DealBook Briefing: Will CBS and Viacom Make It to the Altar?

Good Friday morning. CBS and Viacom are weighing a merger, again. How four big “A” tech giants fared in earnings reports yesterday. And what Gary Cohn told G.O.P. lawmakers about the White House’s infrastructure plans.

Both boards have agreed to form special committees to consider a merger. It’s a big step toward a reunion of the two companies, which split in 2006.

The context

• Shari Redstone, who with her father controls the two companies, has pushed since 2016 to bring them back together.

• Disney’s deal for the bulk of 21st Century Fox has again left media companies wondering whether bigger might not only be better, but necessary.

• The CBS chief, Les Moonves, is more open to a deal than the last time, though still wary.

The big question: Could another company like Verizon jump in as a spoiler?

Critics’ corner

• Tara Lachapelle writes: “CBS isn’t safe from the industry’s broad ratings pressure and subscriber declines, which is why scale is important. Viacom won’t provide enough of it, but it will offer substantial cost-saving opportunities.” (Gadfly)

• The analyst Rich Greenfield writes: “CBS needs far greater scale and a recombination with Viacom is the most logical first step, albeit only a first step with several follow-on strategic moves needed (acquisitions or merger with an even larger entity).” (BTIG)

The media flyaround

• BuzzFeed is in talks with the Emerson Collective, Laurene Powell Jobs’s investment vehicle, about an investment in BuzzFeed News, according to unnamed sources. (FT)

• The publisher of Newsweek and the International Business Times bought website traffic and engaged in ad fraud, according to a BuzzFeed investigation. The publisher denies fraud. (BuzzFeed)


Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.


The big takeaways from the big tech earnings day yesterday:

• Apple sold fewer iPhones than expected in the quarter, but at higher prices, so profit was up 12 percent anyway. And it plans to spend almost all of its fabled cash hoard — perhaps on a combination of buybacks and a big deal.

• Amazon more than doubled its profit from a year ago, to $1.9 billion. This was the first time its earnings have surpassed $1 billion in a quarter.

• Alphabet reported a $3 billion loss, in part because of the tax law. But its results disappointed because of rising costs: It’s spending to capture market share in smartphone searches.

• Alibaba’s profit rose by a third, as the Chinese internet giant offered more and better services to vendors.

Critics’ corner

• “Investors are warming to this less highflying but still steady version of Apple,” Shira Ovide writes. (Gadfly)

• As Amazon’s third-party marketplace and ad division boom, “Some of the nearly $700 billion internet retailer’s fastest-expanding — and most profitable — businesses could be ones that irritate users,” Robert Cyran writes. (Breakingviews)

• “It wouldn’t hurt Alphabet to put more energy into revenue sources that don’t start with a G,” Jennifer Saba writes. (Breakingviews)

The tech flyaround

• Does Aramco want to be valued as a tech company in its forthcoming I.P.O.? (WSJ)

• Amazon’s patents for worker-prodding wristbands: the beginning of a dystopia? (NYT)

• HQ Trivia, the game that people cooler than us are playing, is raising $15 million in a new round led by Founders Fund at a valuation of $100 million, according to unnamed sources. (Recode)

Here are the numbers:

• A €2.2 billion net loss for the fourth quarter

• A €1.4 billion charge from the U.S. tax overhaul

• A €500 million net loss for the year

What else has made investors unhappy:

• Higher-than-expected expenses

• Double-digit drops in revenue in three divisions

Critics’ corner

• Michael Huenseler of Assenagon, a German asset manager, said, “The results are disappointing again and we don’t see anything encouraging in them, reinforcing our doubts in the bank’s strategy and management.” (Bloomberg)

• Christopher Thompson writes, “Last month’s profit warning meant investors knew what was coming, but Deutsche still managed to give them an unpleasant surprise.” (Breakingviews)

The Chinese conglomerate has about $90 billion in debt from splashing out on things like Deutsche Bank and Hilton Hotels. Its borrowing costs are going up, and asset sales are becoming necessary — it’s under the gun to find more money.

Which is why it appears to be asking employees for cash, according to Alexandra Stevenson and Cao Li of the NYT:

The White House adviser told Republican lawmakers at a retreat this week that infrastructure could be paid for in part by a new gas tax, according to Axios.

