TIME Fast Food

McDonald’s First Quarter Results Disappoint Wall Street

The world’s largest restaurant chain put a positive spin on some weak numbers

McDonald’s Corp. posted quarterly profits that came in below investor expectations Tuesday, though the fast food chain in its announcement highlighted that its revenues outperformed last year.

McDonald’s earned $1.21 per share on revenue of $6.7 billion in the first quarter of 2014, well below Wall Street expectations of $1.24 profit per share and $6.73 billion in revenue. Comparable sales fell by 1.7% during the first three months of the year, and operating income declined 3%.

Sales in McDonald’s outlets around the world open for at least 13 months increased by half a percent over the quarter but same-store sales in the U.S. dropped more than analysts anticipated. McDonalds blamed “challenging industry dynamics and severe winter weather” for the decrease in sales.

TIME Culture

Feds: Powdered Alcohol Approved in ‘Error’

The Alcohol and Tobacco Tax and Trade Bureau rescinded its April 8 'label approval' of controversial new product Palcohol

The federal government admitted Monday that its recent approval of Palcohol—a powdered alcohol which turns water into vodka and rum—was actually done in “error.”

The Alcohol and Tobacco Tax and Trade Bureau granted Palcohol “label approval” on April 8 only to withdraw it 13 days later. “TTB did approve labels for Palcohol,” it said in a statement. “Those label approvals were issued in error and have since been surrendered.”

Palcohol’s parent company Lipsmark said in a statement that “there seemed to be a discrepancy on our fill level, how much powder is in the bag” and that the approvals were surrendered on the afternoon of April 21. “This doesn’t mean that Palcohol isn’t approved,” it said. “It just means that these labels aren’t approved. We will re-submit labels.” Palcohol will have to resubmit labels for approval to the bureau, which is part of the Department of Treasury.

The government had originally approved various types of Palcohol—ranging from lemon drops to cosmopolitans. Various news outlets noted the approval of the product more than a week later, when it began covering the science and safety of the powdered drink.

And with good reason, as powdered alcohol has the potential to be a public health nightmare. Beyond the fact that it’s easy for underage drinkers to use discreetly, the potential for users to snort it is serious business. Snorting alcohol is dangerous because it’s quickly absorbed, and users get intoxicated immediately. People have already tried snorting liquid alcohol, and that can cause damage to nasal passages.

Palcohol’s marketing has not always taken this threat entirely seriously. According to blog SB Nation, Palcohol’s website originally stated:

Let’s talk about the elephant in the room….snorting Palcohol. Yes, you can snort it. And you’ll get drunk almost instantly because the alcohol will be absorbed so quickly in your nose. Good idea? No. It will mess you up. Use Palcohol responsibly.

The site has since clarified, “There was a page visible on this site where we were experimenting with some humorous and edgy verbiage about Palcohol. It was not meant to be our final presentation of Palcohol.” The company was not immediately available for comment.

TIME Advertising

This Bank Ad Hilariously Mocks Google Glass

Takes aim at "glassholes"

The faux PSA is a well-worn advertising trope. Now, many advertisers are using it to take aim at the glut of technology in most consumers’ lives. Take this new ad for FirstBank. The spot, created by agency TDA_Boulder, paints a vaguely dark scene from the not too distant future. An entire family is totally distracted from their dinner because they’re all wearing futuristic headsets not dissimilar from Google Glass. (They don’t look as nice.) Pop-up ads, selfies, and games turn the normally Norman Rockwell-esque scenario into a comedy of spasms. The tagline is “get back to the real world”—which in this case consists of a banking app that is apparently pretty easy to use.

TIME Food and Beverage Industry

The Perfect Bacon Bowl Is Totally the Next Snuggie

The Perfect Bacon Bowl has sold 2 million units in its first four months

Nobody needs a bacon bowl. We’ve managed to survive as a species for thousands of years consuming bacon in its much more pedestrian form: as strips. Eaten one at a time. Not baked together into a receptacle.

Yet, in the four months since its television advertising debut, the Perfect Bacon Bowl–a cooking apparatus used to do exactly what it sounds like–has sold 2 million units and is set to rival another product no one ever thought they had use for: the Snuggie.

The Perfect Bacon Bowl is the brainchild of Thom Jensen, a Salt Lake City histologist looking for a way to get his kids out of bed on Saturday mornings. He first tried to make a bacon turtle–just a turtle made out of bacon–using an upside-down muffin tin. But the bacon burned. So Jensen looked online and found people were making bacon bowls all over the place by putting aluminum foil around the tin, which got him thinking.

