Barnes & Noble stock soars 20% as it explores a sale

The board said Wednesday it had appointed a special committee to review offers. One came from longtime Barnes & Noble chairman Len Riggio. He is the company’s largest shareholder, controlling close to 20%.
Barnes & Noble (BKS) also disclosed that a shareholder it could not identify had rapidly built up a stake in the company. To block a hostile takeover, Barnes & Noble’s board of directors approved what’s known as a poison pill.
The poison pill will kick in if the unidentified party accumulates 20% of the stock or more. At that point, shareholders will be allowed to buy Barnes & Noble’s stock at a 50% discount, diluting the value of the shares.

The announcement comes shortly after another investor disclosed a stake of close to 7%, and said he had held talks with Riggio about buying the company.

The board said Riggio would vote his shares in favor of any transaction recommended by the committee.
A potential sale is just the latest twist in the saga of Barnes & Noble, which is looking to replace its fifth chief executive in as many years.
The bookstore fired its most recent CEO, Demos Parneros, in early July, citing unspecified violations of company policy. Barnes & Noble later revealed that claims of sexual harassment and bullying led to Parneros’ termination.
In August, Parneros sued his former employer in federal court for defamation and for firing him without cause.

Barnes & Noble still has more 600 stores and 23,000 employees. Last quarter, same-store sales dropped 6.1% compared with a year ago.
Sales have fallen at Barnes & Noble during each of the past four years. New tactics, such as smaller store formats and a kitchen concept, have struggled to win back shoppers.
Neil Saunders, managing director of GlobalData Retail, said in September that most of the stores “feel tired, are too large and too cluttered, and do not offer the consumer any compelling reason to visit and buy.”
He believes Barnes & Noble will shutter more stores: “Barnes & Noble needs to slim down in order to survive.”

Barnes & Noble’s problems come as local and independent bookstores are resurgent.
The American Booksellers Association, a trade group, reported that the number of independent locations rose 6% last year to 2,470.

The internet industry is suing California over its net neutrality law

Google CEO: Net neutrality ‘a principle we all need to fight for’
The internet industry is suing the state of California over its days-old net neutrality law. The lawsuit, filed on Wednesday by major trade groups representing broadband companies, is the second major lawsuit filed against the state over the law — the first was brought by the Justice Department. On Sunday evening, California Governor Jerry Brown signed what is considered to be the strictest net neutrality law in the country. Under the law, internet service providers will not be allowed to block or slow specific types of content or applications, or charge apps or companies fees for faster access to customers. Hours later, the federal government filed a lawsuit in which it alleged that California was “attempting to subvert the Federal Government’s deregulatory approach” to the internet. The DOJ argues states can’t pass their own laws governing internet companies, because broadband services cross state lines. It is fighting the state over a clause in the 2017 order repealing Obama-era federal net neutrality protections. In that order, the FCC said it could pre-empt state-level net neutrality laws. The impending legal battle could drag on for many months if not longer, Daniel Lyons, an associate professor at Boston College Law School who specializes in telecommunications and Internet regulation, told CNN. A lot is riding on the outcome. The California law is considered the most thorough state-level net neutrality legislation yet passed, and other states are expected to use it as a blueprint for their own laws. If California wins in court, it would open the door for those other states to take similar actions. However, the FCC could try to come back with an order to block their efforts again, Lyons said. California will likely claim that the pre-emption provision is invalid, Lyons said, while the federal government will attempt to get an injunction to stop the law from taking effect. in doing so, it will claim that the law will cause harm if allowed to take effect. “These attempts at getting a preliminary injunction seem weak and are likely to fail for the same reasons that the Internet Service Provider [ISP] industry was unable to obtain a stay of the FCC’s former net neutrality rules in 2015,” said telecommunications attorney Pantelis Michalopoulos, a partner at Steptoe & Johnson LLP who has argued net neutrality cases. “The Internet Service Providers offer speculative theories about why they will suffer irreparable injury. These theories do not appear to satisfy the test for a preliminary injunction.” The industry groups taking part in the new lawsuit represent major companies including AT&T, Comcast and Verizon, as well as other cable companies and wireless providers across the US. The groups had previously lobbied against the state law. (CNN is owned by AT&T.) “We oppose California’s action to regulate internet access because it threatens to negatively affect services for millions of consumers and harm new investment and economic growth. Republican and Democratic administrations, time and again, have embraced the notion that actions like this are preempted by federal law,” the trade groups USTelecom, CTIA — The Wireless Association, The Internet & Television Association, and the American Cable Association said in a statement. “We will continue our work to ensure Congress adopts bipartisan legislation to create a permanent framework for protecting the open internet that consumers expect and deserve.” In a statement Wednesday afternoon, Attorney General Xavier Becerra indicated the state would fight to protect its new law. “This suit was brought by power brokers who have an obvious financial interest in maintaining their stronghold on the public’s access to online content. California, the country’s economic engine, has the right to exercise its sovereign powers under the Constitution and we will do everything we can to protect the right of our 40 million consumers to access information by defending a free and open Internet,” Becerra said in a statement. State Senator Scott Wiener, a co-author of the bill, previously told CNN he expected the ISPs to sue over the law. “The internet service providers have every right to sue California, just like California has every right—indeed an obligation—to protect our residents’ access to an open internet,” Wiener said after the trade groups filed their suit.