But Jonathan Swan of Axios has heard skeptical noises:

The policy flyaround

• President Trump has cleared a path for House Republicans to release a contentious secret memo on the surveillance of a campaign aide, over the F.B.I.’s objections. (NYT)

• And he’s pressing Democrats to strike a compromise on the young immigrants known as Dreamers. (NYT)

• Jim Stewart analyzes the president’s economic claims and says it’s too early for him to declare success. (NYT)

• How business is trying to step into a void left by government. (NYT)

• The Trump administration’s proposal to let terminally ill patients try experimental medicines without additional liability for drug makers — known as “right to try” — excites libertarians, but has strong critics. (Politico)

• The Blackstone Group and Apollo Global Management beat earnings expectations, thanks to their seemingly unstoppable fund-raising. (FT)

• Steve Schwarzman of Blackstone offered this assessment of Masa Son of SoftBank: “He’s an outlier in terms of his — not to beat the phrase — vision.” (Bloomberg)

• Speaking of SoftBank, executives from its Vision Fund say they have a time frame of up to 300 years. That’s not a typo. (Axios)

• Elliott Management is posting printed presentations to fellow shareholders of the chip maker NXP as part of its campaign to push up Qualcomm’s takeover offer. (Reuters)

• AT&T is exploring selling its data centers, according to unnamed sources. (WSJ)

The company’s co-founder and C.E.O., Brian Chesky, couldn’t have put it more plainly in a statement: “Let me address this directly. We are not going public in 2018.”

It’s also tricky to I.P.O. without a C.F.O., and Laurence “L.T.” Tosi is leaving the company after disagreeing with Mr. Chesky over both strategy and tactics. Mr. Tosi, who previously worked at the Blackstone Group, was meant to provide Wall Street experience.

Airbnb has hired an executive search firm to find a replacement, and has named Belinda Johnson, its top business operations executive, as chief operating officer.

They want to avoid government oversight and show the world what a crypto-utopia looks like.

More from Nellie Bowles of the NYT:

Virtual currencies lost $100 billion in 24 hours

Regulators had a lot to do with it.

India joined in the clampdown on Thursday, with its finance minister, Arun Jaitley, saying his government did not recognize digital money as legal tender and would “take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.”

Where Bitcoin’s at: About $8,400, having dropped nearly 14 percent over the past 24 hours, according to

Another source of regrets: The organizer of the North American Bitcoin Conference is sorry about hiring a strip club for a networking event.

• Kazuo Hirai is stepping down as Sony’s C.E.O. after six years, but will become chairman. His old job is going to the C.F.O., Kenichiro Yoshida. (WSJ)

• British officials are secretly considering a customs union deal covering trade in goods with the E.U., according to people familiar with the discussions. (FT)

• The University of Pennsylvania revoked Steve Wynn’s honorary degree and stripped his name from a campus plaza and scholarship. It also revoked an honorary degree for Bill Cosby, something it had declined to do in 2015. (NYT)

• The advertising agency Droga5 fired its chief creative officer, Ted Royer, after telling its staff that it had hired an outside firm to investigate him. (NYT)

• The chairman of Guess, Paul Marciano, has denied any misconduct after being accused of sexual harassment by Kate Upton. (Bloomberg)

• Wells Fargo agreed to disclose the gap between what it pays men and women, as well as disparities affecting minority groups. (Bloomberg)

• The French dairy giant Lactalis has pulled over 7,000 tons of potentially contaminated baby formula and other powdered milk products from shelves across more than 80 countries in one of the biggest recalls of its kind, which has highlighted lax oversight and weak reporting standards. (NYT)

• India plans to give half a billion poorer citizens free health care. (NYT)

• Britain has been a pioneer in outsourcing public services to private contractors, but cracks in its system are becoming apparent. (NYT)

• Why is pay lagging in a tight job market? Possible culprits include lower unionization, constraints on competition and automation. (NYT)

• Rick Rieder, the manager of BlackRock’s Strategic Income Opportunities bond fund, wants it to be a steady winner that doesn’t take any big bets. (Bloomberg)

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