Breakingviews

Murdoch miscalculation points to Time Warner value

August 6, 2014

The media mogul abruptly yanked an $80 bln offer after failing to anticipate his quarry’s resolve and price demands of investors. Fox shares rallied while Time Warner’s retreated toward their pre-bid level. That leaves refusenik boss Jeff Bewkes with something more to prove.

Gannett split puts digital on wrong side of divide

August 5, 2014

The media company is spinning off newspapers, including USA Today, to unburden its TV arm. Cars.com, which Gannett is buying at a $2.5 bln valuation, would have buffered the weaker half in a similar way to Rupert Murdoch’s News Corp carve-up. Instead, print must stand on its own.

BES bail-in leaves CDS traders struck out

August 5, 2014

Banco Espirito Santo’s bail-in meant a killing for any traders that bought the bank’s senior debt and shorted its subordinated bonds. But not all arbs will be celebrating. A technicality means those who shorted credit default swaps on BES’s junior debt have lost out.

Vladimir Putin is the new bad weather

August 4, 2014

The bogeyman of Ukrainian unrest is replacing snow as a reason to expect worse earnings. Just ask VW, Adidas or McDonald’s. The World Cup goes the other way, helping Adidas (again), Twitter and maybe Disney. The message could be muddled when Russia and soccer converge in 2018.

Shock loss at BES makes bail-in a real risk

July 31, 2014

The Portuguese bank made a 3.6 bln euro first-half loss and warned of possible illegal activity. The central bank suspended key staff. BES needs capital fast. But with Angolan issues unresolved, sourcing it from private investors rather than creditors just got much harder.

China throws weight around on car parts costs

July 28, 2014

The whiff of a price probe into vehicle parts was enough to bring concessions from luxury groups Audi and Jaguar Land Rover. That will hit profits, but experience shows in China it is better to admit guilt early than risk bigger fines, or lose access to a critical market.

China’s old meat is a corporate health warning

July 24, 2014

KFC’s parent and McDonald’s have been tainted by stale meat that slipped through a supplier’s controls. Monitoring a rapidly growing business is tough, and global brands face a high bar – just ask JPMorgan or Glaxo. Being foreign and successful is fast becoming a health risk.

Goldman chums return John Thain to semi-importance

July 22, 2014

Merrill Lynch’s last boss has been doing penance running lending minnow CIT for four years. Now he’s spending $3.4 bln to buy OneWest, the remains of a bust bank revived by fellow Goldman alums. It’s a smart deal that restores Thain’s membership in the SIFI club, if only just.

UK banks have much to fear from latest probe

By Chris Hughes
July 18, 2014

Britain’s top antitrust watchdog has warned lenders to expect a full-blown competition investigation. Forced divestments would be a surprising outcome. But given the persistence of concern in spite of past probes, investors should brace for radical, profit-sapping remedies.

Portugal Telecom pays the price for weak controls

July 16, 2014

An Espirito Santo group company failed to repay a $1 bln loan to PT. That means the telco’s shareholders will own a smaller stake in the group it planned to form with Brazil’s Oi. It’s not a good start for a complex merger. The combined entity looks financially weaker.