DealBook Briefing: Will Time Inc. Get Smaller Under New Ownership?

Good Monday morning, where we’re thinking about mergers — including those outside the business world. We’re curious about whether Meredith will sell off Time Inc.’s news titles like Time and Fortune. And we’re closely watching the leadership battle at the Consumer Financial Protection Bureau, which is headed to court.

Now that Meredith has officially announced a $2.8 billion deal to buy the beleaguered publisher — with a $650 million assist from the Koch brothers — the media industry is asking which parts will stay and which parts will go.

Analysts had long seen Meredith, which publishes Family Circle and Better Homes and Gardens, as being most interested in People, Time Inc.’s most profitable title. The more news-focused publications upon which Time Inc. was built, including its namesake magazine and Fortune, have traditionally been less of a focus for Meredith.

If Meredith decides to sell those news publications, who would buy them? The smart money is on a vanity buyer — perhaps from the same universe of investors who are pursuing Rolling Stone, which we hear could be sold as soon as this week.

The Koch angle

Take note of this disclaimer about Koch Industries’ private equity arm:

A spokesman for Koch Industries told the NYT that the financing was a “passive investment.” But that hasn’t stopped people from wondering if the prominent donors to conservative causes would somehow use Time Inc. as another vehicle for their political activism. One possibility, according to the NYT: tying Time Inc.’s consumer data with the voter information held by the Koch-owned data analytics company i360.

The Trump angle

There was controversy over President Trump’s assertion that he turned down the chance to be named Time’s Person of the Year and the magazine’s rebuttal.

Critics corner

• Peter Kafka writes, “The main question remains: Why do the Kochs want to get into the publishing business?” (Recode)

• Jennifer Saba writes of the transaction, “It’s a lucky break because a go-it-alone strategy looked doomed. Bountiful cost savings, however, will go to the buyer and its new billionaire backers.” (Breakingviews)

Extra credit: Meet Reade Browder, the man who controls Maine’s newspaper industry.


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


Is it Leandra English, the deputy director of the bureau and the chosen successor of the now-departed chief, Rich Cordray? Or is it Mick Mulvaney, appointed by Mr. Trump to lead the agency on an interim basis?

Ms. English sued the president late last night to prevent Mr. Mulvaney from taking over. But the C.F.P.B.’s own general counsel, Mary McLeod, backed a legal memo from the Justice Department supporting the White House move.

At stake is the effectiveness of a bureau that Mr. Trump has publicly derided:

The stakes were already high. Mr. Mulvaney is on record as having called the bureau a “sad, sick joke,” leading many to suspect that, should he take charge, would seek to unwind Obama-era initiatives meant to protect financial consumers — and that have infuriated the banking and lending industries.

Now those same industries are worried about the uncertainty that has descended upon the bureau. Coverage by Yuka Hayashi of the WSJ:

While the Justice Department battles AT&T over its proposed takeover of Time Warner amid questions about political motivation, Mr. Trump weighed in again on CNN:

That’s when the Senate Budget Committee is scheduled to vote on moving the proposal to the floor. Axios notes that two undecided Senate Republicans, Ron Johnson of Wisconsin and Bob Corker of Tennessee, sit on that committee.

But the big question remains: Can the Senate majority leader, Mitch McConnell, prevent no more than two of his colleagues from voting against the tax bill? Mr. Johnson and Steve Daines of Maine worry that the current legislation favors big corporations over small businesses. Susan Collins of Maine has expressed worry over health care and deductions for state and local taxes.

Senate negotiators are weighing changes to please those holdouts, according to the WaPo. But Axios notes that the prevailing wisdom in Washington is that Republicans’ worries about failing to pass a tax change could push potential dissenters into backing the legislation.

The tax flyaround

• A new analysis of the Senate plan by the Congressional Budget Office finds that, by 2027, households earning less than $75,000 would be worse off, and that the proposal would add $1.4 trillion to the national debt. (WaPo)

• Republicans worry that the two Goldman Sachs alumni selling the tax bill for the White House, Gary Cohn and Steven Mnuchin, have not been effective pitchmen to middle-class Americans. (Politico)

• Economists at Goldman reckon that the current tax proposals could prod about 2 percent to 4 percent of top earners in New York City to move elsewhere. And it could lower home prices by restricting deductions for property taxes.

