TheChek News Flow

FRANKFURT, Sept 18 (Reuters) - European Central Bank policymakers want to soon start discussing how to tackle the multi-trillion-euro pool of excess liquidity sloshing around banks, with raising reserve requirements a possible first move, six sources told Reuters.

The debate, likely to start at the ECB's next meeting in Athens on Oct. 26 or at an autumn retreat for policymakers, marks a new phase in its fight against inflation.

The central bank for the 20 countries that use the euro has already raised interest rates 10 times to record levels but inflation remains well above its 2% target.

With rates likely on hold at least until December, policymakers are now starting to shift their focus to the cash that they injected into the banking system over a decade of bond purchases.

This stash of money dulls the impact of their rate hikes by reducing competition for deposits and results in hefty interest payments -- and ensuing losses -- by some central banks.

Discussions on how to reduce excess liquidity will focus on three areas, the sources said: the amount of reserves banks must keep at the ECB, the unwinding of its bond-buying programmes and a new framework for steering short-term interest rates.

An ECB spokesperson declined to comment for this story.

RAISING RESERVE REQUIREMENT

Several policymakers are in favour of raising the amount of reserves that banks must park at the central bank - on which they do not earn interest - from 1% of customer deposits to a figure that could be closer to 3% or 4%, the sources said.

The sources said this would have the dual benefit of mopping up cash from the banking system and reducing how much the ECB and the euro zone's 20 national central banks pay out in interest on deposits, which has led to large losses for some.

They thought this could be an easier step for the ECB to take, because policymakers had already discussed it at July's meeting and because mandatory reserves are currently puny at 165 billion euros ($176.02 billion) compared to excess liquidity of 3.7 trillion euros.

However, one source said some policymakers wanted to bundle a decision on reserves with those on the ECB's asset purchase schemes and interest-rate framework, which could be a much slower process.

The debate about shrinking the 4.8 trillion euro pile of debt hoovered up under different schemes by the ECB since 2015, mostly to avert the risk of deflation, was seen by the sources as more difficult.

Most saw scope for phasing out the ECB's Pandemic Emergency Purchase Programme (PEPP) by not replacing maturing bonds, but all were nervous about upsetting financial markets, particularly investors in Italy's government bonds.

ECB President Christine Lagarde said last week that policymakers had not discussed the bond-buying schemes at their latest policy meeting. She described the PEPP as the ECB's "first line of defence" to preserve policy transmission - central bank jargon for bond market stability in the most indebted countries.

Slovenian central bank governor Bostjan Vasle recently backed selling bonds bought under the ECB's older Asset Purchase Programme, which is less flexible than the PEPP. But one of the sources pointed out that this would result in even bigger losses for the ECB as those bonds were mostly bought at higher prices.

The sources said that delicate balance meant a decision on the bond-buying schemes might not come this year, and that any change was very unlikely to take effect until early 2024 or even later in the spring.

Slovakian governor Peter Kazimir said on Monday he would wait another six months before making a decision on PEPP.

Finally the sources said they had not even really started debating the policy framework - whether the ECB wants to continue setting a floor for the interbank rate or go back to a corridor-system in which it provides a lower and upper limit.

The former requires the ECB to keep more excess liquidity in the banking system, although none of the sources would venture a guess about how much, saying it depended on the exact design.

The sources expected this debate to spill over into 2024 and saw no need to rush it as the amount of excess reserves sitting at banks meant the ECB was effectively stuck with a floor system for years to come.

A study presented at the ECB's summer symposium in Sintra showed that now monetary stimulus is no longer needed, the ECB could shrink bank liquidity to between 521 billion euros and 1.4 trillion euros while still meeting banks' need for reserves

RANKFURT/LONDON, Sept 18 (Reuters) - Private equity firms Hg and Permira are exploring strategic options for their stakes in German software firm Personal & Informatik AG (P&I), including a possible minority sale, three sources familiar with the matter told Reuters.

A deal could value the provider of cloud-based HR software at more than 2 billion euros ($2.13 billion), said two of the people who spoke on condition of anonymity.

Other large private equity funds are interested in the company, the people said. The sources cautioned deliberations remain at an early stage and that a deal is not certain.

