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LOS ANGELES — In late sum-mer, Verizon Communicationscame to Rupert Murdoch with asurprise acquisition offer.

Verizon — locked in battle withAT&T, which was then finalizingits $85.4 billion takeover of TimeWarner — wanted to buy pieces of21st Century Fox, Mr. Murdoch’stelevision and film conglomerate.Representatives of the two com-panies secretly met at least onceto discuss a merger.

Mr. Murdoch, 86, shrugged off

the talks as uninspiring, accord-ing to an associate, who spoke onthe condition of anonymity be-cause he wanted to maintain hisaccess to the media titan. Verizondeclined to comment, but theoverture prompted Mr. Murdochto start to think seriously — for thefirst time — about selling his Hol-

lywood treasures.Not only would a sale solve a

business problem, it could solve afamily one.

Several months later, Mr. Mur-doch agreed to sell much of 21stCentury Fox to the Walt DisneyCompany. The proposed $52.4 bil-lion deal, which is subject to regu-latory approval, has the potentialto radically reshape the entertain-ment world, but it also has manywondering what the future holdsfor Mr. Murdoch and the two sonswho seemed to be on the cusp oftaking over his vast media hold-ings.

Disney Deal Fits in a Murdoch Family Fault LineBy BROOKS BARNES and SYDNEY EMBER

Continued on Page A9

Changes for Sons WhoWere on the Cusp of

Taking Over

SEOUL, South Korea — Be-yond a New Year’s declarationby North Korea’s leader, KimJong-un, that he would move tothe mass-production of nuclear

weapons andintercontinentalmissiles in 2018lies a canny newstrategy to initiate

direct talks with South Korea inthe hope of driving a wedge intoits seven-decade alliance withthe United States.

Mr. Kim, perhaps sensing thesimmering tension betweenPresident Trump and PresidentMoon Jae-in of South Korea,called for an urgent dialoguebetween the two Koreas beforethe opening of the WinterOlympics in the South nextmonth.

The strained relationshipbetween the allies has beenplaying out for months, as Mr.Moon, a liberal, argued for eco-nomic and diplomatic openingswith the North, even as Mr.Trump has worked hard tosqueeze the North with increas-ingly punishing sanctions. Mr.Moon also angered Mr. Trumpand his aides in recent monthsby suggesting he holds what hecalled a veto over any Americanpre-emptive military actionagainst the North’s nuclear pro-gram.

Until now Mr. Kim has largelyignored Mr. Moon, whom theNorth Korean media has por-trayed as a spineless lackey ofthe United States. But the dra-matic shift in tone and policy,toward bilateral talks betweenthe two Koreas, suggests that Mr.Kim sees an opportunity to de-velop and accentuate the splitbetween Mr. Moon and Mr.Trump, betting that the UnitedStates will be unable to mountgreater pressure on the North ifit does not have South Koreanacquiescence.

The gambit may work. Hoursafter Mr. Kim’s speech, Mr.Moon’s office welcomed theNorth’s proposal, in a way thatcould further aggravate tensionswith the United States.

“We have already expressedour willingness to engage in adialogue with North Korea at anytime, in any place and in anyformat, as long as both sides candiscuss restoring their relationsand peace on the Korean Penin-sula,” said a presidential spokes-man, Park Soo-hyun.

The statement emphasized theroles of the two Koreas in resolv-ing the nuclear crisis. PresidentTrump, in contrast, has pursueda tougher approach, saying therecan be no talks without signsthat the North is giving up itsnuclear and missile testing, andwithout an understanding thatthe ultimate goal of any negotia-tions is a complete, verifiabledismantlement of the North’s

North KoreaWooing South

To Repel U.S.

A New Ploy to Drive aWedge Between Allies

By CHOE SANG-HUNand DAVID E. SANGER

NEWSANALYSIS

Continued on Page A7

WASHINGTON — A wave ofoptimism has swept over Ameri-can business leaders, and it is be-ginning to translate into the sort ofinvestment in new plants, equip-ment and factory upgrades thatbolsters economic growth, spursjob creation — and may finallyraise wages significantly.

While business leaders are ea-ger for the tax cuts that take effectthis year, the newfound confi-dence was initially inspired by theTrump administration’s regula-tory pullback, not so much be-cause deregulation is saving com-panies money but because the ad-ministration has instilled a faith inbusiness executives that new reg-ulations are not coming.

