Wednesday, November 23, 2022

It's Thanksgiving eve. Scroll down for the latest on Amazon, the NFL, Apple, Semafor, Rupert Murdoch, Kara Swisher, Jennifer Lopez, the "Property Brothers," and more. As a reminder, we will be off for the holiday and back in your inbox next week. But first, the A1.

THE A1

The Story Behind SBF's Fall

CNN Photo Illustration/Ting Shen/Bloomberg/Getty Images

The staggering level of apparent deception staged by former crypto king Sam Bankman-Fried wasn't uncovered by government investigators or a major powerhouse financial news organization, such as The Wall Street Journal.

Instead, the public's first glimpse of the alleged wrongdoing by Bankman-Fried — known to insiders as SBF — came earlier this month from a small news site unknown to much of the public that has spent years chronicling the turbulent and murky world of crypto: CoinDesk.

In fact, the reporter and editor duo who worked to break the story, which prompted a stunning cascade of events that led to the evaporation of billions of dollars, didn't realize the scoop they had on their hands when they first obtained a document that cast tremendous doubt on the stability of SBF's crypto empire.

"Hi Nick," reporter Ian Allison emailed editor Nick Baker about his initial story plan, according to a copy of the message provided to me, "I'm looking at some stuff to do with Alameda if you want to chat this week, no mad rush."

Allison had obtained a financial document that showed 30-year-old SBF had engaged in shady behavior to use his crypto company, FTX, to prop up his separate investment firm, Alameda. But that wasn't clear at first glance and it took "a couple days to figure out the story," Baker recalled to me in a phone call this week. Baker said that both he and Allison "knew that it was an important document to have," but emphasized that the two had no understanding at first of the massive story that was buried in the spreadsheet of numbers.

"Did I know that I'd be speaking to you today? Hell no," Baker candidly told me. "I had no expectation that it was going to be that gigantic."

Over the next couple of days, Baker, from a home office in New York, worked with Allison, who lives in Scotland, to "chisel down" the financial document into a story. On November 2, they hit publish on the explosive report, quickly capturing the attention of the crypto world and shaking the foundation of the mighty exchange FTX. SBF, the prolific tweeter, was noticeably silent.

"It was something that struck us all internally," Baker recalled to me. "Sam, whenever there is a big story about him, he is not shy about tweeting it. And his silence was deafening. That was one of the things we were surprised about in the days after. That he didn't say a thing."

That silence was likely because SBF knew CoinDesk had uncovered something big. And he had good reason to believe that. The article generated enormous doubt about the health of FTX, spurring an effective rush of investors to suddenly pull funds from the company which put its solvency in danger.

After the scoop, SBF's chief competitor, Binance, suggested it would rescue the company through an acquisition. But in a second major scoop that led to FTX's implosion, Allison learned that the crucial deal would not happen. Baker said it was publishing that story, which he knew would "unleash chaos and destruction" on the crypto world, that made him anxious.

"I was nervous," Baker said. "It was definitely a cold hands [moment] — not because I thought [the scoop] was wrong, but because I knew it was right. I knew the pain ahead. Telling a truthful story has consequences."

Soon after, with the crypto market and his company in chaos, SBF resigned in disgrace and FTX moved to declare bankruptcy, marking one of the most stunning collapses in the history of finance.

"There are few parallels for a story with that much impact — and so quick," Baker said, noting FTX's undoing occurred at a much greater speed than that of companies such as Enron. "We dropped the story and in a week and two days they are bankrupt and this leading figure in crypto has fallen. It's stunning. Truly stunning. I've never seen anything like it."

——— BELOW THE FOLD ———

CNN Photo Illustration/Timothy A. Clary/AFP/Getty Images

Thanksgiving Traditions: How are top industry professionals spending the Thanksgiving holiday? I asked a few:

► Gayle King: "Spending the Thanksgiving holiday the way I do every year with my three sisters, their husbands and kids and now GRANDKIDS yaaay for that ! this year a total of 16 adults and two toddlers …. My Preference for location is always warm, pretty and tropical with aquamarine colored water .. my goal is to come back fatter and darker…. And so far success !"

► Wolf Blitzer: "I'm taking a few days off from work and enjoying some quality time with my family. We have so much to be thankful for. It's a truly special holiday."

