TheChek News Flow

CEO Greg Maffei says shared revenues, a cap on spending and new cars have made the sport more competitive

Not so long ago, Liberty Media — the company controlled by US billionaire John Malone — was pleading for patience as it tried to reinvigorate Formula One, the global car racing series.

Now, though, F1 is on a hot streak after a thrilling championship duel last year between Sir Lewis Hamilton of Mercedes and Max Verstappen of Red Bull, as well as this month’s inaugural Miami Grand Prix. It has also pulled in millions of new fans thanks to Drive to Survive, the fly-on-the-wall documentary from Netflix.

Liberty Media took a risk when it acquired F1 for $8bn including debt in 2017. The sport had been led for decades by Bernie Ecclestone, the former car dealer who turned F1 into a global phenomenon. “There were plenty of things we didn’t understand,” Greg Maffei, the chief executive of Liberty Media, tells the Financial Times. “But the things that mattered, we were right on.”

The sport was at risk of going stale when Liberty Media stepped in. On the track, Hamilton and his team were possibly too dominant, while Ecclestone had neglected social media and young fans in favour of an older male audience flush with cash. It left F1 needing to be more competitive and digitally sharp while increasing its appeal in the US.

“There was an opportunity [that], by creating a better on-track product [and] on-grid experience, you could make it more appealing both to fans, because it was more competitive, and also to investors in the teams,” says Maffei. “That would all create a flywheel that was to our benefit as well.”

But talks to alter the economics of the sport initially faltered amid disagreements with Ferrari, Mercedes and Red Bull, the most dominant teams, and plans for US expansion dragged on.

Then, in March 2020, the Covid-19 pandemic struck. The opening race in Australia had to be scrapped and teams feared for their financial lives. F1’s revenue for the year tumbled 43 per cent to $1.1bn.

Maffei mapped out a recovery plan. Liberty Media shifted assets to strengthen F1’s balance sheet with $1.4bn of cash, offered a backstop to teams deprived of revenue, and reworked the calendar to hold 17 races despite travel restrictions. Drive to Survive, meanwhile, pulled in more female viewers and younger fans. Last year, revenues recovered to $2.1bn.

The pandemic response served to highlight the desperate need for change. Teams at the front of the grid came round to Liberty Media’s proposal for competitors to share revenues more evenly. Despite prior opposition from Ferrari, Mercedes and Red Bull, all the teams agreed to cap individual spending at $145mn, excluding marketing costs and driver salaries. The aim is to ensure that races are won by shrewd use of funds rather than unlimited spending.

New cars introduced this season also make overtaking easier, which should make races more exciting to watch. There had been criticism that the previous vehicles caused “dirty air”: turbulence that made it challenging for drivers to close in on rivals.

Investors are buying into Maffei’s vision. The new economics of the sport mean that teams can generate returns instead of losses.

In the past 20 months, Dorilton Capital has paid €152mn for Williams; Ineos, the petrochemicals company, has acquired a third of the Mercedes F1 team; and investment firms MSP Sports Capital and Ares Management have bought into McLaren. Big tech companies such as Google and Oracle have also sponsored teams. In 2026, Porsche and Audi, the brands owned by German automaker Volkswagen, plan to join the competition.

“Now, the bottom team is probably worth at least $500mn,” Maffei says. “It’s probably more, they’re turning down numbers probably in excess of that.”

F1’s expansion in the US with the Miami Grand Prix adds to a schedule that already featured the US Grand Prix in Texas. In addition, the sport has struck a deal to race in Las Vegas from November next year. With events in Brazil, Canada and Mexico on the calendar already, Liberty Media has increased the number of races in an important timezone. “Never say never, but we have no plans in the US beyond the three we have,” says Maffei. “Our core audience is in Europe . . . we recognise our heritage.”

One benchmark of the sport’s success in America will be its new broadcasting deal. The current contract, with ESPN, the US channel owned by Disney, was worth single-digit millions and is due to expire soon. The next US deal could be worth $50mn to $100mn, according to one person with knowledge of F1 broadcast contracts. “I think the next deal will be substantially higher,” says Maffei. “Our growth in the US isn’t done.”

F1 has, however, drawn criticism for expanding into jurisdictions that activists say have poor records on human rights. Drivers discussed whether to go ahead with the Jeddah Grand Prix in Saudi Arabia after a missile attack on an oil depot near the track in March. And, last November, F1 held its first race in Qatar, where migrant workers’ conditions have come under scrutiny.

