TheChek News Flow

Moves come one day after rival Warner Bros. Discovery lowered the valuation of its own cable networks by $9.1 billion

The slow-motion collapse of the cable-television business is coming into clearer focus.

Paramount Global PARA -2.39%decrease; red down pointing triangle, home of channels including Comedy Central, MTV and Nickelodeon, on Thursday wrote down the value of its cable-TV networks by nearly $6 billion, a day after rival Warner Bros. Discovery WBD -8.95%decrease; red down pointing triangle revised the worth of its own cable business lower by $9.1 billion.

Paramount is also cutting about 2,000 jobs, or 15% of its U.S. workforce, as part of an effort to realize $500 million in cost savings.

The reassessments by two of the country’s largest TV conglomerates come as cable-TV networks are contending with the acceleration of cord-cutting, declining ratings and a weak advertising market. Streaming platforms are taking audiences and subscribers away from what was once the engine powering the media industry.

“The challenges of the linear ecosystem are becoming even more apparent especially given the pressure on linear advertising and the competition for ad budgets with connected TV and streaming players and the increasing pressure with cord-cutting,” said Robert Fishman, an analyst with MoffettNathanson.

During a call with investors to discuss the company’s results, Chief Financial Officer Naveen Chopra said the nearly $6 billion write-down of the cable-TV business was triggered by the decline of the traditional TV business, as well as Paramount’s recently announced deal to merge with Skydance Media.

“We need to reconcile the value of our individual reporting unit with the enterprise value for the entire company that’s implied by the [Skydance] transaction,” Chopra said.

Programmers are also facing pressure from distributors increasingly willing to play hardball when the time comes to renew carriage agreements. Customers of Charter Communications’ Spectrum TV service are getting free access to Paramount’s ad-supported streaming services with their cable packages under a new distribution deal between the two companies. That agreement followed a similar model adopted after a feud between Charter and Disney last year.

Shares of Paramount were up roughly 4.4% in after-hours trading.

Paramount, which also owns the namesake movie studio and the streaming services including Paramount+, said it incurred a loss of $5.41 billion in the second quarter, largely because of the goodwill impairment charge it booked for its cable-networks unit. Revenue fell 11% to $6.81 billion.

The company said its streaming business—which beyond Paramount+ also includes Pluto TV—reported its first quarterly profit. But Paramount+ lost 2.8 million subscribers in the quarter, which the company attributed to the exit from a hard bundle agreement in South Korea. The company reiterated its forecast that Paramount+ would be profitable domestically in 2025.

Disney DIS 0.00%increase; green up pointing triangle, one of Paramount’s rivals, also reported streaming profitability for the first time earlier this week, one quarter ahead of schedule.

Revenue in Paramount’s filmed entertainment business fell 18%, the company said. Theatrical revenue suffered from the comparison with the year-earlier quarter, when “Transformers: Rise of the Beasts” was released.

Paramount is currently being run by “the office of the CEO” made up of its three divisional heads—Chris McCarthy, George Cheeks and Brian Robbins. The CEOs said earlier this year that the company’s goal was to reach $500 million in annual cost savings. On Thursday, they said the company would continue to “aggressively execute” that strategic plan.

To realize these savings, Paramount is reducing its U.S.-based workforce by about 15%.

In July, David Ellison’s Skydance Media agreed to a two-step deal under which it will buy National Amusements, the privately held movie-theater company through which Shari Redstone controls Paramount. In the second step of the deal, Skydance will merge with Paramount.

The deal is subject to a “go-shop period”— where other potential buyers can make bids for both businesses—that ends later this month. The company said it expects the deal to close in the first half of 2025.

On Wednesday, Warner, home of myriad cable networks including CNN, TNT and TBS, posted a nearly $10 billion quarterly loss mostly because of a $9.1 billion noncash impairment charge it booked for its cable-TV business.

