DealBook Briefing: BlackRock’s Larry Fink Goes Social Activist

By January 16, 2018 Ripple
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Damon Winter/The New York Times

Good Tuesday morning, and welcome back. This just in: G.E. shares are falling in premarket trading after the company said it would take a $6.2 billion charge tied to its GE Capital unit. A reminder: Citigroup reports fourth-quarter earnings today. And BlackRock wants corporate America to focus on positive social contributions as well as profits.

What’s happening: Larry Fink of BlackRock is sending a letter to C.E.O.s of public companies today saying that they must show how they contribute to society, or risk losing the money-management firm’s support.

More from the letter:

The leverage: BlackRock has $6 trillion under management, making it the biggest investor in public companies in the world.

The context, from Andrew’s latest DealBook column: Mr. Fink’s letter pits the investment mogul “against many of the companies that he’s invested in, which hold the view that their only duty is to produce profits for their shareholders, an argument long espoused by economists like Milton Friedman.”

The assessment: Jeff Sonnenfeld of the Yale School of Management told Andrew, “It is huge for an institutional investor to take this position across its portfolio.” Mr. Sonnenfeld added that he’s seen “nothing like it.”

More in corporate social activism

• Citi said it would measure, publish and address gaps in the pay between male and female employees in the U.S., Britain and Germany, after pressure from an investor. (Bloomberg)

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

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Senator Elizabeth Warren, left, with Senator Heidi Heitkamp.

• Eleven Democratic senators, including Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana, are backing a Republican-led effort to loosen financial regulations, in the biggest overhaul yet of Dodd-Frank. (NYT)

• Lawmakers are no closer to avoiding a government shutdown over spending and immigration issues, and President Trump’s immigration comments haven’t helped. (NYT)

• American intelligence officials warned Jared Kushner that Wendi Deng Murdoch, a friend to him and to Ivanka Trump, may have been using her relationship with them to advance Chinese government interests, according to unnamed sources. (WSJ)

• The burger chain Sonic shows the difficulty of being a progressive C.E.O. in the Trump era. (NYT)

• There’s an explosion in financing for nascent chip makers, thanks to the rise of artificial intelligence. (NYT)

From left, Jessica Alba, Gary Vaynerchuk, will.i.am, Gwyneth Paltrow, and Zane Lowe, stars of “Planet of the Apps.”

Raine — the merchant bank that invested early in Vice and counts Masa Son and Steve Ballmer as clients — has invested in Propagate Content, the studio that produced the first original series for Apple and Twitter. (Propagate’s co-founders are Ben Silverman, once co-chairman of NBC Entertainment, and Howard T. Owens, who was president of National Geographic Channels.)

The thesis: That content is more important than ever in an era of online streaming. Raine’s betting that Propagate, which is also turning popular podcasts like “Lore” into streaming series and working on content for Netflix and CBS, can produce hits from a variety of sources and replicate them around the world.

The pullquote, from Raine co-founder Joe Ravitch:

In other media deals:

• Saudi Arabia’s Public Investment Fund is in talks to invest more than $500 million in Endeavor, the parent company of WME, as part of its push to diversify the kingdom’s economy, according to unidentified sources. (TheWrap, Bloomberg)

• Graydon Carter’s first project after Vanity Fair is an investment in Zig, a start-up described as Instagram for news.

From the venture capitalist’s blog post from this weekend, which has been making the rounds in Silicon Valley:

Mr. Wilson’s bottom line: Stock awards have a real cost — annual dilution of companies’ equity can be as high as 5 percent a year.

He adds:

The tech and telecom flyaround

• By potentially spinning out its Japanese cellphone business, SoftBank could raise as much as $18 billion for deals. (FT)

• Kuaishou, a video site backed by Tencent, is seeking a valuation of about $17 billion in its new round of financing. (Bloomberg)

A Ram 1500 truck at an assembly plant in Warren, Mich., in 2014.