“We have plenty of drivers who are aware and help us . . . and we try to do what we can to be a force for good as well as creating a sports spectacle,” says Maffei. “It’s very difficult to operate in only countries where people are incredibly happy with the regime.”

But Russia, a grand prix set up by Ecclestone, will no longer feature on the F1 calendar after the country’s invasion of Ukraine. Abandoning that race will mean a loss of up to $70mn in revenue, according to the person with knowledge of F1 finances, though another source close to F1 put the number at $40mn. Maffei declines to comment on the figure. F1 will hold 22 races this year instead of 23 as planned.

Five years since its gamble, Liberty Media has no plans to cash in. Maffei sees new opportunities in the US, sponsorship and advertising, in broadcasting rights, and in fees from the promoter partners that stage races.

“There’s a lot of positive flywheels, I don’t know we would want to exit,” he says. “In an environment where a lot of businesses are challenged, it is pretty nice to have one that’s about hitting on every cylinder.”

The Italian technologist CEO says the link between F1 and quality road cars is more than just marketing

When Benedetto Vigna was 14 years old, he sneaked out of the family home in southern Italy and travelled with a friend to Imola to watch the 1983 San Marino Grand Prix — a round trip of almost 1,000 miles. His anxious parents had no idea where he was and, without mobile phones, it stayed that way until he returned two days later. The race was won by a Ferrari.

Vigna went on to a stellar career in technology with STMicroelectronics, a Geneva manufacturer — during which he invented the motion sensor at the heart of the Nintendo Wii console and Apple’s iPhone 4.

But, then, last autumn, the 53-year-old strode into Ferrari’s Maranello headquarters as its new chief executive.

“I am a technologist, but I am an Italian technologist,” he explains. “So, as an Italian, I always had a great passion for racing. This is true all my life. And it’s an honour for me to be at the helm of this company. I always dreamt about it. I never thought I could arrive.

“But I remember, when I was going to school, on my backpack there was a red Ferrari with a yellow driver helmet. Now, as a technologist, I am fascinated [by] all the different kinds of tech­nologies that we deploy in F1 and also how we can deploy these technologies in the road car.”

Ferrari’s fortunes on the track are not just cyclical, they are a rollercoaster. The company dominated the sport with Michael Schumacher 20 years ago. After that, there were several false dawns and near misses, which meant that Ferrari’s last F1 world drivers’ championship win was in 2007.

However, this season it is a contender again, with a bullet of a car designed to F1’s new technical regulations. Its lead driver Charles Leclerc is locked in a battle for the world title against Max Verstappen, Red Bull’s reigning champion.

Vigna’s role, though, is to look ahead. He has not been brought in to help Ferrari produce or sell its current range of luxury cars. Last year, it shipped a record 11,155 models and there is a strong order book for 2023. Ferrari shares, since listing in New York at $52 in October 2015, have risen fourfold.

Instead, the Italian was headhunted to ensure Ferrari does not make a mis-step as it adopts the technologies that will be critical to its future.

The first electric Ferrari will be unveiled in 2025. So, while it seems that the adage “win on Sunday, sell on Monday” — which car manufacturers trot out to justify investment in motorsport — does not apply to Ferrari, Vigna is quick to point out that the link between F1 and quality road cars is about more than marketing,

“A lot of technologies we developed for F1 are transferred to the road cars. So, if you want, the benefit is indirect,” he says. “Today, we have the broadest and most innovative sports car range. We also leverage a lot of the hybrid technologies we have been developing in F1 for 15 years.

“This is why the success of the 296 [the new hybrid convertible Ferrari] is very good. So it’s not a direct consequence but clearly winning in F1 is testament that our technologies are good.

“Competition is part of the game and the differences are very small. So we have to continually fight to optimise our technologies.”

F1 hybrid engines are already among the most efficient motors on the planet, with more than 50 per cent of the available energy from the fuel driving the rear wheels — far more than any road cars.

The next step will be the game-changer in F1’s mission to decarbonise motorsport: the shift in 2026 to 100 per cent sustainable fuels.

It is a move that will transform F1’s relevance and looks set to attract Porsche, Ferrari’s longstanding rival, into the sport.

“All of us, all the companies, have an important responsibility in front of the world that we have to respect,” says Vigna. “We are in a period of technology transition. I think that we have to explore all the avenues possible of high efficiency,” he adds.

