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Some of the biggest names in tech and Hollywood are training their sites on Warner Brothers Discovery, the media and entertainment conglomerate that owns HBO, Max, CNN, and TNT. Earlier this year, Warner Brothers Discovery announced plans to split itself in two to separate its declining cable networks business from its faster growing streaming division. But on Tuesday, Warner Brothers said it's starting to consider a broad range of options
because of unsolicited interest from multiple parties. Bloomberg has learned Netflix and Comcast are eyeing pieces of Warner Brothers and Paramount Sky Dance, as Bloomberg first reported, made an offer for Warner Brothers Discovery, which the company rejected. It's the latest in a new round of potential consolidation and deal making involving old Hollywood studios and new streaming services. Paramount scis itself, a newly merged company, is led by David Ellison.
David Ellison is a movie producer turned movie mogul media mogul who is initially known as the Sun, or perhaps known to many as the son of Larry Ellison. The co founder of Oracle, the second richest man in the world depending on which day, and various net worth calculations.
Lucas Shaw writes the screen Time newsletter for Bloomberg and hosted Sanuel Conference, which took place earlier this month.
His whole thing was, I'm going to invest in your biggest franchises, which are the biggest risks because they cost the most, but also probably the best bets. And as of earlier this year, merged with Paramount not just the movie studio of Paramount Pictures, but the larger company, Paramount Global, which also owns a lot of cable networks like MTV and Comedy Central, and as a streaming service called Paramount Plus.
That was an eight billion dollar deal that just went down in August. I Wison succeeds in putting together a deal that's acceptable to the Warner Brothers board and federal regulators, what he'll have is a media behemoth, one that reflects both his reverence for Hollywood and his dad's success in tech.
He's sort of trying to bridge those worlds. Now, that sounds kind of great as a talking point. What that means in practice is less clear to people, right, you know, if you go back twenty years the assets Viacom and CBS, they were among the crown jewels and media. They've since been lapped and passed by many others, and he wants to kind of restore to them to their final glory by being the youngest and most tech savvy CEO around.
I'm David Gerra, and this is the big take from Bloomberg News Today. On the show, why David Ellison, the chairman and CEO of Paramount Skydance wants to buy Warner Brothers Discovery, we'll hear from Ellison himself, plus what other companies are interested in the business and what more consolidation would mean for Hollywood, the news business, and for you and me. Bloomberg's Lucas Shaw has been tracking Paramount's guidance
his interest in Warner Brothers Discovery very closely. Earlier this month, Lucas and his colleagues broke the news Warner Brothers rejected Paramount's unsolicited bid.
Warner Brothers Discoveries in the process of splitting into two entities, but it became clear sort of late summer early fall that David Ellison made an offer to Warner Brothers Discovery of about twenty dollars a share, which is well below what we believe the board and management thinks it's worth. One of the reasons that they are splitting is because they feel that they're not being properly valued by the street and that they could unlock value by essentially breaking it up into two parts.
How does this overture stand to change, if at all, that plan to split Warner Brothers Discovery into it sounds like David Ellison wants the whole thing. He's not interested in a part of the company.
It's not really clear.
Does that work with the timelet Yeah, I mean yeah.
My assumption has been that he would do that and then spin off all the cable networks, which are the assets that generate the biggest share of the profit, but that are shrinking and nobody really wants, and that what David really wants is the studio and the streaming service and maybe the broadcast network, which she already has with
CBS at Paramount. Now, he can't do that with Paramount as it is, because the cable networks account for the vast, fast, vast majority of the profit, and so if you were to do that, he'd be left with this like tiny company that wouldn't really generate enough money to do what it wants to do. The exact particulars of what he would do in control still a little unclear, Like there's no world in which it would make sense to have
two different streaming services Paramount Plus and HBO Max. You have to assume they're very similar that you would they would just combine them, pick one. You know, I think they're most likely to keep the studios separate for now, just because they're antis paiding the blowback from the creative community if they were to say that either Paramount or Warner Brothers were to go away, and then, yeah, a lot of questions about what they would do with cable networks.
Warner Brothers, Discovery owns HBO, it owns CNN, it owns TNT and TBS. TNT it got a lot less valuable now that they no longer have the rights to the NBA, but still pretty popular cable networks.
I asked Lucas about the timing here. It's only been a couple of months and Skydance Media closed its merger with Paramount Global.
