Business
What Buffett’s Exit Means
A conscience of capitalism prepares to step off the stage
It was closing in on 1 p.m. when Warren Buffett, seated onstage before a rapt audience of about 40,000 at the CHI Health Center in Omaha, said that he was getting a “5-minute warning.”
To most of those there for the annual meeting of Berkshire Hathaway, his company, it was simply a signal that the gathering — known as Woodstock for capitalists — was drawing to a close. No one knew that something historic was about to happen.
After 60 years of running the company he has called his painting, the 94-year-old Buffett said that he planned to step down as chief executive at year end. (Proving how much freedom he has always exercised at Berkshire, he surprised his own board and Greg Abel, his handpicked successor: “I want to spring that on the directors,” he said with a smile.)
People in the crowd, many of whom were in tears, rose from their seats in a standing ovation for a singular figure in the business world.
Buffett is often described as a symbol of American capitalism. The truth is that he has always been an outlier. He is more the conscience of capitalism, willing to speak uncomfortable truths about the system’s ills while others remained silent. (His public comments on issues like tariffs over the weekend are a prime example.)
The billionaire always comes across as a gentleman, and in an age of distrust he became someone people could trust. Fellow business moguls and government officials admired him because of his success, yes — Berkshire reported $89 billion in net profit last year, and it is one of the biggest buyers of U.S. Treasury bonds — but also because he didn’t appear to have changed despite his wealth. He lives in a modest house in Omaha, and for years drove his own car, including to the drive-through at McDonald’s.
Buffett isn’t perfect, something he often acknowledges, and he has urged his followers to stay humble as he discussed his own investing mistakes and misses. But that also got to one of his biggest accomplishments, using his annual Berkshire letters and marathon Q. and A. sessions with shareholders to educate generations about business, investing and life itself.
After the announcement, I was struck by a social media post from someone I wouldn’t have normally considered to be a Berkshire watcher, who perfectly encapsulated the importance of Buffett and his longtime business partner, the late Charlie Munger. “They were the good investors, dealers in reality, patient,” wrote Nick Denton, the founder of Gawker. “When the history of the rise and fall of America is written, one of the chapters will begin in Omaha, with their departure.”
As Buffett prepares to depart, the big question is: What will happen to his masterpiece once it passes to Abel?
It has been apparent for several years now that on a day-to-day basis, Abel is already running large swaths of Berkshire’s operations, so the shift likely won’t be dramatic. But the scrutiny of “Abel’s Berkshire” will undoubtedly increase: The company wasn’t built just as a collection of disparate businesses, but as the vision of one man.
Abel has said he will seek to maintain the culture that his boss meticulously built. But things will inevitably become different. Berkshire’s board gave Buffett an unparalleled degree of autonomy to operate as he saw fit, often learning about significant deals he had struck only after the fact.
Abel will have to work hard to earn even some of that latitude, and under him Berkshire is likely to operate with more guardrails. But there is speculation that Buffett will remain chairman for some period, which could afford Abel more freedom as he grows into the top job.
Nevertheless, Buffett’s success, and the company he built, were exceptional. What investors gathered in Omaha this weekend, and the world over, want to know is what comes next.
HERE’S WHAT’S HAPPENING
Markets brace for central banks and a busy earnings week. On Wednesday, the Fed is widely expected to again hold interest rates steady, potentially further irritating President Trump (though he seems to be backing off calls to fire Jay Powell, the Fed chair). Big companies are also set to report results, with investors focusing on further fallout from the trade war: Ford announces on Monday; Disney, Uber and Novo Nordisk on Wednesday; and Toyota, AB InBev and Shopify on Thursday.
Stocks look set to snap a nine-day winning streak. S&P 500 futures are down, with energy stocks in particular looking weak. Oil prices have fallen roughly 2 percent on Monday — West Texas Intermediate, the U.S. benchmark, is trading around $56.60, well below most domestic drillers’ break-even price — after the OPEC Plus cartel shifted course on Saturday and said it would increase production.
Shell’s shares jump on a report that it’s weighing a bid for BP. The oil giant’s advisers are evaluating a takeover of the struggling BP, Bloomberg reports, and could pounce if oil prices (and its rival’s stock) fall further. The fate of BP has become a much-discussed issue, with Wall Street analysts seeing it as a prime acquisition target as it pursues a turnaround plan under pressure from the activist investor Elliott Investment Management.
