The Wall Street Journal - 02.10.2019

B4| Wednesday, October 2, 2019 ** THE WALL STREET JOURNAL.**

TECHNOLOGY WSJ.com/Tech

pabilities,” David Abney, the

company’s chairman and chief

executive, said in an interview.

“We’re going to move ahead

quickly and expand rapidly,”

he said, “It’s not going to be a

small operation.”

Within months, Mr. Abney

predicts, the first phase could

include 100 or more hospital

complexes.

As delivery options expand,

the company said future steps

might include a single opera-

tor on the ground controlling

multiple flights or using

drones to supplement tradi-

tional package delivery by

trucks in rural areas.

The goal is to be the first

drone operator to operate on a

sizable scale, Mr. Abney said.

The FAA’s move comes

months after it gave Alphabet

Inc.’s Wing Aviation unit ini-

tial authorization to fly a fleet

of drones for consumer-goods

deliveries. That approval cov-

ered only a rural area around

Blacksburg, Va., and mandated

detailed scrutiny of applica-

tions for similar applications

elsewhere.

By contrast, UPS said its

certification offers a faster

and easier path to case-by-

case approvals of new uses.

If that process proves suc-

cessful, the latest step could

set an important precedent in

the budding, fiercely competi-

tive drone industry’s quest to

step up the frequency and

breadth of services.

UPS intends, among other

things, to establish an opera-

tions control center able to

monitor a fleet of drones,

said.

The Wall Street Journal re-

ported in July that Vice Media

was in talks to acquire

Refinery29.

New-media companies have

been teaming up to compete

with tech giants such as Face-

A person familiar with the

transaction said the aim is to

use Vice Media’s global foot-

print to build up the combined

company. About 60% of Vice

Media’s audience and about

50% of revenue comes from

outside the U.S., the person

It is possible the deal with

Vice Media could still fall

apart, but that is unlikely, one

of the people said. That per-

son said Refinery29’s inves-

tors are still working through

the terms of payment in the

event of a deal.

shrunk their losses this year,

according to a person familiar

with the matter.

Earlier this year, Refinery29

said it had raised about $8

million out a total of $20 mil-

lion in convertible debt financ-

ing that it was seeking.

book Inc. and Alphabet Inc.’s

Google that dominate the digi-

tal advertising market. Last

week, Vox Media agreed to

buy New York Media, owner of

New York magazine, in a deal

that valued the target com-

pany at about $105 million,

the Journal reported.

Adding Refinery29 would

provide Vice Media with a

needed infusion of revenue.

Vice Chief Executive Nancy

Dubuc has stated that she is

focused on making the com-

pany profitable after years of

losses. She has embarked on a

strategy that has included

cost-cutting and investment in

key businesses such as Vice

Studios and the company’s ad

agency, Virtue Worldwide.

In recent months, Vice Me-

dia has lost deals to produce

content for WarnerMedia’s

HBO unit that were valued at

more than $50 million annu-

ally, according to people famil-

iar with the matter.

Last week, Vice Media an-

nounced a deal to produce 13

documentaries for CBS Corp.’s

Showtime unit. It is currently

producing content for Hulu.

“Vice News Tonight,” which

recently won five Emmy

awards, will move to Viceland,

the company’s cable channel,

sometime in early 2020, the

company said.

—Joe Flint

contributed to this article.

Vice Media LLC and
Refinery29 Inc. have ham-
mered out most of the details
of a cash-and-stock deal that
would add a large and female-
skewing digital media com-
pany to Vice’s portfolio, ac-
cording to people familiar
with the matter.
The price that Vice Media is
looking to pay for Refinery29
couldn’t be learned. The two
new-media companies are
working to finalize the deal
and have agreed that some of
Refinery29’s founders and se-
nior managers would stay on,
the people familiar with the
deal said. Both companies are
based in New York.
Vice Media is interested in
Refinery29 primarily because
its mostly female audience will
complement Vice Media’s ex-
isting digital footprint, one of
the people said. Refinery29
will also bring revenue
streams that include advertis-
ing, content licensing and
events.
Both companies have in-
creased their revenue and

BYBENJAMINMULLIN
ANDSHALINIRAMACHANDRAN

Vice Media Nears Deal for Refinery29

Media startups have

been teaming up

to battle tech giants

for digital ad revenue

The acquisition of the website publisher would bring with it a mostly female audience. An event sponsored by Refinery29 in Dallas.