A sale of a minority stake to a private equity firm would allow Hg to show returns to its investors, as it is not interested in a full sale, they said.

P&I is expected to generate revenue of more than 200 million euros in 2023, signalling revenue growth greater than 20%, one of the sources said.

For the 2022/2023 financial year, P&I anticipated sales to increase by over 10% from 172 million euros in the previous year, with an expected increase in EBITDA (earnings before interest, taxes, depreciation, and amortization) in excess of 15% from 93 million euros, according to the company's last results published in June 2022.

Hg acquired a majority stake in P&I from Permira for an enterprise value of 2 billion euros in 2019.

Prior to this, the company was listed on the Frankfurt Stock Exchange from 1999 to 2014.

Short positions in 2-year Treasury futures reached record highs in August

A build-up of leveraged bets has the potential to “dislocate” trading in the $25tn US Treasuries market, the umbrella group for central banks said, the latest high-profile warning over the potential for crowded hedge fund bets to sow instability.

The Bank for International Settlements issued a warning in its quarterly report released on Monday about the growth of the so-called basis trade — whereby hedge funds seek to exploit the tiny differences between the prices of Treasury bonds and their equivalents in the futures market.

“The current build-up of leveraged short positions in US Treasury futures is a financial vulnerability worth monitoring because of the margin spirals it could potentially trigger,” the BIS said in the report, which focuses in particular on leverage used in the futures market to post margin.

“Margin deleveraging, if disorderly, has the potential to dislocate core fixed-income markets,” it said.

The Treasury market is one of the world’s most closely watched as it sets borrowing costs for US government debt, with $750bn changing hands every day in August, according to data from Sifma.

The unwinding of leveraged Treasury positions in moments of stress such as in September 2019 and the March 2020 pandemic led to wild swings in the Treasury and repo markets that ultimately forced the Federal Reserve to step in.

As evidence of a build-up in the trade, the BIS cited data from the US Commodity Futures Trading Commission showing a rise of short positions in Treasury futures contracts to record levels in some maturities in recent weeks. The BIS values short positions in Treasury futures at about $600bn.

The bank is the third regulatory body in recent weeks to draw attention to the risks posed by the build-up of hedge fund bets in the bond market.

In August the Fed said there had been a rise in the volume of basis trades placed and warned about the financial stability risks that such a build-up posed. 

The Financial Stability Board, which comprises the world’s top finance ministers, central bankers and regulators, this month warned that hedge funds with high levels of synthetic leverage — debt created by derivatives — were a potential source of market instability.

The basis trade is typically employed by hedge funds that use relative value strategies that involve a long position in the cash market and a short position in the futures market, funded by repurchase agreements. While there is no definitive data that shows the size of the basis trade, weekly figures from the CFTC showing short positions in Treasury futures are often watched as a proxy. Borrowing levels in the repo market are also monitored. 

Because the difference between the cash and futures bonds tend to be small, hedge funds make large profits from these trades by leveraging them heavily, putting very little of their own cash upfront. 

Much of that leverage is seen in the long positions in the cash market, but the BIS paper also highlighted leverage in futures positions. Leverage in futures is elevated — at 70 times in five-year Treasuries and 50 times in 10-year notes — though below levels seen just before the pandemic.

In futures, traders typically use margin to magnify the value of their positions and supply only a fraction of the value of the total trade. The BIS warned that if the market moved against highly leveraged futures investors, they may be forced to ditch their positions, triggering further market sell-offs.

hen Instacart goes public on Tuesday, at least one shareholder likely to make money is its own customer: grocery giant Albertsons, one of several retailers that quietly struck stock deals with Instacart years ago that remained a closely held secret inside the delivery company, people familiar with the matter said.

The grocery company’s stock deal, which hasn’t been previously reported, was tied to a commercial partnership it struck with Instacart several years ago. Albertsons, with a market capitalization of about $13.5 billion, stands to profit roughly $80 million from its stake, according to The Information’s analysis. Kroger, an even bigger grocery seller, struck a similar stock agreement with Instacart several years ago, but it wasn’t clear whether it already sold its shares.

