Commerce Secretary Lutnick Says He Visited Epstein’s Island on a Family Trip

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0:33Howard Lutnick:This year's breathing temperatures carry risks for U.S. factories that depend on natural gas. Plus, Commerce Secretary Howard Lutnick faces calls for his resignation over ties to Jeffrey Epstein that were revealed in the latest batch of the Epstein files.

0:47Jasmine Li:I did not have any relationship with him. I barely had anything to do with that person.

0:57Howard Lutnick:And it's almost Valentine's Day. Would you let a matchmaking algorithm find a date for you? Thousands of Stanford students are obsessed. It's Tuesday, February 10th. I'm Alex Osalev for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:18Howard Lutnick:Paramount has sweetened its hostile offer to acquire all of Warner Brothers' discovery. Warner has chosen a rival offer from Netflix. WSJ Deputy Media Editor Jessica Tunkle breaks down how the latest move from Paramount raises the stakes in the Hollywood mega deal.

1:33Jasmine Li:So Paramount's enhanced offer today does address a lot of Warner's concerns, including Paramount has agreed to pay the$2.8 billion breakup fee if Warner terminates with Netflix, the sweetener they added today. It's called a ticking fee, which says for every quarter that they do not close that goes past 2026, they will pay what amounts to around$650 million to shareholders per quarter. The point of the ticking fee is they're saying we're putting our money where our mouth is. This deal will get regulatory approval in 2026. So that's their sweetener. Warner has said we will review it and we'll get back to you.

2:14Jasmine Li:But right now we're not changing our recommendation. They still have a deal with Netflix.

2:19Howard Lutnick:Jessica says she's spoken to some Warner shareholders, and there's a sense that the new offer from Paramount isn't going to change minds.

2:25Jasmine Li:Even shareholders that do want this to change things think Paramount has to up its bid overall right now for Warner's board to engage.

2:35Howard Lutnick:Target is laying off about 500 workers in district offices and supply chain sites and says that'll let it invest in more workers in its stores. The retailer also named a new head of merchandising and chief operating officer. Michael Fidelke, who officially started as CEO this month, wants to improve the shopping experience and get sales growing again. New data out today from the Commerce Department show that U.S. retail sales were flat in December, disappointing economists who had expected growth and feeding into concerns about a fragile consumer economy. Speaking of the economy, whether you're hiring or firing or looking for work, we'd love to hear from you.

3:11Howard Lutnick:To share your view on the job market or to ask a question of one of our reporters, email a voice note to wnpod at wsj.com or leave us a voicemail on 212-416-4328. Make sure to include your full name and location so we can use your comments on the show.

3:31Howard Lutnick:In U.S. markets, the S &P and Nasdaq both dropped, with the Nasdaq leading the losses and closing down 0.6%. The Dow edged higher. And in the latest AI worries, a financial technology firm said it had an AI tool that could interpret financial documents and create personalized tax strategies. That weighed on financial firms with big wealth management businesses. Shares of Charles Schwab, Raymond James, and LPL Financial all fell 7 % or more. In earnings out today, Spotify reported better-than-expected earnings in the fourth quarter. Its premium subscribers grew 10 percent from the same quarter a year ago, beating the company's guidance.

4:11Howard Lutnick:Shares closed up nearly 15 percent. Dow Jones, publisher of The Wall Street Journal, has a content partnership with Spotify. And Coca-Cola says it's selling products at different prices and sizes to respond to customers who are financially stretched. But there's no big shakeup of its pricing strategy in store. For the fourth quarter, higher prices and sales volumes lifted revenue by 2 percent. But analysts expected stronger growth. Its shares fell about 1.5 % today. Commerce Secretary Howard Lutnick says he visited Jeffrey Epstein's private island in 2012. Lutnick had previously said that he had cut off ties with a convicted sex offender years before that visit.

4:50Howard Lutnick:During a Senate hearing today, Lutnick said he was on the island only briefly.

4:54Jasmine Li:My wife was with me, as were my four children and nannies. I had another couple. They were there as well with their children. and we had lunch on the island. That is true for an hour, and we left with all of my children, with my nannies and my wife all together. We were on family vacation.

5:16Howard Lutnick:The latest batch of Epstein files show that Lutnick, the former CEO of Wall Street firm Cantor Fitzgerald, had a more extensive relationship with Epstein than he had previously revealed. As well as plans for the island visit, the files appear to show Lutnick emailing with Epstein, his former neighbor on Manhattan's Upper East Side, arranging calls, and being scheduled for a drink in 2011. Several lawmakers on both sides of the aisle are calling for Lutnik's resignation. Lutnik said today that he's done nothing wrong. White House Press Secretary Caroline Levitt says that President Trump supports Lutnik.

5:48Howard Lutnick:And we're exclusively reporting that the U.S. is sending 200 troops to help Nigeria fight Islamist militants in the coming weeks. They'll help train Nigerian troops and provide technical guidance. A handful of U.S. military personnel were already in the country to help local forces identify targets for military strikes. Nigerian and U.S. officials said that the Americans wouldn't be in combat. The U.S. has become more involved in Nigeria's fight against Islamist militants, after sharp words from the White House. President Trump has accused Nigeria of failing to protect Christians from terror attacks.