Jensen sent an online video of a conceptual bacon bowl into Edison Nation, a company that solicits ideas from everyday inventors. If Edison Nation believes the product might sell, the company licenses it and brings it to market, giving the inventors a cut of the sales. Jensen’s prototype was crude, a mere container made purely from tin foil, but it caught the eye of Edison Nation, including CEO Louis Foreman.

“There’s an incredible number of great ideas out there that never get to market because the obstacles are too great,” says Foreman, who’s also an inventor. “If you woke up and said, I have a great idea, you’d have two choices – quit your job and become an entrepreneur, which is high risk, or try to license your invention to somebody else.”

For many would-be inventors, however, filing for a patent and developing a prototype can be complicated and incredibly expensive. Foreman began Edison Nation as a way for people to realize their ideas without resorting to something drastic like liquidating their 401k. Anyone with $25 can submit an idea, and if it gets approved, Edison Nation invests all the capital and gives 7.5% royalties to the inventor.

The company receives thousands of submissions a year, but only a handful actually making it to store shelves. Foreman says trends and technologies like the maker movement and 3D printing have spurred more Americans to try their hand at inventing. He also says that because there’s less brand loyalty than ever (and the fact that stores will take virtually anything back) consumers are also more likely to try something different.

Since its founding in 2008, Edison Nation has licensed hundreds of products, including Party in the Tub (a disco light to get kids to take a bath), Eggies (an alternative to hard-boiling an egg), Gyro Bowl (a “spill-resistant” bowl for kids) and Emery Cat (a cat scratching board).

But Bacon Bowl may outperform them all. Edison Nation says the product is on par with the Snuggie, which sold 25 million units in a little over two years and has brought in an estimated half a billion dollars since it debuted in 2008. “I’m just overwhelmed,” Jensen says.

Bacon Bowl is the only one of the two dozen or so ideas Jensen has sent into Edison Nation. And even though he’s likely to receive a hefty royalty check at the end of the year, he’s not going to quit his day job. “I have to have something to pay for my hobby,” he says.

TIME Career Strategies

Top 10 Best Cities to Start a New Career

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Photography by Bridget Calip—Getty Images/Flickr RF

New graduates with a choice may want to start their career in one of these fun and affordable cities.

As a new set of college graduates prepares to enter the workforce, one thing on their mind will be finding a place to call home. Boomeranging back to Mom and Dad’s house may work for a while. But your career could take you elsewhere. Besides, it’s a lot more fun on your own.

One strategy is to simply move wherever you find work. With jobs still relatively scarce five years into the recovery, many new grads will go that route, no questions asked. But for those who want to be a little more thoughtful about where they set up their new life, Apartments.com has complied a list of the best cities for new and recent graduates.

The list takes into account affordability; it favors cities where the average rent for a one-bedroom unit is less than 25% of gross median income. Career opportunity is a big consideration; no cities with unemployment above 7% make the cut. The list also takes demographics into account; weight is given to cities with more people aged 25-29. If you are setting up house for the first time, and have choices, this list may be a decent place to start:

  • Denver Average single-bedroom apartment rent is on the high side: $1,248. But the unemployment rate is just 4.3%, compared to 6.7% nationally, and there is a thriving singles culture with one in eight residents aged 25 to 29.
  • Charlotte Average rent (one bedroom, throughout the list): $953. Young people enjoy the southern culture amid a major urban area and high density (11.1%) of those aged 25 to 29.
  • Phoenix Average rent is just $842. Yet residents have the highest median household income of all cities on the list: $81,349.
  • Austin, Texas Average rent: $1,188. There’s no shortage of entertainment in “The Live Music Capital of the World” and with unemployment at just 3.3%, there’s also no shortage of jobs.
  • Columbus, Ohio Average rent: $732. This is a bustling Midwest college town that scores big on the singles scene with high percentages of male-only (7%) and female-only (14.9%) households.
  • Cincinnati Average rent is extraordinarily low for a major city with many large employers including Kroger and Procter and Gamble: $707.
  • Fort Worth, Texas Average rent: $864. The cost of living is low and so is the unemployment rate at just 4.5%.
  • Indianapolis Another large city with low average rent: $946 and high density (11.1%) of those aged 25 to 29.
  • Las Vegas The gaming culture here is not for everyone but with the city’s housing market still recovering from the bust average rents are just $897. It might be worth a gamble.
  • Dallas Average rent: $1,178. This city has lots of sun, large employers including AT&T and Exxon Mobil, and an impressive unemployment rate of just 4.3%.