The Warner cable-TV write-down was triggered in part by continued softness in the U.S. TV advertising market and uncertainty related to affiliate and sports rights renewals. Warner’s TNT wasn’t able to strike a new deal to keep rights to carry National Basketball Association games beyond next season, which could adversely affect subscriber fees and ad revenue for the channel.

PLBY Group says that it’s relaunching Playboy Magazine with an annual edition that will be released in February 2025

Playboy magazine is making a comeback.

Its owner PLBY Group PLBY 2.10%increase; green up pointing triangle on Thursday said that it was relaunching Playboy magazine with an annual edition to be released in February 2025. The decision comes over four years after the company said it would shut down the magazine, known for its mix of glossy nude photos and high-brow fiction and journalism, as a result of the Covid-19 pandemic.

“The highly anticipated return of these Playboy franchises marks a new chapter in the brand’s storied legacy and celebrates 70 years of the company’s flagship property,” the Los Angeles company said.

In March 2020, Chief Executive Ben Kohn said in a post on Medium that the Covid-19 pandemic sped up the company’s plans regarding for the magazine. Before that, the magazine had steadily cut its print frequency since the death of its founder, Hugh Hefner, in 2017.

“We were forced to accelerate a conversation we’ve been having internally: the question of how to transform our U.S. print product to better suit what consumers want today,” Kohn wrote in the Medium post.

The company said Thursday it named Mark Healy as the editor-in-chief of Playboy magazine’s first print edition since 2020. Healy has held senior positions at GQ and Rolling Stone, and served as editor-in-chief of Men’s Journal.

Despite the news about the relaunch of the magazine, Playboy faces a challenging environment.

In recent years, the company had primarily become a licensing business, making money by placing the Playboy name and its distinctive bunny-ear logo on clothing lines, casinos, fragrances, wallets and more.

The company Thursday said its second-quarter revenue fell 29% to $24.9 million, in part because of the termination of two licensing agreements in China. Digital-subscription and content revenue were flat.

Significant cost cuts narrowed the company’s loss to $16.7 million, or 23 cents a share, compared with a loss of $131.8 million, or $1.77 a share, a year earlier, when it recorded a large impairment charge.

Playboy also said its lenders agreed to give it more time to repay its debt at a significant discount to reduce its total leverage, and that it hired an investment bank to secure new financing.

In Donald Trump’s first term, Fed Chair Jerome Powell resisted his demands to lower rates, but if re-elected, Trump could replace him in 2026

WASHINGTON—Donald Trump’s assertion that as president he should have more say over how the Federal Reserve sets interest rates would, if carried out, reverse a longstanding custom by which the central bank enjoys political autonomy to fight inflation with often unpopular rate increases.

Trump’s comments during a Thursday press conference were the former president’s most direct acknowledgment of his longstanding desire to chip away at the central bank’s independence. If he wins the election and follows through on his pledge to directly influence monetary policy, Trump would break with decades of precedent.

Economists and scholars have long argued for central bank independence on the theory that politicians prefer lower interest rates, though that can lead to inflation.

Fed officials have assiduously guarded their ability to set interest rates without political inference since the 1970s, when high inflation was blamed in part by President Nixon’s success in persuading the Fed chairman, a former economic adviser, to keep rates low before the 1972 election.

‘Awful history’

“There’s an awful history of presidents trying to exert dovish pressure on Fed chairs. It hasn’t ended well,” said Mark Spindel, an investment manager who co-wrote a history of Fed independence. While presidential pressure to lower rates is “nothing new, having a direct input to the process is a whole different thing.”

On Thursday, Jared Bernstein, chairman of President Biden’s Council of Economic Advisers, posted on X a quote from a May council report on the importance of central bank independence: “History could not be clearer regarding the lasting and damaging inflationary consequences of ignoring this lesson or reversing the hard-earned progress of the past half century.”

