Putting a price on celebrity
In buying a majority stake in the powerhouse Hollywood talent agency Creative Artists Agency, François-Henri Pinault showed that high-ticket M.&A. is a game that more than one French luxury billionaire can play.
Acquiring CAA — which represents stars including Tom Hanks, Margot Robbie and Pinault’s wife, Salma Hayek Pinault — underscores Pinault’s ambitions, and reinforces the growing importance of celebrity in the luxury sector.
Pinault is no stranger to deal making. Like his archrival, Bernard Arnault of LVMH, Pinault used a series of acquisitions to assemble the luxury empire now known as Kering, starting with Gucci and later adding Saint Laurent, Bottega Veneta, Alexander McQueen and more.
Through Artémis, his family’s investment arm — which owns a 42 percent stake in Kering, a stake in the sportswear brand Puma and all of the Christie’s auction house — Pinault will now control CAA (reportedly at a valuation of $7 billion, including debt). The agency will be run separately from Kering; Bryan Lourd, the superagent who represents Scarlett Johansson and Brad Pitt, will become C.E.O. of CAA.
Pinault is betting on the power of boldface names. Celebrities attract legions of followers primed to buy what they’re promoting, driving fashion brands to lock up the biggest names to pitch their products. Hayek Pinault plays into that, wearing Gucci and Balenciaga gowns on the red carpet and appearing next to her husband at fashion shows.
“There’s no separation between fashion and entertainment anymore,” the luxury consultant Robert Burke told The Times, calling the deal a “natural, if unprecedented, evolution.”
It’s a reciprocal relationship, especially now: With the actors’ strike prohibiting promotion of movies and TV shows, commercial work with brands is one of the few union-approved ways celebrities can still make money.
The deal also marks a cashing out for the investment giant TPG, which is selling its majority stake in CAA to Pinault. TPG first bought into CAA 13 years ago, setting off a race among private equity firms to get into the talent business. Silver Lake later invested in William Morris Endeavor, and last year EQT invested in United Talent Agency.
Meanwhile, CAA’s rivals have sought to scale up to strengthen their leverage over streaming giants like Amazon, Netflix and Apple. (Endeavor, with help from Silver Lake, oversees an empire that spans talent representation and the soon-to-be-combined Ultimate Fighting Championship and WWE.)
In other luxury news: Giorgio Armani, 89, said he has no desire to sell his fashion house to Kering or LVMH: “Why should I be dominated by one of these mega structures that lack personality?” he told The Financial Times.
HERE’S WHAT’S HAPPENING
Senators introduce a bipartisan proposal for A.I. regulation. Richard Blumenthal, Democrat of Connecticut, and Josh Hawley, Republican of Missouri, will put forward legislation that would require licenses for and audits of artificial intelligence, and create a new government watchdog. It’s the latest step by a Washington grappling with A.I. Congressional leaders will hear more from tech executives on the subject next week.
Goldman Sachs’s C.E.O. pushes back against critics. David Solomon defended his sometimes turbulent tenure as leader of the Wall Street bank in an interview with CNBC, amid lagging performance and others carping about his track record; “I don’t recognize the caricature that is painted of me,” he said. Meanwhile, Goldman is planning to lay off more employees, according to The Financial Times.
The S.E.C. is reportedly looking into Ryan Cohen’s trades in Bed Bath & Beyond. A focus of the regulator’s inquiry is Cohen’s investing of $120 million in the struggling housewares retailer and then abruptly selling his stake days after publicly praising the company, according to The Wall Street Journal. Shareholders have already sued the billionaire, accusing him of a pump-and-dump scheme.
Walmart is said to cut pay for some new workers. The retail giant will pay most new hourly workers the lowest possible wage for their store, abandoning a system in which some positions were paid more than others from the start, The Wall Street Journal reports. It’s another sign of companies feeling less pressure to offer higher pay to attract workers as labor markets cool.
The pressure mounts on Bankman-Fried
Ryan Salame, the former co-C.E.O. of the crypto exchange FTX, who made millions during the sector’s boom years, pleaded guilty on Thursday to criminal charges for his role in exchange’s collapse last year, leaving its founder, Sam Bankman-Fried, increasingly isolated just weeks before his criminal trial.
Salame, 30, who has become a major Republican donor, admitted to breaking campaign finance laws and operating an unlicensed money transmission business. He is set to be sentenced in March.