• The Communications Workers of America union has asked several companies that employ its members to promise to give workers a pay increase if the cut in the corporate tax rate goes through. (NYT)

The digital currency rose as high as $9,682 this morning, as part of its lightning-fast ascent in value in recent weeks. A month ago, it was trading below $6,000.

So far, Bitcoin observers are bullish on a continued jump in value because of investor FOMO:

• Chris Weston, the chief market strategist of IG Group, told clients today, “Bitcoin has seen another frenzy of buying as the fear-of-missing-out trade bites even harder.”

• Shane Chanel of ASR Wealth Advisers told CNN Money that he thinks the currency could hit $12,000, adding, “Greed will continue to drive the price over the short term.”

About those initial coin offerings …

Joe Grundfest, a former Securities and Exchange Commission official who now teaches at Stanford, thinks that the virtual currency sales being held by scores of companies are potentially rife with fraud and wants the agency to regulate them. Here’s what he told Nathaniel Popper of the NYT:

Foot traffic at brick-and-mortar stores was down 4 percent from the period a year ago, according to RetailNext. But online sales rose yet again, amid a battle between Amazon and Walmart — and things were anything but quiet at the warehouses that service e-commerce operations.

From Sarah Nassauer and Laura Stevens of the WSJ:

Extra credit, retail edition

• Sarah Halzack writes, “If I were a retailer, I would tune out the funeral dirges being played for Black Friday and listen instead to what I assume your sales numbers are telling you: The occasion is still critically important.” (Gadfly)

• Jeff Bezos’s net worth surpassed $100 billion on Black Friday. He’s the first person to hit those heights since Bill Gates did in 1999. (Bloomberg)

• A tale of two Sears locations, one representing its dismal present and one marking what the retailer hopes is its brighter future. (NYT)

• Amazon is courting vendors in India to sell on its platform. (NYT)

This week, Barron’s takes a look at how markets in China, Russia and India have been outperforming the United States:

• Boris Collardi, the C.E.O. of Julius Baer, unexpectedly defected to a rival Swiss bank, Pictet. (FT)

• Robert Lu, the ChemChina executive who spearheaded the company’s $44 billion takeover of Syngenta, has joined China Reform Holdings. (FT)

• Harvey Schwartz, Goldman’s C.F.O. and a potential successor to Lloyd Blankfein, has a reported tendency to “mark to market” his underlings — meaning that, in accounting terms, he assesses their value to his objectives and treats them accordingly. (NYT)

• The Chinese conglomerate HNA Group gave incorrect information about two of its stakeholders in its offer prospectus for its $1.5 billion deal to acquire the Swiss air-travel logistics company, Gategroup Holding, the Swiss Takeover Board found. (WSJ)

• Uncertainty over the Affordable Care Act and the threat of companies like Amazon are prompting health organizations to expand, creating ties with former adversaries. (NYT)

• Alex M. Azar II, President Trump’s nominee to lead the Department of Health and Human Services, is expected to face tough questioning at a Senate confirmation hearing, about why Eli Lilly and Company raised its prices while he was there. (NYT)

• At Etsy, a new chief executive and a new focus on profitability have sapped the enthusiasm of many employees. (NYT)

• Chinese tech shares seem to be setting up for a classic burst-bubble, John Authers writes. (FT)

• One of the ironies of the global financial crisis: A decade later, a panic with origins in the United States has made the dollar more globally important than ever before. (WSJ)

• Growth in the amount of money being lent by banks is slowing, even as signs point to a more buoyant economy. (WSJ)

• ICYMI: A new school in East Palo Alto for children from low-income families, funded by the Chan Zuckerberg Initiative, has been met with wariness, and some families have blamed the school for their recent evictions. (NYT)

• Tencent rose to become a $500 billion company fueled by a culture of internal competition. Now those teams are working together to synchronize data and deliver targeted ads, with the aim of becoming a commercial powerhouse like Facebook. (Bloomberg)

• Who gets to make money in space? The Outer Space Treaty may now be getting in the way of entrepreneurs. (NYT)

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