RICHARD RODRIGUEZ/GETTY IMAGES FOR REFINERY29

eventually incorporating new

technologies to help detect

and avoid potential airborne

collisions.

Amazon.com Inc. and Uber

Technologies Inc. are among

those companies vying for

similar U.S. approvals to po-

tentially transport food and

small consumer goods to resi-

dential customers.

Many of those firms have

turned overseas to test pre-

liminary delivery systems, cit-

ing accelerated regulatory ac-

tion from Australia to Iceland

to Switzerland.

Like Wing, UPS ultimately

will be able to operate in the

U.S. as something akin to a

small charter or cargo carrier

using conventional aircraft,

featuring specific pilot-train-

ing programs and accident-

prevention procedures.

Mr. Abney also said UPS

plans to invest in ground-

based technologies to better

track drones, while working

with manufacturers to create

new drone models.

Along with all other drone

champions, the UPS initiative

still faces major hurdles to

rapid growth until the FAA es-

tablishes industrywide rules

allowing flights over urban ar-

eas and sets standards for re-

mote identification of drones

by law enforcement and air-

traffic control.

Those long-awaited regula-

tions will be partly based on

input from real-world flights

and pilot programs champi-

oned by the Transportation

Department and White House

aides.

United Parcel Service Inc.
said it received the first-of-its-
kind federal approval to start
setting up a fleet of unmanned
aircraft to deliver health sup-
plies and eventually consumer
packages potentially through-
out the U.S.
After the latest regulatory
boost for expanded commer-
cial drone services, the com-
pany also intends to phase in
routine night flights and
heavier cargo limits—areas
now generally off limits to
most operators.
Under the Federal Aviation
Administration’s announce-
ment Tuesday, the company’s
Flight Forward unit obtained
an immediate green light to
ship medical products and
specimens in North Carolina
across various hospital cam-
puses. But the broad approval
for an entire fleet of future
drones and pilots on the
ground—going beyond what
the FAA approved previously—
opens the door for many other
types of longer-range applica-
tions spanning rural and sub-
urban areas.
The FAA approval doesn’t
apply to urban areas.
Calling it a major step to
enhance services for health-
care customers and ultimately
other types of industries, the
company said the FAA’s ap-
proval “has no limits on the
size or scope of operations.”
UPS said it already has started
limited flying under the new
certification.
“It just gives us a lot of ca-

BYANDYPASZTOR

UPS Cleared to Deliver With Drones

The FAA’s move applies to medical shipments in North Carolina.

UPS/AGENCE FRANCE-PRESSE/GETTY IMAGES

unsold buyout loans on their

books.

Fund managers hesitated to

lend to Shutterfly, an online-

photo service, because of wor-

ries about its business model

and its relatively low single-B

credit rating, the people famil-

iar with the matter said.

Investment banks rarely take

such large buyout loans on

their own balance sheets.

The structure of the Shut-

terfly financing may also affect

overall returns on the buyout

for Apollo as the firm agreed to

buy $300 million of unsecured

bonds. The more of their own

capital that buyout firms com-

mit to an acquisition, the slim-

mer their profit margin be-

comes.

Apollo is purchasing Shut-

terfly and its competitor Snap-

fish LLC in an effort to roll up

the two companies into a larger

business that offers online and

printed photos, school photog-

raphy and personalized holiday

cards, among other services.

Shutterfly and its bankers

began marketing a $1.285 bil-

lion loan and a $500 million

bond to investors in early Sep-

tember, touting strong growth

in Shutterfly’s sales of person-

alized gifts such as photo mugs

and pillows, according to filings

with the Securities and Ex-

change Commission and re-

ports by S&P Global Market In-

telligence.

