In our bi-weekly roundup of what the billionaires of been up to, Oprah Winfrey sells a stake in her network for the first time and a coder in a tweed cap becomes one of Canada's newest billionaires
Oprah Winfrey gets a $70m boost to cable channel OWN
Discovery Communications is paying US$70 million to Oprah Winfrey’s Harpo to obtain a majority stake in their jointly owned cable channel, OWN.
Discovery lifted its holding in OWN to 70 per cent from about 45 per cent. Winfrey will remain chief executive, according to a statement last week, and will extend her exclusive commitment to the channel through 2025. It’s the first time she’s sold stock in the network since it started a decade ago.
Winfrey will retain a significant minority interest in OWN, which was founded as a joint venture between the billionaire TV personality and Silver Spring, Maryland-based Discovery. Winfrey is worth $3.7 billion, according to the Bloomberg Billionaires Index. OWN, which has been increasing its original scripted programming, is part of a Discovery lineup that also includes TLC and Animal Planet.
The deal will allow Discovery, one of billionaire John Malone’s key holdings, to report OWN’s operations as part of its consolidated financial results. OWN began airing in 2008 and lost as much as $330m in its first four years, Bloomberg has reported. It reported its first quarterly profit in 2013.
In July, Discovery agreed to buy Scripps Networks Interactive for $11.9bn in a bet that uniting ownership of cable channels like Animal Planet and HGTV will help the company adapt to a fast-changing television landscape.
When Gordon Gund took control of the fortune his father left to him, the odds were high that he wouldn’t do much more than enjoy the spoils of inheritance.
But Mr Gund, 78, is no ordinary heir. He began investing in the 1970s, around the same time he went blind. He bought stakes in the Cleveland Cavaliers basketball team, biotech company Gilead Sciences and Align Technology, whose clear plastic aligners have been embraced by patients seeking to fix wonky teeth without the metal wires and brackets of traditional braces.
His Align stake, valued at $29m at the company’s 2001 initial public offering, is now worth $1.7bn, propelling Mr Gund’s net worth to at least $2.3bn, according to the Bloomberg Billionaires Index. The firm’s profit topped Wall Street estimates for 10 of the past 11 quarters and its shares have surged about 169 per cent this year, the best performance by far in the 62-company S&P 500 Health Care Index.
Align’s removable devices have been embraced by teenagers and adults. The company announced this year that 5 million patients started using Invisalign, helping boost revenue by 38 per cent in the third-quarter from a year earlier.
It’s the kind of wealth creation not normally seen among billionaire heirs, who have a combined $1.6 trillion and comprise about one-third of the Bloomberg index, a daily ranking of the world’s 500 richest people. Self-made billionaires make up the balance, and their combined $3.6tn is more than double the wealth inherited by their peers, and growing at a faster clip.
“In theory, motivation is always going to be greater for founders rather than heirs,” said Dominic Samuelson, chief executive of Campden Wealth, a network and education business for generational wealth holders. “It’s absolutely not the norm for wealth to be successfully passed between generations.”
Mr Gund and his siblings trace their wealth to their father, George Gund II, who bought the US patent for decaffeinated coffee after it was stripped from its German owner during World War I. He commercialised the process before selling the Kaffee Hag brand to Kellogg Company in the late 1920s for $10m, mostly in stock. Today, the Gund family remains one of the cereal maker’s biggest shareholders with a 7.5 per cent stake, worth about $1.6 billion.
Mr Gund’s office in Princeton, New Jersey, is crammed with career mementos, including a signed jersey of LeBron James, the star of Gund’s hometown Cavaliers, which increased in value 20-fold during his two decades as an owner.
He began investing almost a half century ago after a four-week stay in a hospital in the former Soviet Union failed to save his eyesight. He returned home determined to make his mark in business, soon becoming one of America’s earliest venture investors.
Mr Gund suffers from retinitis pigmentosa, a degenerative eye disease, and has been blind since 1970. Helping find a cure for blindness is taking up much of his time. He co-founded the Foundation Fighting Blindness in 1971 and, with his wife Llura and wider family, has contributed more than $200m for research to cure blinding retinal diseases.
A dimly lit office and the occasional taps of his white cane as he walks are among the few indications of his condition. He rarely uses braille, relying instead on a longtime assistant to read investment pitches and news stories. At meetings, he said he can size up people by carefully focusing on their words and nuances of voice to make a judgment on a prospective venture.
An unapologetic computer nerd with a penchant for tweed caps has become one of Canada’s newest billionaires by helping small merchants sell online.