“Sustainable fuels is a big one that we have to keep in mind — we are pushing on that.”

Vigna is well aware of Ferrari’s pedigree. Enzo Ferrari, the company’s founder, who died aged 90 in 1988, was a racing driver and team owner before he built his first road car. Under Vigna, the race team appears to be well aligned with the road car business.

Another tradition that began with Enzo continues to this day. “Here, in Maranello, when we win on Sunday the local church rings the bell and all the people come out of their homes,” Vigna says.

“And I can tell you that, on Monday morning, when you’re in the office, if you win the race, you can smell and taste the sense of pride of all the people. It means a lot. Competition is part of the DNA of this company.”

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GSK majority-owned company in talks with regulators on generic manufacture of highly effective PrEP injection

GlaxoSmithKline’s ViiV Healthcare is “actively negotiating” a voluntary licence on the patents for its injectable HIV prevention drug to make it more widely available in poorer nations, where fewer than a third of those at risk are on prophylactic treatment.

Deborah Waterhouse, ViiV chief executive, said in an interview that the GSK majority-owned drugmaker was committed to licensing the patents relating to the drug and that it was in talks over terms with the UN-backed Medicines Patent Pool.

ViiV makes cabotegravir, a long-acting, injectable drug that is highly effective in preventing HIV infection. It is given as infrequently as six times per year. A licence would enable generic makers to produce more of the drug at affordable prices without the risk of patent litigation, widening availability at the same time.

The move underscores how protracted battles on intellectual property during the Covid-19 pandemic, especially for vaccines, may have altered how companies think about access to medicines.

ViiV had initially said in March it was “unable” to seek a voluntary licence for the drug, mainly because of manufacturing challenges, according to archived copies of the webpage seen by the Financial Times. After an outcry, ViiV issued a statement, stored at the same URL, saying it was open to the voluntary licensing of its patents.

Waterhouse said this had been a “misunderstanding . . . Our policies [on access] never change . . . We’ve always been open to exploring licences on this medicine and all others.”

Cabotegravir is part of an HIV prevention strategy called pre-exposure prophylaxis, or PrEP, which is highly effective and has reduced new infections where it is widely used. Before cabotegravir, PrEP was available only in tablet form, usually taken daily.

Charles Gore, the head of the MPP, said the drug could be “a game-changer in prevention”.

Despite improvement, global access remains lopsided. According to the UN, in 2020, the drug had reached only 28 per cent of the 3mn targeted in poorer nations.

Jessica Burry, of the HIV and Hepatitis C access campaign at the Médecins sans Frontières charity, welcomed the news. She said, however, that it had “taken far too long even to get to this point”, delaying entry of a more affordable and generic version of the drug into the market.

Asia Russell, executive director at Health Gap, said the company should make the drug available in the interim at a price comparable to oral PrEP, which can retail for less than $30 per month.

Waterhouse said the drug, a vial of which retails at $3,700 per year in the US, would be available to low-income, least-developed and sub-Saharan African countries at a non-profit price until a generic became available.

ViiV had earlier this year privately told stakeholders this could be as low as $240 per patient a year, according to people familiar with the matter. Waterhouse and the company declined to comment on pricing. However, ViiV alone cannot satisfy global demand.

The need for effective and easily accessible PrEP continues to be strong. In sub-Saharan Africa, for example, thousands of young women and adolescent girls contract HIV every week, said Kimberly Smith, ViiV’s chief of research and development.

“Those numbers are shocking and upsetting and we all feel the need to do something,” she said. “We want to be able to reach as many as we can to change the trajectory of the pandemic.”

The influence of psychology on investors’ decision-making still largely explains stock gyrations

I’ve lived through (and been schooled by) several significant cycles during my years as an investor. And yet, when I was about two-thirds of the way through writing my last book, a question dawned on me that I hadn’t considered before: why do we have cycles?

After pondering this question for a while, I landed on what I consider the explanation: excesses and corrections. If the stock market were a machine, it might be reasonable to expect it to perform consistently over time. Instead, the substantial influence of psychology on investors’ decision-making largely explains the market’s gyrations.

Everyone knows — or should know — that parabolic stock market advances are generally followed by declines of 20-50 per cent. Yet those advances occur and recur, abetted by the willing suspension of disbelief.

