On The Money: Eric Schmidt interview, Bezos plays ball, Ike’s revenge and Elon’s energy drink

Personality-driven business capsules you can only get here. Our weekly dispatch gets you ready for what people are thinking before they talk about it— the hitters you know and want to know across Wall Street, Washington, and Silicon Valley.

Bezos ball grab?

Efforts to sell the Washington Commanders aren’t going well – and some NFL insiders are hoping that Jeff Bezos will deliver a game-saving play.

Indications of interest from a pair of prospective buyers for the crisis-ridden football franchise have come in at the $6 billion requested by the team’s controversial owner Dan Snyder – but it’s not clear whether they’ll be that high in the final round, sources told On The Money. 

Among those looking to replace Snyder is Josh Harris, the former Apollo Global Management bigwig who also owns the Philadelphia 76ers and the New Jersey Devils. One other mystery buyer has submitted a bid – and appears to be the only other suitor, sources told The Post’s Josh Kosman.

“They are struggling and there are only two buyers left,” a source said. “They bid $6 billion each but don’t have the money yet.”

With a net worth estimated by Forbes at $6.3 billion, Harris is rich – but hard-pressed to write the $1.5 billion equity check that the NFL would require for the purchase so that they own 25% of the team, according to people briefed on the matter. To close a $6 billion deal, a bidder also would be allowed to take on a maximum of $1 billion in debt while raising $3.5 billion from multiple minority investors – a tough ask that may not be so attractive in any case, given the team generates just $150 million a year in Ebitda, according to a banker close to the process.

That’s not a problem for Bezos, whose fortune is currently pegged by Forbes at $123 billion. 

“I think when they realize they can’t get to $6 billion they’ll say to Jeff Bezos, ‘It’s yours for $6 billion,’” the source said, reckoning that the two current bidders may end up with offers closer to $5 billion in the final round.

Nevertheless, Snyder is reportedly unhappy that Bezos owns the Washington Post – a newspaper which published a series of tough exposes on Snyder that have, among other things, pressured him to surrender ownership of the team. 

As reported exclusively by The Post, some investors are betting that Bezos might be willing to sell the newspaper to clear the way for his NFL ownership. But some sources close to Bezos insist such a deal is unlikely – and that, with all the noise coming out of Washington, he is once again inclined to be patient and wait until his home team, the Seattle Seahawks, finally comes up for sale in the next two or three years.

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Indeed, people close to Bezos insist he is much more focused on his rocket company, Blue Origin, which is working with Boeing Co and Lockheed Martin to put humans on the moon again by 2024. These people add while he doesn’t mind his name being in the rumor mill, he has no intention of actually buying the team.

Snyder’s advisor Bank of America is asking suitors for an update on Feb. 15, sources said. The goal is to have an agreement in place by the NFL owners meeting on March 26. If Snyder refuses to sell for less than his asking price and Bezos wants to buy the team for $6 billion then it would be up to the NFL to force the sale.

NFL Commissioner Roger Goodell could do that during the owner’s meeting if he gets 24 of the league’s 32 owners on board. Still, while Snyder and his management team have become pariahs in the league over accusations of sexual harassment and tax evasion, some insiders say it’s not a cinch he’d lose the vote.

“I don’t know if they have the 24 votes,” a source who knows NFL owners said.

Meanwhile, sources said speculation has emerged that Bezos will be a no-show at Sunday’s Super Bowl in Phoenix despite being invited multiple times by the NFL. That would be a surprise, sources add, given that Bezos has been a fixture in luxury boxes at the Big Game in recent years.

If Bezos does indeed fail to show up on Sunday, some people with knowledge of the NFL bidding process said it’s an indication Bezos has other priorities. The Super Bowl is an ideal opportunity to schmooze with team owners whose votes Bezos would need to purchase a team.

Another sports banker, however, disagreed, opining that a Bezos no-show could instead be a sign he’s still in the race.

“The last thing you want if you are a bidder is to be seen in public,” a sports banker said. “The better thing to do is lay low.” 

Spokespeople for Bezos, Snyder and Harris declined to comment.

Photo illustration showing key figures in the Disney proxy battle in teacups
The battle between Disney CEO Bob Iger and billionaire investor Nelson Peltz has come to an end.

Don’t like Ike

Nelson Peltz’s proxy battle with Disney came to a quick and decisive end – and for that we can thank Ike Perlmutter, sources told On The Money.

It’s no secret that Perlmutter – a gun-toting octogenarian who effectively was pushed from the helm of Marvel Entertainment by Disney CEO Bob Iger following a nasty tiff in 2015 – had lately been plotting with Peltz behind the scenes against his old nemesis, Iger. 

It’s also no secret that Perlmutter’s outsized stake in Disney – and his reputation for playing hardball – gave Peltz’s recent demands on the Mouse House their heft.

“Nelson’s presentation meant nothing,” a source added. “Over the last year other activists like Dan Loeb have taken swipes at Disney but the entertainment giant hasn’t actually changed anything in response.”

Perlmutter — who once screamed at a group of investment bankers working until 2 a.m. for expensing a pizza for dinner — is maniacal about cutting costs. Lately, sources said he became a nuisance at Disney — meeting with division heads and learning every line in the budget, sources said.

“Disney did not want Ike under the tent,” a source close to the situation told On The Money. “The layoffs Wednesday were the sacrificial lamb to show cost cutting was happening… Iger getting rid of 7,000 people that quickly isn’t something a CEO would normally do just months after taking over…it was a reaction to what Ike was doing.”