 

TIME Aereo

The Aereo Supreme Court Case Is About to Change TV Forever

Aereo CEO & Founder Chet Kanojia Interview
Chet Kanojia, chief executive officer and founder of Aereo Inc., speaks during a Bloomberg Television interview in New York, July 31, 2013. Jin Lee—Bloomberg/Getty Images

Television streaming company Aereo went up against the nation's largest broadcasters on Tuesday as the Supreme Court heard arguments about whether the service is legal. The court's decision could have major consequences for the future of TV and Internet services

Updated 12:55 p.m. ET

Upstart Internet video company Aereo squared off against the nation’s largest TV broadcasters on Tuesday in one of the most closely watched Supreme Court cases involving the media business in years. The outcome of the case could have important implications for Internet streaming, cloud computing, and the future of the TV industry itself.

Aereo, a two-year-old startup backed by media mogul Barry Diller, has infuriated the major broadcasters because the company pays nothing to capture free, over-the-air TV programming using thousands of dime-sized antennas that are rented to individual users. Aereo then transmits that content to its customers over the Internet for $8-$12 per month. The broadcasters, including ABC, CBS, NBC and FOX, say this amounts to blatant theft.

If the Supreme Court rules that Aereo’s service is legal, the decision could throw a wrench into the highly lucrative broadcast business model, in which cable and satellite companies pay billions to the TV companies for the right to broadcast popular programming. Such retransmission fees are projected to reach $4 billion this year and $7.6 billion by 2019, according to research firm SNL Kagan.

The broadcasters say that an Aereo victory could prompt them to yank their programming from free TV and move it to pay channels like Showtime. The National Football League and Major League Baseball, which are supporting the TV companies, have threatened to take high-profile broadcasts like the Super Bowl and World Series to cable. Aereo says such a move would “disenfranchise” millions of Americans who still rely on antennas for local news and other programming.

After oral arguments Tuesday, a decision is expected some time in the summer.

Last year, two federal courts agreed with Aereo’s argument that it is transmitting thousands of legally protected “private performances” that individuals have captured using their own leased antennas housed in Aereo’s antenna farms. Those verdicts relied on principles established by the landmark 2008 Cablevision decision, which allowed remote DVR technology. But in February, a federal judge in Utah sided with the broadcasters, intensifying the legal uncertainty surrounding Aereo.

“Based on the Cablevision remote DVR verdict, a one-to-one relationship between the consumer’s copy or the antenna driving the stream to the consumer is what the law requires,” Aereo CEO Chet Kanojia told TIME in a recent interview. “We looked at that verdict and set out to comply with the law to the fullest extent possible, and we created a great technology that is solving a real consumer problem and bringing choice to the marketplace.”

The TV broadcasters say that Aereo is simply ripping them off. “Nothing about Aereo’s convoluted scheme of miniature antennas and gratuitous copies exempts its commercial retransmission service from the same rules that govern all others,” the companies wrote in their brief. “Aereo’s unauthorized retransmission of broadcast television to the public is obvious and unambiguous copyright infringement.”

Several prominent legal experts agree, including U.S. Second Circuit Judge Denny Chin, who called Aereo “a sham” and a “Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.” Judge Chin made those comments in a dissent to the Second Circuit verdict that found Aereo’s service to be legal, and is now being challenged by the broadcasters in the Supreme Court.

In March, the Obama administration filed a friend of the court brief claiming that Aereo is “liable for infringement.” Last week, Diller, the billionaire media mogul who has poured millions of dollars into Aereo, blasted the White House for signaling “that the preservation of legacy business models takes precedence over lawful technological innovation.”

Meanwhile, several well-known public interest and technology advocacy groups have backed Aereo, including the Electronic Frontier Foundation, Public Knowledge, the Consumer Electronics Association, and Engine Advocacy. Dozens of prominent law professors and legal scholars are also supporting Aereo.

“Aereo simply provides an antenna for viewers to privately transmit free over-the-air broadcast television signals,” says Jodie Griffin, Senior Staff Attorney at Public Knowledge. “It does nothing more than make it easier for viewers to access already free broadcast service.”