Prediction markets versus the vaticanisti
Betting on papal elections may be older than the Sistine Chapel. This week’s conclave involves a new twist: It’s the first time that major online prediction markets have turned their focus on the Vatican’s ancient selection process.
And the wagers are flowing in. The Italian cardinal Pietro Parolin has emerged as the odds-on favorite to succeed Pope Francis, according to the prediction markets Polymarket and Kalshi. Even a report last week that the 70-year-old had medical issues, which the Vatican denied, did little to dent that lead.
But while prediction markets claimed vindication in correctly predicting President Trump’s victory in November, picking the next heir to Saint Peter’s throne is likely to be a tougher challenge, experts both inside the Vatican — known as the “vaticanisti” — and outside tell Bernhard Warner and Michael de la Merced.
The wisdom of crowds can likely go only so far. High-tech betting sites “will never be able to break through the complexity, the unpredictability of the decisions made inside,” Franca Giansoldati, a Vatican specialist who writes for Il Messaggero, one of Italy’s biggest daily newspapers, said.
Rajiv Sethi, an economist at Barnard College who has studied prediction markets, noted that when it came to the presidential election, bettors were able to process a wide variety of information sources, including public polls and televised debates. The papal conclave — famously conducted behind closed doors and composed of an expected 133 cardinal electors sworn to secrecy — offers far fewer clues for gamblers.
Consider that a spike in the Polymarket contract betting that a new pope would be picked in 2025 took place after Francis’ death was announced, according to Sethi. Were there inside trading, someone could have made a lot of money. “We can rule out information leakage from cardinals,” Sethi said.
Conclave politics have been highly unpredictable. In 2013, the odds-on favorite was Cardinal Angelo Scola; then-Cardinal Jose Maria Bergoglio, who became Francis, was on few short lists. There are also unexpected developments, most recently when Cardinal Angelo Becciu, who was forced to resign his positions after a financial scandal, briefly sought to crash the upcoming conclave.
Again this time, the cardinals are divided, and many are meeting for the first time — factors that could complicate how long it takes before white smoke emerges from the Sistine Chapel.
Then there are other potential wild cards, including President Trump’s policies (which Francis frequently criticized), Giansoldati noted. Could cardinals even be influenced by a Trump social media post depicting himself in papal vestments? Analysts have seen a kind of Trump effect energizing national elections around the world already this year.
All that is unlikely to deter online bettors. Kalshi’s main contract on who the next pope will be currently has about $5 million in wager volume. “So far, the papal election market is tracking to be as big as the Super Bowl,” which saw $27 million in volume, Jack Such, a spokesman for the prediction market, told DealBook.
“Today, it might be that, you know, Donald Trump thinks he can take over the election system through one of his executive orders. Tomorrow maybe it’s the banking system. After that, maybe it’s contracts. Maybe he decrees, ‘I’m gonna decide which contracts are binding and which contracts aren’t binding.’ So, the legal system is fundamental to how our society operates, how capitalism operates, and everyone should have a stake in that.”
— Marc Elias, a prominent lawyer for the Democratic Party whom President Trump has targeted by name in his campaign against big law firms, on “60 Minutes.” Trump drew further concern when, during an interview on “Meet the Press” that aired on Sunday, he repeatedly said “I don’t know” when asked if he needed to uphold the Constitution and guarantee the right of due process.
The trade war goes to Hollywood
Shares in Netflix were down more than 4 percent in premarket trading this morning as investors weigh President Trump’s latest tariff target: films made overseas.
Never mind that Hollywood has a huge trade surplus with the rest of the world, and that it’s difficult to define how much of a major film is actually produced outside the United States. The proposal, which involves a 100 percent levy on such films, could scramble the economics for major studios and streaming services.
Elsewhere in tariff news:
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Trump said on Air Force Once that he has no plans to speak with Xi Jinping, China’s top leader, this week as the trade talks between the two stall. But he reiterated that he is willing to lower the levies that have hit commerce between the two countries.
