♪ >> announcer: this is "nightly business report," with tyler mathisen and sue herera. sudden exit? united healthcare, the nation's largest health insurer, says it may leave the public health insurance exchanges. surprising investors and consumers and potentially dealing obamacare a serious blow. just do it. what nike just did late today that could impact the market tomorrow. and fantasy world. draft kings and fan duel, the daily sports gaming sites, have spent millions on advertising. but will the money continue to flow to the media companies as legal challenges mount? all that and more tonight on "nightly business report" for thursday, november 19th. good evening, everyone. and welcome. a warning from united healthcare and a possible blow to the affordable care act. the nation's largest insurer

said it may stop offering coverage to individuals on the public exchanges as losses from those plans mount. the company also cut its earnings forecast for the year, which sent shares 5% lower, making it the worst-performing dow stock in today's session. but today's announcement comes in sharp contrast to more optimistic projections made about its exchange business just last month. so bertha coombs takes a look at the reasons behind united health's announcement and what it could mean for the insurance exchanges. >> reporter: this is united healthcare's first year offering plans on the public aca exchanges that's seen costs and losses mount. the insurance giant says it will still offer plans for 2016 but may get out of the exchange business altogether after that. >> the overall exchange market profile is more negative than we had planned. with new market enrollment growth that will be more slowly. these indicators point to an environment that is declining

and likely to continue in that direction into next year. >> reporter: exchange plans make up just 1 1/2% of united's business. so analysts say pulling the plug won't hurt its profit and it won't sink the aca markets short term, says robert liszewski. >> if united healthcare pulls out the remaining insurance companies are enough. that's not the point here. >> reporter: longer term he says aca regulations make it too hard for insurers to price plans that attract healthy consumers who can offset high-cost members, and it's a big problem, he says, for non-profit insurers who offer some of the most affordable plans on exchanges. >> this is the first time that blue cross plans in aggregate have lost money since the 1980s. there's a fundamental problem here with the business model and the affordable care act in these insurance exchanges. and that business model has got to change. >> reporter: united is the only insurer publicly threatening to leave, but others are making their own quiet assessments,

says analyst sarah james. >> we've already started to hear some other companies talk about pulling back their marketing efforts, broker commissions, as well as rethinking how they're going to it approach 2017. so i think this is a broader market issue. the fact that there's too high of a sick mix in the exchanges is really something impacting everybody. >> reporter: in response to united's warning one health department official says today's statement by one carrier is not indicative of the marketplace's strength and viability. still, the clock is ticking. united health says it will decide whether it will pull out of the exchanges for 2017 over the next six months. bertha coombs, "nightly business report," new york. and let's turn now to anna gupte who talked more about what this will mean overall for the public health exchanges for obamacare and for health insurance stocks. she's senior health care services analyst at lierink partners. good to have you with us. you heard in that piece, one of

the sources say that this united health care threat to pull out unearthed a "fundamental problem with the business model of the health care exchanges." do you agree with that? if so, what is the problem and how could you fix it? >> yes, i do agree with this. i don't think united is alone in this issue. the other four big insurers, anthem, aetna, and humana in particular are also facing a lot of issues on exchange. the exchanges look broken to me. the two biggest issues are we have the sickest comers. they always come in first. we have not been able to get a balanced risk pool with the younger and healthier enrollees that would have balanced out some of the sick insurance premium spirals with the healthier people. >> why haven't the younger people come in? why haven't they? >> partly the problem is we only

have partial subsidies for people that make a household income of $50,000 or more. and so between $50,000 and, say, $85,000 to $90,000 the product is not very affordable. the premium subsidies are not adequate. and then the veil of hospital services and procedures they experience huge sticker shock because the deductibles on the co-insurance can be very high. so these enrollment members are not staying on exchange. they're coming in and out. and as a consequence the product is not becoming affordable for the rest of the market as well. >> which leads to kind of a financial instability for the organizations like a united healthcare or a humana or whichever one you're talking about, right? so do you need to underpin those organizations with some sort of financial stability specific to the exchanges? >> well, there are a couple of

things that cms can do. the first big one i think is that they could reduce or at least dial down the special enrollment periods with very big hardship exemptions that's allowing some of this instability to persist in the marketplace, and i think that would cut some of the losses that players like humana in particular and now united are facing. the second is that there were supposed to be these backstops called the three rs in risk corridors that were expected to give some cushion to the insurers in the early years when the exchange marketplaces were not stable. however, the end of september cms has now said they will not be paying out the entire risk corridor payments to the insurers, and as a consequence the pricing by the insurers on exchange has not been adequate for the losses they're facing. that's another change that could be made as well. >> a very thorny set of