The former president didn’t explain in detail what kind of role he envisions for himself, arguing only that he should have a say in setting interest rates. But he said he is more qualified to make decisions than many Fed officials about monetary policy because of his business experience. “I made a lot of money,” Trump said. “I was very successful and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.”

Trump suggested that he thinks the Fed’s decisions are based on little more than what he called a “gut feeling,” and he said the central bank has “gotten it wrong a lot.” Fed Chair Jerome Powell, he said, tends to be a “little bit late on things. He gets a little bit too early and a little bit too late.”

The Trump campaign declined to comment on the former president’s remarks.

While Trump says he knows better than the Fed when rates should change, his views often reflect political considerations as well. With inflation falling and the labor market cooling, the Fed is expected to soon cut interest rates, probably starting in September.

Trump disagrees, calling any cut before the November election a gift to Democrats. In a recent Bloomberg Businessweek interview, Trump said it is something central bank officials “know they shouldn’t be doing.”

Trump vs. Powell

As president, Trump frequently railed against Powell, spearheading an unusual campaign—in social-media posts, speeches and interviews—to pressure the Fed chair to do his bidding, browbeating him first for raising rates and later for not lowering them enough. Powell resisted, infuriating the then-president who ramped up his attacks, suggesting on X (then called Twitter) that Powell was a “bigger enemy” to the U.S. than Chinese President Xi Jinping.

While Trump hasn’t been specific in how he would exert control over the Fed, some advisers have laid out options.

The Wall Street Journal reported in April that a group of Trump’s allies had drawn up a 10-page document outlining options for blunting the Fed’s independence. The document recommended that Trump should be consulted on interest-rate decisions and makes the case that Trump would have the authority to oust Jerome Powell as Fed chair. The Trump campaign said at the time that policy discussions aren’t official unless they come directly from the campaign.

The Journal reported in April that several people who have spoken with Trump said he appears to want someone in charge of the Fed who will, in effect, treat the president as an ex officio member of the central bank’s rate-setting committee. Under such an approach, the chair would regularly seek Trump’s views on interest-rate policy and then negotiate with the committee to steer policy on the president’s behalf. Some of the former president’s advisers have discussed requiring that candidates for Fed chair privately agree to consult informally with Trump on the central bank’s decisions, according to people familiar with the matter.

Others close to Trump strongly disagree with that approach. Several economic and financial-market analysts who have counseled the former president and GOP nominee on economic issues have warned that efforts to erode the Fed’s independence are a bad idea.

Robert Lighthizer, Trump’s former trade ambassador and an adviser, told the Journal earlier this year, “It’s a great accomplishment that America eventually got to an independent Federal Reserve system. The last thing I’d suggest is to do anything to change it.”

If elected this fall, Trump would have little ability to influence the Fed until 2026, when Powell’s four-year term expires as chair and when another governor’s term expires.

Powell last month said the U.S. economy has been served well by having a central bank that can set interest rates without direct interference by the White House. “The record is pretty clear” that a central bank that operates outside of political factors and direction is “a good institutional arrangement that serves the public well,” Powell told lawmakers on Capitol Hill. Many Republican elected officials have also defended the current arrangement.

Last week, Powell fiercely disputed suggestions that the Fed would be influenced by politics. “Anything that we do before, during or after the election will be based on the data, the outlook and the balance of risks, and not on anything else,” he said.

Perplexity’s popularity surges as AI search start-up takes on Google

Artificial intelligence app boosts usage and sales despite controversy over its data-gathering techniques

Perplexity AI, an artificial intelligence search start-up, has increased its monthly revenues and usage seven-fold since the start of the year, after closing a new $250mn round of funding.

The AI-powered search engine answered roughly 250mn questions in the last month, compared with 500mn queries for the whole of 2023, Dmitry Shevelenko, Perplexity’s chief business officer, told the Financial Times.

The new figures underscore Perplexity’s position as one of the fastest-growing generative AI applications to emerge since OpenAI’s ChatGPT launched to huge acclaim in November 2022, despite controversy over the start-up’s data-gathering techniques.