Technology advocates warn that a ruling against Aereo could imperil cloud computing services offered by companies like Google, Amazon and Dropbox, because Aereo relies on the same legal principles as the entire cloud-computing industry, a point that Kanojia made in the TIME interview.

“The Aereo case puts the cloud at risk because when broadcasters have complained about Aereo, their complaints also describe cloud computing,” according to Matt Schruers, vice president for law & policy at the Computer & Communications Industry Association, which is supporting Aereo.

In their appearance before the Supreme Court on Tuesday, the TV broadcasters marshaled significant legal firepower to make the case that Aereo is illegal. The companies are represented by Paul D. Clement, the former Solicitor General under George W. Bush who is widely regarded as one of the most skilled and experienced Supreme Court lawyers of his generation.

TIME technology

The Hot War Between Netflix and Comcast Is Escalating

The Comcast Center, home to Comcast's corporate headquarters, in Philadelphia
The Comcast Center, home to Comcast's corporate headquarters, in Philadelphia. William Thomas Cain—Getty Images

Netflix and Comcast are wrangling over whether their controversial interconnection pact should be covered by U.S. net neutrality rules

Internet video powerhouse Netflix used the occasion of its quarterly earnings report on Monday to lash out once again at Comcast, the nation’s largest broadband company, for charging what it calls “arbitrary interconnection tolls” against online content companies.

Comcast should not be permitted to buy smaller rival Time Warner Cable in a $45 billion deal now being scrutinized by U.S. regulators, Netflix CEO Reed Hastings argued in a letter to shareholders, because the cable giant is already too powerful.

It’s the second time in a month that Hastings has attacked Comcast, following a controversial deal in which the streaming video company agreed to pay for a direct connection to the nation’s largest broadband provider. “Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix,” Hastings wrote. “The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers.”

Comcast’s response was swift. The broadband giant accused Netflix of using “net neutrality“—the principle enshrined in the now-defunct U.S. Open Internet rules that prohibited Internet service providers from favoring some online services—as a pretext for advancing its own commercial interests. In essence, Comcast says that Netflix is taking advantage of regulatory scrutiny of the Time Warner Cable deal to try to make interconnection deals—standard business arrangements that have existed between Internet and broadband companies for years—a net neutrality issue. And it’s doing this, according to Comcast, to bolster its own bottom line.

“Internet interconnection has nothing to do with net neutrality,” Comcast wrote in a company blog post. “It’s all about Netflix wanting to unfairly shift its costs from its customers to all Internet customers, regardless of whether they subscribe to Netflix or not.” In its 2010 Open Internet order, which was struck down by a federal judge in January, the Federal Communications Commission made clear that interconnection deals were not subject to the net neutrality rules.

As part of its deal with Comcast, Netflix gained a direct connection to the nation’s largest broadband company, bypassing bandwidth providers that operate as intermediaries between residential broadband companies and Internet firms. The agreement is already benefitting Netflix customers who subscribe to Comcast broadband service. Last week, Netflix said that streaming speeds to Comcast users had increased by 65% between January and March.

Comcast says that if Netflix is not happy with their interconnection pact, it’s free to terminate the pact. “If Netflix did not like the terms of our agreement, or if they do not like the terms Comcast provides at any time in the future, Netflix can work with any of the multiplicity of partners that connect with Comcast,” the broadband giant wrote.

Comcast pointed out that “Netflix approached us for this direct connection between Netflix and Comcast, cutting out the wholesalers with whom Netflix had traditionally contracted and paid for transit. This arrangement was thus about Netflix exercising its market power to extract a more favorable arrangement directly from Comcast than what Netflix had been paying for through third party providers.”

“Netflix is free to express its opinions,” Comcast concluded. “But they should be factually based. And Netflix should be transparent that its opinion is not about protecting the consumer or about Net Neutrality. Rather, it’s about improving Netflix’s business model by shifting costs that it has always borne to all users of the Internet and not just to Netflix customers.”

Paid interconnection agreements have been a common feature of the Internet’s behind-the-scenes architecture for many years, but now Netflix wants to frame such deals in terms of net neutrality. Moving forward, the FCC will decide whether deals like the one struck by Comcast and Netflix will be covered by the Open Internet rules. As of now, that’s not the case.