problems. anna gupte, thank you very much. anna is with lierink partners. a big move late today by another dow component. nike will split its stock two for one. the board of the world's largest sporting goods company approved a new $12 billion share buyback program, and it raised its quarterly cash dividend by 14% to 32 cents per share presplit. that sent shares higher in after-hours trading. >> and that late-day move in nike could help the market tomorrow. but today it was healthcare that weighed on the index and capped any gains. the dow jones industrial average off four points to 17,732. nasdaq down a point. and the s&p 500 dipped two. to the economy now and some positive news in manufacturing. a survey by the philadelphia fed shows activity in that sector improved in november. it follows two negative readings. new orders and shipments showed some improvement as well. a separate report indicated continued strength on the job market. the number of americans filing

for unemployment benefits fell last week by 5,000 to 271,000. household debt has climbed toyotas highest level since 2010, now totals more than $12 trillion. a report by the new york federal reserve bank shows borrowing in the third quarter was driven by increases in mortgage lending, credit cards, auto, student loans, and that, folks, is pretty much everything. >> indeed it is. federal reserve official loretta mess ter said economic conditions are right for an interest rate hike, the first one in nearly a decade but added the market's focus should not solely be on the timing of the first rate rise. >> the path after lift-off is more important than lift-off per se. there's a lot of reasons to think that's going to be a gradual path and the flc has said that in a statement and i agree with that. >> reporter: mester characterized the labor market as near full employment. in washington the house of

representatives passed a bill that would make it harder for syrian refugees to enter the united states. the legislation would suspend the president's program to admit 10,000 refugees next year. 47 democrats backed the bill that broke with the president, who has threatened to veto the measure and the bill now goes over to the senate. there were major developments in the paris terror attack investigation. a french prosecutor announced today that the man they believed organized friday's attack is dead, killed in a s.w.a.t. team raid yesterday. michelle caruso-cabrera reports tonight from paris. >> reporter: 24 hours after that violent police raid in northern paris, prosecutors announced today that they found abdelhamid abaaoud dead in the rubble, his body riddled with bullets, and that they identified him by his fingerprints. we're also learning a lot more about the female suicide bomber in that raid. the woman who detonated a vest loaded with explosives was

27-year-old hafna abolechen. belgian media reports she posted this photo of herself on social media. according to the associated press, three police officials have told them she was abaaoud's cousin. her voice can be heard on this videotape obtained by french tv station tf-1. it was recorded by a neighbor at the height of the raid. also today in the lower house of parliament mps voted overwhelmingly to extend the current state of emergency to three months and also to give increased power to the police, including allowing them to put people under house arrest for dangerous attitudes. that vote will be taken up by the senate later this week. it is widely expected to pass. but many in paris are determined to live their lives before, as in their words to not let terrorism win. for example, today was the annual launch of the beaujolais

nouveau. that's the young wine that's introduced every year at this time. it's a huge cultural event in france. >> we decided to maintain the festivities because what happened on friday in paris in a way was an attack on french culture, on the french way of life, and we felt that the best way to respond to terrorist attack is to show that no, they won't change our way of life, they won't change the values. >> reporter: and it doesn't appear that tourists are staying away. we saw them all day here at the eiffel tower. for "nightly business report" michelle caruso-cabrera, paris. attention today turned to brussels, where belgian police conducted a series of raids and arrested two people in connection with the paris attacks. seven others were questioned. julia chatterly has been following the developments from brussels. >> reporter: the key question here in brussels tonight is who are the nine suspects we believe are being held in police

custody? a product of nine sefrpt raids that took place earlier today across brussels and in the surrounding regions. what i can tell you is the vast majority of those raids were very much focusing in on known associates of one of the suicide bombers from the paris attacks. it's a man called bilal hadfi. and i can tell you his relationship to brussels and belgium is that he lived here. in fact, his family still do live here. but he's not the only connection. in fact, the man believed to be the mastermind behind those paris attacks and the man killed yesterday in the raids in paris also lived here in brussels. in fact, he lived in a region called molenbeek, and that's actually where i am now. i'm in a central square. you can see the town hall here behind me. and this region has been described to me as the jihadist capital of europe. it's got an 80% muslim population. it's got an incredibly high unemployment rate. and the authorities have been criticized for not doing more

socially but also not doing enough to clamp down on the extremist radicalization activities that are believed to take place here. what the prime minister of belgium told us earlier is we're going into crease security, we're going to increase surveillance. and i think the raids that we saw this morning are all going to be part of that process. so we saw nine raids. we believe we've got nine suspects now in police custody. the question is who are they and what if any is their connection to those attacks in paris last friday? we wait and see. for the "nightly business report" i'm julia chatterly in brussels. still ahead, tough new rules from the treasury department that could throw a curveball at a potential $150 billion deal. ♪