► Kara Swisher: "I am in Boston at my wife Amanda Katz's family home with the two younger kids. The older two are with my ex AND my mother in upstate NY. Welcome to the lesbian world! All of the four of the kids will be with me in SF for Christmas. Working on my memoir."

► Jon Karl: "I am spending Thanksgiving with family — the first real thanksgiving since the pandemic. I am with my daughters and my in-laws. The menu includes lots of Turkey, gravy and stuffing but no social media."

► Olivia Nuzzi: "I got COVID at Mar-a-Lago. A little too on the nose, even for me."

► Jonathan Capehart: "Dinner with my mom and my husband at a restaurant. It's a spot sentimental to my husband and me, so it's the closest we'll come to home cooking. But I will be thinking of the families who lost loved ones in Colorado and Virginia just this week."

► Jonathan Swan: "Betsy [Woodruff] and I are heading to her parents' place for a big family meal. Lots of toddlers and babies - including some of my own - will ensure delightful chaos."

► Geoff Bennett: "This year, my wife and I are hosting friends and family at our home. For us, Thanksgiving has evolved into a three-day, rolling celebration — starting Wednesday with a game night and ending on Friday with a cookie baking contest. I'm particularly grateful this year for those journalists who are covering conflicts and who have committed themselves to uncovering truth in the darkest corners of the darkest places. Their work is more important than ever."

The Food Network's 'Super Bowl': Thanksgiving marks the start of the business time of the year for the Food Network. "The holidays are always a seasonal high point," a spokesperson for the channel told me, adding that Thanksgiving, in particular, is "akin to our Super Bowl." The channel, which I should note shares the same parent company as CNN, marks the season by offering its hungry audience a slate of holiday programming and recipes.

OFF THE WIRE

Savannah Guthrie and Hoda Kotb will be back to host the 96th annual Macy's Thanksgiving Parade, which airs 9am on NBC. (E! News)
Last year, the NFL said that it had its highest Thanksgiving Day ratings since 1998. What will this year bring?
Not into football? Vulture put together this handy guide of "the 14 best movies and TV shows to watch" this weekend. (Vulture)

CURTAIN CALL

CNN Photo Illustration/Nathan Stirk/Getty Images

Out of the Amazon: Blockbuster news from Bloomberg's Lucas Shaw: Amazon "plans to spend more than $1 billion a year to produce movies that it will release in theaters." Shaw, who cited sources for his report, said the internet giant plans on releasing between 12 to 15 movies each year in theaters, putting it on par with major, established studios. Read Shaw's full story.

📈 Stocks surge: Moments after Shaw's report published, shares in Amazon rose. The company ended the day up precisely 1%. Shares in AMC Theatres, Cinemark, and Cineplex were also lifted by the news.

The Kingdom's Speech: Bob Iger will return to the Walt Disney Studio Lot on Monday and host a town hall for staffers, according to an invite sent to the company on Wednesday. During the employee event, which will take place at noon ET, Iger will "talk about the future" of the company and answer questions. It's safe to say, Disney employees will probably have no shortage of those after the last few days.

OFF STAGE

The NFL's Sunday Ticket talks are taking time "because it is trying to bundle the package of out-of-market Sunday N.F.L. games with other media assets, including NFL Network and the NFL RedZone channel," Tripp Mickle, Benjamin Mullin, and Kevin Draper report. (NYT)
"Avatar: The Way of Water" is projected to open with at least $150 million at the U.S. box office. (Deadline)
Meanwhile: "Wakanda Forever" has crossed past the $300 million mark at the domestic box office. (Deadline)
Is Jennifer Lopez about to make a big announcement? Todd Spangler notes she has deleted all her posts on social media. (Variety)
Cynthia Littleton talks to Drew and Jonathan Scott — most commonly known as the "Property Brothers" — about how they built a billion dollar empire in less than a decade. (Variety)

THE VALLEY

CNN Photo Illustration/Drudge Report

Anger at Apple Plant: The iPhone-maker's carefully crafted corporate image was dealt a blow Wednesday with banners on the Drudge Report and elsewhere declaring that workers at its main supplier were "SLAVE TO THE APPLE." The headlines were the result of workers at Foxconn's huge plant in China confronting authorities as frustrations over pay and Covid restrictions boiled over. In short, workers allege that Foxconn has failed to honor lucrative recruitment offers that it had promised. Searches for the term "Foxconn" on Chinese social media now yield few results, an indication of heavy censorship. CNN Beijing bureau has the latest here.