San Francisco-based Perplexity, which was founded by former Google intern Aravind Srinivas just three months before ChatGPT launched, uses AI software to answer questions, using information pulled in “real time” from the web, including news websites.

Perplexity started the year with $5mn in annualised revenues — a projection of full-year revenues based on extrapolating the most recent month’s sales — and is now making more than $35mn on the same basis, according to a company insider.

Now, the start-up is pivoting its business model from subscriptions to advertising, bringing it into closer competition with Google, which dominates the $300bn search ads industry.

Its growth comes as Google steps up its integration of AI features into its core search product and OpenAI launches SearchGPT, a prototype AI search tool available to roughly 10,000 testers.

“At the end of the day the smaller player in the space has two advantages: velocity and focus,” Shevelenko said. “Our users and team only think about one thing when it comes to Perplexity: a place you get your questions answered. Competition sharpens our focus even more.”

To fuel its fight against larger rivals, Perplexity recently closed a new $250mn investment from investors including SoftBank’s Vision Fund 2, said people familiar with the deal, tripling its valuation from $1bn in April to $3bn. Bloomberg previously reported on the funding negotiations.

Its existing investors include AI chipmaker Nvidia and Amazon founder Jeff Bezos, as well as several prominent names from the AI industry, such as OpenAI co-founder Andrej Karpathy and Meta’s chief AI scientist Yann LeCun.

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Shevelenko said Perplexity was not daunted by competition from better-resourced tech companies, including Microsoft-backed OpenAI, which makes the world’s most popular AI chatbot.

“OpenAI are doing so many different things . . . They’re not focused on answering people’s questions with high-quality sources,” Shevelenko said. “That’s why side-by-side feedback of SearchGPT says it doesn’t stack up favourably to Perplexity.”

Perplexity’s revenues have been mainly from its consumer and enterprise subscriptions but the start-up recently announced it would introduce advertising on to its platform by the end of next month.

“Unlike OpenAI, we always knew our main monetisation engine was going to be advertising,” Shevelenko said.

It will split a “double-digit” percentage of its revenues on every sponsored article with news publishers cited, said Shevelenko. It has signed deals with Time, Der Spiegel and Fortune, among others.

However, prior to announcing its recent partnerships with publishers, Perplexity in June was accused of plagiarism by publications Forbes and Wired, which criticised the start-up’s reproduction of stories without clear attribution and its scraping of websites that had explicitly blocked its crawlers.

Shevelenko acknowledged the allegations and said the company had taken on board the criticism. Perplexity has subsequently made changes to its user interface to make citations more prominent and taken steps to ensure its responses do not summarise any websites.

He said 50 publishers had asked to join Perplexity’s revenue-sharing programme in the two weeks since its launch. The company hopes to include as wide a pool of websites as possible.

“For Perplexity to be a useful product on the open web, there need to be good business models for publishing new and updated facts about the world,” Shevelenko said. “If you want to align incentives [with journalism] in the long term, revenue-sharing is a more powerful way of doing so than one-time lump sum payments, which is the route OpenAI went.”

Unlike Google and OpenAI, Perplexity does not build its own AI models, which has become increasingly costly. Instead it licenses a combination of AI systems from the likes of OpenAI and others.

Perplexity’s search engine was originally powered by a licensed version of Microsoft’s Bing index of the web, like many would-be Google competitors. But Shevelenko said it no longer uses Bing as its core system.

“We have our own proprietary search index and ranking system,” Shevelenko said. “We use signals from all kinds of engines but we have our own crawler and ranking system.”

The platform has targeted journalism and academia because of their vast amounts of reliable information and data. One person who worked for Perplexity earlier this year said it saw that source material as its advantage over traditional search engines such as Google, which draws on a much wider range of websites.

“Trash in and trash out is a problem that plagues companies, so you need to consult a better variety of sources when training models,” this person said.