♪ the treasury department is cracking down on so-called corporate tax inversions, a process in which companies reincorporate in lower tax nations abroad but continue their domestic operations. eamon javers is in washington with more on these just-issued rules. eamon, this is a very timely story because earlier today we hear that the talks between allergan and pfizer are heating up. that would be potentially i guess the biggest of the -- what has the treasury department said? >> well, it could be, and that's a potential deal that's waiting out there in the wings. treasury officials briefed reporters earlier this afternoon on this, and they wouldn't answer any specific questions about pfizer, allergan, and what these new rules mean for that particular deal. they say they do this without any company specifically in mind. but let me bring you the highlights or sort of the meat on the bones of what is in these new rules, the so-called treasury notice that was issued today.

among them they say the new rules will limit the ability of u.s. companies to combine with foreign entities using a new foreign parent located in a third country. they also say they'll limit the ability of u.s. companies to inflate the new foreign parent corporation size and therefore avoid what's known as the 80% ownership rule, and they'll also require the new foreign parent to be a tax resident of the country where the foreign parent is created or organized. all of this, tyler, is all about making these deals less appetizing for u.s. companies and protecting the u.s. tax base. treasury officials very concerned here that american companies are doing this too often and they want to stem the pace of u.s. companies going overseas for tax reasons. >> if they wouldn't talk about the potential pfizer allergan situation and how this might apply, did they at least talk about when, what kind of a timetable this might go into effect? because that might affect any pfizer-allergan linkup. >> they did. and that gives you your big clue.

they said all of these rules will be in place as of today. that is, the press conference that they held over the phone was just before 5:00 p.m. this afternoon. so presumably any deal, any transaction that takes place after that time including possibly pfizer-allergan would be influenced by these new rules. that means they'd have to go through these with a fine-toothed comb and make sure that deal still makes economic sense. there are a lot of reasons why they might still want to go through with it, but this is something the treasury says they need to do in order to stop these companies from moving overseas for purely tax reasons. >> all right, eamon, thanks very much. eamon javers reporting with the latest from washington. one of silicon valley's hardest start-ups made its wall street dedue bu today. payments for square rose above its ipo price of 9, which was below its projected range of $11 to $13 a share. some investors are concerned about square's increasing competition which we told you about last night. but ceo jack dorsey is quited

about square's future. >> we really want to accelerate our tools out to sellers all over the world. and a big part of our future is really around this device that we announced, our new reader that accepts apple pay and emb. we want to accept that square shape where you can pay with your phone. we think it's a beautiful experience. cuts back on transaction time. and just feels great. >> shares of square surged 45%. and the online dating service match also began trading today after price at the lower end of its expected range. the company's a spinoff from the internet holding company iac interactive and it owns names like tinder and ok cupid. in an interest view today ceo greg blat explained how the company is evolving. >> traditionally our business makes most of its money from subscription revenue. advertising hasn't been a big focus. but as our business model has evolved over time while we've been growing our paying users a lot, we've also grown our audience of non-paying users.

now we've got 55 million people a month that don't pay us, but we have highly targeted demographic information, age, gender, geography, education, et cetera. so it's a really great audience for us. and you know, we've done some tests this year in our ad side, and it's really exciting for people. and we think it's going to be big business. >> shares of match were 22% higher today. best buy is forecasting a rather slow holiday season, and it posted lower than expected quarterly results and comparable sale same-store sales. the company expects revenue to decline at a low single-digit percentage rate in the current quarter. and that of course raised doubts about its turnaround. and as you can see there, it pressured the shares, which fell 2%. courtney reagan has more on the numbers and what the ceo told her. >> reporter: well, best buy's latest results weren't blockbuster. the consumer electronics retailer did outperform the broader industry. best buy beat earnings estimates, but its revenue was merely in line with

expectations. comparable sales at u.s. stores increased only marginally and less than analysts had forecast. but the electronics reerltd highlighted faster year-over-year growth online, saying free two-day shipping, searchability of clearance inventory, and online-only flash sales were among the drivers. i spoke to ceo hubert jolie on the phone who is in high spirits. summing up the results of this quarter and quarters prior by saying, "we at the company feel that we are crushing it." jolie said that while results across retailers have been uneven he has a "very positive view of the growing demand over time for technology products and services." industry tracking group npd predicts consumer electronics demand will fall in the fourth quarter. best buy expects its comparable sales to be flat. when it comes to the view on the health of the u.s. consumer going into the holiday season, jolie talked about the uneven reports from retailers. strength in some places, weakness in others. but ultimately, jolie told me "it's less about the psyche of the consumer and more about having the right products and the experience." getting into product specifics,