Priyanka Chopra is helping Bumble expand in India

Bumble, which requires women to make the first move, announced Wednesday plans to launch in India later this year. Indian celebrity Priyanka Chopra, a new investor in the company, will advise on the expansion.
The news comes less than a week after rival Tinder launched a My Move feature in India that gives women the option to prevent men from initiating a conversation.
But Bumble’s efforts for an expansion in India have been in the works for awhile. Founder and CEO Whitney Wolfe Herd said the newly engaged Chopra first told her “Indian women needed Bumble” months ago. Chopra was among a group of high-profile women who helped Bumble kickoff its networking app, Bumble Bizz, in October 2017.

“It was clear then we shared a passion for empowering young women on a global level,” Wolfe Herd told CNN in an e-mail. “From there we began architecting a plan to partner and launch Bumble in India.”

Wolfe Herd said the challenge in entering the Indian market is “localizing the experience and attracting women” — an area in which Chopra will help.
Chopra’s manager, Anjula Acharia, is also an investor and adviser. Acharia helped Chopra — who was already established in India — reach fame in the United States. But Acharia has a long history of crossover efforts. She was instrumental in introducing artists such as Britney Spears and Lady Gaga to India — a background that could translate to Acharia helping Bumble resonate with the local audience.
Bumble’s local app will be in both Hindi and Hinglish — a hybrid between Hindi and English — and available on iOS and Android. It will also roll out new safety features before entering the region, which has a reputation for violence against women. In June, India was named the most dangerous country in the world to be a woman.
Wolfe Herd said it will only require Indian women to provide the first initial of their name — no first or last names — and provide new ways to report “bad behavior” in the app.

Bumble already has photo verification features and more than 4,000 content moderators who review photos and profiles.
Before Bumble, Wolfe Herd was an early employee and exec at Tinder but left the company in 2014 after suing for sexual harassment and discrimination. The case was eventually settled.
But tension between the two dating companies has become increasingly palpable as a result of very public litigation between the Bumble and Match Group, Tinder’s parent company.
In March, Match Group targeted Bumble with a lawsuit accusing the company of patent infringement and stealing trade secrets. Bumble asked the court last week to dismiss the case.

Separately, Bumble filed a counter lawsuit against Match Group. Bumble argues that Match Group is using litigation as revenge over failed acquisition talks. Both lawsuits are ongoing.
While Bumble already operates in over 160 countries, India is a significant market because of its size. According to a report from Bain & Co, India has 390 million internet users, the second largest of any country behind China.