THE TAKEAWAY

• Albertsons could see roughly $80 million windfall in Instacart IPO

• Stock deals incentivize big grocers to work with Instacart

• Instacart has lost some exclusive grocery partnerships

The deals are mentioned in the firm’s IPO filing, without identifying the grocers. They were part of Instacart’s wooing of retailers after Amazon bought Whole Foods in 2017, which incited fear across the grocery industry.

The deals may provide a financial underpinning for one of the most important messages Instacart executives tried to push on the company’s investor road show last week: Its retail partnerships have largely held up, even in the face of growing competition from well-capitalized competitors like Amazon, DoorDash and Uber.

As part of a road show presentation shared with investors last week, Instacart executives pointed to data from analytics firm YipitData that showed it had maintained its vast majority share of the grocery-delivery market, compared to other third-party delivery firms like Uber, DoorDash and Amazon, particularly in online grocery orders above $75. Instacart still had about three-quarters of sales among that size of grocery orders.

“No other player in the industry or any single grocer can easily and cost effectively replicate what we’ve built,” Instacart CEO Fidji Simo said in the firm’s IPO road show video, which The Information viewed.

Executives are conveying confidence even as they ask investors to buy at a discount to the price where rival DoorDash trades, based on multiples of revenues and profits. Instacart and its bankers at Goldman Sachs will set the price of its IPO on Monday, likely at a valuation close to $10 billion, down from $39 billion in 2021. (When it last raised money, Instacart had a bigger market cap than Kroger, but is now less than a third of the grocery giant’s $33 billion value.) Instacart also said one of its top advertisers, Pepsi, would invest $175 million in a private placement alongside the IPO. The stock will start trading publicly Tuesday.

Instacart said in its filing that it makes up about 5% of its top 20 customers’ total sales, up from 0.6% five years ago. “They’ve done a good job for us,” said Richard Galanti, Costco’s chief financial officer, in an interview. “We started with them a number of years ago. Volume and efficiencies have grown.”

That’s not to say there aren’t notable cracks in those relationships. Walmart, the largest supermarket chain in the country, has built up its own grocery-delivery operations to about three times the size of Instacart’s by sales, according to YipitData. Kroger, the fifth-largest retailer in the U.S. by sales, has invested heavily in building warehouses that can handle grocery delivery around the country. Albertsons and Aldi now work with DoorDash in addition to Instacart for delivery, rather than working exclusively with Instacart.

Instacart has a kind of “frenemy” relationship with grocery retailers, said Matthew Hamory, a managing director at consultancy AlixPartners, which consults with those businesses. Retailers have several reasons to be cautious about their relationship with Instacart, including the delivery firm’s competition with them for advertising dollars and customer data, he said.

Hamory said the stock deals help explain why large grocery firms who might have money to build their own delivery operations “put up with the risks of working with” Instacart. “If you have skin in the game and you have more than a purely commercial relationship—but a joint relationship—that makes a fair bit of sense,” he said.

‘Thermonuclear Bomb’

Instacart’s push to award equity shares to grocery retailers started after Amazon’s purchase of Whole Foods, which sparked a series of new partnership deals for Instacart under former CEO and founder Apoorva Mehta. It had taken four or five years for the company to land deals to offer grocery delivery services from Albertsons or Kroger stores. Instacart played up the threat Amazon posed to grocers. “It really was like a thermonuclear bomb against the entire grocery industry,” Mehta told Forbes in November 2017 after Instacart signed a deal to deliver groceries for Kroger’s Ralphs chain.

The equity agreements with Albertsons and Kroger are identified in the index of Instacart’s IPO filing as “retailer warrants,” or agreements to buy common stock, at an $18.52 strike price, in November 2017 and February 2018, respectively. That was the same price as the Series D round, led by Sequoia Capital. (The Information learned the retailers’ identities from people familiar with the arrangements.)

The deal paid off more for Albertsons if both companies continued to work together, incentivizing the grocer to stick with Instacart. It had about 2.7 million warrants outstanding as of the IPO filing, excluding the shares that Instacart will sell to cover the retailer’s payments to exercise the stock, a roughly $78 million value at the IPO mid-point price.

Kroger got an even larger stock deal than Albertsons. It paid about $170 million between 2020 and the first half of 2022 to exercise its warrants. The value of the shares it held was $163 million by the end of 2021. By the end of last year, it didn’t have any warrants outstanding, meaning it could have sold all of its stake.