Sergio Marchionne, the automaker’s outspoken C.E.O., made it clear that the company won’t sell its Jeep or Ram divisions or otherwise break itself up. But if that idea is “three years ago,” as he said at the Detroit Auto Show, what is his plan to compete with rivals who are diving headlong into autonomous vehicles?

From his interview with Bloomberg:

Mr. Marchionne also confirmed that this will be his last year leading Fiat Chrysler, with a successor to be named in March.

The Detroit Auto Show flyaround

• Automakers are celebrating their best ever three-year stretch, but they could be headed for choppier waters. (NYT)

• BlackBerry continued its push into the auto industry with a product to help carmakers detect software security flaws. (Bloomberg)

That’s an actual question posed in a private forum that was sent to us by a reader this weekend.

Your daily reminder of virtual currency prices, courtesy of CoinMarketCap:

• Bitcoin is at $12,288, down 11 percent over the past day.

• Ethereum is at $1,137, down nearly 15 percent.

• Ripple is at $1.45, down 22 percent.

And your daily dose of virtual currency skepticism, courtesy of Bloomberg:

The digital money flyaround

• The head of Singapore’s central bank said he hoped the technology underpinning Bitcoin and other digital currencies would outlast the current “fever.” (Axios)

• Nine hedge funds who had bet on Bitcoin made a 1,167 percent return last year — less than the virtual currency’s return but far more than the 8 percent that the hedge fund industry as a whole generated. (Bloomberg)

• China is escalating its cryptocurrency crackdown, and has blocked websites and apps that offer exchange-like services, according to unidentified sources. (Bloomberg)

• IBM has teamed up with Moller-Maersk to create a blockchain-based platform for the shipping industry. (Reuters)

• TechCrunch got hold of Telegram’s initial coin offering prospectus and learned that the messaging service wants to challenge Ethereum as a platform for services. (TechCrunch)

Mr. Bezos with, from left, the actors Matt Damon, Taika Waititi and Chris Hemsworth after the Golden Globes last Sunday.

— Margaret O’Mara, a professor of history at the University of Washington, on how the Amazon founder has been thrust further into the spotlight as his company has come under pressure.

• Spotify is threatening to upend Wall Street with its unusual public share listing. The banks involved will collect only a fraction of the usual fees for big initial public offerings. (WSJ)

• The e-commerce firm JD.com has kicked off a fund-raising round for its logistics unit with a target of $2 billion, according to people with direct knowledge of the matter. (Reuters)

• A Colorado pension fund is suing Canada’s top six banks and three other lenders. It has accused the banks of engaging in an “unlawful conspiracy” to boost their derivatives trading businesses by manipulating a key Canadian lending rate. (WSJ)

• The A380 superjumbo’s days may be numbered: Airbus said that it would have to end production of the plane if its only major customer, Emirates, did not order more. (NYT)

• The British government has been scrambling to contain damage after Carillion, the country’s second-largest construction firm, was forced into liquidation. (NYT)

• The consulting firm Mercer has agreed to buy the Japanese asset management company BFC in a bid to expand its reach into Asia. (FT)

• Greek lawmakers approved new measures demanded by international creditors, which included cuts to benefits for large families and restrictions on trade unions. (NYT)

• Private equity firms are introducing new policies to retain female staff, including paying for nannies to fly with women and offering to freeze eggs for free. (FT)

• Elliott Management has disclosed a 4.8 percent economic stake in Bezeq Israel Telecom, that country’s biggest telecoms group, calling for sweeping reforms to its governance. (Reuters)

• Saudi Aramco has not invited UBS or Bank of America Merrill Lynch to pitch for senior advisory roles in its stock market listing because they have not lent it money in recent years, according to people in finance. (Reuters)

• Prices for Brent crude have risen nearly 50 percent since June, which could lead to increased investment in oil. (NYT)

• Royal Dutch Shell will buy 44 percent of Silicon Ranch, a solar energy company based in Nashville. (Bloomberg)

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