However, this person suggested the introduction of advertising could deter users: “There is an untrustworthy environment when you see ads. People are a little sceptical of results on Google now.”

Google, which a US judge this week ruled was a “monopolist” in a landmark antitrust case, has fended off many attempts to challenge its dominance of search over the past 20 years.

Nonetheless, Joseph Teasdale, head of tech at Enders Analysis, a consultancy, said the AI search market was “hotting up”.

“The risk from AI is . . . that general web search as a whole is made redundant by new ways of matching users with information, products and services,” he said. The “big unknown”, however, is whether it can be reliable enough for mainstream use.

“AI is stubbornly prone to confabulation,” Teasdale said. “At the scale of billions of queries per day, serious failures are inevitable.”

L’Occitane and the trouble with trying to leave Hong Kong

Prada and Samsonite must be watching with interest the skincare group’s attempt to delist

In the wake of the 2008 financial crisis, as demand for high-end consumer goods waned in Europe and the US, a handful of retailers made a bold bet on Asia. 

L’Occitane, Prada and Samsonite all chose Hong Kong as the venue for their initial public offerings, listing in the territory in 2010 and 2011.

“The domestic market was booming in China and everybody wanted to take advantage of that,” said a person who advised several companies that made or considered the move at that time. “They thought having investors in Hong Kong would increase their visibility and help sell products in that region.” 

More than a decade later, that strategy has aged poorly. Hong Kong’s Hang Seng index has been among the world’s worst-performing major stock indices over the past 12 months, sliding 14 per cent while the US S&P 500 index has risen 16 per cent. China’s growth is slowing and Sino-US tensions show no sign of ending.

Last month, the Austrian billionaire Reinold Geiger, whose L’Occitane Group already owned a 72 per cent stake in Hong Kong-listed L’Occitane International, won over enough minority shareholders to take it private.

It is easy to wonder why the trio of US and European companies have not left Hong Kong sooner. L’Occitane International, which is incorporated in Luxembourg, shows that the answer may lie in technical difficulties.

Geiger did not pursue the take-private through a Hong Kong scheme of arrangement — a process that would need the backing of 75 per cent of shareholders. Because Luxembourg does not have such schemes, and requires a buyer to acquire 95 per cent of shares to force minority shareholders out, doing so would have risked lawsuits from disgruntled European shareholders.

But this decision put him up against a “tender offer” system in Hong Kong that gives high priority to the interests of minority shareholders. A tender offer in the territory requires the backing of 90 per cent of minority shareholders instead of 95 per cent of all shareholders.

That high hurdle means, for example, that any hedge fund with a small stake could threaten to block a deal until they get a higher price. 

Geiger managed to meet the threshold last month after offering a sweetener that would give minority shareholders the chance to own a stake in the company even after it delists. 

But there was another hurdle. Hong Kong has a process for “squeezing out” dissenting shareholders, or forcing them to sell once the threshold is met. Using that process risks lawsuits from shareholders who might claim it is not a valid process for a Luxembourg company.  

Instead, Geiger’s advisers had to win over regulators in Hong Kong and Luxembourg in order to use an alternative: squeezing out the remaining shareholders based on rules set out in the company’s own articles of association. Putting that system in place was a time-consuming and expensive process whose success was not inevitable. 

In line with Hong Kong’s rules, the articles provide a two-month period for shareholders to object. Unlike in Europe, where squeeze-outs can happen within days, the process could drag on until the autumn. 

L’Occitane Group has clearly deemed it worthwhile to jump through hoops. There is an obvious option available to global companies listed in Hong Kong: delist, then later relist in the US where companies trade at higher multiples. 

The alternative is to seek a dual listing. Prada had considered a dual listing in Milan. But its chief executive Andrea Guerra told the FT in May that this was no longer a priority, adding that the technicalities of such a move, among other factors, had put off the plan. Prada said it had no plans to delist. 

