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In today’s edition, we have a scoop on Standard Industries looking to buy the five-year-old startup ͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
 
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February 6, 2024
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Liz Hoffman
Liz Hoffman

Hi, and welcome back to Semafor Business.

It’s been a brutal few weeks in the media business, with major cuts at The Wall Street Journal, Los Angeles Times, and Business Insider joining a drumbeat of layoffs last year at both legacy newsrooms and startups. It’s also a surprisingly dynamic moment — at least we think so. We launched Semafor Signals this week, a global, multi-source breaking news format that takes advantage of shockingly good developments in AI language translation to bring a wider range of views to our readers.

Today we have a scoop on old-meets-new journalism and the generation of billionaires betting on the next generation of influencers. (And no, it’s not David Ellison’s Paramount pursuit.)

Plus, hopes fade for a March rate cut, Palestinian boycotts start to sting Western brands, and the deepfake scams begin.

Buy/Sell

➚ BUY(Backs). Corporate stock repurchases fell last year but could hit $1 trillion in 2024, according to Deutsche Bank, which just announced its own $1.7 billion contribution to the cause. BP and UBS followed today, and Meta’s $50 billion buyback is one of the biggest of the century.

➘ SELL: Fronts. Two of the U.K.’s biggest banks allegedly helped Iran skirt Western sanctions by moving money for dummy corporations controlled by Tehran’s intelligence services, the Financial Times reports.

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The Tape

The Kremlin buys out “Russian Google”... Adam Neumann wants WeWork back… China traps investors in stock slump… Luxury retailers have too much cash… Boeing workers threaten to strike… New rules for hedge funds... Trump’s overseas empire is growing again… Chinese investors are jealous of giraffes… David Solomon beats James Gorman (at Pebble Beach)...

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Liz Hoffman and Max Tani

Roofing magnates eye newsletter gloss

THE SCOOP

A billionaire roofing family is in talks to buy Air Mail, former Vanity Fair editor Graydon Carter’s effort to drag glossy magazines into the online age.

Standard Industries — whose CEOs, two ex-brothers-in-law named David, are stretching a family business into a wide-ranging financial empire — is in talks to acquire the five-year-old media company for about $50 million, people familiar with the matter said.

Early investors including TPG and RedBird are selling out, and Carter would remain a shareholder under the terms being discussed, which value Air Mail at about four times its 2019 worth.

Paul Bruinooge/Patrick McMullan via Getty Images

Representatives for Standard Industries and Air Mail declined to comment.

LIZ’S VIEW

The dire headlines might suggest that media is uninvestable right now, but there’s a lot of money in the world, some of it in unexpected places. Nobody really knows, but by one estimate, family offices manage $6 trillion, more than all hedge funds combined. The largest of them, which invests the $225 billion fortune of the Walmart heirs, would rank among the 100 largest global asset managers if it took outside funds. Most made their money doing one thing very well and are now looking to spread it around, for diversification and for fun.

Standard Industries’s co-CEOs, Davids Millstone and Winter, inherited and built industrial concerns into an operating empire with 20,000 employees and $11 billion of revenue. They are, in some ways, classic media investors: The proprietors of a thriving, unglamorous family business with money to burn, they’ve put about $25 million into a handful of media startups with potential future profits but immediate cachet, including Puck, Malcolm Gladwell’s audio publisher Pushkin, and Cabana, which promises readers “a journey through sophistication, obsessive collecting, colors and fabrics.” (Standard Industries also hired a handful of former Carter deputies, prompting the New York Times to ask, “How many former Vanity Fair employees does it take to build a roof?”)

The company’s origins trace to GAF, a publicly traded roofing company acquired in a 1983 hostile takeover by corporate raider Samuel Heyman, a Michael Milken-backed player in that decade’s dealmaking. Millstone, 46, and Winter, 47, joined the family business by marrying Heyman’s daughters, and Winter brought his own real-estate family fortune into the bargain.

In addition to its roofing, trucking, and chimney-duct operations, Standard also runs a roughly $5 billion portfolio of public stocks and venture-backed startups, which tilts toward industrial companies but also holds its media investments.

