Los Angeles Time - 08.08.2019

LATIMES.COM/BUSINESS THURSDAY, AUGUST 8, 2019C3

Pacific Standard, an on-
line magazine that aimed to
be a Western U.S.-based
chronicler of global social
and environmental justice
and public policy, plans to
shut down after a decade of
publication, the magazine’s
editor in chief, Nicholas
Jackson, said Wednesday.
The publication’s last
day will be Aug. 16 and the
decision by the board of Pa-
cific Standard’s backer, the
nonprofit Social Justice
Foundation, came without
warning, Jackson said in a
phone interview.
“This a tough day,” said
Jackson, who has been ed-
itor in chief for four years.
The foundation was
started by academic pub-
lishing mogul Sara Miller
McCune of Santa Barbara,
who established the maga-
zine — first titled Miller-Mc-
Cune — in 2008, and it
also was operated as a non-
profit.
In a series of tweets earli-
er Wednesday, Jackson said
that “I’m heart-broken and

devastated” by the decision

but also “proud of what we

accomplished.”

“We were repeatedly and

enthusiastically told we

were over-performing and

-delivering up until the very

end, and that we had a

long-term commitment,” he

said.

Pacific Standard’s goal,

as Jackson put it, was to pro-

vide “nonpartisan, science-

informed reporting on social

and environmental justice.”

The magazine’s website cur-

rently lists stories covering

such topics as fair housing

protections in Los Angeles,

issues surrounding Venezu-

elan refugees, alleged ethics

violations at the Depart-

ment of Interior and the

state of rural schools.

Jackson said the call to

close Pacific Standard was

made by its four-member

board of directors that in-

cludes board President Clive

Parry, who’s also a vice presi-

dent at McCune’s Sage Pub-

lishing, which publishes aca-

demic books and journals.

Parry made the an-

nouncement to Pacific

Standard’s staff at its Santa

Barbara headquarters

Wednesday and indicated

the decision stemmed from

Sage’s decision to curb its

charitable giving, Jackson

said. A call to Parry was not

immediately returned.

Jackson said that he also

had reached out to McCune

but that she had not re-

sponded. A call to McCune

through her McCune Foun-

dation was referred to the

magazine.

Pacific Standard has

about 20 full-time employ-

ees, 25 writers on contract

and dozens of freelance writ-

ers who contributed to the

publication, Jackson said,

adding that the employees

were offered severance pack-

ages.

Pacific Standard’s clo-

sure is another blow to the

publishing world, which has

struggled in the last decade

to shift to the digital market

from print while remaining

financially viable.

, The magazine Govern-

ing, which has covered state

and local government for the

last 32 years, also said

Wednesday that it plans to

end operations.

But Pacific Standard was

unique in that its backing

was a nonprofit foundation

as opposed to, say, a publicly

held entity concerned about

its shareholders and quar-

terly results.

McCune committed

about $2.2 million a year for

five years to launch the mag-

azine. That figure had

climbed to about $3 million a

year as of 2014, the Columbia

Journalism Review reported

then.

“I honestly don’t know

what it takes, beyond a bil-

lionaire, to keep a niche me-

dia company afloat,” said

Reyhan Harmanci, a mem-

ber of Pacific Standard’s edi-

torial advisory board, who

only heard of the closure

when Jackson announced it

on Twitter. “We need

smaller, smarter publica-

tions to do interesting work

that might fall through the

cracks elsewhere.”

Eric Zassenhaus, Pacific

Standard’s digital product

manager, likewise said that

the decision to close the

magazine was “totally

abrupt” and that “we were

expanding up until the

moment we shut down. We

had several projects in mo-

tion.”

THE MAGAZINEfocused on “nonpartisan, science-informed reporting on social and environmental justice.”

Jerome AdamsteinLos Angeles Times

Pacific Standard magazine to

shut down after losing funding

Decision by its backer after a decade of publication is a surprise

By James F. Peltz
and Sam Dean

Bento Box is producing two

series destined for the Fox

network: “Duncanville,”

from producer Amy Poehler,

and “The Great North,”

from Loren Bouchard, cre-

ator of Bob’s Burgers. The

latter is about a single father

in Alaska and his weird kids.

“Duncanville” is a co-pro-

duction of three TV studios:

Fox Entertainment, Uni-

versal Television and Dis-

ney’s 20th Century Fox Tele-

vision. Meanwhile, Fox and

Disney will co-produce “The

Great North.”

