News Information and Media Site: Byers Market: Who wants TikTok?; Jason Kilar's Friday night massacre

August 10, 2020

By DYLAN BYERS in Los Angeles &

AHIZA GARCÍA-HODGES in San Francisco

Good morning. 🇭🇰 Hong Kong police arrested media tycoon Jimmy Lai and raided the offices of his Apple Daily newspaper this morning in an aggressive crackdown on press freedom made possible by the new Beijing-backed security law.

• Meanwhile, U.S.-China relations are deteriorating rapidly after the White House's decision to impose sanctions on Hong Kong chief executive Carrie Lam and other senior officials, one day after the executive orders on TikTok and WeChat.

📈 Earnings watch: SoftBank reports Tuesday; Tencent reports Wednesday.

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📱 Moving the Market

Who wants TikTok?

"Several investment and technology firms are exploring a potential deal for the U.S. operations of TikTok," though Microsoft is still "considered the front-runner for any possible deal," WSJ's Georgia Wells, Rolfe Winkler and Cara Lombardo report.

• "Twitter has had preliminary talks about a potential combination with TikTok in the U.S. ... It is unclear whether Twitter will pursue a deal, which would face significant challenges and almost certainly need help from other investors, given Twitter's size."

• "Twitter is seen as a long-shot bidder, and would almost certainly need help from other investors. ... But Twitter does have high-powered investors such as private-equity firm Silver Lake."

• "Several investment firms with ties to Twitter or ByteDance also could play a role in any transaction involving Twitter or Microsoft. ... Among them is venture-capital giant Sequoia Capital, whose China-based affiliate first invested in Bytedance in 2014."

• "Doug Leone, Sequoia's global managing partner... has been pressing contacts in the administration, including Treasury Secretary Steven Mnuchin and ... Jared Kushner, to craft a solution that would enable TikTok to keep operating in the U.S."

• "Other investors include private-equity firm General Atlantic and Japanese investment giant SoftBank Group. ... SoftBank itself would like to throw its hat in the ring as a possible TikTok suitor... but as a foreign company remains a long shot for consideration."

What's next: "Discussions remain fluid..."

• Bonus: CNBC's Alex Sherman says Netflix should buy TikTok. Yes, it's crazy. But what the hell.

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🏛️ Big in the Beltway

TikTok to sue over Trump ban

"TikTok is planning to sue the Trump administration, challenging the president's executive order banning the service from the United States," NPR's Bobby Allyn reports. It "will file the federal lawsuit as soon as Tuesday... in the U.S. District Court for the Southern District of California, where TikTok's American operations are based."

• "The lawsuit will argue that President Trump's far-reaching action is unconstitutional because it failed to give the company a chance to respond. It also alleges that the administration's national security justification for the order is baseless."

Speaking of... We noted last week that there was quite a bit of ambiguity over whether Trump's executive orders applied solely to TikTok and WeChat or to their parent companies as well. NYT's Ana Swanson says that ambiguity may be intentional, part of an effort to "dissuade American companies from operating in China."

🇺🇸 Ban effects 🇨🇳

"Chinese tech giant Huawei is running out of processor chips to make smartphones due to U.S. sanctions and will be forced to stop production of its own most advanced chips... a sign of growing damage to Huawei's business from American pressure," AP's Joe McDonald reports.

Qualcomm, the San Diego-based chipmaker, is lobbying the Trump administration to roll back restrictions for the sake of its own business, per WSJ's Asa Fitch and Kate O'Keeffe.

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🌁 Big in the Bay

Social media's 'false balance'

NYT's Ben Smith says Facebook, Google and Twitter, "the new referees in American politics," are mistakenly trying to balance perspectives from the right and the left, rather than facing the fact that "misinformation on social media is a central tactic of the right."

• "The American right and left have never been mirror images of each other. They're different sorts of coalitions, with different histories and strategies. And in the Trump era, a specific kind of misinformation on social media is a central tactic of the right."

• "Facebook, Google and Twitter are making the same mistakes the news media made decades ago, looking for balance rather than confronting the plain reality of the moment."

• "The global surge in misinformation isn't a matter of code, or an eternal political truth, or the structure of information. It's just how the social-media-fueled, right-wing populism of 2020 works."

Moving Menlo: Our colleague Olivia Solon has obtained leaked materials showing that Facebook "has allowed conservative news outlets and personalities to repeatedly spread false information without facing any of the company's stated penalties."

• "Facebook spokesperson Andy Stone did not dispute the authenticity of the leaked materials, but said that it did not provide the full context of the situation."

Market Links

• Bill Gates sounds off on social media (Wired)

• Jeff Bezos launches his climate company (Recode)

• Sheryl Sandberg takes issue with Apple (Verge)

• Jack Dorsey addresses Twitter's mistakes (NYT)

• The Murdochs watch Fox News thrive (NYT)

Toshifumi Kitamura/Getty

🎬 Talk of Tinseltown

Jason Kilar's Friday massacre

"WarnerMedia's new boss ousted the leadership of HBO Max, the streaming service that launched less than three months ago, as part of a broader overhaul that aims to simplify how the entertainment giant makes and distributes content," WSJ's Joe Flint reports.

• "Jason Kilar said on Friday that he is removing WarnerMedia Entertainment Chairman Robert Greenblatt, who oversaw HBO and HBO Max as well as several other cable channels, and Kevin Reilly, who was the unit's head of content."

• "The reorganization puts a single person, Warner Bros. Chair and Chief Executive Ann Sarnoff, in charge of all content that will be distributed on the company's many platforms."

• "Andy Forssell... the general manager of HBO Max, will oversee the business operations of the unit as well as marketing and consumer engagement. Both he and Ms. Sarnoff will report to Mr. Kilar."

• "Also elevated in the reorganization is Casey Bloys, who currently oversees original programming for HBO. Mr. Bloys will report to Ms. Sarnoff and be directly responsible for original content of HBO Max and the entertainment cable networks."

The big picture: The move, which combines all WarnerMedia production into one unit, is meant to streamline what until now was an unnecessarily complicated and confused leadership structure, and to adapt to new financial realities brought on by the pandemic.

• It's also a bold move by Kilar, who is axing two high-profile leaders from the company just three months after his arrival, and less than three months after the launch of HBO Max. (In an interview with Bloomberg, Kilar says he's "very happy" with the service).

What's next: Layoffs. "WarnerMedia is expected to let go of at least 800 staffers at its Warner Bros. and HBO operations as part of a broad restructuring," Variety's Brian Steinberg reports. "Warner Bros. is expected to commence layoffs of around 650 people starting Monday... while HBO is seen shedding between 150 and 175 staffers."