It’s dabbling in an industry that’s still looking for a workable model. Faustian bargains with social platforms to distribute viral content have failed, and many in the industry are grateful for the deep pockets.

But if advertisers are fickle, the rich can be, too. Recent months have shown the weakness of the benevolent-billionaire model of media ownership, with the Washington Post, Time Magazine, and the Los Angeles Times running through the funds and patience of, respectively, Jeff Bezos, Marc Benioff, and Patrick Soon-Shiong. The Emiratis are trying the same play at the Telegraph.

Those are all legacy media companies, though, with expensive newsrooms to manage and print-first mindsets to outrun. A new generation of billionaires is betting on a new generation of influencers. And the industry’s current woes go down easier when they come with a standing reservation at the Waverly Inn, Carter’s restaurant-salon in lower Manhattan.

Read what Semafor media reporter Max Tani thinks about Air Mail.  →

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Semafor Signals

Semafor launched in October of 2022 with a philosophy of presenting our sophisticated audience with reliable facts and sophisticated, diverse insights. Our Semaform story structure, which separates facts and analysis, embodies that approach. And you seem to like it!

So we’re announcing the launch of our biggest new product since then, a new, global multi-source breaking news feed called Signals. Our journalists, using tools from Microsoft and Open AI, will offer readers diverse, global insights on the biggest stories in the world as they develop on our gorgeous site, Semafor.com, as well as other platforms like this one.

Read more about our attempt to address the troubles of fragmented, polarizing internet breaking news in a memo from editor-in-chief Ben Smith and executive editor Gina Chua. →

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Evidence

Investors have now abandoned hope that the Fed will start its long-awaited interest rate cuts at its next meeting in March. Last week’s blockbuster jobs numbers and strong manufacturing data had tempered expectations even before Chair Jay Powell went on 60 Minutes Sunday night and told everyone to sit tight.

Unemployment is at 3.7%, industrial orders are ticking back up, and consumer vibes about the economy rose sharply in January. The question for Powell is whether that’s a sign that he’s stuck the soft landing or the remnants of a too-hot economy that could reignite if he declares victory too soon. Investors have consistently misjudged his moves.

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What We’re Tracking
Reuters/Radu Sigheti

Performance review: ​​Just this week, deepfake videos tricked an employee at an unnamed global firm into transferring $25 million to thieves and showed Romania’s top central banker pitching dodgy stock investments.

AI is a fraudster’s dream, but the question remains whether it will go the way of email scams — comically lazy bottom-fishing by Nigerian princes — or more sophisticated and costly attacks on moneyed institutions. The latter would threaten major investments by financial firms like Fidelity in biometric indicators to keep clients’ accounts safe.

Beholden arches: Pro-Palestinian boycotts dented McDonald’s sales in the Middle East and other predominantly Muslim markets. “So long as this war is going on... we’re not expecting to see any significant improvement,” CEO Chris Kempczinski said yesterday. Starbucks reported similar declines last week (its CEO, careful not to mention either Israel or Palestine, cited “misperceptions about our position”) and the owners of Burger King and KFC report their earnings later this month.

Corporate boycotts are nothing new — remember “Cracker Barrel has fallen?” — but BudLight is a cautionary tale for companies trying to navigate issues that divide consumers.

Hot seat: U.S. advisers to Saudi Arabia’s investment arm will testify this afternoon in front of a Senate investigatory panel. Executives at McKinsey, BCG, and Teneo, along with investment banker Michael Klein, all received congressional subpoenas in November seeking records of their work for the Public Investment Fund, which sued them in a Saudi court to keep those documents secret, a move that has displeased the Senate’s investigators. One legal expert’s advice: “Comply with the country that you’re most scared of.” Watch the hearing live at 3:30 ET.

Tradewinds: Top U.S. Treasury officials are in Beijing this week for economic talks after a year of tense and deteriorating relations. U.S. officials complained about China’s government subsidies and industrial overbuilding, a long-held grievance. Other sore spots include Washington’s investment restrictions and Beijing’s throttling of graphite exports, which are crucial for EV batteries.

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