“Bob’s Burgers” was

among the Fox studio assets

that Disney acquired this

spring for $71.3 billion. But

now Fox will share in the

profits, and it will have rights

to future projects developed

by Bento Box.

The animation studio’s

executive team, including

co-founders Scott Green-

berg and Joel Kuwahara, will

continue to run the opera-

tion.

This year, Fox launched

SideCar, an incubator

headed by former Fox net-

work head Gail Berman, to

develop scripted and un-

scripted content. Fox Corp.

Chief Executive Lachlan

Murdoch has expressed in-

terest in acquiring content

producers to help feed the

Fox broadcast network.

On Sunday, Fox said it

had a deal to buy 67% of

Credible Labs Inc. for $265

million. The San Francisco

digital site offers consumer

lending information. In a

statement, Murdoch said

the purchase would be bene-

ficial to Fox Business Net-

work and Fox-owned TV sta-

tions.

Fox Corp. said this week

that it has acquired Bento

Box Entertainment, the ani-

mation studio behind the

popular sitcom “Bob’s Bur-

gers.”

It is the first acquisition

of an entertainment proper-

ty for the slimmed-down Fox

since controlling sharehold-

er Rupert Murdoch sold

much of the Fox entertain-

ment assets, including the

20th Century Fox film and

television studios, to Walt

Disney Co. in March. The

move demonstrates Fox’s

desire to remain a leader in

prime-time animation. The

Fox network also broadcasts

“The Simpsons” and “Fam-

ily Guy.”

Financial terms were not

disclosed. The acquisition

was valued at under $50 mil-

lion, according to a person

familiar with the trans-

action.

Bento Box, based in

North Hollywood, will op-

erate as a stand-alone entity

within Fox Entertainment, a

division led by Charlie Col-

lier, its chief executive, who

announced the purchase.

“As we grow Fox for the

next generation, it only

makes sense we would ex-

pand our animation capa-

bilities by bringing on board

the best in the business:

Bento Box,” Collier said in a

statement Tuesday. “The

Bento-Fox combination

brings Fox front-door access

to the next wave of the gen-

re’s creative leaders.”

In addition to the hit

Sunday night cartoon about

the culinary Belcher family,

Fox buys studio

behind animation

hit ‘Bob’s Burgers’

“BOB’S BURGERS” was among the Fox studio as-

sets that Disney acquired this year for $71.3 billion

Fox

By Meg James

was around 2.5% then.

I’ll never say never, but

it’s hard to see a path back

to those levels anytime in

the near future. Rather than

fret about a quick 75-basis-

point climb in 10-year yields,

the more pressing question

for investors should be when

(if ever) they expect to see

interest rates this high

again.

In Europe, for instance, it

seems investors have all but

given up hope of a return to

normality, which explains

the incessant bid for ultra-

long debt that still offers a

positive rate of return. In

effect, 30-year French bonds

that yield 0.6% is a way of

expressing that short-term

rates in the region are un-

likely to climb much above

zero in the coming decades.

And here’s a staggering data

point from Bloomberg

News’ Sebastian Boyd: The

average yield on an invest-

ment-grade bond in euros is

a measly 4 basis points, the

lowest ever.

U.S. investors need to

ask themselves those same

uncomfortable questions.

Yes, it’s hard to get excited

about the 10-year yield at

Cash is just a flash in the
pan.
The inherent appeal of
U.S. money market funds is
undeniable. For one, they’re
a stable alternative when
the United States’ trade war
with China is whipsawing
equity markets. Plus, they
still pay more than 2% inter-
est in a world in which $14.5
trillion of debt yields less
than zero, including 30-year
German securities and even
some junk-rated corporate
bonds. Last week, Barron’s
published an article titled
“The Case for Going Into
Cash Now,” which made
both of those points.
The first one holds up. If
an investor believes that the
Trump administration’s
trade disputes will continue
to roil risk assets, then it
makes perfect sense to park
money in cash, collect a
modest return and wait out
the storm before returning
to the market at a cheaper
price. Granted, the Stand-
ard & Poor’s 500 index has
looked as if it peaked before,
only to reach new highs, so
it’s anyone’s guess whether
this latest escalation will be
what topples the decade-
long bull run in stocks.
However, considering
cash as a haven from the
growing pile of low- or nega-
tive-yielding debt simply
doesn’t pass muster. The
difference between now and,
say, a year ago is that the
Federal Reserve is no longer
gradually raising interest
rates. Quite the contrary:
Bond traders are expecting
the federal funds rate to fall
almost 50 basis points by
the end of October. They see
the central bank’s lending
benchmark tumbling to
about 1% come early 2021.
This rapid easing will
take its toll on money mar-
ket funds — the yield advan-

tage they enjoy now will

evaporate quickly. As I

wrote in June, cash in-

vestors were already coming

to grips with the idea that

the industry was at its peak.

