant. The pandemic has just made things worse for cinema owners.
Disney, Comcast-owned Universal and others – including Paramount Pictures – are choosing instead to debut movies on their own streaming services. A green light for mergers doesn’t necessarily mean there will be buyers. (By Jennifer Saba)
Fear of flying. Qantas Airways’ latest fundraising hasn’t flown well with Australia’s mom-and-pop investors. The airline said on Monday that it had raised just A$71.7 million, about $50 million, from a share purchase plan aimed at its non-institutional shareholders – miles short of its A$500 million target. The retail book had been open since July 2. The flop is a stark contrast to the successful A$1.4 billion institutional fundraising that opened and closed within a day.
Timing was part of the problem. Qantas said on June 25 that it was giving shareholders the chance to buy discounted stock. The retail placement, which was offered free of any brokerage fees, commissions or transaction costs, launched a week after the institutional one. However, the deal coincided with a series of virus-related border restrictions across Australian states and territories, forcing a reassessment of the carrier’s prospects. Institutional investors may come to learn that boarding before economy passengers doesn’t always pay. (By Alec Macfarlane)
Luxury slump. The Covid-19 crisis is taking the sheen off the high-end London property market. Before the pandemic, developers were the obvious buyers for a 95,000 square foot mansion overlooking Regent’s Park that is being put on the market for 185 million pounds, particularly as the structure has planning permission to create 28 individual homes. Still, owner Zenprop is abandoning plans to develop the property, and hoping to sell to a wealthy individual instead.
Financing is the biggest issue for developers. A lockdown-induced recession means banks are prepared to provide less funding and are valuing properties more conservatively, according to property experts. That means developers have less cash to invest. But the pandemic and uncertainty around Brexit may also put off the super-rich, too. Last year, a buyer considered an offer of 200 million pounds for the same property, according to the Financial Times. Luxury owners have little choice but to price properties to sell. (By Aimee Donnellan)
Mayhem in Minsk. The virus is weakening the grip of Belarusian strongman Alexander Lukashenko. The country’s president won a landslide re-election victory on Sunday. Critics reckon the vote was rigged and his victory has been undermined by clashes between thousands of protestors and police, which resulted in at least one death.
Even though Lukashenko is holding onto power for now, the scale of the protests is arguably the biggest challenge he has faced in his 26-year rule. Summer clashes in Belarus were prompted in part by anger over the president’s mishandling of the Covid-19 pandemic. Lukashenko refused to impose a lockdown, instead recommending vodka and saunas as remedies. Leaders elsewhere who have downplayed the threat from the disease, such as Nicaragua’s Daniel Ortega or even U.S. President Donald Trump, are also seeing falling support. Lukashenko’s controversial victory carries a broader lesson in how the coronavirus can stir political unrest. (By Dasha Afanasieva)