Bull markets are, by definition, characterised by exuberance, confidence, credulousness, and a willingness to pay high prices for assets — all at levels that are shown in retrospect to have been excessive. History has generally shown the importance of keeping these things in moderation. For that reason, the intellectual or emotional rationale for a bull market is often based on something new that history can’t be used to discount.

Consider the FAAMGs (Facebook, Apple, Amazon, Microsoft and Google), which have a level of market dominance and ability to scale up that had never been seen before.

The dramatic performance of the FAAMGs in 2020 attracted the attention of investors and supported a widespread swing toward bullishness. By September 2020, these stocks had nearly doubled from their March lows and were up 61 per cent from the beginning of the year. Notably, these five stocks are heavily weighted in the S&P 500, so their performance resulted in a good overall gain for the index, but this distracted attention from the far less impressive performance of the other 495 stocks.

Or consider cryptocurrency. Bitcoin has been around for 14 years but it has been in most people’s consciousness for only about five. It fits economist John Kenneth Galbraith’s sceptical description of the type of financial innovation in bull markets that prior generations supposedly “do not have the insight to appreciate”. Bitcoin enjoyed a dramatic price spike from $5,000 in 2020 to a high of $68,000 in 2021, before falling back this year to about $24,000.

The striking performance of cryptocurrencies and “super stocks” — as well as tech shares generally — in the last two years had added to investors’ general optimism, enabling them to disregard worries concerning the persistence of the pandemic and other risks.

It’s risk aversion and the fear of loss that keep markets safe and sane. But when bull markets heat up, caution, selectivity and discipline often go out the window. Bullishness tends to exaggerate the merits of bull market winners. This pushes security prices to levels that are excessive and thus vulnerable — because the upward swing doesn’t last for ever.

We often see negative fundamental developments pile up for a good while, with no reaction on the part of security prices. But then a tipping point is reached — either fundamental or psychological — and the whole pile suddenly gets reflected in prices, sometimes to excess. And the stocks that rose the most in the up years often experience the greatest declines in the down years.

Some people may believe that asset prices are all about fundamentals, but that’s certainly not so. If market prices are set by a consensus of intelligent investors on the basis of fundamentals, then why are many formerly highflying tech/digital/innovation stocks down by such large percentages in recent months? Do you really believe the value of many businesses more than halved in this brief period?

The price of an asset is based on fundamentals and how people view those fundamentals. So the change in an asset price is based on a change in fundamentals and/or a change in how people view those fundamentals. Attitudes regarding fundamentals are psychological/emotional, not subject to analysis or prediction, and capable of changing much faster and more dramatically than the fundamentals themselves.

None of the market trends I’ve discussed relates exclusively to fundamental developments. Rather, their causes are largely psychological, and the way psychology works is unlikely to change. That’s why I’m sure that as long as humans are involved in the investment process, we’ll see these trends recur time and time again.

KYIV, Ukraine—Ukrainian President Volodymyr Zelensky dismissed suggestions that his country should cede territory to Russia in return for peace, comparing them to attempts to appease Nazi Germany, as Russia stepped up its attacks in Ukraine’s east.

With the war in Ukraine now past the three-month mark, there is debate among Western officials about what it would take to achieve a cease-fire, and what concessions—including territorial ones—such a deal might necessitate. But despite Russia’s renewed attacks in Kharkiv and other areas of the east, Moscow has absorbed heavy losses in both troops and equipment, raising questions of how long it can sustain the forward thrust of its military campaign in Ukraine.

Poland, the U.S. and the U.K., among Ukraine’s staunchest allies, have advocated taking an uncompromising stance against Russian aggression. Some European Union states have floated the idea of giving President Vladimir Putin an off-ramp that would make it easier for him to justify a de-escalation to his domestic audience in Russia, while a peace plan drawn up by Italy proposed autonomy for Ukraine’s Crimea and Donbas.

Mr. Zelensky forcefully rejected the notion, put forward Monday by former U.S. Secretary of State Henry Kissinger, that Ukraine should forfeit land to Moscow as part of negotiations on a peace deal.

Mr. Kissinger, speaking at the World Economic Forum in Davos, Switzerland, had said that “ideally, the dividing line should return to the status quo ante,” suggesting that Ukraine should allow Russia to retain the Crimean Peninsula, which it annexed in 2014, and swaths of the eastern Donbas region seized by Moscow-backed separatists the same year.

Mr. Zelensky described Mr. Kissinger’s suggestions as on par with attempts to appease the Nazis in the run-up to World War II.

