Wall Street’s game theory

As more leading Democrats say privately that President Biden should withdraw from the presidential race, some of the party’s most prominent backers on Wall Street spent the holiday weekend debating what to do next.

The group — including Larry Fink of BlackRock; Robert Rubin, the former Treasury secretary; Jon Gray of Blackstone; Peter Orszag of Lazard; Blair Effron of Centerview Partners; and Robert Wolf, a former UBS executive close to Barack Obama — talked to friends, colleagues and in some cases each other about whether to stick with Biden, people with knowledge of the discussions told DealBook.

If they favor calling for him to step back, they discussed what their next moves should be.

Wall Street is taking a different approach than Hollywood. A number of media moguls have publicly called on Biden to step aside, including Reed Hastings of Netflix; Barry Diller of IAC; the director Rob Reiner; and the media heir Abigail Disney. (Many are also reportedly irate at Jeffrey Katzenberg, Biden’s campaign co-chair.)

But the finance business is built around the idea of discretion. And many donors want to maintain their influence within the Democratic Party.

What Wall Street is saying: One C.E.O. suggested to DealBook that there was an “inevitability” to Biden stepping aside, describing it as a matter of timing and positioning. Several executives described themselves as “concerned.”

The deal makers are gaming out various scenarios. Some donors have discussed “elegant” ways for Biden to step aside to preserve his reputation.

Others focused more on how such a move might affect the Democratic Party and, ultimately, the race.

There are some timing concerns:

• Some executives suggested to DealBook that it would be a mistake for Biden to quit without first becoming the nominee, arguing that doing so would rob him of the power to anoint his replacement. If an open convention led to intraparty strife that helped Donald Trump win, Biden could shoulder the blame.

• It would also be tricky for the president to step aside before the NATO summit in Washington this week, some donors suggested.

• Others believe that dropping out sooner is better. Biden withdrawing now would leave more time for a sort of mini-primary, which could bestow more legitimacy to whoever becomes the nominee. It could also energize the party and draw oxygen away from Trump, with the Republican National Convention set to start next week.

Biden and his allies have resisted pressure to step aside so far. One reason: Polls indicate that his support in swing states hasn’t shifted since the debate. And even if Biden refuses to budge, there appears to be little chance that some top finance donors would shut their wallets, given their deep opposition to Trump.

What next? Tuesday could be key. The House Democratic caucus will meet in the morning, which could see more lawmakers push for Biden to step down.

And The Times’s Theodore Schleifer reports that the Biden campaign will hold a call today with fund-raisers. One of the co-hosts is Gov. Wes Moore of Maryland, who has been floated as a potential replacement candidate.

HERE’S WHAT’S HAPPENING

Boeing pleads guilty in a deal with the Justice Department. The plane maker admitted to a felony charge of conspiring to defraud the federal government over fatal 737 Max crashes in 2018 and 2019. The deal includes a $487.2 million fine and a pledge to invest at least $455 million in compliance and safety programs over the next three years, but it did not satisfy concerns from families of the crash victims who sought tougher terms.

More than one million people are under a hurricane warning as Beryl makes landfall in Texas. The storm brought wind and rain that hammered the coast and led to cancellations of hundreds of flights in Houston. Forecasters have issued warnings of flooding and power outages, and they said that Beryl’s potency was an ominous sign for the rest of hurricane season.

Inflation and bank earnings dominate the calendar this week. Jay Powell, the Fed chair, is scheduled to testify on Capitol Hill on Tuesday and Wednesday; expect questions on interest rates and the strong but slowing labor market. On Thursday, the Consumer Price Index is expected to show that the inflation rate held steady last month. On Friday, Citigroup, JPMorgan Chase and Wells Fargo report second-quarter earnings, with a rebound in investment banking expected to lift results.

A blockbuster merger takes shape

The biggest media deal of the year finally got done.

Just before Shari Redstone was expected to fly to Sun Valley, Idaho, for Allen & Company’s annual mogul-fest (more on that below), she struck an agreement that paves the way for Paramount to merge with the upstart studio Skydance. The transaction cements David Ellison, Skydance’s founder, as one Hollywood’s most important executives.

The deal is subject to regulatory approval. But if the merger closes, it will herald an uncertain new era for one of Hollywood’s most prominent studios, DealBook’s Lauren Hirsch and The Times’s Ben Mullin write.

Will anyone top Ellison? The transaction includes a “go-shop” period that will give Paramount 45 days to find a better offer. Other suitors, including the billionaire Barry Diller and a group consisting of Sony and the investment giant Apollo Global Management, have already expressed interest.

How will the company change its streaming strategy? Paramount’s critics have accused it of spending hundreds of millions of dollars annually on a streaming service, Paramount+, that is forecast to lose money until next year.

Some analysts have recommended adopting the “arms dealer” approach of Sony, which sells movies and TV shows to other general-interest services.

In a release last night, Skydance said it would deliver content on Paramount+ and Pluto, suggesting it isn’t going to surrender the streaming wars entirely.

