Dropping anchors
Fox News’s firing of Tucker Carlson, the most popular prime-time host in cable news, sent shockwaves through the media and political spheres yesterday. Few had thought that repercussions from Fox’s $788 million defamation settlement with Dominion Voting Systems would reach Mr. Carlson, who commanded a following of millions and has the ear of Donald Trump.
But Fox and Rupert Murdoch, who are used to courting controversy and legal settlements as the costs of doing business, may be betting that getting rid of Mr. Carlson is the smarter financial move.
The impact on Fox is undeniable. Since gaining his prime-time show in 2017, Mr. Carlson became the brightest star in the Fox News orbit, with “Tucker Carlson Tonight” averaging over 3 million viewers every night.
While the show doesn’t feature top-tier advertisers, many of whom recoiled from his frequent controversies, his formidable audience numbers would have helped Fox News in forthcoming negotiations with cable providers over fees they pay to carry its network. (Shares in Fox Corporation fell 3 percent yesterday — more than they did after the company settled with Dominion last week.)
Mr. Carlson’s contract, worth $20 million a year, is expected to be paid out.
His dismissal was swift. Lachlan Murdoch, the C.E.O. of Fox Corporation, with the blessing of his father, conferred with the Fox News chief Suzanne Scott on Friday about dismissing Carlson, and the host was reportedly notified just 10 minutes before the announcement went out.
Mr. Carlson may have become too hot to handle:
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The Dominion lawsuit unearthed private comments by Carlson in which he often profanely disparaged colleagues, sources and, perhaps crucially, his bosses.
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A former producer is suing Fox News after accusing Carlson of overseeing a hostile and discriminatory work environment.
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And the Murdochs have reportedly grown tired of trying to corral a controversial host who proudly says he can’t be controlled.
Then again, Semafor’s Max Tani notes that the firing of Mr. Carlson is only the latest sudden and seemingly erratic move by Murdoch. And others are wondering whether there’s some bigger shoe to drop.
The Murdochs clearly hope that Carlson is replaceable. That’s been true before when Fox ousted big names like Bill O’Reilly. But the outpouring of support for the host from Mr. Trump and conservatives suggests that it’s not a given this time. It’s unclear where Mr. Carlson will go next — rival outlets like Newsmax beckon, as do striking out on his own and getting into politics.
Mr. Carlson wasn’t the only media star shown the door yesterday. CNN ousted the anchor Don Lemon, hours after he appeared on air. (Among the reasons: Some guests didn’t want to appear on air with him after he drew criticism for sexist comments, and internal CNN research showed that his popularity with audiences was declining.)
Mr. Lemon didn’t take the news well — “I am stunned,” he tweeted — and has hired the same lawyer as Carlson to negotiate his exit.
HERE’S WHAT’S HAPPENING
President Biden announces his re-election bid. In a three-minute video posted this morning, he urged voters to let him “finish this job.” The widely expected move sets him up for a potential rematch with Donald Trump; Biden is expected to meet with top donors later this week.
UBS draws billions in new customer funds. The Swiss bank said today that it gained $28 billion in new assets in the first quarter, including $7 billion after it announced a deal to buy Credit Suisse. Its stricken rival lost $69 billion in customer money during the same period.
An appeals court largely sides with Apple in its fight with Epic Games. A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit ruled that the iPhone maker’s control of its App Store didn’t violate antitrust laws. But the judges also said developers should be able to steer users to payment systems outside the App Store, avoiding Apple’s fees.
Disney’s latest layoffs include a top ESPN executive. The media giant started a new round of job cuts yesterday that included Russell Wolff, who oversaw the ESPN+ video service. Cutting streaming costs has been a priority for Bob Iger, Disney’s C.E.O., as he moves to slim down the company.
Coinbase sues the S.E.C. The lawsuit is meant to compel the regulator to respond to a rule-making petition filed by the crypto exchange asking for more clarity on enforcement policies. It followed a disclosure by Coinbase that the agency was investigating the company for potential violations of securities law.