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Many of the corporate promises to invest big in America, which the White House has said amount to “trillions of dollars in new investment,” are wildly overblown, according to an analysis by The Washington Post.
DEALBOOK WANTS TO HEAR FROM YOU
We’d like to know how the tariffs are affecting your business. Have you changed suppliers? Negotiated lower prices? Paused investments or hiring? Made plans to move manufacturing to the U.S.? Or have the tariffs helped your business? Please let us know what you’re doing.
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Business
Disney warns that ESPN, ABC and other channels could go dark on YouTube TV
Walt Disney Co. is alerting viewers that its channels may go dark on YouTube TV amid tense contract negotiations between the two television giants.
The companies are struggling to hammer out a new distribution deal on YouTube TV for Disney’s channels, including ABC, ESPN, FX, National Geographic and Disney Channel. YouTube TV has become one of the most popular U.S. pay-TV services, boasting about 10 million subscribers for its packages of traditional television channels.
Those customers risk losing Disney’s channels, including KABC-TV Channel 7 in Los Angeles and other ABC affiliates nationwide if the two companies fail to forge a new carriage agreement by Oct. 30, when their pact expires.
“Without an agreement, we’ll have to remove Disney’s content from YouTube TV,” the Google Inc.-owned television service said Thursday in a statement.
Disney began sounding the alarm by running messages on its TV channels to warn viewers about the blackout threat.
The Burbank entertainment company becomes the latest TV programmer to allege that the tech behemoth is throwing its weight around in contract negotiations.
In recent months, both Rupert Murdoch’s Fox Corp. and Comcast’s NBCUniversal publicly complained that Google’s YouTube TV was attempting to unfairly squeeze them in their separate talks. In the end, both Fox and NBCUniversal struck new carriage contracts without their channels going dark.
Univision wasn’t as fortunate. The smaller, Spanish-language media company’s networks went dark last month on YouTube TV when the two companies failed to reach a deal.
“For the fourth time in three months, Google’s YouTube TV is putting their subscribers at risk of losing the most valuable networks they signed up for,” a Disney spokesperson said Thursday in a statement. “This is the latest example of Google exploiting its position at the expense of their own customers.”
YouTube TV, for its part, alleged that Disney was the one making unreasonable demands.
“We’ve been working in good faith to negotiate a deal with Disney that pays them fairly for their content on YouTube TV,” a YouTube TV spokesperson said in a statement. “Unfortunately, Disney is proposing costly economic terms that would raise prices on YouTube TV customers and give our customers fewer choices, while benefiting Disney’s own live TV products – like Hulu + Live TV and, soon, Fubo.”
Disney’s Hulu + Live TV competes directly with YouTube TV by offering the same channels. Fubo is a sports streaming service that Disney is in the process of acquiring.
YouTube said if Disney channels remain “unavailable for an extended period of time,” it would offer its customers a $20 credit.
The contract tussle heightens tensions from earlier this year, when Disney’s former distribution chief, Justin Connolly, left in May to take a similar position at YouTube TV. Connolly had spent two decades at Disney and ESPN and Disney sued to block the move, but a judge allowed Connolly to take his new position.
YouTube TV launched in April 2017 for $35 a month. The package of channels now costs $82.99.
To attract more sports fans, YouTube TV took over the NFL Sunday Ticket premium sports package from DirecTV, which had been losing more than $100 million a year to maintain the NFL service. YouTube TV offers Sunday Ticket as a base plan add-on or as an individual channel on YouTube.
Last year, YouTube generated $54.2 billion in revenue, second only to Disney among television companies, according to research firm MoffettNathanson.
The dispute comes as NFL and college football is in full swing, with games on ABC and ESPN. The NBA season also tipped off this week and ESPN prominently features those games. ABC’s fall season began last month with fresh episodes of such favorite programs as “Dancing with the Stars” and “Abbott Elementary.”
ABC stations also air popular newscasts including “Good Morning America” and “World News Tonight with David Muir.” Many ABC stations, including in Los Angeles, run Sony’s “Wheel of Fortune” and “Jeopardy!”
“We invest significantly in our content and expect our partners to pay fair rates that recognize that value,” Disney said. “If we don’t reach a fair deal soon, YouTube TV customers will lose access to ESPN and ABC, and all our marquee programming – including the NFL, college football, NBA and NHL seasons – and so much more.”