“It’s an overall sense that you’renot going to face any new regula-tory fights,” said Granger Mac-Donald, a home builder in Ker-rville, Tex. “We’re not spendingmore, which is the main thing.We’re not seeing any savings, butwe’re not seeing any increases.”

The applause from top execu-tives has been largely for the ad-ministration’s economic policyagenda. Many have been publiclycritical of President Trump’s ap-proach to social and cultural is-sues, including his response to awhite nationalist march over thesummer in Charlottesville, Va.,that turned deadly and his deci-sion to withdraw from the Parisclimate accord. Two of the busi-ness advisory councils that Mr.Trump assembled in the nascentdays of his presidency disbandedafter executives grew concernedabout his public remarks on the vi-olence in Charlottesville.

There is little historical evi-dence tying regulation levels togrowth. Regulatory proponentssay, in fact, that those rules canhave positive economic effects inthe long run, saving companiesfrom violations that could costthem both financially and reputa-tionally. Cost-benefit analysesgenerally do not look just at theimpact of a regulation on a partic-ular business’s bottom line in thecoming months, but at the broaderimpact on consumers, the envi-ronment, public health and otherfactors that can show up overyears or decades.

But in the administration andacross the business community,there is a perception that years ofincreased environmental, finan-cial and other regulatory over-sight by the Obama administra-tion dampened investment andjob creation — and that Mr.Trump’s more hands-off approachhas unleashed the “animal spirits”of companies that had hoardedcash after the recession of 2008.

Some businesses will essen-tially be able to get away withshortcuts that they could not haveunder a continuation of Obama-era policies. The coal industry, forinstance, will not have to worryabout a regulation, overturned by

With Red TapeLosing Its Grip,Firms Ante Up

Spending Is on the Riseas Confidence Grows

By BINYAMIN APPELBAUMand JIM TANKERSLEY

Continued on Page A10

JERUSALEM — An embold-ened Israeli right wing is movingquickly in the new year to make itfar more difficult to create a Pales-tinian state, signaling its intentionto doom hopes for a two-state so-lution to the conflict.

The actions have come on mul-tiple fronts, as Prime MinisterBenjamin Netanyahu’s party forthe first time has urged the annex-ation of Jewish settlements in theWest Bank, and the nation’s top le-gal officers pressed to extend Is-raeli law into occupied territory.

In addition, the Israeli Parlia-ment, after a late-night debate,voted early Tuesday to enact stiffnew obstacles to any potentialland-for-peace deal involving Je-rusalem, while also easing theway to rid the city of several over-whelmingly Palestinian neighbor-hoods, according to Israeli mediareports.

Coming on the heels of Presi-dent Trump’s recognition of Jeru-salem as Israel’s capital in defi-ance of decades-old United Statespolicy and international consen-sus, the moves showed that the Is-raeli right senses a new opening topursue its goal of a single statefrom the Jordan River to the Medi-terranean.

“We are telling the world that itdoesn’t matter what the nations ofthe world say,” Public SecurityMinister Gilad Erdan told morethan 1,000 members of Likud’scentral committee on Sunday.“The time has come to expressour biblical right to the land.”

But Palestinians and Israeli

Energized FoesPush to CrippleTwo-State Goal

By DAVID M. HALBFINGER

Continued on Page A6

TEHRAN — Ignoring pleas forcalm from President HassanRouhani, Iranian protesters tookto the streets in several cities forthe fifth day on Monday as pent-up economic and political frustra-tions boiled over in the broadestdisplay of discontent in years.

The Iranian government re-sponded with conciliatory wordsfrom Mr. Rouhani, but also a wid-ening security clampdown — anda pledge late Monday to crack

down even harder.The government will not allow

an “insecure situation to continuein Tehran,” Brig. Gen EsmaeilKowsari, deputy chief of the mainIslamic Revolutionary GuardsCorps base in Tehran, told the

semiofficial ISNA news agency.“If this situation continues, the of-ficials will definitely make somedecisions and at that point thisbusiness will be finished.”

Despite Mr. Rouhani’s diplo-matic language, it was clear thedemonstrators would be given noleeway.