Samsonite, like L’Occitane, is incorporated in Luxembourg. In March it said it was pursuing a dual listing. On a technical level that might make it easier to later delist in Hong Kong and even be taken private, avoiding the process L’Occitane is going through.

But Samsonite’s articles of association contain provisions similar to L’Occitane’s. That means it could copy what L’Occitane is doing if the company paves the way to delist in Hong Kong successfully.

Ultimately, listing in Hong Kong in pursuit of regional sales was probably not the right call for the western retailers. “I’m not sure that in the long run it produced all the benefits that were anticipated,” the adviser said. “I don’t think Prada had to be listed in Hong Kong in order to be known in China.” 

Demand data begins to show uptick but prices remain suppressed by excess fleet capacity

The US trucking industry is beginning to show signs of life after one of the deepest downturns in its history, with demand picking up even as prices remain suppressed by excess fleet capacity, soaring fixed costs and increased competition for limited freight loads.

Requests for shipments in the US rose on average 9 per cent year-over-year in the second quarter of 2024. Tender rejections, a measurement of carriers’ willingness to accept loads, increased 1.3 per cent from the same period last year, meaning truckload capacity has slowly started to tighten, according to data from logistics intelligence firm FreightWaves.

“I do think the worst is behind us,” said Bob Costello, Chief Economist for the American Trucking Associations.

Following a consumer product surge during the pandemic that led to one of the largest upswings in trucking demand, the industry was hit with a “freight recession” in 2022, as inflationary pressures led to a decline in consumer spending and forced a reduction in cargo volumes and rates.

“Rates went into free fall” in 2022, Michael Castagnetto, President of North American Surface Transportation for logistics firm C.H. Robinson, said in an email. “We’re seeing an extended trough.”

The surplus of trucks left over from the pandemic boom was not met with sufficient demand, leading to a capacity overhang still being felt by companies today. And company results have yet to show much of a recovery.

US transporter J.B. Hunt, one of the largest firms in the industry, missed earnings expectations for the fifth consecutive quarter on July 15 with a 24 per cent decline in operating income compared to the same period last year. The company cited underutilisation of assets and flat pricing as the main drivers for low revenue.

“We still see oversupply across all modes with shippers having options on both mode and provider to move their freight,” said Spencer Frazier, EVP of Sales and Marketing for JB Hunt on the earnings call. “While capacity is not a top concern right now, there is an awareness that this will change at some point.”

But as consumer demand continues to rise steadily, the trucking industry looks optimistically towards rate gain momentum in 2025, particularly if interest rates come down, according to Avery Vise, VP of Trucking for FTR Transportation Intelligence.

“We could be back by, say, the middle of next year, late next year, to something that is very comfortable for carriers,” said Vise.

However, structural issues persist for trucking firms, particularly around costs and competition.

Industry marginal costs excluding fuel surcharges rose more than 6 per cent in 2023, according to an analysis published by the American Transportation Research Institute.

Insurance and maintenance costs have gone up a third, said FreightWaves senior analyst Tony Mulvey, primarily due to high interest rates, installation of new technology, and an uptick in truck-related accidents, increasing expense pressure on small-to-mid-sized fleet owners.

“That’s the killer for the trucking companies,” explained Costello. “Their cost inflation is still going up significantly.”

Despite the rising costs, cash reserves from the freight surge during the pandemic have largely allowed smaller carriers to survive the tough market, though over 25,000 trucking firms have already exited, according to Vise.

The smallest players, those with less than five trucks, make up more than 85 per cent of the market, Castagnetto noted.

The growth of small carriers has largely been driven by increased access to commercial driving licences and technology that has allowed for the “uberization” of freight loads.

Rather than relying on brokers and existing relationships with cargo owners, drivers can utilise digital platforms to see where available loads are and independently take on freight.

As a result, the number of carriers in the market has remained at a high level, spreading out freight volumes over a larger range of companies and increasing price competition.