Salame is the fourth Bankman-Fried deputy to plead guilty. He told a federal judge in New York on Thursday that he had made millions in political contributions at the direction of Bankman-Fried, all labeled as loans from FTX’s sister company, the crypto hedge fund Alameda Research.
“I understood that the loans would eventually be forgiven, and that I would never have to repay them,” he said, entering his plea wearing a suit and tie with socks featuring Bitcoin logos. He stood in front of the same judge who is presiding over the Bankman-Fried proceedings.
Salame will pay a $6 million fine and more than $5 million in restitution to the bankrupt FTX. He will forfeit two properties in Lenox, Mass., along with a Porsche. He also faces up to 10 years in prison. Other former colleagues from the FTX empire — Nishad Singh, Caroline Ellison and Gary Wang — pleaded guilty on charges related to the implosion of the crypto business, which saw investors lose billions. Unlike Salame, those three have agreed to cooperate with the authorities, and are expected to testify against him.
The legal pressures are mounting on Bankman-Fried. Lawyers for the 31-year-old — who is being held in jail after a judge ruled that he had twice tried to interfere with witnesses in the case — have argued that he is unable to adequately prepare for his fraud trial, set to begin Oct. 3.
A new job for a top New York public defender
David Patton, an influential lawyer and longtime head of New York City’s federal public defenders office, is stepping down to become a partner at the boutique law firm Kaplan Hecker & Fink, report The Times’s Benjamin Weiser and Karen Zraick for DealBook.
A team led by one of the firm’s name partners, Roberta Kaplan, recently won a $5 million civil trial verdict in which a federal jury in Manhattan found former President Donald Trump liable for sexually abusing and defaming the writer E. Jean Carroll.
Patton has led Federal Defenders of New York for 12 years. In his post, he oversees lawyers who represent indigent defendants in New York’s Southern and Eastern District. He has handled dozens of federal trials, including the first death penalty trial of the Biden administration, which resulted in a life sentence. Patton said he would leave Federal Defenders at the end of October; Barry Leiwant, the head of its appeals unit, will lead the office on an interim basis.
Patton, an outspoken critic of conditions in jails, has worked with the law firm before. The Federal Defenders, represented by Kaplan Hecker & Fink, sued the Federal Bureau of Prisons in 2019 after a weeklong blackout at a Brooklyn federal jail left inmates without heat, power or access to their lawyers.
Sean Hecker, another of the firm’s partners, said there was a “perfect synergy” with Patton, given the firm’s commitment to public interest. Patton said joining Kaplan Hecker would enable him “to practice law at the highest level — to try cases and to still maintain a strong commitment to public service.”
— The amount Mattel says it expects to make in total billings from “Barbie.” The film appears headed toward a box office haul of $2 billion, giving the toymaker a share in the kind of runaway hit that has eluded it for years.
Apple by the numbers
Shares in Apple were hovering around break-even in premarket this morning, another ominous sign for shareholders after the tech giant’s stock sank 6 percent this week on reports of a potential iPhone crackdown in China. Here are a few points to put that into perspective:
$190 billion: The two-day sell-off shaved roughly $190 billion off Apple’s market value and at one point on Thursday the loss topped $200 billion, more than Netflix’s market cap of $196 billion.
$2.8 trillion: That’s Apple’s current market cap, which still makes it the world’s most valuable public company.
7%: Apple makes up 7 percent of the weighted value of the entire S&P 500, making it one of the most widely held stocks. A bad day for Apple shares can often drag down that benchmark, as well as the tech-heavy Nasdaq composite. Both indexes fell on Thursday, though they outperformed Apple.
Up next: Investors (and gadget fans) will be watching the iPhone 15 rollout on Tuesday, as questions swirl over whether a new model can recharge the company’s fortunes.
THE SPEED READ
Imbue, a two-year-old A.I. start-up, has raised $200 million from investors including Nvidia at a valuation greater than $1 billion. (Reuters)
Steve Cohen, the billionaire owner of the New York Mets, has invested in TGL, the upstart golf league founded by Tiger Woods and Rory McIlroy. (CNBC)
Best of the rest
The new movie “Dumb Money,” about the GameStop trading frenzy, lampoons Wall Street moguls — but was made with help from the son of Blackstone’s Steve Schwarzman. (NYT)
Peloton’s latest legal trouble: a lawsuit asserting that a falling bike killed a customer. (CNBC)
Howard Schultz, the former Starbucks chief, reveals that he initially opposed selling Frappuccinos. (Insider)
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