The deputy interior minister,Hossein Zolfaghari, told the semi-official Jamaran website, “Fromtonight the unrest will be con-trolled more seriously.”

On Monday, a crackdown by the

By THOMAS ERDBRINK

A woman in a cloud of tear gas at the University of Tehran on Saturday. Demonstrations in Iran entered their fifth day on Monday.AGENCE FRANCE-PRESSE

Iran Vows to Snuff Out Largest Protests in Years

President’s Attempts toAllay Discontent AreEclipsed by Threats

DAMON WINTER/THE NEW YORK TIMES

Mayor Bill de Blasio embracing his family after being sworn in Monday for a second term. Page A11.Warm Hugs at an Icy Inauguration in New York

Fungi could play a role in improvinglaundry detergents and, by extension,reducing energy use. PAGE B1

BUSINESS DAY B1-4

Finding a Future in Fungus

Americans use health care servicesabout as much as people in other coun-tries, but they pay a lot more. PAGE B1

Health Costs Set U.S. Apart

A woman in California tracks house catsthat fled the wildfires and tries to re-unite them with their owners. PAGE A8

‘Fire Cats’ Are Hardest to Herd

In a north London neighborhood under-going a radical transformation, resi-dents fear gentrification. PAGE A4

INTERNATIONAL A4-7

Renewal Brings Fear of Ouster The Met’s new staging, with SonyaYoncheva, above, has high points, butmay be pointing the company in thewrong direction, our critic says. PAGE C1

A Very Inoffensive ‘Tosca’

David Brooks PAGE A15

EDITORIAL, OP-ED A14-15

The airport, once a source of pride inthe area, has recently fallen out of favoramong neighbors who call it dangerousand noisy. PAGE A16

NEW YORK A11-13, 16

Teterboro Airport Disquiet

A gelatin made from the hide of theanimals is prized as a traditional Chineseremedy. Now the braying is being si-lenced in some African villages. PAGE D1

SCIENCE TIMES D1-6

Old Cures and Stolen Donkeys

Late Edition

VOL. CLXVII . . . No. 57,830 + © 2018 The New York Times Company NEW YORK, TUESDAY, JANUARY 2, 2018

Amid a slow and halting rollout, dispen-saries selling marijuana for recreationaluse opened Monday in a handful ofcities, with more to come. PAGE A9

NATIONAL A8-10

Pot Is Now Legal in CaliforniaAmanda Hess, a Gemini, is of two mindsabout astrology’s online appeal. PAGE C1

ARTS C1-8

The Web, Celestially Speaking

After accusations of sexual har-assment and physical and verbalabuse, Peter Martins, the power-ful leader of New York City Balletwho shaped the company for morethan three decades, has decided toretire.

“I have denied, and continue todeny, that I have engaged in anysuch misconduct,” Mr. Martins, 71,wrote in a letter dated on Mondayinforming the board of his retire-ment, which takes effect immedi-ately.

Mr. Martins, who has been on

leave as the company investigateshis actions, added, “I cooperatedfully in the investigation and un-derstand it will be completed

shortly. I be-lieve its find-ings wouldhave vindicatedme.”

Charles W.Scharf, thechairman ofCity Ballet’sboard, issued astatement on

Monday thanking Mr. Martins forhis contributions, but noted the in-vestigation will continue: “The

board takes seriously the allega-tions that have been made againsthim and we expect the independ-ent investigation of those allega-tions to be completed soon.”

Board members were told of hisdecision in a conference call Mon-day evening, when they alsolearned that he had been arrestedon Thursday and charged withdriving while intoxicated in West-chester County, according to aperson with knowledge of themeeting who requested ano-nymity because the discussionswere confidential.

Mr. Martins was charged in

City Ballet Leader Retires Amid Abuse ClaimsBy ROBIN POGREBIN

Peter Martins

Continued on Page A13

Sony Michel, left, scored in the secondovertime to give Georgia a 54-48 victoryover Oklahoma. Alabama beat Clemson,24-6, in the other semifinal. PAGE B5

SPORTSTUESDAY B5-10, 12

Georgia vs. Alabama for Title

Continued on Page A6

Today, plenty of sunshine, brisk,cold, high 25. Tonight, clear, cold,low 16. Tomorrow, times of cloudsand sunshine, not as harsh, high 30.Weather map appears on Page B12.

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