Tobi Lutke, a 37-year-old German immigrant who built Shopify into one of tech’s hottest stocks, is worth about $1.1bn from company shares, options and sale proceeds, according to the Bloomberg Billionaires Index. He owns almost 9.7 million shares and options in Shopify, equal to about 11 per cent of the business.
Mr Lutke, who founded the company in 2004, regained his status as a billionaire after Shopify bounced back from a short-selling attack in October. A spokeswoman for the Ottawa-based company declined to comment on the chief executive’s wealth.
Mr Lutke stands out among the handful of Canadian billionaires, most of whom hail from family firms built over generations. The chief executive, with vivid blue eyes, has cultivated an image as a direct, even-keeled leader who has said he still codes for fun at home. He joins other Canadian billionaires including grocery kingpin W G Galen Weston and heirs to the Thomson media fortune, including Sherry Brydson and David Thomson.
The Shopify founder is one of the few billionaires in the country to get rich from Canadian-made tech. BlackBerry co-founders Jim Balsillie and Mike Lazaridis were billionaires before the smartphone maker’s value imploded. But others like Uber Technologies co-founder Garrett Camp and Alibaba Group Holding co-founder Joseph Tsai made their billions outside the country. Mr Lutke now leads a pack of entrepreneurs striving to build the next wave of Canadian tech companies.
Shopify’s shares have gained about 588 per cent since their trading debut in May 2015, compared with a 36 per cent gain for the Nasdaq Composite Index over the same time frame. The company is the second-best performing stock on Canada’s S&P/TSX Composite Index this year.
Shopify helps small and medium-sized companies set up online stores, and provides tools to make e-commerce as smooth as possible, including payment options, cash advances and integrating into Amazon.com’s marketplace. It employs 2,000 people and says more than 500,000 businesses use its platform, from well-known brands such as Nestle to proprietors flogging ugly Christmas sweaters.
Mr Lutke is taking others along on the company’s share surge. His father-in-law, Bruce McKean, a former Canadian civil servant, is one of the largest shareholders with about a 4 per cent stake that was worth about $388.5m, according to Bloomberg data.
Jacques Saade and Gianluigi Aponte
A shopping spree by two billionaires is shaking up a shipping industry still recovering from years of falling rates and overcapacity.
Jacques Saade’s CMA CGM, the world’s third-largest container line, announced an order for nine massive vessels in September, after a year of tepid sales for new ships. Within days, Gianluigi Aponte’s Mediterranean Shipping Company (MSC), the No. 2 container line, confirmed it had lobbed in an order for 11 behemoths, each of which can hold 22,000 shipping containers, enough capacity for 44,000 cars or 8.8 million 50-inch TVs.
The orders amounted to almost $2.9bn combined, according to London-based Vessels Value, an online ship-valuation database. Longer than three and a half football fields, the container ships will be among the largest ever built.
Some analysts, however, say it’s the last thing the market needs right now.
“The problem with the industry as a whole is that there are just too many ships,” said Toby Yeabsley, an analyst at Vessels Value. “It’s a struggle to see where these are going to fit in.”
But brash bets are characteristic of ship owners, in a volatile and cyclical industry. Mr Aponte, an Italian-born former ferry captain, started operating cargo ships in 1970 and amassed a fleet of 490 container vessels, ferries, cruise ships and stakes in port terminals. His son Diego became chief executive in 2014.
Mr Saade formed CMA in Marseille after he moved from Lebanon in 1978. He built it into what has become France’s largest shipping company, helped by a 1992 bet on China’s economic growth. His son Rodolphe is now chief executive.
Their success means Mr Aponte has a net worth of $8.9 billion and Mr Saade $4.4bn, placing both men on the Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people. Both companies declined to comment on their founders’ net worth.
The purchases are emblematic of a trend toward bigger ships amid industry-wide consolidation, with global carriers becoming more dominant, according to Tom Bebbington, founder of consulting firm Container Logic.
The order demonstrates CMA CGM’s confidence in the coming years thanks to trends such as China’s recovering economy, the company said in an emailed statement. An MSC spokesman said the new vessels are expected to replace smaller ones and won’t substantially add to the carrier’s capacity.
The billionaires may be sensing that the market has hit bottom. Years of low rates have forced shipowners to destroy - or "scrap" - boats as young as eight years to ease a glut that has weighed them down. Asset prices have also plummeted, making ordering new boats more attractive, though at the risk of throwing supply and demand even further out of whack.
“It’s so finely balanced,” Mr Yeabsley said. “That’s why it’s a shock to see these huge orders.”