“I get the sense that instead of the year 2022, Mr. Kissinger has 1938 on his calendar,” he said in a video address Wednesday night. “And that he thought he was addressing an audience not in Davos, but in erstwhile Munich.”

In an expletive-filled tirade broadcast on his YouTube channel on Wednesday, Ukrainian presidential adviser Oleksiy Arestovych called those who say Kyiv should relinquish land “crazy.”

“Get lost with suggestions of this sort, that Ukraine should trade some of its territory,” Mr. Arestovych said. “Children are dying here, soldiers are stopping shrapnel with their own bodies, and they’re telling us to sacrifice territory. It will never happen.”

Military analysts and diplomats say the intense battle for the eastern Donbas region of Ukraine makes it unlikely either side will seek a cease-fire soon, since a shift on the battlefield could lead to a more favorable position for talks later.

“For Henry Kissinger to offer some part of sovereign Ukrainian territory as an appeasement—I find it objectionable,” said Bill Taylor, former U.S. ambassador to Ukraine and current analyst at the United States Institute for Peace, which is funded by Congress. “They’re not ready to cede, they’re not ready to give up claim to their territory; they’re ready to fight, they’re ready to win and we should help them do that.”

The Kremlin said that Moscow expects Kyiv to accept its demands.

“These are not territorial concessions,” Mr. Putin’s spokesman, Dmitry Peskov, told reporters on Thursday. “Kyiv must acknowledge the de facto situation and simply give it a sober assessment.”

The exchanges come in the midst of an intensified Russian assault in Ukraine, focusing on eastern parts of the country to which Moscow switched its efforts after failing to capture Kyiv.

Kharkiv, which came under fierce Russian bombardment early in the war as Russia’s forces pushed to seize the city, was heavily shelled Thursday. Nine civilians, including a 5-month-old child, were killed, and 19 were injured in the attacks, said Mr. Zelensky in his nightly video address. It was the first attack of such a scale since Ukraine’s second most populous city began reopening stores and re-establishing communal services after weeks on the front line.

Officials urged Kharkiv residents to take precautions in case of further attacks.

The Russian army also shelled settlements in the Mykolayiv and Dnipropetrovsk regions, local authorities said. Three people died in Lysychansk, a city Russia has been seeking to capture as it vies for control of the Luhansk region, Luhansk Gov. Serhiy Haidai said. Mr. Haidai said attacks on nearby Severodonetsk have left dozens of homes damaged.

Russian forces have been trying to encircle Lysychansk and Severodonetsk as they move to capture the area around the Siverskyi Donets River, pushing back Ukrainian forces that still control the westernmost parts of Donbas, which is claimed by Moscow-backed separatists fighting alongside Russia in the war.

A Ukrainian officer in Severodonetsk and Lysychansk said that the Russians were trying to break into the cities, but without success.

“The enemy has not advanced a meter,” said the officer. “They are taking losses, but unfortunately our guys are, too.”

He said the cities are under constant fire from artillery, mortars, tanks and warplanes that are hitting civilian buildings, roads and bridges, resulting in civilian deaths. Citing the three he said were killed in Lysychansk overnight, he added: “They aren’t picking their targets.”

The fighting spirit of Ukrainian troops in the two cities remained strong, the officer said. Volunteers are helping to keep the troops supplied, he said, “but the main thing we need is fighters.”

Russia on Thursday said it had targeted two ammunition depots in eastern Ukraine and destroyed a signals-intelligence center in an attack that it said had killed 11 Ukrainian service members and 15 foreign specialists. Ukraine didn’t immediately comment on the claim.

Ukraine said Russia was also strengthening its defense lines around occupied parts of southern Ukraine, including in the Kherson and Zaporizhzhia regions, as it attempts to cement its control there.

In Mariupol, a city in southeastern Ukraine that fell to Russian forces after weeks of relentless bombardment, footage posted to social media showed Russian trucks parked in parts of the city center, fitted with large screens and broadcasting Russian TV news, which advances the Kremlin’s false narrative that Russia is defending Ukraine from fascists running the government in Kyiv.

The intensified assault in eastern Ukraine is coming at a high cost to Moscow, which has lost thousands of troops since it launched its invasion on Feb. 24, according to Ukrainian intelligence and Western officials.

