Lawsuits Claim Disney Colluded to Replace U.S. Workers With Immigrants

Leo Perrero was laid off a year ago from his technology job at Walt Disney World in Orlando, Fla.
Brian Blanco of The New York Times

ff a year ago from his technology job at Walt Disney World in Orlando, Fla.

Even after Leo Perrero was laid off a year ago from his technology job at Walt Disney World in Orlando, Fla. — and spent his final months there training a temporary immigrant from India to do his work — he still hoped to find a new position in the vast entertainment company.

But Mr. Perrero discovered that despite his high performance ratings, he and most of the other 250 tech workers Disney dismissed would not be rehired for at least a year, and probably never.

Now he and Dena Moore, another American laid off by Disney at that time, have filed class-action lawsuits in federal court in Tampa against Disney and two global consulting companies, HCL and Cognizant, which brought in foreign workers who replaced them. They claim the companies colluded to break the law by using temporary H-1B visas to bring in immigrant workers, knowing that Americans would be displaced from their jobs.

“I don’t have to be angry or cause drama,” said Ms. Moore, 53, who had worked at Disney for 10 years. “But they are just doing things to save a buck, and it’s making Americans poor.”

Dena Moore, another American tech employee who was laid off after years at Disney, said she applied for more than 150 Disney jobs and did not get one.
Brian Blanco of The New York Times

Ms. Moore had also trained her replacement. After she was laid off, she applied for more than 150 other jobs at Disney. She did not get one.

The lawsuits by Mr. Perrero and Ms. Moore, who each filed a separate but similar class-action complaint on Monday, represent the first time Americans have gone to federal court to sue both outsourcing companies that imported immigrants and the American company that contracted with those businesses, claiming that they collaborated intentionally to supplant Americans with H-1B workers.

A furor over the layoffs in Orlando last January brought to light many other episodes in which American workers, mainly in technology but also in accounting and administration, said they had lost jobs to foreigners on H-1Bvisas, and had to train replacements as a condition of their severance. The foreign workers, mostly from India, were provided by outsourcing companies, including the two named in the lawsuits, which have dominated the H-1B visa system, packing the application process to win an outsize share of the quota set by Congress of 85,000 visas each year.

The Labor Department opened investigations of the outsourcing companies — the direct employers of the temporary immigrants — at Disney and at Southern California Edison, a utility that laid off hundreds of American workers in 2014. The investigations are continuing. At least 30 former Disney workers also filed complaints with the federal Equal Employment Opportunity Commission, claiming that they faced discrimination as American citizens.

The lawsuits by Mr. Perrero and Ms. Moore are based on the rules for H-1B visas, which were designed by Congress to bring foreign workers with special skills into the country. Employers are required to declare to the Department of Labor that hiring foreigners on the visas “will not adversely affect the working conditions of U.S. workers similarly employed.”

“Was I negatively affected?” Ms. Moore asked. “Yeah, I was. I lost my job.”

Sara Blackwell, a lawyer in Sarasota representing the former Disney employees, said the suit charged that the companies lied under oath when they said that no Americans would lose their jobs.

Disney has vigorously denied any violations, saying it requires its contractors to obey all laws. Disney has said all but 95 of the tech workers laid off in Orlando were rehired to other positions or moved on voluntarily. Last year, it canceled 35 layoffs scheduled in other areas of the company.

HCL and Cognizant have said that they carefully comply with United States laws. Cognizant has said that it employs many thousands of Americans in this country, with H-1B workers only a minority of its labor force.

Responding to the frustration of American workers, Congress in December renewed and increased a fee on outsourcing companies that it had allowed to lapse. Larger companies employing many H-1B workers in the United States will pay an extra fee of $4,000 for each new H-1B visa — up from $2,000 — and another $4,000 to move an H-1B immigrant who is already in the country to a new employer.

Senator Bill Nelson of Florida, a Democrat who has been openly critical of Disney’s layoffs, offered a bill to reduce the H-1B quota by 15,000 visas a year to 70,000. The issue came up in the presidential race, as Senator Ted Cruz of Texas, a Republican candidate, introduced a bill with Senator Jeff Sessions of Alabama, a Republican hard-liner on immigration, to sharply increase the minimum wage for H-1B workers to $110,000 a year, to discourage outsourcing companies from using the workers to lower wages.