Business
10 years since Aliso Canyon: Disaster was wake-up call for U.S. on dangers of underground gas
On an evening 10 years ago, Porter Ranch resident Matt Pakucko stepped out of his music studio and was walloped by the smell of gas — like sticking your head in an oven, he recalled.
Pakucko called the fire department. It turned out crews had already been up to the Aliso Canyon gas storage facility in the Santa Susana Mountains behind the neighborhood, responding to a report of a leak. Many of his neighbors were beginning to feel ill, reporting issues such as heart palpitations, vomiting, burning eyes and bloody noses.
“I swear I thought I was standing behind a 747 with its engines blowing — it was not just gas, it was oil smell, it was chemical smell that permeated,” recalled Pakucko, who went on to co-found the advocacy group Save Porter Ranch. “I couldn’t stay out there for 30 seconds. It tasted like f— gasoline.”
Soon it was clear that this wasn’t just a leak — it was a blowout. Over the course of 112 days, the Aliso Canyon facility would spew an estimated 120,000 tons of methane and toxic chemicals into the atmosphere. It was the worst natural-gas well blowout in U.S. history, and an environmental disaster whose effects will be unpacked for generations.
The event was widely seen as a wake-up call to the dangers of methane and underground natural gas storage. Methane, a planet-warming greenhouse gas, is about 80 times more potent than carbon dioxide and is responsible for about a quarter of all the human-caused climate change we are experiencing. A study published by UCLA researchers last month found that women in their final trimester of pregnancy who were living within 6.2 miles downwind of the blowout in 2015 had a nearly 50% higher-than-expected chance of having a low birth-weight baby.
The blowout ushered in a wave of new regulations to strengthen the governance of natural gas storage facilities in California and the United States, as well as new tools and technology to monitor methane emissions.
But 10 years later, some Porter Ranch residents say the wounds still feel fresh, and too many promises have been broken. After the disaster, then-Gov. Jerry Brown called for the permanent closure of Aliso Canyon by 2027 — a goal his successor, Gavin Newsom, called a top priority and vowed to meet even sooner.
Instead, Aliso Canyon remains open, with regulators voting in December to continue using the facility for years — probably into the 2030s — citing the need for natural gas to help maintain affordable energy rates and grid reliability in California.
The facility is a key asset for Southern California Gas. In an emailed statement, the company said the state would struggle to meet electricity demand without Aliso Canyon’s storage. The site fuels 17 power plants and helps keep the lights on during the hours that can’t yet be met by solar, wind and other renewable resources, the company said. Natural gas still represents about 40% of the state’s electricity supply.
“There’s a lot of work to do to get off natural gas and oil in California,” said Adam Peltz, senior attorney with the nonprofit Environmental Defense Fund. “That work is underway, but it’s not complete. If you’ve built an economy on fossil fuels, it takes awhile to get off of it.”
Aliso Canyon was originally drilled as an oil field in the late 1930s before SoCalGas converted it to natural gas storage in the early 1970s. Utilities often use played out crude oil fields as places to pump gas downward under pressure and hold it until it is needed.
Aliso Canyon is one of the largest natural gas storage facilities in the U.S.
In the lead-up to the blowout, SoCalGas was filling the site in preparation for the winter heating season. Crews were using tremendous force to pump gas down a well that was more than 60 years old. But a metal casing on well SS-25 had corroded, and gas began blowing out at very high volumes.
Methane is not visible to the naked eye, but aerial images captured with infrared cameras and released by the Environmental Defense Fund showed a geyser-like eruption of the flammable, climate changing gas — making it clear to the whole world the magnitude of the disaster.
Matt Pakucko, right, founder of Save Porter Ranch, and other protesters against SoCalGas hold a rally at the intersection of Tampa Avenue and Rinaldi Street on Sept. 28, 2021, in Porter Ranch.
(Irfan Khan / Los Angeles Times)
It took nearly four months for crews to stop the leak. By that time, damage was done. More than 8,000 households were temporarily displaced, businesses were shut down, and two schools were relocated for several months.