Other grocery retailers also received stock in Instacart in 2021, the filing says, but those details couldn’t be learned. Kroger and Albertsons, which have a combined $46 billion market capitalization, are also awaiting regulatory approval to merge.

Albertsons declined to comment. Kroger didn’t respond to requests for comment. Kristin Chasen, an Instacart spokesperson, said the company couldn’t comment for this story.

The fact that the stock was tied to commercial deals raises questions about whether equity agreements allowed the retailers to negotiate better fee rates with Instacart than their competitors. That could raise eyebrows in an industry like grocery, which has low margins and several national and regional rivalries. Competition among retailers is a sensitive area for Instacart. On its own app, Instacart avoids telling customers whether one retailer offers food at a lower price than a rival, for instance.

“When you have a seat at the table, you can negotiate a better deal. You know the people; you have the relationships,” said James Angell, an associate professor of business at Georgetown University.

The nature of the grocery industry, which is dominated by several large firms and a smattering of mom-and-pop businesses, makes it important that Instacart keeps its grocery businesses happy. Instacart said in its IPO filing that 43% of its sales stem from just three grocery companies, opening the door for a big sales hole if one defects or reduces its reliance on Instacart. Its three biggest customers are Kroger, publicly traded warehouse behemoth Costco, and Publix, a regional grocer in the Southeastern U.S., according to YipitData. Albertsons, which owns the grocery chains Safeway and Vons, was sixth-largest.

Instacart’s relationships with retailers have appeared to fray at times. An executive at Kroger, Instacart’s largest retailer customer, told The Information in 2021 that it didn’t want to be “all dependent on Instacart.”

Simo, who took over as CEO in 2021, has tried to broaden the types of services it offers retailers. More than 60% of its top 20 grocers, including Kroger, Publix and Costco, pay Instacart to run a delivery service from grocers’ own websites, the company said in its IPO filing. More than 40% use Instacart to power a curbside grocery pickup service, including Kroger. “We are in the business of growing our partners’ businesses,” she said in the road show video.

Still, fewer grocery retailers are willing to work exclusively with Instacart as they may have in previous years. Suzy Monford ran the Seattle-based chain PCC Community Markets when it renegotiated its contract with Instacart a couple years ago. She held firm on one point in particular: She wanted to keep her options open. “If you’re Instacart, you need to stop me from going to DoorDash or Uber Eats,” said Monford, also a former Kroger executive.

Monford, who now consults for grocery chains, counsels firms to take the approach she did in negotiations. But she acknowledged Instacart’s crucial position in the grocery industry. “If grocers want their fair share of the [market] in e-commerce, you’re going to want to be on Instacart’s marketplace,” she said.

Last week, Charter Communications, the No. 2 cable provider, and Walt Disney Co. cut a deal to include Disney streaming services, such as Disney+ and a new ESPN service still in the works, with Charter’s cable television packages. That pact could be a watershed for traditional TV gatekeepers that want a piece of the action from the streaming services they’ve grown to fear.

Charter urgently wanted a deal in place for Disney-owned ESPN—the most important cable network in the TV ecosystem—because it believed such a deal would help it reach similar arrangements with the operators of other streaming services, one person with knowledge of Charter’s thinking said. In the coming years, Charter plans to negotiate with other TV programmers following the framework of the Disney deal, including Warner Bros. Discovery, Paramount and NBCUniversal, people with direct knowledge of the matter said.

Disney, for its part, has received inquiries from other TV distributors about potential deals for Disney+ and ESPN following the announcement of the Charter agreement, said other people with direct knowledge of the matter. Meanwhile, Verizon—which already offers a streaming bundle of Netflix, Paramount+ and Showtime at a discounted price to its wireless and broadband customers—is exploring similar deals with other streaming services, said Erin McPherson, senior vice president and chief content officer at Verizon.

• Charter wanted an ESPN deal to serve as a framework for other streaming pacts

• The No. 2 cable operator plans to pursue similar arrangements with Warner and others

• Other TV distributors have contacted Disney about streaming deals for Disney+ and ESPN

In one case, a telecom company has gone even further by almost entirely outsourcing the pay TV side of its business to a streaming provider. Since March, fiber broadband provider Frontier Communications has bundled its internet service with YouTube TV, which mimics the traditional cable TV bundle through a streaming app, as its primary TV option for new customers.

