Good morning from the Financial Times.
Today is Monday, December 8th, and this is your FT News Briefing.
European leaders are meeting today to shore up support for Ukraine, and the Fed's final meeting of the year could feature the most divided rate decision in years, plus a look inside the entertainment mega-merger that few actually saw coming.
Kind of out of nowhere.
Netflix has come in swooped in this audacious 83 billion enterprise value deal to buy one of the most storied and revered studios of old Hollywood.
I'm Victoria Craig, and here's the news you need to start your day.
Ukrainian President, Volodymyr Zelensky, will meet European leaders in London today as they try to rally support for Kyiv, which is under pressure from the White House to agree a peace deal with Russia.
The European Commission is pursuing a plan for a quote reparations loan to Ukraine that would be backed by frozen Russian central bank assets.
But there's mounting frustration at France, which has withheld details about which institution holds the second biggest stash of frozen Russian funds.
France has kept the details under wraps, claiming issues of client confidentiality.
Belgium wants holdings from other countries, including those in France, included in any reparations plans in order to spread the financial and political risk.
But Paris argues that assets held at commercial banks are subject to different legal obligations than those at Brussels-based securities depository Euroclear, where the main holding of Russian assets are held.
This week brings the final Federal Reserve meeting of the year, and economists are expecting one last cut to America's benchmark interest rate.
But there are deep divisions within the central bank about the future path of rate cuts, especially as political pressure on the Fed continues.
So what's on tap for the week ahead?
The FT's U.S. economics editor, Claire Jones, joins me now.
Hi, Claire.
Hi, Victoria.
So what is the latest chatter on this December rate decision?
So in the run up there's been a lot of uncertainty about what's going to happen at the final Fed meeting of the year.
There's some people on the FOMC who want to prioritise inflation, who don't want to see more cuts.
There's others that are concerned about the labour market and the US economy, that would like to see more action.
It does look as though those who want to see more action will win out.
And investors and economists are now forecasting the third quarter point cut in a row to come on Wednesday.
And that division that you're talking about at the Fed.
How is that likely to impact this month's decision?
I think that's a very good question.
So we polled this week a selection of academic economists.
It's done on behalf of the FT by the University of Chicago's Booth Clark Center.
And what they found this time was that the vast majority of respondents expect to see dissent at the Fed.
Around 60% expect two dissents.
And A significant minority of about a third are seeing three or more dissents.
Now, the last time we saw four dissents was way back in 1992 in the early years of Alan Greenspan.
And we haven't seen three dissents since 2019.
So dissent on this sort of scale is really quite rare.
Yeah, that's a pretty stark statistic there.
And I wonder how much politics is playing into this division at the Fed.
I think there's two elements to it, really.
I mean one is that it's very tricky to really know what Fed officials should be prioritizing right now.
A lot of the survey respondents.
We've got almost half of them saying they should prioritize the inflation, fighting part of the Fed's mandate over the labor market.
But Fed officials are concerned that after years of real, real strength, the US labor market may now be weakening.
So there is this sense in which the economic situation right now is very difficult, where we have inflation still running close to 3, which is way above the Fed's 2 goal.
But there are a lot of signs that the labor market is weakening too.
So that's one element of it.
Another is that some see the more hawkish comments by regional Fed presidents as an attempt to show that they're not just going to lay down and cut interest rates as aggressively as Trump's pick for Fed chair is probably going to want them to.
In recent weeks, it's emerged that the front runner is Kevin Hassett, who's the head of the National Economic Council, which is based at the White House and is seen as a very close ally of the US president.
So politics is on one hand.
On the other, there's this data fog issue that Chair Powell mentioned at the last Fed meeting.
And that's, of course, due to the government shutdown, which we've also talked with you quite a lot about.
How long is that going to be a problem for the Fed?
How long is their visibility going to be muted?
I think that's totally right.
And that's another area of disagreement what the data is showing and whether they actually have enough data to And there's a lot of private sector information on the labour market.
A lot of Fed officials don't feel like there's so much on inflation.
And they're going into this meeting with the Bureau of Labour Statistics.
Having said that, they're not going to be able to publish anything.
October data for consumer price index inflation.
So there's a real blind spot here.
It's likely to last for at least a month or two, I think, before the BLS is able to get fully back to normal and start publishing data on the normal schedule.
We will be watching for all of those things.
Claire Jones, the FT's US economics editor.
Thank you.
Thanks, Vicky.
President Trump's administration is accelerating a power shift away from investors and into boardrooms.