Dan Rayburn, principal analyst at Frost & Sullivan and executive vice president of StreamingMedia.com, says Netflix arguments against Comcast’s proposed merger with Time Warner Cable aren’t valid. “This argument between Netflix and Comcast about interconnection deals has nothing to do with net neutrality,” Rayburn wrote on Monday. “This isn’t about ‘fighting for the Internet the world needs,’ like Netflix has said, it’s about keeping their costs down.”

TIME Apple

Apple Will Now Recycle Any Product You Give Back—and Give You Credit for It

The Apple Inc logo sits on display at the company's store in the Gran Plaza 2 shopping mall in Majadahonda, near Madrid, Spain, on Friday, Sept. 28, 2012.
Angel Navarrete—Bloomberg/Getty Images

Apple Stores will now accept any of the company's products for recycling at no charge, and may even give you a store credit to be used against a new model if the items you are trading in look in resealable condition

Starting today, Apple Stores will begin accepting any of the company’s products for recycling at no charge.

Even better, if the items look resalable, you might even get a store credit, a.k.a. an Apple gift card. CEO Tim Cook last month told shareholders the company wants to “leave the world better than we found it,” and this initiative is part of that.

Lisa Jackson, Apple’s vice president of environmental initiatives (and a former EPA administrator) told the AP Apple aims to “use all our innovation and all of our expertise to make the planet more secure and make the environment better.”

The move caps off an evolution from a few years ago when the company was criticized by some groups as contributing to electronic waste. Since then, Apple has unveiled a number of initiatives aimed at cutting its environmental impact.

TIME GM recall

GM’s Recall Troubles Haunt Former Executive’s Run for Congress

Wife Of Longtime Congressmen John Dingell, Debbie Dingell Announces Her Run For His Seat
AN ARBOR, MI - FEBRUARY 28: Debbi Dingell, wife of Congressman John Dingell, the longest serving member of Congress in U.S. history who recently announced he will not be seeking reelection, speaks with reporters after she discussed the announcement she made earlier this morning that she will run for his seat and seek the democratic nomination for Michigan's 12th Congressional District at the Downtown Home and Garden store February 28, 2014 in Ann Arbor, Michigan. (Photo by Bill Pugliano/Getty Images) Bill Pugliano—Getty Images

Articles about the Chevy Cobalt's ignition shut-off problems were written in 2005, but top General Motors officials including Debbie Dingell, who oversaw the company's marketing strategies that year and who's now running for Congress, apparently didn't read them

If you think things look bad for General Motors now, they looked even worse back in the summer of 2005. Its finances were shaky, its models were unloved and the big carmaker’s future was very much in doubt. So it had a lot riding on the reviews of its newest line of small cars that was supposed to help it shift away from the slowing SUV sales it had relied on for years.

Which is why the review of the Chevy Cobalt in the New York Times on June 19, 2005 was such good news for the company. The Times called the Cobalt “a good car, if not a great one,” a “creditable competitor” to comparable Toyota and Honda models, and one of several new GM models that were “vastly improved and generally likeable.”

Sadly, no one in top management read the article, according to current GM officials who are currently scrambling to manage the PR fallout of the belated recall of Cobalts earlier this year. Or at least, say the current officials, no top managers read the sidebar story that ran next to the main review and reported on a troubling phenomenon: intermittent stalling of the Chevy Cobalt and loss of electrical power due to a problem with the ignition system.

GM now claims top managers only learned of the Cobalt’s ignition system problems this year, and only mid- and low-level officials have been punished. But the coverage of the ignition issue in the Times and elsewhere in June 2005 raises uncomfortable questions for GM, and for at least one former official from the time who is seeking public office.

The Times review was highlighted in documents released by the House oversight committee earlier this month, and was referenced in documents released by the National Highway Traffic Safety Administration over Easter weekend. It reported that Chevy was telling dealers that drivers could accidentally cut power to the car’s engine and should be told to lighten the load on their keyrings. It cited one example of the cutoff occurring when the reviewer’s wife was driving the car, and it quoted a reviewer in a small Pennsylvania paper who said the problem happened four times in a week of testing the car.

A week after the Times review, the Cleveland Plain Dealer wrote about the problem. And the House oversight committee also published a statement that had been released in June 2005 by a GM spokesman, Alan Adler, acknowledging the ignition problem and saying that dealers and “service advisers” had been told to tell customers to remove items from their keyrings that might be contributing to the shutoff problem.