How involved will the Redstones continue to be? Redstone and her son, Tyler Korff, have both discussed taking seats on the board of the combined company. But the extent of the Redstones’ future involvement is still an open question.

How long will it take for the deal to be approved? By traditional antitrust standards, this deal presents no major issues. But the result of a review by the Federal Communications Commission could still pose trouble. Jessica Rosenworcel, the F.C.C. chair under President Biden, has been aggressive in blocking media deals. If Donald Trump were to win in November, would Rosenworcel push to take action before leaving office?

In any case, the last time a broadcast network was sold, when Comcast bought NBCUniversal, the F.C.C. review lasted 14 months. If Paramount gets stuck in a regulatory mire, will it lose ground to other media companies potentially striking their own deals?

Now what for France?

The euro slipped along with French bonds as a nervous calm grips the eurozone’s second-biggest economy after voters on Sunday blocked the far right from gaining parliamentary control.

But French stocks gyrated as the country faces political paralysis and uncertainty, Vivienne Walt reports for DealBook.

“It’s crazy”: The front-page headline in the newspaper Libération on Monday summed up the mood. President Emmanuel Macron’s go-for-broke gamble last month to call the election may have stalled the march to power of Marine Le Pen’s far-right National Rally party.

But a surge in support for left-wing parties means the country is heading toward a hung parliament. That could doom Macron’s pro-growth initiatives that had helped attract billions in foreign investment and pose a wider challenge for Europe.

“We can predict a weak France in Europe, resulting in a weak Europe in the world,” André Loesekrug-Pietri, a former venture capitalist who is chair of the Joint European Disruptive Initiative, an agency that funds science and tech research, told DealBook.

Investors are increasingly worried about the country’s finances. The spread between French and German bonds — a key measure of Europe’s fiscal stability — had soared in recent weeks to its highest level since Europe’s sovereign debt crisis in 2012.

Analysts are bracing for potential credit downgrades. Business leaders are also feeling antsy about Jean-Luc Mélenchon, the far-left leader who has called for a slate of corporate and wealth taxes.

One outcome is certain: Macron’s party has diminished legislative power.

Business investment and talent could go elsewhere. Macron’s presidency has been marked by a booming tech start-up scene. U.S. tech giants and Silicon Valley V.C.s have poured funding into the likes the French artificial intelligence start-up Mistral. “We had a president who was super-supportive of innovation, of new companies,” Loesekrug-Pietri said. “A lot of foreign investors came.”

That is not guaranteed to continue, if Macron’s political options are constrained.

A Buffett-less Sun Valley

Top leaders in media, technology and politics are headed to Sun Valley, Idaho, for Allen & Company’s annual retreat this week. But one of the gathering’s best-known regular attendees won’t be there, DealBook’s Michael de la Merced writes.

Warren Buffett isn’t on the guest list, according to media reports. Instead, other top Berkshire Hathaway executives — his appointed successor, Greg Abel, and his investment lieutenants, Todd Combs and Ted Weschler — are set to be there, in another example of the changing of the guard at the conglomerate.

Buffett had been a longtime regular at the gathering, joining dozens of other attendees at off-the-record panels and presentations. He once quipped that the conference, where corporate megadeals have been hatched on the sidelines, was perfect for “A.B.W.A.” — short for “acquisitions by walking around.”

But Buffett has been cutting back his travel schedule extensively. He hosted Berkshire’s annual investor meeting in May, but Abel played a bigger role than in years past. Abel, Combs and Weschler have all attended the Allen & Company conference before.

Buffett is also nearly 94, and it’s worth noting that Sun Valley is well above sea level — 5,750 feet, to be exact. Last year, he was seen riding a golf cart to get around the resort. (Buffett did not respond to a request for comment.)

Buffett recently laid out some of his estate planning in public, telling The Wall Street Journal that he intends to give most of his remaining wealth to a new charitable trust overseen by his children.

Here are some of the headline-makers who will be attending, according to media reports:

• Sam Altman of OpenAI, whose company has been busy trying to strike licensing deals with Hollywood and media moguls;

• Adam Silver, the N.B.A. commissioner, who’s in the final stretch of negotiating what is reportedly a $76 billion broadcast package;

• Bob Iger of Disney, who will be accompanied by several potential successors, including Alan Bergman, Dana Walden, Josh D’Amaro and Hugh Johnston.

Others include Jeff Bezos and Andy Jassy of Amazon; Tim Cook of Apple; Mark Zuckerberg of Meta; David Zaslav of Warner Bros. Discovery; and Marc Benioff of Salesforce.

THE SPEED READ

Deals

• Carlsberg, the Danish brewing giant, agreed to buy Britvic, a British soft drinks maker, for $4.2 billion. (CNBC)

• Eric Trump is pursuing more deals in the Gulf region, raising potential conflict of interest concerns if his father is re-elected. (FT)

Elections, politics and policy

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