Researchers are still working to unpack the health outcomes of the event. SoCalGas, meanwhile, has paid about $2 billion in settlements and agreed to operate the facility at a lower maximum pressure.
Officials with the gas company said they have shored up the facility, including replacing the inner steel tubing on all operating wells and conducting continuous ambient methane monitoring. All wells at the site are subject to real-time pressure readings and visual inspections four times a day, among other protocols, SoCalGas said.
“Over the past 10 years, SoCalGas has conducted comprehensive safety reviews and implemented multiple safety layers that protect one of California’s most important assets for energy reliability and affordability,” the company said.
While the maximum allowable operating pressure at the site remains reduced — about 3,183 pounds per square inch compared with 3,600 pounds per square inch in 2015 — state officials recently voted to let SoCalGas increase storage at the facility to 68.6 billion cubic feet of natural gas from 41 billion cubic feet, outraging many in the community.
But experts say there are silver linings to the disaster. California overhauled its underground natural gas storage regulations to make them the strongest in the nation and among the strongest in the world, according to Peltz, of the Environmental Defense Fund. The changes include more thoughtful rules for well construction, better monitoring and risk management, and improved planning and emergency response.
Congress reacted to the disaster by requiring its regulatory agency, the Pipeline and Hazardous Materials Safety Administration, to issue safety standards for natural gas storage nationwide. In 2016, it adopted best practices recommended by the American Petroleum Institute, which were strengthened at the beginning of this month.
Many states with natural gas storage previously had no regulations at all, Peltz said.
“On a national basis, the systems will be safer as a result of that change,” he said.
There have been technological advancements too. The infrared aerial recording of the leak captured in 2015 was a relatively new technique at the time, but has now become commonplace. The California Air Resources Board conducted its first large-scale statewide aerial methane survey in 2016, identifying many of the largest methane sources in the state.
There have also been considerable advancements in the ability to observe methane super-emitters through satellites and remote sensors, according to Seth Shonkoff, executive director at the science research institute PSE Healthy Energy and an associate researcher at the UC Berkeley School of Public Health.
“The rub is that we know more than we ever have, and we’re perhaps controlling more than we would have if we didn’t have the technology to see them, but we’re still seeing more and more of these large-scale emission events all across the United States and all across the world,” he said.
Methane concentrations in the atmosphere are still rising. It is streaming, often constantly, from facilities associated with the oil and gas industry, landfills and dairy farms, among other sources.
The Aliso Canyon Southern California Gas storage facility on May 28, 2020.
(Robert Gauthier / Los Angeles Times)
Methane isn’t the only concern either. Researchers now have a better understanding of what’s in the gas that blew from Aliso Canyon and that continues to be stored in natural gas facilities around the country. Although it is primarily composed of methane, roughly 99% of samples analyzed by Shonkoff and his team have contained hazardous air pollutants such as benzene, hexane and toluene, largely as a result of commingling with depleted oil and other subsurface materials.
Moving forward, he said, it will be critically important for gas companies to disclose to regulators and risk managers what their gas is composed of, so that if it leaks, responders can quickly determine the appropriate response.
“If we had had that with Aliso Canyon, we could have, within a matter of hours, understood whether people should get out of the way or stay inside, and we wouldn’t have had as many people suffering from health symptoms,” Shonkoff said.
In 2024, the Biden administration passed the first comprehensive rules to limit methane pollution by fining oil and gas developers for excessive emissions. But this year, the Trump administration revoked the rule, which it described as a tax.
At the same time, many natural gas storage facilities across the country are old and require retrofitting to meet current regulations, but such upgrades can be slow and expensive — often leaving ratepayers on the hook.
Residents near Aliso Canyon have also long feared an earthquake or wildfire in the area. The gas field sits along the Santa Susana fault and is in a high fire hazard severity zone. SoCalGas says it has numerous safety plans and procedures in place.
Perhaps the greatest tension remains between those who wish to see Aliso Canyon shuttered and the officials who say the facility is critically important to California’s energy supply, which is increasingly trying to serve power-hungry artificial intelligence data centers.
Dozens of Porter Ranch protesters chant “shut it all down,” as they demonstrate at the Aliso Canyon gas storage facility in Porter Ranch on May 15, 2016.