Still, some insiders were likewise surprised by Peltz’s swift response early Thursday that he was calling off his campaign, declaring he was happy that Disney was “listening.” What was the rush?

“Stop while you’re ahead. Stock price is up huge,” one source said, guessing Peltz’s thinking. “And Ike is a wild card – even to Peltz”

Ozempic slims stocks

As business tycoons like Elon Musk and Michael Rubin embrace trendy weight-loss medications like Ozempic and Wygovy, some short sellers are starting to place bets that those drugs could crush weight-loss stocks, On The Money has learned. 

Stocks of weight loss firms have soared during the past five years, among them Medifast (up 73% at $115 per share), Planet Fitness (up 170% at $80 per share) and Xponential Fitness (up 98.8%). But if the popular drugs catch on, some shorts are wagering that demand for special diets and gym time could tank. 

Since the new wonder drugs are mostly buried inside mega-cap pharmaceutical names, the only way to play the trend is by shorting pure play weight-loss stocks.

“Because these drugs are still relatively new we’re not seeing a pinch on these companies’ bottom line yet… but at the first sign of weakness short-sellers will pile in,” said Ihor Dusaniwsky, managing director at S3 Partners.

“Short sellers are the canary in the coal mine if these stocks lose value,” says Dusaniwsky, who adds that he’s lately been taking Ozempic himself. “They’ll jump in well before investors sell their long positions.” 

Xponential Fitness, Medifast and  Planet Fitness did not respond to requests for comment.

Some restaurateurs, meanwhile, say they haven’t noticed a bite out of their bottom line. 

“Lots of people are talking about it, but I’ve seen enough dietary trends to know at some point the fads end,” John McDonald, CEO of Mercer Street Hospitality, told On The Money. “And if people are eating one meal a day they’re going to make sure that one meal is a show — it’s not going to impact business.” 

Photo illustration shows hundred dollar bills ripped in half over a Deutsche Bank logo
Deutsche Bank may be cutting base salaries.

Deutsche downer

Deutsche Bank is planning to slash high-level investment bankers’ base salaries in addition to trimming their bonuses, a person with direct knowledge told On The Money. 

Investment bankers at DB make more money from their base salaries and less from their bonuses than peers at other banks, insiders said. While managing directors at Goldman can make base salaries of mid- to high-six figures, many MDs at DB haul in seven-figure base salaries.

A source close to the bank said the salary cuts won’t affect junior bankers. 

“The concern is these high salaries can breed complacency… the company also needs to get costs in line with revenue,” a source added.

The announcement isn’t expected until March and will likely go into effect April 1. DB declined to comment.

An animation shows Elon Musk considering how good of an idea a sports drink would be
A source says Tesla is already deep in the process of developing a sports drink.

Elon Energy drink

Elon Musk’s electric-car maker Tesla— which has already done a stint selling tequila— is now looking to branch into sports drinks, On the Money has learned. 

According to a source who reviewed internal product development documents at Tesla, Musk is already focused on the nitty gritty of the design.

“He’s mulling color schemes right now. Bright, primary colors versus sleeker colors like black or camel,” the source said.

In 2020, the Tesla tycoon launched a small batch “Tesla Tequila” añejo. Tesla dropped 420 tequila bottles at $420 a pop in 2022. Musk has created other random merchandise over the years including satin shorts, surfboards, and flame throwers.

Musk has previously complained that the caffeine content in one of his favorite beverages – Diet Coke – made him too jittery.  

“I got so freaking jacked that I seriously started to feel like I was losing my peripheral vision,” Musk told Inc. in an interview, adding that he now opts for caffeine-free Diet Coke.

It’s unclear whether the Tesla beverage will be caffeinated or not.

Eric Schmidt
Google’s ex executive chairman Eric Schmidt discusses ChatGPT.

Two minutes with Eric Schmidt​

Google parent Alphabet shed more than $100 billion in market cap this week after its hotly anticipated ChatGPT rival, Bard, spat out inaccurate information about the James Webb telescope. Nevertheless, Google’s former executive chairman Eric Schmidt was kind enough to lend his thoughts to On The Money on the subject of artificial intelligence.

Lydia: I have to ask about Google Bard… 

Eric: I’m not going to comment on Google but this is a multi-year race… and I’m glad everyone is in the race. 

Lydia: Before this interview I asked ChatGPT to write in the tone of The New York Post and it was terrifying how good it was…should I be worried about AI taking my job?

Eric: Here’s why I’m not worried about ChatGPT taking your jobs now: The first thing to understand is, it’s a remarkably agile writer that didn’t bother to study the facts very well.

What happens with ChatGPT is it sounds very persuasive — and its done a really good job of using reinforcement learning to fine tune it to be very conversational — but it doesn’t actually know a lot of facts and it gets easily confused. It hallucinates. If you let it talk for a while it ends up making no sense. But it is very earnest in its narrative of false facts.

It’s worth noting how these things came about. The team that started this was just one of the teams that was trying to predict the next word. The computer learned language prediction so what happened was they made bigger and bigger models and begin to be able to write paragraphs and then sentences

It’s predicting language, it’s not predicting factual things. It’s a very good pattern generator and it’s extremely impressive. But there’s also a context problem. It absorbed language and the language is ambiguous. If you start to probe its limits you’ll be surprised… it doesn’t have memory. It’s not going to be able to write a book. It doesn’t understand basics like gravity.

Lydia: What’s the timeline for this technology to cause massive disruption?

Eric: Eventually these systems will be very grounded and then all bets are off, but it’s years away. The first iPhone came out almost 15 years ago. Think of how much has changed since then. 

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