jolie again expects demand for 4k tvs to be strong. i asked him about the cost of broken 4k tvs before they reached consumers' homes. and he said "4k tvs are very fragile, very thin, very large. the risk of damaging them in the supply chain or from the store to the shipping center to the customer is very high. so you should have the geek squad install them for you. i wish a lot of look to our competitors to take a crack at this." when i asked him about the demand for the new apple products from iphones to ipad pro to apple watch going into the holiday season, jolie said, "i can provide you tim cook's e-mail and phone number." for "nightly business report" i'm courtney reagan. intel hike its dividend, and that's where we begin tonight's market focus. the dow component's new quarterly payout will be 26 cents a share. the company also updating its guidance, saying it expects revenue to grow again next year. shares today up about 3 1/2% to 34.30. the activist investor starboard value is putting pressure on yahoo!. the firm sent a letter to the

company saying it should abandon its planned spinoff of its stake in alibaba and instead sell its core internet business saying the risks of the spinoff are just too high. shares were off 1% to 32.62. and jm smucker, always like to talk about them, reported earnings that easily beat estimates but revenue missed consensus. the food company's bottom line was helped by its purchase of big heart pet brand, improved coffee sales. with a report like that smuckers' shares had to be good. they jumped to 121.28. >> i should have seen that one coming. >> you knew it. san francisco is suing american express for anti-competitive and alleged illegal merchant restraints. that civil suit follows a court decision earlier this year where the justice department ruled that some of the credit card's practices restrained trade. shares were a fraction higher to 72.74. gap cut its earnings projections for the full year because sales fell more than expected. the retailer's same-store sales

fell about 4%. its banana republic unit has been its worst performing. shares slipped in initial after-hours trading but during the regular session the stock was still off about 1%. and the grocer fresh market. store closures weighed on its results. it comes after the firm said recently it might weigh a potential sale of its business. shares were little changed in initial after-hours trading. during the regular session the stock was off more than 6%. coming up, ripple effect. the fantasy sports industry is facing big challenges, as you may well know. and other companies in other sectors could feel the impact as well. ♪ ♪

here is what to watch tomorrow. volkswagen faces a deadline to tell regulators here in the u.s. how it plans to fix nearly a half million diesel cars that don't meet emissions standards. and we'll hear from some prominent members of the federal reserve. i thought they were all pretty prominent, sue. that's what to watch tomorrow. massachusetts wants to ban people under the age of 21 from playing daily fantasy sports. the state's attorney general is also proposing tighter regulations including a ban on advertising or promotion of the contests at schools or college campuses. the massachusetts attorney general didn't go as far as new york's and stopped short of calling the games illegal. draft kings, one of the biggest daily fantasy sports sites, is based in boston. comcast ventures and nbc sports ventures have stakes in rival fan duel. comcast is the parent company of

cnbc, which produces this program. >> draft kings and fan duel are spending more money on legal fees as their challenges mount. and that could mean less money spent on all those advertisements. our julia boorstin takes a look at the companies that may feel the impact. >> reporter: legal challenges to draft kings, fan duel, and yahoo! sports could force the fantasy sports giants to shift tens of millions of dollars from advertising to legal fees and they raise questions about the long-term viability of daily fantasy. >> draftkings.com. >> reporter: these companies spent between 140 and 175 million dollars on ads in the third quarter. according to nomura analyst anthony de clemente. that means a range of companies could feel the impact from a cutback in ad spending. and now draft kings is reportedly asking tv partners to delay payment schedules. >> we've seen of lot of these ads on espn but you've seen them all over the football games on

fox, on cbs, and sports has been, you know, a really healthy part of the market. so you know, the impact's going to be noticeable at these networks if these guys go away. >> reporter: fantasy sports represented about 2% of the big four broadcasters' revenue in the third quarter. but they represented more than half of their advertising growth in the quarter according to bernstein estimates. >> if you look at something like espn, i mean, they were growing advertising normalized at a 9% clip in the september-ending quarter. and probably a couple of percentage points of that was tied to the services. so it's still good growth but not quite as good if you strip these guys out. >> reporter: in september alone 7% of espn ad dollars came from fantasy sports. followed by fox with 6%, espn 2 with 5%, and cbs with 4%, according to moffett nathanson. yahoo! facebook, google, and twitter are also exposed with an

estimated 40% of fantasy sports ad spending going to digital. fan duel tells us, "our advertising spend is seasonal. it peaks at the beginning of the nfl season and declines as the season goes on." fan duel says it shifted spending toward fantasy sports for all, a group petitioning to keep the business legal. draft kings tells us it's been scal of the nfl season and they're discontinuing ad channels that are not performing well. for "nightly business report" i'm julia boorstin in los ange and that's it for us. i'm sue herera. >> and thanks for watching. we'll see you back here tomorrow night. ♪

woman: it kind was, like, the bang that set off the night. man: that is the funkiest restaurant. man 2: the honey-walnut prawns will make your insides smile. woman 2: more tortillas, please. man 3: what is comfort food if it isn't gluten and grease? braff: i love crème brûlée. sobel: the octopus should've been, like, quadropus because it was really small. sbrocco: and, you know, when you split something, all the calories evaporate and then there's none. man: that's right. yeah.