The president is considering enacting curbs on voting influence of BlackRock, Vanguard and State Street.
Those are giant asset managers whose index funds typically own as much as 30 percent of most listed companies.
Those holdings give asset managers vast influence over shareholder votes about how companies are managed.
The administration is also weighing limits on influential proxy advisors that can sway votes at annual meetings.
Executive orders on such moves could come within weeks, according to a person familiar with the administration's considerations.
A company that made a name for itself by snail mailing DVDs in red envelopes is set to take control of one of Hollywood's most celebrated studios.
Netflix's 83 billion takeover deal of Warner Brothers Discovery has been the talk of Tinseltown since it was announced on Friday.
But what does the mega merger mean for the future creation and delivery of global entertainment, news and sports?
The FT's global media editor, Dan Thomas, joins me now.
Hi, Dan.
Hi there.
How are you doing?
Good, thanks.
Thanks for being here.
So at the beginning of this bidding war for Warner Brothers Discovery, Netflix was kind of seen as a sort of long shot spoiler, wasn't it?
How did we get here?
Yeah, it's worth recapping really because if you go back, even a week, this was a deal which Paramount backed by the Ellison family, you know deep pockets, huge links into the Trump administration and into the technology sector.
It was really seen as a deal for them to lose.
I think most analysts gave Netflix a relatively scant chance of securing it.
And kind of out of nowhere, Netflix has come in, swooped in with this audacious deal.
83 billion enterprise value deal to buy one of the most storied and revered studios of old Hollywood.
What does Netflix's victory in this fight mean for Paramount?
Because like you said, it had been seen as the front runner.
How does this change its position in the market now?
So Paramount's play was always to buy Warner Brothers and to buy into their HBO Max streaming platform, which gives them a great position to go forward and create a really good big global player.
Without Warner Brothers Discovery, they're looking much smaller now.
And that's going to be a problem for them going forward.
Most households can only really have maybe three or four subscriptions maximum, right?
So the market can only really have half a dozen streamers going around the world.
And Paramount is now at risk of being a subscale compared to the rest of them.
Warner Bros.
Discovery owns many well-known brands like TNT and CNN.
What does the future of those look like now?
Within the next few months they're going to take a lot of those legacy network assets, including some of the sports stuff with TNT Sports, and they're going to separate them into a different company.
So actually, Netflix won't necessarily have the contractual obligations around that.
For Netflix, this is giving them one of the most incredibly deep and meaningful libraries of content and IP going forward.
This is everything from...
Citizen Kane to Game of Thrones.
You've got the Harry Potter franchise coming back.
But Netflix.
This is super important because Netflix have seen one of the problems they've seen recently is that almost they've been a victim of their own success because they've been bringing in lower cost subscription tiers where viewers have to watch a bit of advertising in order to get their programs.
They've been incredibly popular.
And so the premium side of things is losing numbers to their own sort of stablemate.
So what HBO content?
Think about Sopranos, think about this really premium content, White Lotus.
It gives them an opportunity to have a really strong HBO premium layer which really supports top end subscriptions.
So Hollywood is really worried about job cuts and the future of movie theater releases if this deal does go through, which many want regulators to block.
So how do those concerns sort of fit into this overall picture?
Well, Netflix have committed to the theatrical distribution of Warner Brothers Discovery.
This sort of deal breeds fears among the traditional entertainment industry.
Even actors, right?
Actors like to be in cinemas.
That's kind of one of the fundamental things about these big stars and the movies that they sign up to.
So I think it's been important that Netflix was clear that they will keep the cinema distribution network very present, very important to their future strategy.
But at the same time they will inevitably, over time, probably look to bring more movies quicker onto their streaming platform, just because that's their fundamental model.
And as with any deal, shareholder and regulatory approval is required.
So is there any risk that this does not get the green light?
Clearly, the board of Warner Brothers Discovery has picked to go with Netflix.
So they are clearly saying that they're quite confident that the regulatory process will be straightforward.
Analysts would tend to disagree.
I think there's a pretty strong company being created in the content distribution and production space here.
I think there's greater confidence there that they will get through this.
And you can see that in the break fee, Netflix have offered Netflix more than 5 billion if this deal doesn't go forward.
So they're on the hook for some pretty big numbers if it doesn't go their way.
The FT's global media editor, Dan Thomas.
Thanks for breaking this all down for us.
Thank you so much.
You can read more on all of these stories for free when you click the links in our show notes.
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