Antitrustworthy

MARKETS

  • U.S. markets: The major indexes enter the week hoping to make up for last week's losses. The S&P dropped 1.2%
  • What to look out for this week: The Fed's first meeting with Jerome Powell in charge, the fallout from Russia's election, and steel and aluminum tariffs going into effect on Friday.



Want Morning Brew Daily Served Fresh to Your Inbox?
Drop Your Email Below...

 

MEDIA

Previewing the Media Merger Melee: AT&T vs. DOJ

Picture

Today, AT&T and the DOJ will begin a trial over a suit brought by the Justice Department to block AT&T's $85 billion takeover of Time Warner. And boy, if this isn't the juiciest antitrust trial in the Brew's young history (granted, it's a low bar).

At stake? The future of the media industry.

Here's what you need to know

The main players: U.S. antitrust chief Makan Delrahim taking on AT&T CEO Randall Stephenson (and their lawyers). And don't forget the judge, Richard Leon, who also ruled in a similar case in 2011 (Comcast's acquisition of NBCUniversal). There's no jury, so Leon holds all the power.

The main arguments:

* The DOJ will make the claim that if AT&T is able to acquire Time Warner (and its properties CNN, HBO, TBS, and more), "American consumers will end up paying hundreds of millions of dollars more than they do now to watch their favorite programs on TV." That's because AT&T could theoretically hold these channels hostage to competitors.
* AT&T will respond: Why would we do that? "Withholding programming means immediate, catastrophic losses in licensing and advertising revenue..." And, it laughs off the DOJ's own calculations that the average monthly bill would increase by a whopping $0.45.

The broader trend: A complex media industry verging on chaos. You might've heard that traditional pay-TV is in trouble, as Netflix, Amazon, Hulu, and streaming copycats continue to attract new eyeballs at a high rate. For legacy media companies, scale is the only survival tactic.

The massive implications:

* If AT&T wins, look out for an M&A sprint among content distributors (Verizon, Charter) and content creators (Disney, Fox). Vertical integration will be all the rage as old-guard media firms bulk up to take on the tech giants.
* If the DOJ wins, those tech giants (Facebook, Google, Netflix, etc.) score a huge victory. Another potential roadblock on their way to dominating the media space...vanquished.

TECH

Another Scandal Hits Facebook

Just as Facebook seemed to be turning the corner on its troubles during the 2016 election, it got hit with another whopper.

Late Friday night, Facebook suspended Cambridge Analytica, a data analysis firm that consulted for the Trump campaign (meaning it can't buy ads or administer its clients' pages). Cambridge Analytica had violated Facebook rules when it collected info on 50 million Americans...and lied to Facebook about deleting all of it.

So how'd it get the data? It worked with a professor to set up a personality quiz app that was granted access to users' profiles (friends, likes, etc.) in the name of academic research. Cambridge Analytica then collected the data to use for hyper-targeted ads.

Facebook tried to clean up the mess, saying, "This was unequivocally not a data breach.'' But this seems like one mess too many for legislators. Senator Amy Klobuchar tweeted, "This is a major breach that must be investigated...Mark Zuckerberg needs to testify before the Senate Judiciary."

MANAGEMENT

Paul Jacobs Is Leaving Qualcomm’s Board

Although it successfully fended off Broadcom's unwanted advances, there's still plenty of drama at Qualcomm. Paul Jacobs, the son of Qualcomm's co-founder and its former CEO, was removed from its board by his fellow directors after he repeated his intentions to take the company private.

Jacobs should've remembered the old saying: if you don't have anything nice to say about a semiconductor manufacturer's future business prospects...don't say anything at all.

What does this remind us of? Michael Dell, who took his company private in 2013 for $25 billion with the help of PE firm Silver Lake.

But if Jacobs succeeds with Qualcomm, we'd be shocked...and impressed.

* It would be the largest leveraged buyout ever (more than $100 billion).
* He owns only 0.13% of Qualcomm.

So where might Jacobs get his financing? The biggest fund in the world. Reuters reports that he's been talking with none other than Masayoshi Son and SoftBank.

MANAGEMENT

What's Going on at Nike?

For the second time in as many days, the WSJ reported that a Nike executive is leaving the company after internal complaints of inappropriate workplace behavior.

The two execs: Vice president Jayme Martin and brand president Trevor Edwards.

This is a huge management shakeup

Martin came on board in 1997, and worked his way up to lead some of Nike's most prolific segments, like women's, running, and basketball.

As for Edwards (joined in 1992), he was Nike's second-in-command, and was expected to take the reins from current CEO Mark Parker in 2020...but that succession plan has gone out the window.

Do we know what happened? The company isn't saying much, but a WSJ source says both Martin and Edwards used their leadership positions to protect "male subordinates who engaged in behavior that was demeaning to female colleagues."

Zoom out: Toxic workplaces in corporate America are no longer being tolerated to the extent they were.

WHAT ELSE IS BREWING

  • Steve Cohen's hedge fund, Point72, continues its transformation as president Doug Haynes stepped down.
  • WSJ: A federal investigation into Wells Fargo's sales practices is expanding to include its wealth management business.
  • iQiyi, the video streaming unit of Chinese search giant Baidu, is launching a $2.4 billion IPO in New York.
  • Reporting earnings today: Oracle

WATER COOLER

A CLOSER LOOK

Having trouble staying up-to-date on the latest developments in each industry? We got your back. Today, we’re looking at a new report on AI hedge funds.

These days, you can't work in any industry without worrying about an overachieving robot trying to steal your job.

That’s especially true on Wall Street, where all the talk is about how algorithmic trading could replace a time-honored homo sapiens pastime. After all, who do you want making decisions with your money: Nate, who's nervously checking his March Madness bracket every two minutes? Or Nate.ai, who was hard-wired to be 100% objective?

Well, humans can breathe a sigh of relief

The folks at Eurekahedge, a hedge fund database provider, report that AI and machine learning-based hedge funds posted their worst month ever in February (the index fell 7.3%). What's more, they significantly underperformed the broader hedge fund index (2.4% decline).

Let's hedge that a bit: Eurekahedge's AI hedge fund index tracks 15 funds that use very different strategies, from traditional statistical analysis to more sophisticated machine learning models. So it's not clear whether we should jump to any broad conclusions about AI funds.

At the very least, JPMorgan is convinced AI contributed to the February sell-off: "AI funds...likely played a big role in February's correction by being forced to de-risk given an unprecedented 7.3% loss over the past month."

THE BREAKROOM

AROUND THE WORLD
Earlier this month, the West African country of Sierra Leone became the first country to use blockchain technology (the tech behind cryptocurrencies) in its presidential election. With traditional voting software vulnerable to hacking, keep an eye out for tamper-proof blockchain networks to play a bigger role in the voting process.

M&A TRIVIA
Which massive tech company bought LinkedIn for more than $26 billion in 2016?

(Answer located at bottom of newsletter)

BRAIN TEASER
Find the the largest 6-digit number that satisfies this condition:

Each digit from the third one on equals the product of its two preceding digits.

(Answer located at bottom of newsletter)

Want Morning Brew Daily Served Fresh to Your Inbox?
Drop Your Email Below...

 

Breakroom Answers

M&A Trivia
Microsoft

Brain Teaser
900,000

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
kanon's picture
kanon
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
DrApeman's picture
DrApeman
98.9
9
GameTheory's picture
GameTheory
98.9
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”