There’s good reason to be skeptical that cable deals with streaming services will help cable and telco companies reverse the cord-cutting problem that has been battering their pay TV businesses. Overall, the pay TV video ecosystem has lost roughly 25 million customers, or 25% of total households, in the last five years, according to a presentation from Charter during its Disney dispute. The percentage of U.S. households subscribing to a pay TV service is at its lowest point—58.5%—since 1992, MoffettNathanson said.

That exodus has stemmed in large part from the relentless bill increases pay TV providers have for years imposed on their customers. At the same time, the bounty of streaming services—many of which include programming that used to be only accessible on cable, such as HBO—have made it easier for consumers to pick and choose their entertainment options, often for less money than they used to pay for their cable bundles. The only upside for pay TV providers from the streaming era: It has stoked demand for the broadband side of their businesses.

“The speed of U.S. pay-TV subscriber declines in recent years was accelerated by the consumer choice that streaming delivered,” said Marc DeBevoise, CEO of video technology firm Brightcove and a former top CBS executive who helped launch and operate CBS All-Access, which later became Paramount+. “Streaming made the traditional bundle, while still super-relevant and in half or more of U.S. households, less necessary in every household.”

It’s possible, though, that cutting deals with streaming services could give pay TV providers a way to stop some of the bleeding of subscribers while also giving them a slice of streamers’ businesses. Media and entertainment companies, after all, are desperately looking to make their streaming services profitable in part by raising prices for consumers.

Cable and telecom providers are trying to attract and retain customers by bundling those streaming services with traditional pay TV plans, betting that consumers will feel they’re getting a better value from such packages. At the same time, cable and telecom companies believe they can help programmers turn a profit from their streaming businesses because of their experience in marketing, content sales, billing and customer service.

“It’s early days for bundling [in streaming], but we believe it is the future for entertainment services,” Verizon’s McPherson said. “Before we reach whatever end destination we are heading to, there will be an increase in bundles of [subscription video] services, and we plan on being a leader in the space.”

When, Not If

At first glance, the conflict between Charter and Disney resembles the routine squabbles between programmers and cable companies that have temporarily knocked popular channels off air in years past.

Charter’s deal to distribute ESPN and Disney’s other TV channels, including ABC and FX, was set to expire by the end of August. The two companies were in the thick of discussions about a new pact, through which Disney aimed to collect rate increases for its networks. Charter—which services more than 14 million households through its Spectrum cable service—was paying $2.2 billion annually to Disney for its channels, or 14% of Disney’s domestic revenues from cable fees.

What wasn’t routine was the challenges Charter was facing in its pay TV business. From 2020 to 2022, it lost roughly 1.1 million residential video customers. Six months into 2023, another 426,000 households had cut the cord to Charter’s pay TV services.

Those kinds of declines made it difficult for Charter to stomach another round of rate increases for cable channels, even one like ESPN, long viewed as a keystone of the traditional cable bundle because of the importance of live sports to millions of viewers. Cable companies like Charter had long resisted efforts to move marquee live sports programming exclusively to streaming.

That’s a big reason why Disney’s first attempt at a streaming version of its sports channel, ESPN+, didn’t give cord cutters a way to watch any of the channel’s most popular live sports programming from the NFL, NBA, college football and other top sports competitions. To watch those games, an ESPN+ subscriber would have to already be a paying customer of a pay TV service and authenticate with that provider.

But those days have gradually been coming to an end. More and more live sports programming in recent years has begun migrating to streaming services, thanks in large part to spending on media rights deals by deep-pocketed tech companies like Apple and Amazon. Soon ESPN will finally join the fray with a new service offering all of its live sports programming to anyone with an internet connection, including cord cutters.

In August, Charter executives took notice when Bob Iger, CEO of Disney, told analysts launching a new streaming version of ESPN that would live outside the traditional cable TV bundle was “not a matter of if, but when.” The Charter executives decided the time was now to take a stand: They wanted a cut of Disney’s streaming business, the people with knowledge of their thinking said.

At the end of August, when Disney and Charter could not come to an agreement on a new distribution deal, Disney’s channels, including ESPN, went dark on Charter’s systems.

