Bush's dubious Dubai guilt-trip.

Bush's dubious Dubai guilt-trip.

Bush's dubious Dubai guilt-trip.

A mostly political Weblog.
Feb. 24 2006 3:28 PM

Bush Dubious Dubai Guilt-Trip

Are port-sale critics a bunch of bigots?

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Rattner's new hedge fund will specialize in the same industry sector--media and communications--in which Rattner's Quadrangle Group also runs a private equity fund. Now suppose, hypothetically, that the Quadrangle private equity fund is thinking of buying a part of media firm Knight-Ridder, currently on the block. In the course of its "due diligence" as a potential purchaser, Quadrangle gets to look at everything within the company--five years of financial reports, projections, special projects, etc. Let's speculate, again hypothetically, that the results aren't that promising--the billions of potential cost savings Quadrangle thought they would find aren't there. There's no fat to cut! The equity fund concludes buying Knight Ridder isn't a good deal.

Now let's say that Quadrangle's hedge fund is "long" in Knight-Ridder stock. (Again, this is hypothetical, especially since the hedge fund isn't even established). The hedge fund is betting that private equity funds are going to buy Knight Ridder at a 20% premium above the current trading price. Of course, the hedge fund execs aren't supposed to be privy to Knight Ridder's books. But senior Quadrangle managers (e.g. Rattner) now know the meaning of every last detail of KR's business because of the diligent investigations of Quadrangle's private equity fund.  Are they really going to allow their hedge fund to make a "long" bet on Knight-Ridder stock if they know Knight Ridder isn't worth the money? Can any business like Knight-Ridder (or Time Warner) really trust the Quadrangle's private equity side not to share information with the hedge fund side?  More subtly, can they--with many millions at stake--trust that Rattner (also with many millions at stake) won't sigh, roll his eyes, or cough, or otherwise telegraph doubts when he (hypothetically!) hears his hedge fund guys explain why they think Knight-Ridder stock is a terrific buy and worth a whole lot of money? Yes, says Rattner! "[T]he two funds," Sorkin dutifully reports, are to be "separated by a so-called Chinese Wall. "

But wait. Rattner also tells Sorkin that the two sides will "share ideas about industry trends", and that he

hoped that investment managers who specialized in public market media companies would "offer a window into the other side of the house."

What kind of Chinese Wall is that? It lets "ideas" through but not ...er, what? (What if you see a "trend" that "there's no more fat to cut at big media firms"?) Isn't Rattner's promise of semi-porous purity the sort of claim of which the New York Times would ordinarily be a tad skeptical? (Substitute the name "Frist" or "Marvin Bush" for "Rattner" to see what I mean.)


Assignment Desk: This is clearly a job for one of the Times' excellent, fearless business columnists--say Floyd Norris or Joe Nocera. Nocera would be especially well-suited, since unlike Sorkin he's good at explaining things like hedge funds and conflicts of interest in language ordinary readers can understand. Is Pinch's workout buddy blowing smoke or not? If not, nail him to the wall! It's not as if Nocera has kids to put through college. ... Oh wait. [ Better not recommend any interns for jobs at the Times--ed  I knew there was a high-minded reason I don't have interns.]

P.S.: Of course, it's not clear that any media company really wants to get tough on Rattner. He might be buying up their stock one day. ... 1:19 A.M.

Stix Nix Crix Pix: It's a post-nomination heartland breakout runaway red state frenzy! Brokeback Mountain'sdomestic box office take has ... "collapsed," according to Andrew Sullivan. ... But hey, "less so than the other [eggheady, leftish and New Yorkerish] Oscar contenders." ... [You only wrote this so you could use that hed--ed True. I should have used it earlier. But it could be better. Remember the French word for "prize" ... ] ... See also J. Leo. ... Update: It's not just me! BoxOffice Mojo'sBrandon Gray, writing for the LAT,   confirms the bumpless box office fizzle:

If you thought box office results were low for best picture contenders on the first weekend after nominations were announced, take a look at what happened in their second week basking in Oscar's glow.

As a group, this year's best picture nominees dropped an average of 43% last weekend from the previous weekend's already dismal results.

How bad does it look? Last year's best picture candidates — the least profitable group of nominees on record — fell just 17% in the same frame.

"Brokeback Mountain" fared the best among this year's crop, and it was down 33%. It's the only best picture nominee that rates more than a blip on the box office radar, with a $4 million weekend and a $66.5 million tally in 66 days.

"Capote" crumbled 45%, "Good Night, and Good Luck" slumped 43% and "Munich" sank 53% from already pitiful grosses the weekend before. ...

"Brokeback Mountain" ads, for instance, trumpet the picture's legion of awards and nominations, essentially telling filmgoers they must see the picture because it's important and revelatory.

The message that "Brokeback Mountain" happens to be a universally resonant love story is buried underneath all the trophies. The result? The picture seems to have lost momentum since receiving all those Academy Award nominations. [Emph. added]

Beating Capote doesn't mean you've moved the red states on gay rights! ... [Tks. to alert reader M.C.] 9:50 P.M.

To Drudge: The newsweeklies are the caboose on a story more often than they're  the locomotive, no? ...  12:18 A.M.

Hill-won't-run contrarianism: Right on schedule. ... 2:36 P.M.