Carriers are now playing a “game of chicken,” Vise pointed out, whereby larger players are avoiding their own capacity drawdowns by waiting for smaller firms to exit the market, bearing cost increases and slowing the reduction of industry oversupply.

“A lot of these operations have been very, very hesitant about cutting back because they’re anticipating a recovery,” he said. “I think most people, though, had anticipated a recovery by now.”

But as supply reduces and demand accelerates, forecasters predict that rate improvements are just on the horizon.

“Exits are happening,” said Mulvey. “From a shipper perspective, if you’re looking for cost savings, that time has largely passed.”

Vintage cases have become highly collectible, whether they can hold their value is another question

When the Olympic torch arrived in Paris last month ahead of the games, it appeared on the Champs Elysées exactly as one sponsor, LVMH, had decreed: in its own, custom-made trunk, designed by Mathieu Lehanneur and made by Louis Vuitton in a signature checkerboard canvas. 

Indeed, cases are so synonymous with the luxury brand that the hoardings concealing the makeover of its boutique on the same street are configured to resemble one, and it continues to riff on a design first launched more than 160 years ago.

It’s a sign of the enduring appeal of luxury suitcases — items that have gone from functional to decorative objects whose purpose now rests less in their practical application than as something to admire and display. Notable collectors include former footballer Zlatan Ibrahimović and the rapper Tyler the Creator, whose portfolio ranges from Goyard and Gucci to Globetrotter.

In fact, vintage luggage has become so collectible that standalone trunk-selling auctions are now a fixture of the major houses’ calendars. In June, Christie’s held a sale where the 90 or so lots were estimated to fetch between €1mn-€2mn; in the event they made €2.4mn (£2.06mn) — the priciest of all, a 1925 wardrobe trunk, sold for €189,000.

That estimate-busting sale isn’t an outlier. In December, Christie’s sold a rare diamond-patterned Louis Vuitton trunk, which was estimated at $10,000-$15,000 but fetched $44,000. The last time this same model, a rarity, was offered by Christie’s was in 2002. Back then, experts put its mid-estimation value at £1,500 (about £2,700 in today’s money). Under the gavel, it managed £1,410.

But is there really an investment case for antique luxury luggage? After all, fetching six figures at the gavel doesn’t guarantee an item has value beyond whomever was in the room at the time.

The entire Christie’s sale was consigned by a single collector: Magnus Malm, a sixtysomething Swedish property developer who stumbled into his passion after buying a single trunk — in his case, a vintage Vuitton — 15 years ago.

“I started to buy one more and one more, and soon I had 15 in my homes,” he says. “They have such an interesting history — travelling by train or plane, maybe in the tropics, but we can’t know exactly what they have been used for.”

Malm was particularly smitten by metal trunks, made for hotter climes where standard materials were at risk from termites, often out of zinc or copper. These are more expensive, and far rarer, and he was thrilled to find a pair owned by Sven Staudenmaier, a paper dealer in northern Germany. Staudenmaier, though, refused to sell just those two trunks, and insisted that Malm buy in bulk, so he paid almost €4mn for 152 pieces, just to secure them. “I wasn’t in need of so many trunks,” Malm says now, with Nordic deadpan. 

So he repurposed the surfeit into a travelling exhibition, Legendary Trunks. After appearing in Amsterdam and Sweden, he decided to sell some duplicates in the collection so struck that deal with Christie’s, selling about a quarter of his holdings. He retained those two prized metal trunks.

Malm has still not managed to source the ultimate piece, though: an aluminium Vuitton trunk, of which probably fewer than 10 were ever made. “It was more expensive than gold at that time, and I’ve only seen one, at another collector’s house in Paris,” he says. “He wouldn’t sell it to me. Trust me, I’ve asked him 500 times.”

Rachel Koffsky, international head of handbags and accessories at Christie’s, understands his eagerness. “That was more than just a functional object. It was an extreme piece of luxury that looks like a sculpture,” she says. 