Eventually, after weeks of haggling, the two sides hammered out an agreement. Under it, the ad-supported version of Disney+ will become a part of Spectrum’s most popular cable package, and ESPN+ will be bundled into a separate package. When Disney launches an all-streaming version of ESPN, it too will be packaged and sold by Charter to its customers.

Customers won’t pay anything extra beyond the prevailing retail price for Charter’s various bundles. And Disney will get rate hikes for its networks carried by Charter, which it pays wholesale rates for. At the same time, Charter will no longer carry some smaller Disney channels, including Freeform, Disney Junior, FXX and Nat Geo Wild.

Including Disney’s streaming services in TV packages for Charter’s customers incentivizes both companies to get new customers to sign up for those services and existing ones to keep their subscriptions, their thinking goes.

Another important angle to the deal is advertising. Iger lately has talked up his optimism about how streaming ad sales can help the company’s bottom line, in part because that market is healthier than the linear TV ad business. But revenue in advertising demands reach. In early July, Disney had only 3.3 million subscribers to the ad-supported tier of Disney+, a small fraction of the 105.7 million total subscribers for the service (excluding Disney+ Hotstar in India).

Disney’s need to expand reach for the ad-supported version of the service was a motivating factor in its push for a deal with Charter, according to people familiar with the matter.

The data that Charter and other TV distributors can provide on their video and internet households could also be useful in improving the ability of streaming services to more precisely target the right demographics with advertisements on their services, said Jason Manningham, CEO of ad technology company Blockgraph, which is jointly owned by Charter, Comcast and Paramount.

“The authenticated relationship with consumers [that TV distributors have]...is a bigger deal than some industry analysts are giving them credit for,” he said.

A Risk of Bundling Backlash

Other players in the TV and streaming businesses have also decided they’re better off working together.

In July, YouTube and Verizon announced a deal to give away for free a full season of Sunday Ticket—a complete package of all NFL games, including those that aren’t airing in a viewers local market—to some new and existing Verizon mobile and broadband internet customers. YouTube has cut similar deals with Frontier and Comcast, which offer Sunday Ticket to their internet or pay TV customers at a discount on the $349 to $489 annual price the service retails for.

For YouTube, getting distribution from these providers could help cover the hefty $2 billion price it is paying the NFL annually for rights to offer Sunday Ticket. In July, MoffettNathanson forecast that the Sunday Ticket service would remain unprofitable for YouTube through at least 2026, when it’s expected to generate $1.6 billion in revenue. YouTube’s deal with Verizon comes with a minimum guarantee on payments Verizon makes to YouTube based on how many subscribers they expect to attract, a common practice in these sorts of arrangements.

There’s a danger to this kind of deal-making, though. For distributors and programmers, bundling streaming services could provide benefits to both of them, including reduced subscriber churn, since a customer is less likely to cancel a subscription when they have multiple options under one bill. But excessive bundling could also create the bloated packages of content that turned so many customers off on cable in the first place.

Verizon’s McPherson said her company is being careful about how many such streaming deals it agrees to. Putting profits over giving customers what they want is likely to backfire, she said.

“Then the tail wags the dog,” she said.

‘Taxing Customers’

For Frontier Communications, the cable TV math simply no longer worked.

Over the years, programming costs kept rising for Frontier—a relatively small player in the pay TV business that serves households in New York, California, Texas and other states. At the same time, its cable packages kept getting bigger as TV network owners insisted that Frontier include more of their channels within its most popular TV bundles. Cable packaging rules made it difficult for Frontier to say no to their demands. Pay TV providers like Frontier in turn had to jack up rates for customers.

“It’s almost like we are taxing customers for a bunch of channels they don’t watch,” John Harrobin, executive vice president of consumer at Frontier and a former senior NBCUniversal and Verizon executive.

Customers responded by accelerating their cord cutting, which shrank profits, said Harrobin. During the first six months of 2023, Frontier’s video services business generated $229 million in revenue, a drop of 15% from the same period a year earlier, driven by customers canceling their traditional TV subscriptions.