The Institute of Electrical and Electronics Engineers, an international association of tech workers, posted an online petition to encourage Americans who were displaced to file complaints with the Justice Department. In a letter to the group in December, Alberto Ruisanchez, a Justice Department lawyer in charge of prosecuting immigration abuses, confirmed that it would be a violation of anti-discrimination laws for an employer, or a contracting firm, to fire workers or hire replacements “because of citizenship or immigration status.”

Mr. Perrero, like many Americans who have lost their jobs, said he was long reluctant to speak out publicly against his former employer. At 42 and with a family to support, he worried that he would not find another job in Orlando, where Disney rules as the largest employer by far. He spoke with The New York Times anonymously in an article in June about the humiliation of training his foreign replacement.

But local recruiters told him that despite the company’s statements, Disney managers said they would avoid rehiring workers who were laid off. Mr. Perrero said he knew of only two workers from the close-knit group of more than 200 who were dismissed who went back to tech jobs at Disney.

Mr. Perrero said he was “part Italian, part English, part Swedish.” He said, “I wholeheartedly believe our country needs to have amazing people come here to build a long-term foundation.” But he said the H-1B program had been abused.

Ms. Moore said that even with strong programming credentials, it was hard for her to start over in her 50s with another company. She has 13 grandchildren, and she confessed that one of the difficult losses was a pass that allowed her to take them to Disney World at no cost.

Written by Julia Preston of The New York Times

(Source: The New York Times)

Advertisers Are Fleeing Television: Will You Pay More?


In a classic case of ad dollars following eyeballs, it seems Madison Avenue is slowly moving away from traditional television advertising, presumably to allocate more ad spend to digital outlets, especially the growing mobile advertising segment.

After years of being able to count on strong and stable audience sizes from television, television audiences are now shrinking as more consumers no longer see the value in large, expensive pay-TV packages. For the recently completed third calendar quarter, Bloomberg-compiled analyst estimates predict that the pay-television industry will lose 280,000 to 360,000subscribers.

This news was actually framed as a positive, considering the industry lost a massive 600,000 subscribers in the second quarter. However, when compared with last year’s third-quarter losses of 189,000, according to SNL Kagan, the estimated figure is nearly 70% higher at the midpoint. And advertisers are starting to notice.

SMI points toward falling TV ad spend

According to ad-spend insight firm Standard Media Index, by way of Business Insider, total TV ad spend has dropped by 4% compared with the previous broadcast year. However, all television outlets are not the same: Local operators grew 3%, and the heavily watched cable TV subtype dropped only 1%. However, major broadcast networks such as CBS(NYSE: CBS) ABC, and NBC are experiencing a year-on-year ad-based drop of 7%.

For CBS, a company that was dependent on advertising for nearly 50% of its total revenue haul during the first half of 2015, this is apparent in its financial results. On a year-on-year basis, the first half of 2015 has produced 3.7% less ad-based revenue over last year’s corresponding period.

During the second-half results, the company agreed with SMI that more of its ad-spend has transitioned to scatter-based marketing rather than upfront in both the broadcast and cable-TV markets. Long story short, upfront tends to be more expensive for advertisers but guarantees ad space — scatter, on the other hand, is cheaper but gives no guarantees as to availability, as it is usually sold closer to the ad’s airing. A shift to scatter-based marketing insinuates advertisers are less concerned with television marketing.

Better news for Disney’s ESPN

On the other hand, the news isn’t as bad for cable channels including The Walt Disney Company‘s (NYSE: DIS) ESPN. After renegotiating deals with the NBA and the NFL for huge price increases, the company is looking to cut as many as 350 jobs to partially compensate for the increased content costs.

And while Disney is a far-flung conglomerate, with many — myself excluded — looking for its movie studio to lead the path forward, the company is still led by its media-networks business. And while the company also owns other TV stations, including broadcaster ABC, ESPN is still the most-important channel for its most-important media-networks division.

There are two ways ESPN monetizes its cable network: subscriber fees and ad-based revenue. While SNL Kagan’s estimate of ESPN’s per-sub monthly cost, $6.55, has been widely reported in the media, ESPN would really like to grow advertising as well. And while a 1% decrease for cable-based ad-spend isn’t encouraging, it certainly isn’t the huge drop of 7% broadcasters are now facing.

In the end, however, this is another report that points toward a slow unraveling of the television business model. If ad dollars dry up, it’s possible that networks attempt to recoup the lost revenue in the form of higher subscriber costs (read: cable bills). Subscribers should watch costs carefully.