6:21Howard Lutnick:Coming up, when temperatures fall, why factories are finding themselves frozen out of the flow of natural gas. That's after the break.

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7:06Howard Lutnick:A big promise of the shale drilling boom was that natural gas would be cheap and plentiful in the U.S. Now, 15 years later, there's record amounts of gas production. But there's a problem. Manufacturers say they can't get gas when they need it to power their factories, especially when it's freezing out. Ryan December covers commodities for the journal and joins me now. Ryan, you write that factories are getting squeezed out when there's a lot of demand for natural gas, like when it's really cold. Why is this plentiful supply not getting to the factories that need it?

7:34Ryan Dezember:Well, the simple answer is we don't have enough pipelines and we don't have them in the right places. The country's natural gas plumbing was really set up in an era when we were bringing it from the coast, from the Gulf of Mexico down by Louisiana and Texas. The shale boom opened up all these gas fields in Appalachia and other places, and we haven't really caught up the infrastructure necessary to deliver it where it's needed. So we have a ton of gas, and then in periods of high demand, some people, mostly factories, can't get it.

8:06Howard Lutnick:So it's getting to homes. It's getting to the places where it's exported. Why isn't it reaching manufacturers?

8:12Ryan Dezember:So the problem manufacturers have is that they're sort of last in line. If you think about utilities or your gas provider, they keep it flowing to your home and to grocery stores. You don't want food spoiling. You don't want grandma freezing to death or overheating in the summer. And then you have the exporters who are taking an increasing share, shipping it overseas. Because of the nature of their business, they get long-term contracts to match with pipelines and utilities that send them the gas. Manufacturers can't really guarantee that they're going to sell X amount of products 10, 15 years from now.

8:47Ryan Dezember:They go sort of year by year. It just doesn't really line up with the contracting system for the pipelines. And it sort of leaves them squeezed out when demand is high and the pipe is full of gas that's been reserved. And so manufacturers are getting shut off.

9:03Howard Lutnick:In your story, you quote a trade group executive saying that pipelines restricted the flow of gas to manufacturers more than 40 times last year. Why is an interruption in their gas supply a problem for manufacturers?

9:13Ryan Dezember:Interruption is sort of two things. One, where you physically go out, close the valve into your factory. You're not allowed to have gas right now. And then there's pricing mechanisms where you're used to getting gas for$3.50 a million British thermal units. Well, because of the situation, you're going to have to go to the spot market and it's over$100 for the same amount. So the price goes so high that you can't run your factory profitably that day. And that's a big problem. International Paper, which makes the cardboard boxes we get all our deliveries in, they use that to dry the cardboard, the paper that makes boxes.

9:50Ryan Dezember:So without that, they just have to shut down. Not only do you have the lost sales and production of those days, but you have expense stopping the facility, starting it back up, making sure equipment doesn't freeze by bringing in, like, emergency heaters.

10:04Howard Lutnick:That was WSJ reporter Ryan December. Thanks, Ryan.

10:08Ryan Dezember:Thank you.

10:13Howard Lutnick:We're exclusively reporting that Blackstone CEO Steve Schwartzman is expanding his philanthropic efforts. The billionaire and his team expect to grow his foundation into one of the 10 largest private foundations in the U.S. It focuses on education, culture, medical innovation, and the impact of AI. And it's not just investors who are getting pulled into the hype for a SpaceX IPO. Michael Grimes, the longtime Morgan Stanley rainmaker and Elon Musk's go-to banker, is returning to Morgan Stanley as chairman of investment banking. He had left the bank for a job at the Trump administration a year ago.

10:46Howard Lutnick:And the question on Wall Street was if he'd be content remaining in government and missing out on the IPO. The IPO is expected to generate hundreds of millions of dollars in fees for banks.

10:59Howard Lutnick:And finally, there's a new obsession taking over the Stanford campus, a matchmaking platform called DateDrop. Created by graduate student Henry Wang, DateDrop has students answer 66 questions, like what their top five core values are or whether they think having no social media is a green flag. These responses are fed into an algorithm that pairs compatible students. Every Tuesday night at 9 p.m., new matches drop. And the kids are into it. More than 5 ,000 Stanford students have used it. Date Drop just raised about$2 million in venture capital funding and has spread to 10 other colleges. Journal reporter Jasmine Lee described Date Drop's appeal to our colleagues at Tech News Briefing.

11:38Ryan Dezember:So what I hear from college students about dating culture on campus is that you're not really going up to people and asking them out anymore. Some students are on mainstream dating apps, but some students also think they can be a little overwhelming. When students use a platform like Date Drop, the hope is that if they put in the work, answer all these questions, the algorithm is going to know them well enough to pair them with somebody that's high quality. That's going to be a good match. These students are crowding around in their dorm rooms, seeing who they're matching with, who their friends are matching with.

12:12Ryan Dezember:It's just a fun social thing for some of these students.

12:15Howard Lutnick:But is Date Drop actually helping students find love? Students who Jasmine talked to said they'd gone on some dates or gotten a few more LinkedIn connections, but no earth-shaking love stories yet. To hear more about Date Drop, listen to this Friday's episode of our Tech News Briefing podcast. And that's what's news for this Tuesday afternoon. Today's show is produced by Pierre Bien-Aimé with supervising producer Tali Arbel. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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