First Republic looks for help
First Republic’s brutal quarterly earnings report yesterday sent its share price plunging, after the bank revealed that customers pulled billions in deposits, profits fell by about a third and it planned to cut a quarter of its work force. Withdrawals have eased, and the worst may be over after the country’s biggest banks gave the California lender a $30 billion lifeline last month.
But First Republic still needs to cut its balance sheet and shrink its losses. The question is how.
The results revealed the depth of the problems. Customers pulled $102 billion out of First Republic last month, well over half of the $176 billion it held at the end of last year. Over that same period, it borrowed $92 billion, mostly from the Federal Reserve and government-backed lending groups. The loans helped stabilize its finances, but they came at a higher cost than using customer deposits.
(There was some good news: First Republic says it retained 90 percent of the advisers in its wealth management division.)
What next? The bank wants the government to push the country’s largest banks to come up with a more permanent solution to its problems than their last one, DealBook hears. That does not mean the government injecting capital itself, but it does mean corralling big bank bosses and pressuring them to find a solution.
For the government, the optics of doing so are far from ideal, particularly given that the bank largely caters to the wealthy. But a First Republic failure would pose broader risks, adding more strain on the banking system at a time when smaller lenders remain vulnerable.
It would also reopen the question of whether the government plans to back all uninsured deposits. (Treasury Secretary Janet Yellen has delivered mixed messages on this front.) Any bank failure risks a hit to the government’s insurance deposit fund, which is funded by taxes levied on the banks.
Big banks have not committed, and First Republic’s sizable losses likely won’t help. Given the banks’ recent bumper earnings, the government also lacks the same cudgel it had in 2008, when it pressured JPMorgan Chase to buy Bear Stearns (a move Jamie Dimon, JPMorgan’s C.E.O., has long bemoaned).
The window to secure a deal before another big shock to the industry may be closing. “First Republic’s stand-alone earnings picture is still worse than we had feared,” wrote analysts at Autonomous, expressing surprise that the stock was not down more than 20 percent after hours. “We would remain very cautious.”
$500 billion
— The stock market capitalization reached yesterday by LVMH, the French luxury group, making it the first European company to do so. Shares of the company have surged on the back of booming sales in China, making its founder, Bernard Arnault, the world’s richest person.
An open source fight goes to court
Jack Dorsey, the co-founder of Twitter and the payments company Block, started the Bitcoin Legal Defense Fund last year to help developers of the cryptocurrency. But its first case, set to be heard in an English court tomorrow, could have broader ramifications for the tech industry and the whole idea of open source software development.
The lawsuit claims that open source developers should be held accountable for a theft. A Seychelles-based crypto company is suing a group of developers who contributed code to the Bitcoin network, a decentralized set of computers that keeps track of all transactions. The network is an open source project and, like most such software, was created under terms that allow for free use and disclaim liability.
Craig Wright, an Australian developer (who also claims to be the man behind the pseudonym Satoshi Nakamoto, Bitcoin’s creator), lost access to digital wallets containing 111,000 bitcoin following a 2020 hack of his home computer. His company, Tulip Trading, contends that Bitcoin programmers control the open source network and have a duty to block illegitimate transactions. Last year, a court in Britain dismissed the case on jurisdictional grounds, but that decision was reversed in February following an appeal.
The open source model encourages collaboration and innovation, and it has been crucial to software development for decades. Programmers don’t usually get a direct financial benefit from participating. Rather, they share their skills to build and gain credit with the coding community.
“These lawsuits could have serious detrimental effects on open source development writ large, which will negatively impact our lives in ways we may not even realize until it’s too late,” Mr. Dorsey said.
Greg Maxwell, a defendant in the case, told DealBook he began working on the Bitcoin network in 2010 because he was interested in the idea of money without intermediaries. But he stopped after getting sued. “People won’t participate if there’s liability,” he said.
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