Vuitton remains the prime collectors’ marque in the market, regardless of material, says Koffsky, largely because Vuitton invented the trunk as we know it. It was his innovation to flatten the top for the first time (allowing stackability), but he also invented a waterproof canvas that meant such flat surfaces could withstand the weather. The final flourish was his creation of a supposedly unpickable lock. Goyard and Hermès also made trunks, but these are less in demand, says Koffsky.

The value of these vintage pieces is directly connected with size and condition — larger trunks, or special orders, will command a premium, as do trunks which retain original detailing such as leather handles or the ribbons on the lid’s interior which were more prone to damage. “It’s not significant if it isn’t lockable, but that’s a nice-to-have,” she says of misplaced keys.

Then again, you could probably pick up a key or two from Churchill Barton, the Maine-based dealer and restorer who runs Bretton’s Village Trunk Shop. He’s been buying, fixing and dealing for 30 years, using techniques such as finishing with tung oil, the naturally resinous sap that renders wood or leather waterproof but breathable or clinch nailing, which flattens them to prevent snagging.

Barton says that the trio of French makers is the most in-demand, with prices between $20,000-$40,000; Vuitton is at the upper end. Barton is also fond of Shwayder trunks, made stateside by the company that would eventually become Samsonite. 

“We had a customer bring us a trunk about two weeks ago that he’d never been able to get open, but we had a key here that opened it. We found a Goyard label inside, and I told him ‘You can switch to a better brand of vodka’ now.”

Anyone looking for returns in the trunk market should be careful. As with a lot of collectibles, sales are relatively rare, making data patchy and accurate pricing difficult. There’s also a lot of emotion involved, with collectors’ own tastes affecting valuation. Prices can seesaw with the fashion: while some record auction prices for luxury trunks have been achieved recently, prices of unbranded vintage trunks have softened since 2020, when locked-down buyers snapped them up during home redecorations as coffee tables and similar: an item offered now for $1,200 would have fetched double four years ago, says Barton. These are less investment opportunities than simple collectibles.

Alsace-based Jean-Philippe Rolland is Barton’s European counterpart, and the foremost restorer and dealer on the continent via his company La Malle en Coin: he has around 300 cases for sale at any one time, while his personal haul sits at 500. That personal collection differs from Malm’s in that it includes several brand names beyond Vuitton; Rolland dismisses Hermès and instead trumpets the quality of Moynat’s trunks. “A collector buys either for the history and decoration, or for investment, and it isn’t the same budget,” he says, “You can have a lot of fun with €500, but for investment, you start at €5,000 and there’s no real limit.” 

Indeed, that would have bought a fine condition first-series Louis Vuitton Classic case 15 years ago, Rolland says, back in the same era when Christie’s was selling those trunks at or near estimate. “Currently, it costs €20,000 — if you are lucky enough to find it.” 

Proceed with caution, too, when provenance is touted as a price booster, warns Malm. “If you’re told this trunk was owned by, let’s say, Greta Garbo because it has the GG initials, it’s very hard to get information. You ask Vuitton and the most common answer is that they don’t tell. So it could have been owned by anyone with those initials. Don’t pay extra for provenance.”

Trunk collectors note that there’s one thing you’ll need more than deep pockets: plenty of space, since these are bulky items (Barton stores his archive in a New England dairy barn).

Whatever the prices, though, collectors note that vintage cases remain far cheaper than brand new ones — despite in some cases being of far lesser quality. “It surprises me that a new trunk is more than double an antique one. I can’t understand that,” says Malm.

Rolland is more matter of fact, pointing to the price inflation of new models. “A new trunk at Vuitton was worth around €18,000 before Covid. It’s currently at €48,000 in the catalogue,” he notes. “But the new one is much less beautiful than the old one: no patina, a printed canvas which is no longer made by hand, the corners are often made of lozine [vulcanised paper] not leather. One day, we think, that means the old will sell for more than the new.”