The U.S. has assessed that Russia has also lost roughly 1,000 tanks, 350 artillery pieces, 50 helicopters and three dozen fighter aircraft during the war, a senior defense official told reporters Thursday. Ukraine’s General Staff put its estimates of Russia’s losses higher for similar categories.

In Russia, officials took additional steps to shore up the faltering economy. Russia’s central bank cut its key interest rate for a third time since early April, lowering it to 11% from 14%.

The Bank of Russia has now largely reversed a doubling of the key rate that took place after the invasion of Ukraine, a move intended to support a rapidly weakening ruble and limit a surge in inflation as imports became more expensive.

The currency and the country’s financial system have since stabilized, as Russia’s foreign-currency revenues from oil-and-gas exports have surged because of higher prices. But the outlook for the economy is gloomy, with Western sanctions limiting Russia’s ability to import needed goods.

Mr. Putin said Thursday that isolating Russia is impossible and those trying to do so “will harm themselves the most,” in remarks to members of the Eurasian Economic Forum.

“Western countries are sure that any persona non grata who has their own point of view and is ready to defend it can be deleted from the world economy, politics, culture and sports. In fact, this is nonsense,” he said.

In Davos, Germany’s chancellor said Russia won’t win the war.

Conquering the whole of Ukraine is now even less possible than at the start of the war, Olaf Scholz said in a speech at the gathering in Switzerland.

“Our goal is very clear: Putin must not win his war,” Mr. Scholz said. “And of this I am convinced: He will not win.”

KYIV, Ukraine—Ukrainian President Volodymyr Zelensky dismissed suggestions that his country should cede territory to Russia in return for peace, comparing them to attempts to appease Nazi Germany, as Russia stepped up its attacks in Ukraine’s east.

With the war in Ukraine now past the three-month mark, there is debate among Western officials about what it would take to achieve a cease-fire, and what concessions—including territorial ones—such a deal might necessitate. But despite Russia’s renewed attacks in Kharkiv and other areas of the east, Moscow has absorbed heavy losses in both troops and equipment, raising questions of how long it can sustain the forward thrust of its military campaign in Ukraine.

Poland, the U.S. and the U.K., among Ukraine’s staunchest allies, have advocated taking an uncompromising stance against Russian aggression. Some European Union states have floated the idea of giving President Vladimir Putin an off-ramp that would make it easier for him to justify a de-escalation to his domestic audience in Russia, while a peace plan drawn up by Italy proposed autonomy for Ukraine’s Crimea and Donbas.

Mr. Zelensky forcefully rejected the notion, put forward Monday by former U.S. Secretary of State Henry Kissinger, that Ukraine should forfeit land to Moscow as part of negotiations on a peace deal.

Mr. Kissinger, speaking at the World Economic Forum in Davos, Switzerland, had said that “ideally, the dividing line should return to the status quo ante,” suggesting that Ukraine should allow Russia to retain the Crimean Peninsula, which it annexed in 2014, and swaths of the eastern Donbas region seized by Moscow-backed separatists the same year.

Mr. Zelensky described Mr. Kissinger’s suggestions as on par with attempts to appease the Nazis in the run-up to World War II.

“I get the sense that instead of the year 2022, Mr. Kissinger has 1938 on his calendar,” he said in a video address Wednesday night. “And that he thought he was addressing an audience not in Davos, but in erstwhile Munich.”

In an expletive-filled tirade broadcast on his YouTube channel on Wednesday, Ukrainian presidential adviser Oleksiy Arestovych called those who say Kyiv should relinquish land “crazy.”

“Get lost with suggestions of this sort, that Ukraine should trade some of its territory,” Mr. Arestovych said. “Children are dying here, soldiers are stopping shrapnel with their own bodies, and they’re telling us to sacrifice territory. It will never happen.”

Military analysts and diplomats say the intense battle for the eastern Donbas region of Ukraine makes it unlikely either side will seek a cease-fire soon, since a shift on the battlefield could lead to a more favorable position for talks later.

“For Henry Kissinger to offer some part of sovereign Ukrainian territory as an appeasement—I find it objectionable,” said Bill Taylor, former U.S. ambassador to Ukraine and current analyst at the United States Institute for Peace, which is funded by Congress. “They’re not ready to cede, they’re not ready to give up claim to their territory; they’re ready to fight, they’re ready to win and we should help them do that.”

The Kremlin said that Moscow expects Kyiv to accept its demands.