The Fed’s well-telegraphed

interest rate cut last week,

its first in more than a dec-

ade, might have been the

tipping point. Total net

assets in money market

funds fell in the week that

ended July 31, the first out-

flow since April, according

to Investment Company

Institute data. At about $3.3

trillion, the amount of cash

in money markets is still

near the highest since early

2010.

It’s true that cash has far

less duration risk than

longer-term bonds, which

could hand fixed-income

investors steep losses if

inflation or economic

growth rebounds suddenly.

The Barron’s article says

that if the iShares 20+ Year

Treasury Bond exchange-

traded fund, known by its

ticker TLT, simply reverted

to where it was three

months ago, it would mean

a 7% loss for investors. The

benchmark 10-year yield

1.73% when it was above 2%

just a week ago. But some

market observers are start-

ing to talk about that bench-

mark not just falling below

its all-time low of 1.32%, but

dropping all the way to zero.

If anything close to that

scenario happens, people

will be kicking themselves

for not locking in current

yields for the next decade,

just as they probably regret

not loading up on 10-year

Treasuries when the yield

was 3.25% in October.

That’s a somewhat grim

future to contemplate,

which probably makes

money markets appear to

be a more alluring solution.

But it’s crucial to remember

those funds are fraught with

reinvestment risk. Unlike

longer-duration bonds,

which lock in a set interest

rate for years and years,

cash rates can disappear

quickly, especially when just

about every central bank

around the world is prepar-

ing to ease monetary policy.

Cash may be king now,

but its reign is nearly over.

Chappatta writes for

Bloomberg.

Money market funds not so safe now

BOND TRADERS expect the Federal Reserve to cut interest rates further, tak-

ing a toll on money market funds. Above, the Fed building in Washington.

Karen BleierAFP/Getty Images

COMMENTARY

By Brian Chappatta

Pacific Investment Man-

agement Co. has joined the

chorus of voices warning

that U.S. Treasury bond

yields may eventually go

negative.

In a blog post Tuesday,

Joachim Fels, global econo-

mic advisor at the fixed-in-

come investing giant, said

it’s “no longer absurd to

think that the nominal yield

on U.S. Treasury securities

could go negative.” At least 1 1

countries have negative 10-

year yields, and Germany’s

30-year yield joined the rest

of its curve below zero last

week.

U.S. 10- and 30-year yields

were near their lowest levels

this year, with the 30-year at

2.25%, close to its record low

of 2.088% in 2016. The 10-year

Treasury yield, at about

1.73%, compares with

around negative 0.59% for

German bunds of the same

maturity.

Negative U.S. yields re-

quire a “major Fed easing cy-

cle” that remains “a possibil-

ity rather than a probabil-

ity,” Fels wrote. “But if the

Fed cuts rates all the way

back down to zero and re-

starts quantitative easing,

negative yields on U.S.

Treasuries could swiftly

change from theory to reali-

ty.”

The trend is being driven

by both secular and cyclical

factors, Fels says. The main

secular driver is rising life ex-

pectancy, which has created

a savings glut. The cyclical

forces include a cooling U.S.

labor market, the U.S.-

China trade war and the risk

that the Federal Reserve is

falling behind the curve of

staving off another reces-

sion.

JPMorgan Chase & Co.

strategist Jan Loeys last

month said the global heap

of negative-yielding bonds

has a quicksand-like ability

to engulf much of the fixed-

income universe, including

the U.S.

“Yield is evaporating

globally,” Bank of America

U.S. rates strategist Bruno

Braizinha said. By the end of

2020, a “Japanification sce-

nario” — an extended period

of low growth and inflation

marked by extremely ac-

commodative central bank

policy — implies a 10-year

yield in the 0.30%-to-0.60%

range. And if the Fed returns

the policy rate to zero, “10-

year yields could go nega-

tive.”

Pimco says Treasury

yield may go negative

bloomberg

IF THE FEDcuts rates to zero, Treasury yields

could go negative, a Pimco analyst wrote Tuesday.

Don BartlettiLos Angeles Times