The loan included a rare fea-

ture committing the company

to repay $100 million of the

debt at the end of 2019 with

cash from holiday-season sales,

people familiar with the matter

said.

Still, investors were put off

by declining sales of photo

prints and what they saw as a

low barrier to entry for larger

competitors such as Ama-

zon.com Inc. or Google, the

people familiar with the matter

said. The banks cut the price of

the debt hoping to finalize the

deal last week but still failed to

secure enough orders, they

said.

Investment banks have

struggled in recent days to

raise about $2 billion of debt

for Apollo Global Manage-

ment ’s buyout of Shutterfly

Inc., highlighting investors’

newfound caution toward the

riskiest portions of the credit

markets.

Barclays PLC, Citigroup Inc.

and other banks Apollo hired

for the sale agreed to buy up to

$280 million of the financing

themselves after failing to find

enough outside investors, peo-

ple familiar with the matter

said. They also were forced to

slash the price of the debt to

entice investors to buy up the

balance, they said.

While not all buyout financ-

ings are struggling, Shutterfly’s

difficulties show how much

harder it has become for Wall

Street to unload risky debt

since a global selloff in August

prompted many investors to

shift toward a cautious ap-

proach. Some worry the high-

yield market may be headed to-

ward a freeze like in 2015,

when investment banks were

stuck with billions of dollars of

BYMATTWIRZ

ANDALEXANDERGLADSTONE

Banks Struggle to Raise $2 Billion

For Apollo’s Buyout of Shutterfly

The trouble shows

howharditisnow

for Wall Street to

unload risky debt.

Libra could offer a means of

providing financial services

through those channels.

In announcing the project in

June, the company said it

hoped to provide basic financial

services to people around the

world who lack bank accounts

and to save some of the $25

billion “lost by migrants every

year through remittance fees.”

Some analysts have been

bullish that Libra could help

Facebook diversify its revenue

base and potentially transform

the digital consumer economy

over the long term.

Yet government officials and

central bankers were quick to

criticize the project, citing con-

cerns about how the network

would protect users’ privacy

and prevent criminals from us-

ing it to launder money.

David Marcus, the Facebook

executive in charge of the

project, endured two days of

tongue-lashings from members

of Congress over the summer

for the lack of details about how

the new cryptocurrency would

work as well as Facebook’s past

missteps on data privacy. Fed-

eral Reserve Chairman Jerome

Powell told legislators he had

“serious concerns” about Libra.

Privately, U.S. regulators

have leaned on Libra’s backers.

The Treasury Department sent

letters to companies including

Visa, Mastercard, PayPal

Continued from page B1

Holdings Inc. and Stripe Inc.

asking for a complete overview

of their money-laundering

compliance programs and how

Libra will fit into them, people

familiar with the matter said.

Dante Disparte, head of pol-

icy and communications at the

Libra Association, said in an

email that the group has held

regular meetings with regula-

tors and policy makers to dis-

cuss conforming to anti-

money-laundering laws and

preventing terrorism financing.

Libra Association members,

meanwhile, have been pressing

Facebook for more informa-

tion. They have asked Mr.

Marcus and other Facebook

executives how illegal activi-

ties such as money laundering

and terrorist financing would

be kept off Libra and haven’t

received detailed answers, one

of the people familiar with the

matter said.

Mr. Marcus said on Twitter

on Tuesday evening that it was

“categorically untrue” that de-

tailed information about how to

protect the Libra network from

illegal activity wasn’t shared. “I

can tell you that we’re very

calmly, and confidently working

through the legitimate concerns

that Libra has raised by bring-

ing conversations about the

value of digital currencies to

the forefront,” he said.

It is unclear how many of

the initial Libra Association

members will commit to the

network. So far, members have

signed nonbinding letters of

intent and haven’t handed over

the $10 million that Facebook

requested from each member

to fund the creation of the dig-

ital coin and build out the pay-

ments network, people famil-

iar with the matter said.

Backers of

Facebook’s

Libra Waver

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