► Notably, Apple has not issued a public comment on the matter, choosing to stay silent amid the bruising headlines.

TOO MANY TABS

Meta says an internal investigation it conducted found that "individuals associated with the US military" created a cluster of fake accounts targeting a variety of different countries. (WaPo)
Google employees are worried about layoffs, despite the fact that the tech giant has so far avoided major cuts as the economy worsens. (CNBC)
TikTok says it is on "high alert" in Malaysia and "will aggressively remove any violative content" amid the country's election crisis. (Reuters)

THE INFO WARS

CNN Photo Illustration/Michael Gonzalez/Getty Images

Musk Wars With Semafor: You may notice that Elon Musk is now in The Info Wars section of this newsletter, and not The Valley. That is intentional, given Musk has made it clear he aims to be an active participant in the information wars. On Wednesday, for instance, Musk effectively declared all-out war on Semafor (among the many other things he did), bashing the upstart digital outlet over a report that said he had once offered Sam Bankman-Fried, in a private text, the ability to "roll" the previous stake he had in the company into a privately held Twitter.

Musk laced into Semafor Editor-In-Chief Ben Smith, saying that "all public holders of Twitter were allowed to roll their stock into Twitter as a private company, but he did not do so." Musk argued that Semafor's reporting "made it falsely sound like he did, when in fact [SBF] owns 0%." The billionaire also repeatedly asked how much SBF had invested in the news startup (this is a fair question and I have asked Semafor this, but not received an answer). "To be direct, the very real concern here is that you have been pushing a completely false SBF ownership of Twitter narrative while effectively being his paid shill," Musk said. A spokesperson for Semafor didn't provide a comment.

Twitter's 'Amnesty': Musk on Wednesday suggested that he might allow virtually all users who had been permanently banned from Twitter back onto the platform. "Should Twitter offer a general amnesty to suspended accounts, provided that they have not broken the law or engaged in egregious spam?" Musk asked in an unscientific Twitter poll that wraps Thursday. Last time Musk posted such a Twitter poll, it was to decide whether or not to reinstate Donald Trump on the platform. After the poll concluded, Musk quickly restored Trump's account. It's unclear what Musk will do next, but he's suggesting he could do the same again for a much larger group of misfits. The Verge's Mitchell Clark has details here.

🔎 Zooming in: Restoring most banned accounts would be another step in a direction that would alienate advertisers, which Twitter desperately needs, given they account for the lion's share of the company's revenue. Advertisers simply do not want their brands associated with people using hate speech, spreading misinformation, and all the rest.

IN THE BATTLEFIELD

"Twitter is just a guy now," John Herrman writes. (NY Mag)
It sounds like Musk's relationship with Kara Swisher has hit a very rough patch: "There was a time when you cared about the truth [Elon Musk]. That is long gone. I'll add: Playing to the cheap (and dirty) seats is no way to live. You may be my greatest disappointment in 25 years of covering tech." (Twitter)
Musk deleted a post in which he said the "hands up don't shoot" narrative in wake of Michael Brown's death "was made up" and "fiction." (Gizmodo)
Musk hammered Business Insider, alleging that it's "not a real publication." (Twitter)
Musk poked fun at Stephen King, who said that "pretty soon the only advertiser left on Twitter will by My Pillow." (Twitter)
Musk also claimed that "far left San Francisco/Berkeley views have been propagated to the world via Twitter" and that the company is now "moving rapidly to establish an even playing field." (Twitter)

THE BUSINESS

CNN Photo Illustration/Dia Dipasupil/Getty Images

Murdoch's Merger In Trouble?: A major investor in both News Corp. and Fox Corp. "opposes a plan by Rupert Murdoch to recombine the companies and wants other alternatives considered, including a breakup of News Corp," WSJ's Alex Frangos reported Wednesday. "Independent Franchise Partners, a London-based investment firm and one of the largest non-Murdoch holders of both News Corp and Fox, said it told a special committee of News Corp's board last month that it thought a combination on its own would fail to realize the full value of the company. It believes any combination should be done in conjunction with the sale of some of News Corp's most valuable business units." More from Frangos here.

Thank you for reading! This newsletter was edited by Jon Passantino. Have feedback? Send us an email here. We will be back in your inbox next week after the holiday.