(Francine Orr / Los Angeles Times)
California has committed to reaching 100% carbon neutrality by 2045. But SoCalGas says it still needs Aliso Canyon.
“SoCalGas is aligned with the state of California in pursuing the technologies and infrastructure that supports California’s climate plan, including clean renewable hydrogen and renewable natural gas, that could, over time with other renewable energy projects, deliver the reliability and affordability Aliso Canyon supports today,” the utility said in a statement. However, any decision to reduce or eliminate operations at Aliso Canyon must be based on genuine reduced demand that is permanent, the company said.
Pakucko, of Save Porter Ranch, noted that the facility was offline for two years after the blowout without an interruption in service.
“Two years!” he said. “And guess what? We managed without the facility.”
For others in the area, it feels like the latest in string of broken promises.
Among SoCalGas’s settlement agreements was a $120-million consent decree with the state of California requiring the utility to fund methane mitigation projects, air monitoring and other initiatives to address alleged harms caused by the blowout. About $25 million of that went toward a long-term health study on the effects of natural gas exposure, which is being conducted by researchers at UCLA. The results are eagerly awaited.
About $26 million went to a program for dairy digesters in the Central Valley, which capture methane from cow manure before it enters the atmosphere. Many had hoped those funds would be spent closer to home, including former L.A. Mayor Eric Garcetti, who at one point envisioned the mitigation money being used to transform Porter Ranch into a net-zero community.
“That would have been so great,” said Patty Gleuck, a Porter Ranch resident who served on the community advisory group for the health study. Instead, “that money went to this dairy digester program that does not benefit this area.”
Like Pakucko, Gleuck recalled suffering health effects during the blowout, including a tightness in her chest and a metallic taste in her mouth that dissipated when she left the area and resumed when she returned.
She still suffers from a chronic cough and uses an inhaler, she said, adding that “a lot of inhalers were prescribed in the area.”
“A lot of people moved away, taking a loss on their homes because they were so sick, or their family members were sick,” she said. “I just don’t think that there has been justice.”
Business
Cable giant Charter cuts 1,200 managers from its workforce
Cable giant Charter Communications is laying off 1,200 employees nationwide as the company faces increased competition for its broadband internet packages.
The company operates Spectrum cable TV and broadband service, which was once a huge growth engine. But the company has faced a steady drumbeat of subscriber losses, including shedding 177,000 internet customers in the first and second quarters of this year.
The company has nearly 30 million internet customers.
The layoffs, equivalent to a little more than1% of its workforce, hit corporate and management positions at Charter’s headquarters in Stamford, Conn., and centers in Charlotte, Denver and St. Louis, according to a person familiar with the cuts but was not authorized to comment.
No sales or service positions were eliminated, the person said, adding the cuts were part of an effort to streamline management functions. The company is scheduled to announce its third-quarter earnings next week.
In addition to its internet service, Charter provides bundles of cable television channels to 12.6 million customers.
It also has nearly 11 million mobile phone subscribers.
The move comes in advance of Charter’s planned takeover of Cox Communications, which also operates in Southern California. This week’s cuts were not related to the Cox transaction, the knowledgeable person said.
Charter’s $34.5-billion industry-consolidating deal with Cox, which was unveiled in May, needs regulatory approval but that process has been slowed by the federal government shut-down.
Charter reported that it had about 94,500 active full-time workers at the end of 2024.
The company’s stock is down 27% since the beginning of the year. On Wednesday, shares slipped around 1% in mid-day trading.
Broadband internet has been the company’s bright spot as revenue from cable TV packages steadily declined over the years amid consumer cord-cutting and the shift to streaming.
Charter recognized that trend and began offering streaming apps to its broadband customers to help with retention efforts.
Two years ago, the company suffered huge cable TV customer losses during its 10-day blackout of Walt Disney Co. channels, including ESPN, during a tense distribution battle.
Charter was able to wrangle the ability to offer Disney’s streaming apps, including Disney+ and Hulu, to Spectrum customers.
The company had already been undergoing scattered instances of belt-tightening.
In August, Charter canceled its award-winning El Segundo based news show, “LA Times Today,” a collaboration with the Los Angeles Times, which ran on the cable company’s Spectrum 1 news channel.
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