“These are not territorial concessions,” Mr. Putin’s spokesman, Dmitry Peskov, told reporters on Thursday. “Kyiv must acknowledge the de facto situation and simply give it a sober assessment.”

The exchanges come in the midst of an intensified Russian assault in Ukraine, focusing on eastern parts of the country to which Moscow switched its efforts after failing to capture Kyiv.

Kharkiv, which came under fierce Russian bombardment early in the war as Russia’s forces pushed to seize the city, was heavily shelled Thursday. Nine civilians, including a 5-month-old child, were killed, and 19 were injured in the attacks, said Mr. Zelensky in his nightly video address. It was the first attack of such a scale since Ukraine’s second most populous city began reopening stores and re-establishing communal services after weeks on the front line.

Officials urged Kharkiv residents to take precautions in case of further attacks.

The Russian army also shelled settlements in the Mykolayiv and Dnipropetrovsk regions, local authorities said. Three people died in Lysychansk, a city Russia has been seeking to capture as it vies for control of the Luhansk region, Luhansk Gov. Serhiy Haidai said. Mr. Haidai said attacks on nearby Severodonetsk have left dozens of homes damaged.

Russian forces have been trying to encircle Lysychansk and Severodonetsk as they move to capture the area around the Siverskyi Donets River, pushing back Ukrainian forces that still control the westernmost parts of Donbas, which is claimed by Moscow-backed separatists fighting alongside Russia in the war.

A Ukrainian officer in Severodonetsk and Lysychansk said that the Russians were trying to break into the cities, but without success.

“The enemy has not advanced a meter,” said the officer. “They are taking losses, but unfortunately our guys are, too.”

He said the cities are under constant fire from artillery, mortars, tanks and warplanes that are hitting civilian buildings, roads and bridges, resulting in civilian deaths. Citing the three he said were killed in Lysychansk overnight, he added: “They aren’t picking their targets.”

The fighting spirit of Ukrainian troops in the two cities remained strong, the officer said. Volunteers are helping to keep the troops supplied, he said, “but the main thing we need is fighters.”

Russia on Thursday said it had targeted two ammunition depots in eastern Ukraine and destroyed a signals-intelligence center in an attack that it said had killed 11 Ukrainian service members and 15 foreign specialists. Ukraine didn’t immediately comment on the claim.

Ukraine said Russia was also strengthening its defense lines around occupied parts of southern Ukraine, including in the Kherson and Zaporizhzhia regions, as it attempts to cement its control there.

In Mariupol, a city in southeastern Ukraine that fell to Russian forces after weeks of relentless bombardment, footage posted to social media showed Russian trucks parked in parts of the city center, fitted with large screens and broadcasting Russian TV news, which advances the Kremlin’s false narrative that Russia is defending Ukraine from fascists running the government in Kyiv.

The intensified assault in eastern Ukraine is coming at a high cost to Moscow, which has lost thousands of troops since it launched its invasion on Feb. 24, according to Ukrainian intelligence and Western officials.

The U.S. has assessed that Russia has also lost roughly 1,000 tanks, 350 artillery pieces, 50 helicopters and three dozen fighter aircraft during the war, a senior defense official told reporters Thursday. Ukraine’s General Staff put its estimates of Russia’s losses higher for similar categories.

In Russia, officials took additional steps to shore up the faltering economy. Russia’s central bank cut its key interest rate for a third time since early April, lowering it to 11% from 14%.

The Bank of Russia has now largely reversed a doubling of the key rate that took place after the invasion of Ukraine, a move intended to support a rapidly weakening ruble and limit a surge in inflation as imports became more expensive.

The currency and the country’s financial system have since stabilized, as Russia’s foreign-currency revenues from oil-and-gas exports have surged because of higher prices. But the outlook for the economy is gloomy, with Western sanctions limiting Russia’s ability to import needed goods.

Mr. Putin said Thursday that isolating Russia is impossible and those trying to do so “will harm themselves the most,” in remarks to members of the Eurasian Economic Forum.

“Western countries are sure that any persona non grata who has their own point of view and is ready to defend it can be deleted from the world economy, politics, culture and sports. In fact, this is nonsense,” he said.

In Davos, Germany’s chancellor said Russia won’t win the war.

Conquering the whole of Ukraine is now even less possible than at the start of the war, Olaf Scholz said in a speech at the gathering in Switzerland.

“Our goal is very clear: Putin must not win his war,” Mr. Scholz said. “And of this I am convinced: He will not win.”

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