Written by Jamal Carnet of The Motley Fool

(Source: The Motley Fool)

Disney’s ESPN Said Planning to Eliminate as Many as 350 Jobs


(Bloomberg) — Walt Disney Co.’s ESPN sports network plans to eliminate as many as 350 positions, according to people with knowledge of the matter.

The cuts will be announced to employees as early as Wednesday, said the people, who asked not to be identified discussing an internal matter.

The action follows Disney’s announcement in August that earnings at its cable networks wouldn’t meet company forecasts as a result of subscriber losses in pay television and currency translation. That triggered a selloff in the shares of several media companies.

An ESPN spokesman didn’t immediately respond to a request for comment on Tuesday.

“ESPN has historically embraced evolving technology to smartly navigate our business,” the company said in a statement last month when plans for job cuts were reported by “Any organizational changes will be announced directly to our employees if and when appropriate.”

Written by Scott Soshnick and Christopher Palmeri of Bloomberg 

(Source: Bloomberg

10 Small and Unlikely Businesses Created by Big Tech Execs Before They Got Famous

Provided by Business Insider
Provided by Business Insider

Entrepreneurship comes with both high ambitions and risks. After all, 9 out of 10 of them fail.

Before these big name self-starters created a household name for their companies, many of them faced failure with their first startups.

Some were young and wanted to make some extra money on the side. Some knew when it was time to say goodbye and move on to their next dream project.

And, in many ways, these early bumps should be viewed in a positive light. After all, if Google co-founder Larry Page had continued to pursue his saxophone music career, your current home page might not exist.

These are the strange successes and bittersweet failures of some of the biggest names in tech.

1. Elon Musk attempted to convert a frat house into an underground nightclub.

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When the magnate of Tesla Motors and SpaceX wasn’t studying up for his business or physics degrees, he threw ragers at a multi-bedroom apartment that he managed to turn into a nightclub.

Musk, along with his friend Adeo Ressi, did this to earn extra cash and become more acquainted with the University of Pennsylvania scene as they were transfer students. They even hired bouncers and people to be in charge of clean-up.

On Sundays, Musk would wind down and watch The Simpsons on his run-down TV.

2. College-aged Larry Page of Google created business plans for a company that made software music synthesizers.

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While growing up, Page loved music and would play the saxophone and study music composition. When the Google founder was still attending the University of Michigan, he created a business plan for a company that would use electronic music synthesizers built from software. The difficulties he encountered with the software while trying to get it to operate in real-time irked him, however.

Page told Fortune , “It’s amazing to the extent I think that modern operating systems are terrible at being real-time. If you think about it from a music point of view, if you’re a percussionist, you hit something, it’s got to happen in milliseconds, fractions of a second.”

Page’s obsession for speed was a key element of the Google platform, as he pushed for his engineers to cut down every millisecond of lag in search results.

3. Before Travis Kalanick created Uber, his search engine was sued by the Motion Picture Association of America.

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Kalanick, along with five other students from UCLA’s computer science department, founded a multimedia search engine called Scour in 1997. It was successful at first, even attracting the investment of former Disney president Michael Ovitz.

To compete with Napster, a former peer to peer music service, Kalanick and his friends jump started a company called Scour Exchange. The file exchange service allowed users to trade videos and video files, rustling the MPAA’s feathers, which then alleged copyright infringement.

Scour died soon after because it failed to raise enough funds to continue its operations. The whopping $250 billion lawsuit charge forced Kalanick and his buddies to file for bankruptcy .

4. Elizabeth Holmes, the CEO of Theranos, sold C++ packages to Chinese universities.

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Homes was concerned with how Chinese universities often lacked information technology, as she lived in China at the time due to her father’s frequent business trips.

So before the youngest self-made female billionaire even flew over to California to start her Stanford education, Holmes sold C++ compilers to Chinese universities . At this point, Holmes had already been dipping her toes with a variety of programming languages, and wanted to amp up the tech used by Chinese education.

Thanks to her fluency in Mandarin, Holmes worked in a lab at the Genome Institute in Singapore. From there, she was inspired to draft up a patent that would eventually lead to Theranos, a health tech company that develops solutions for laboratory diagnostic tests that are mainly blood-related.

5. Walt Disney and his brother created an animation series that was forced to shut down.

© Bettmann/CORBIS

In 1923, the Disney brothers created the “Alice Comedies,” which were spin-offs of the Alice in Wonderland story, in their uncle’s garage.

