Coming up: Join DD’s Robert Smith for a look back at some of the most high-profile accounting scandals in recent years with Carson Block, the short-seller behind Muddy Waters Research. Be sure to register here.
‘MAGA’ M&A: investors target TV for Trump fans
After 14 seasons of The Apprentice, Donald Trump is no stranger to the small screen.
And as his time in the Oval Office draws to a close, the glossy early-aughts reality programme may not be the last television stint for the US president.
Trump’s public falling-out with Fox News, whose ratings he helped bolster as one of its biggest fans over the past four years, has left investors wondering whether a rumoured Trump-led television network could finally take on Rupert Murdoch’s conservative empire, the FT’s Anna Nicolaou, Alex Barker, and DD’s James Fontanella-Khan report.
Though his post-presidency plans remain in flux, there are a few ways this could go. If Trump were to launch his own network, it would cost hundreds of millions of dollars. Alternatively, he could get in on the dealmaking action that has already been ignited as a result of his feud with Fox.
Hicks, the private equity group co-founded by Texas billionaire and Trump supporter Tom Hicks, has already set its sights on Newsmax and One America News Network, two niche rightwing rivals of Fox News.
The Dallas buyout shop has held talks with Republican National Committee finance chair Todd Ricketts about working together on an acquisition of Newsmax or OANN, seeking to capitalise on a chunk of Fox’s audience that is beginning to view the network as “too moderate”, according to insiders.
“Fox is trapped in the middle of trying to be both Trump TV and CNN,” said one person familiar with Hicks’ thinking.
As Trump tuned out Fox, so have his most fervent supporters, fuelling a surge in ratings for Newsmax and OANN.
But even as new viewers trickle in, the conservative contenders are still dwarfed by Fox, which has grown to become the most-watched basic cable channel in the US, garnering 13.7m viewers on election night. Newsmax’s audience peaked at about 600,000 as the votes rolled in.
Trump has also voiced interest in a digital-only streaming platform, a move that would challenge Fox Nation, the $6-a-month streaming service run by Fox, which offers on-demand programming from some of the president’s biggest on-screen allies including Tucker Carlson.
The most cost-efficient route may be no Trump TV at all. “He could easily make $40m a year,” said one former senior Fox executive on the prospect of Trump hosting a show for the network or another conservative outlet.
And with the dealmaking heating up around new rightwing media players, there may be more than one network courting Trump for a primetime spot.
Chinese SOEs put out an SOS
Beijing has warned of a crackdown on financial misconduct, in the wake of bond defaults by state-owned enterprises that have shaken the Chinese debt market.
Authorities will show “zero tolerance” for illegal behaviour around bond financing, ranging from “malicious” transfer of assets to misuse of funds, said vice-premier Liu He at a meeting for the committee that oversees China’s financial sector.
Potential defaults by Yongcheng Coal and Electricity Holding Group, which missed three debt payments earlier this month, have shattered the widely held belief among Chinese investors that state-backed companies have little risk because of an implicit government guarantee.
The once highly-profitable company this week faces potential defaults on Rmb26.5bn ($4bn) worth of bonds. Chinese regulators are investigating securities companies and banks for possible wrongdoing in connection with the default. Read up here.
Yongcheng’s potential defaults come at a time when the Covid-19 pandemic is causing some state-owned enterprises to struggle financially, raising questions for investors about the government’s willingness to step in to help them.
Earlier this month Brilliance Auto, a carmaker owned by the Liaoning provincial government, announced it would not be able to repay a three-year Rmb1bn bond, and the state-backed semiconductor company Tsinghua Unigroup defaulted on a Rmb1.3bn ($198m) bond.
That’s forcing a rethink for some investors. “Our investment decision had been based on the belief that triple-A rated state firms are safe investments regardless of their fundamentals,” the chief ratings officer at a Shanghai-based bond fund said this month. “That’s no longer the case.”
Having received tens of billions of dollars in government support as President Xi Jinping’s administration increases efforts to build a self-reliant semiconductor industry, Tsinghua’s plight has been especially damaging to Beijing’s quest to break free from US technology. (DD recommends this episode of the FT’s Behind the Money podcast for a deeper dive into China and America’s unravelling technological ties.)
As these huge state-backed groups struggle, vultures are circling for scraps. Yongcheng Coal and Brilliance Auto’s defaults have triggered a plunge in prices of state-backed corporate debt, enticing distressed specialists to place “significant” purchase orders on bonds issued by struggling Chinese companies.
Securities and insecurities: the life of a rookie investment banker
Have you slept in a toilet cubicle? Been humiliated for wearing a shirt with a pocket? Agonised over the font size in a pitchbook?
If so, Industry, an HBO-BBC series that seeks to portray the reality of life for banking’s graduate trainees, might feel familiar. Its co-creators, Mickey Down and Konrad Kay, worked in M&A and equity sales, respectively. So they understand both the securities and insecurities involved.
The show (below) is gripping, filled with sex and drugs, and — according to many City workers — is pretty accurate.
“This is the closest to reality I’ve seen,” Bilal Hafeez, a former research analyst at JPMorgan Chase, Deutsche Bank and Nomura told the FT’s Henry Mance. Catch up with the full interview here.
The writers insist that they haven’t portrayed the City as “black and white” or “fundamentally evil”.
“There’s always a tendency in art to go for the most base version of these people and not to humanise them and to make them feel cold,” says Down. “I looked around where I worked and saw all these different types of people.”
Banks have changed since 2012-13, when Down and Kay left the financial sector. But think of it this way: if you’re wondering whether the City is for you, Industry will probably give you a better answer than any careers fair.
BNP Paribas Asset Management has hired Stéphanie Passet as chief investment officer for infrastructure debt and Romain Linot as chief investment officer for real estate debt. Passet previously worked at Crédit Agricole, and Linot at Aviva Investors.
Houlihan Lokey has hired Tom Goldrick as a managing director and head of M&A tax services. He joins the group’s Chicago office after spending 13 years at KPMG, most recently as a managing director in its tax practice.
Misadventures in capitalism In its insatiable hunt for unicorns, the VC industry has poured billions of dollars into companies that can’t live up to the hype (see: WeWork). But hurling cash at start-ups is the only way to outpace rivals in Silicon Valley’s ultra-competitive bubble, some venture capitalists argue. (The New Yorker)
Made in the USA China’s surveillance state is powered by more than just the Communist party. The vast nexus of cameras and data centres enabling the suppression and mass incarceration of Uighur Muslims and other minorities within the Xinjiang region operates on chips made by American tech groups Intel and Nvidia. (NYT)
Movin’ on out More than 160 New York executives including those of BlackRock and Goldman Sachs in a letter urged the Trump administration to begin a transfer of power, concerned that the US president’s refusal to accept the election results puts the country’s public and economic health at risk. (FT)
Game of Thrones Hong Kong’s ascent to become Asia’s prime financial hub has been thrown into question as Ant Group’s massive IPO remains in purgatory and political unrest destabilises the region. Singapore and Tokyo have spied an opportunity, but taking on China will be no easy feat. (FT)