One longtime executive at another cable TV provider, who has negotiated deals with programmers for decades, said the margins in the video business now are often in the single-digit percentages or in some cases even negative. It’s one of the reasons why over the years cable TV companies have charged extra fees to customers for set-top boxes and upselling customers to other products and services—a practice unfriendly to customers that he referred to as “bad profits,” he said.

During the Covid-19 pandemic, Frontier decided it was going to stop selling its legacy TV service to new customers. While existing subscribers can keep their Frontier packages, the company cut a deal with YouTube to refer new Frontier customers to its YouTube TV service as the primary pay TV option.

Earlier this year, Frontier and YouTube decided to deepen their relationship: Frontier now allows its customers to sign up for YouTube TV through Frontier, and it rather than YouTube TV manages the billing for the service. Since that change, sign-ups to YouTube TV through Frontier have more than doubled, though the number of subscribers to the service hasn’t yet surpassed that for its legacy TV business, Harrobin said.

“We do not have to manage carriage relationships with content providers, we do not have to manage hardware, we do not have to adjust fees when [programming costs] go up,” Harrobin said. “From an administrative and operational standpoint, it’s so much easier to execute.”

Germany leads EU condemnation of Ukraine trade curbs

Berlin accuses Poland, Hungary and Slovakia of ‘part-time solidarity’ with Kyiv over grain import bans

Germany has led condemnation of Poland, Hungary and Slovakia’s unilateral curbs on grain imports from Ukraine, accusing the countries of cherry-picking EU policies and putting their own interests over Ukraine.

The remarks by Cem Ozdemir, the German food and agriculture minister, underscored the wider ramifications of the Ukrainian grain dispute, which has posed the biggest challenge in decades to Brussels’ authority over EU trade.

The European Commission lifted a ban on imports of four Ukrainian grains, including wheat and maize, on Friday on the condition that Kyiv agreed to prevent surges of grain into neighbouring EU countries.

In the hours that followed Poland, Slovakia and Hungary applied their own curbs, flouting EU rules in order to protect farmers from an alleged glut of Ukrainian products. Poland and Slovakia are both holding elections within weeks.

Ozdemir said the commission had made the “right decision” to lift the ban and accused the eastern European countries of “part-time solidarity” with Ukraine. “When it suits you, you are in solidarity and when it doesn’t suit you, you are not,” he said.

France and Spain also criticised the move as in breach of core EU rules, which has granted the commission oversight of common trade policy since the 1970s.

Marc Fesneau, the French agricultural minister, said the unilateral measures “call into question the single market and the common market very deeply”. Luis Planas, Spain’s agriculture minister, suggested the measures were unlawful but said it was “for the commission to judge”.

Ukraine has said it will take Poland, Slovakia and Hungary to the WTO and could retaliate with its own trade curbs against products from the three countries.

The unilateral bans put the commission in an awkward position as it is responsible for acting as the bloc’s trade negotiator. If Ukraine pursues its WTO action, Brussels could face having to defend the three countries against Kyiv.

The commission has so far declined to elaborate on whether it would take formal legal action against the three renegade countries, insisting it was attempting to find a compromise. Poland led a group that first introduced the import bans earlier this year, which the commission later adopted as an EU-wide measure to deal with a temporary surge in supply.

A commission spokesperson said that Brussels was “analysing the measures” being adopted and was focused “on making the system work”.

Brussels lifted tariffs on imports of Ukrainian grain shortly after Russia’s full-scale invasion as a way to boost Ukraine’s economy. It has also poured millions of euros into improving infrastructure along rail and river corridors to try and get grain to ports in other EU countries after Moscow pulled out of a scheme to allow exports via the Black Sea.

Hungary on Friday said it would continue to curb Ukrainian grain imports and added dozens of food groups including frozen and fresh beef, pork, lamb, goat, honey and wine.

“If cheap Ukrainian imports flood the markets of neighbouring EU member states . . . we can’t watch this idly,” Hungarian farm minister István Nagy said on Facebook on Saturday.

Poland has also added certain seeds and Ukrainian flour to the four grains embargoed by the original EU ban.

The issue has become a particularly heated topic in Poland ahead of the national elections in October. Polish minister of agriculture Robert Telus said in an interview with PAP news agency last week that Ukraine should not be allowed to accede to the bloc unless it met certain conditions for agricultural exports.