Apparently only good news made it up the chain to top managers in 2005, however. In comments to the media and GM employees on Oct. 17, 2005, then-CEO Rick Wagoner praised the market success of the Cobalt and other new models, saying “these products have been well-received by the enthusiasts and general press.” Wagoner was forced out as part of GM’s restructuring during the government bailout of the company in 2009 and has largely stayed out of the spotlight since then.

Not all top officials from that time may find it so easy to stay out of the GM recall story as it unfolds, however. Debbie Dingell was GM’s Executive Director of External Affairs and Constituent Relations in 2005, overseeing the company’s marketing strategies, community relations and its relationships with labor, suppliers, dealers, business organizations and constituency groups. She too retired from GM in 2009. But after her husband John Dingell, the long-serving Congressman from Michigan’s 15th district, announced his retirement in February this year, she announced she would run for his seat.

Debbie Dingell declined to answer questions about the 2005 coverage of the ignition shutoff problem. However, she said through a spokeswoman that she knew nothing about the troubles besetting the Cobalts and other small cars when she worked for GM. “Her responsibilities were not related to the engineering and design segment of the business and she was not part of the management group related to or responsible for recall decisions,” says Liz Boyd, Dingell’s spokeswoman. Boyd says Dingell was not aware of the articles in the Times or the Plain Dealer and was not aware of the instructions sent to dealers and service managers regarding the ignition cut-off problem.

GM has named a former federal prosecutor to investigate what the company knew about the problem as it unfolded. Company spokesman Greg Martin said of the 2005 Times story, “It was printed in the paper and we’ll have further information as it becomes available.”

TIME technology

Get Ready for a Netflix Price Hike

Streaming service Netflix announced plans to increase its price after a quarterly earnings report showed that profits edged out analyst estimates. The news of a price hike comes as Netflix continues to add new subscribers at a rapid pace

Netflix is planning to raise its prices, the company revealed in a quarterly earnings report today. The price hike, which the company says will amount to $1 or $2 per month, will take place sometime from April to June. The increase will only affect new members for now. Netflix says current members will be able to keep their current plans for one to two years.

The company is being rightly cautious in increasing subscription rates. Its 2011 attempt to generate more revenue by separating its DVD-by-mail and streaming services into separate businesses was disastrous for Netflix’s brand and its stock price. Since then the company has earned back credibility with customers by bankrolling a growing stable of original shows and inking licensing deals with big entertainment companies like Disney. But this content comes at a great cost — Netflix will spend almost $3 billion licensing shows and movies this year. The company needs both more subscribers and more revenue per subscriber to keep its business profitable as acquisition costs soar.

“If we want to continue to expand to do more great original content, more series, more movies, we have to eventually increase prices a little bit,” CEO Reed Hastings said in a video conference with analysts. “You’re talking about a dollar or two difference per month, so I don’t think that it’s a huge difference.”

The news of a price hike comes as Netflix continues to add new subscribers at a rapid pace. The company added 4 million new members in the first quarter of 2014, bringing its total subscriber base to more than 48 million globally. The additions were above Netflix’s guidance of 3.85 million new members for the quarter thanks to a surge in international subscriptions. Netflix generated $1.27 billion in revenue for the quarter, in line with analyst estimates. Net income was $53 million, topping $3 million in the first quarter of 2013. Earnings were 86¢ per share, beating analyst targets by 3¢.

Netflix also used its earnings report to formally oppose the planned merger between Time Warner Cable and Comcast that is currently under scrutiny from federal regulators. The online video service recently reached a deal to pay Comcast for a direct connection to its broadband network in order to ensure faster streaming speeds for its users. But the company has publicly complained that this type of paid-peering agreement is unfair and violates the principles of net neutrality (broadband providers feel different). Netflix fears a combined Comcast and Time Warner Cable, which would serve about 60% of U.S. broadband households, would be able to charge even more for such fees. “Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix,” the company wrote in a letter to shareholders. “The combined company would possess even more anti-competitive leverage to charge arbitrary interconnection tolls for access to their customers.”

The company continues to be coy in revealing precise viewership numbers for its expensive original shows, allowing only that Season 2 of House of Cards attracted “a huge audience that would make any cable or broadcast network happy,” according to Netflix’s shareholder letter. Chief content officer Ted Sarandos also confirmed that Orange Is the New Black remains the most popular original show on the streaming service.

Netflix stock jumped more than 6% in after-hours trading. It’s still down significantly from its all-time high of $458 in early March as part of an overall decline in the tech sector over the past month.

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