Disney and his brother, Roy, made their first films for four years, and then created a new character called Oswald the Lucky Rabbit. After making 26 episodes, the Disney brothers found out that their distributor had gone behind their backs and asked animators to make the Oswald cartoon without consulting Disney.

Upon reviewing his contract, Disney realized that the distributor owned the rights to the cartoon — a painful lesson for the entrepreneur. But he had the last laugh— Disney World is currently valued at $35 billion.

6. Mark Zuckerberg created the notorious Facemash, the pre-Tinder app of today

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The Facebook founder ran the site by putting photos of two people of the same gender side by side. The user would then vote on the “hotter” person and then Facemash would present a final ranking . In just one day, 450 people had already visited the site and voted on people’s faces over 22,000 times.

Immediately, criticism ensued. The Harvard student newspaper deemed his site improper, and Zuckerberg was accused of breaching security, violating copyrights, and violating individual privacy by Harvard’s administrative board.

Zuckerberg took the website down, admitting that “issues about violating people’s privacy don’t seem to be surmountable. I’m not willing to risk insulting anyone.”

On a less controversial note, high-school Zuckerberg built the Synapse Media Player, a machine that adapted to a music-lover’s listening habits, which was ranked 3 stars out of 5 in PC Magazine. It generated songs in a playlist according to someone’s taste, much like the discovery function of Spotify.

7. LinkedIn’s Reid Hoffman founded an ‘overeager’ dating site

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Before LinkedIn, Hoffman tried his hand at building another type of networking site in 1997: the “overeager” dating site called SocialNet. The ambitious concept included professional networking along with finding you a date, someone to room with, or even tennis partners.

In a previous interview with Business Insider, Hoffman talked about the learning experience of it all, saying, “if you’re not embarrassed by your version one release, you released it too late”.

Even though Hoffman creates products which connect people, he was a self-described “loner” in high school with three to five friends in his circle.

He left SocialNet after tensions in the strategy board and then joined the PayPal Mafia, the alumni of the online payment service who started their own tech companies. This was when Hoffman’s passion project became LinkedIn. SocialNet no longer exists.

8. Alexis Ohanian and Steve Huffman of Reddit made a geeky company called “bread pig.”

Alexis Ohanian.

© Andy Kropa/Invision/AP Alexis Ohanian

Right after he graduated from the University of Virginia, Alexis Ohanian and Steve Huffman co-founded the online news forum Reddit.

Their other lesser-known project was “born at an unknown point in 2005” before reddit exploded online. While Huffman and Ohanian searched for a domain for Reddit, they came across and impulsively purchased it. Huffman envisioned the flying animal with two loaves of bread for wings, and the mythical beast became the beloved symbol of their business.

Ohanian and Huffman waited for to stop being treated as a spam page for pig supplies and bread makers for a year.

Breadpig “sidekick-for-hire” continues to sell an assortment of eccentric objects, and is still up and running, with Ohanian as the Founder and Chief Swine Defender.

9. Richard Branson quit school when he was 16 to start a magazine that was doomed for failure.

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Before Branson founded the multinational VC conglomerate that is the Virgin Group, he tried to start a magazine simply called “Student”. Branson hoped that the pages would be filled with opinions of activists and inspire young people everywhere.

He snagged some interviews with big names like French philosopher Jean-Paul Sartre and poet Robert Graves, but the magazine wasn’t profitable.

Branson went along with a passing idea to mail records to people at discounted prices. He used Student to advertise for his new business, and then renovated a shoe shop to a discount record store. Everyone Branson hired to work at his store was inexperienced — a “virgin at business” — hence the title which eventually spawned a $5 billion enterprise.

10. Investor and philanthropist Warren Buffet used to place pinball machines in barber shops.

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While other children were frolicking at a playground, Buffett was already a young entrepreneur — he sold golf balls, stamps, and delivered newspapers. He put $1,200 from this business towards 40 acres of farmland.

Buffett then shopped around for pinball machines with his friend Donald Danly during his high school years, buying one for $25 and placing it in a nearby barber’s shop. The profit-minded teen invested in more machines and eventually owned them in three different locations. The young duo made $50 a week.

He eventually sold his business, called Wilson Coin Operated Machines, to a war veteran for $1200.

Written by Celena Chong of Business Insider

(Source: Business Insider)