Well, the reason not to do it now, and I know some advisors of his have urged him to wait. Is that the feeling that the price will only go down, that Warner Brothers Discovery is a damaged company, much as Paramount has been a damaged company. That it has all these cable networks that are shrinking. It has a very large studio in Warner Brothers, but the business is really about the cable networks. And if the cable networks keep going into the crapper, then the stock price for the
company will too. And why pay twenty dollars a share now and you can pay fifteen dollars a share in a couple of years. The other argument for waiting is he just got his arms around Paramount. Why not wait and try to execute your strategy. A lot of these big media deals have not worked out very well. You know, this would be the third time that Warner Brothers Discovery has been traded in the last ten years. And it's got all these great assets. You know, Warner Brothers is
one of the great Hollywood studios. HBO is this amazing brand, and yet the company keeps getting less valuable because these deals tend to be huge distractions and they prevent the buyer from thinking long term and executing against a real strategy.
Lucas says, there are also reasons why Ellison would want to do a deal.
Now.
I think they are two big reasons, well maybe three. One is, if you're already going to go through the pain of integration with Paramount, why not just like try to take your lumps all at the same time. The other two would be to regulatory and competition. The Ellison family has a very good relationship with President Trump. If you're going to go for a big media merger, why not try to do it a time where you have a regulatory regime that favors you that ties into the
other one, which is competition. This current regulatory environment would seemingly box out a lot of other potential buyers for the asset. You know, Comcast has been floated a lot. The Trump administration does not like Comcast and the Roberts
family that is kind of the biggest shareholder there. It has frowned at certain big tech companies, and so I think there's an opportunity to act now while you are the one clear obvious buyer, as opposed to waiting and risking there being more competition in the price going up.
You mentioned the Ellison family's closeness with Preston Trump and with the Republican Party. You asked David Ellison about that relationship on stage, and what did he tell you.
He said that his family has a very productive relationship with the administration and not a ton beyond that.
Here's some of Lucas's conversation with Ellison at the screen Time conference earlier this month.
I think I can to answer this one. Say to people who seem who are concerned that there's just like an Ellison slash Ellison Trump plot to just like corner the media business. You've got Elon with Twitter. You know they're they're no.
I know where you're going.
Look it's.
I'm on the headline him doing better. I can uh, I can only speak to Look, I think I can speak to my personal state of mind, right, is that fair?
Am? I am imitted to do that.
So what I can tell you is that conversation has never once been discussed or or brought up. You know, when we basically approach things, it is going back to always how do we create basically value for shareholders?
I mean, he has tried to avoid talking about politics too much. His talking point is their company is an entertainment company first, and their job is to entertain the world, and getting political kind of interferes with that. But he can't disguise the fact that his dad has a good relationship with this administration and it does work to their benefit.
In the context of news, what has he said about editorial independence and how have we seen that play out in actual fact now that he's he's in charge of CBS News, Well.
He hasn't spoken that much about news other than he did this big deal in buying the Free Press, which was started by Barry Weiss, kind of a former opinion writer at The New York Times, and he has talked about it more as a business than in terms of the output or the content. He would like to see the news division modernized in terms of how it gathers news and most importantly, I think in terms of how it distributes it after the break.
What it would mean if Paramount sky Dance or another big company buys Warner Brothers Discovery, how it could change news gathering, sports coverage, and what gets made in Hollywood. I asked Bloomberg's Lucas Shaw about how significant a deal would be between Paramount sky Dance and Warner Brothers Discovery, or between Netflix and Warner Brothers or Comcast and Warner Brothers. Bloomberg reported Tuesday those two companies, Netflix and Comcast are also interested.
In It would be seen as something like the Disney Fox deal, where you'd have these two entertainment companies combining. It would put a lot of cable networks under one roof. But perhaps more importantly to producers and sellers in Hollywood, it would combine two major streaming services, two major movie studios,
and two major television studios. And typically when assets like that combine, they're not gonna make more, Right, Like if one company makes twenty movie in one company makes twenty, when they combined, they might make thirty, but they're not going to take the forty they are making to fifty. So there's a lot of concern that output will only go down further, that job cuts will continue, and that it will be a kind of a net bad for the creative community.
If we were to get this giant media company of paramounts Guidance and Warner Brothers Discovery, what does that mean for me as a consumer of video content? What's going to change if we have a company of that's scale and size.
Well, the most likely outcome would be you'd have one fewer streaming service to pay for, but the resulting streaming service that you almost certainly want would be more expensive, I'd say is the most likely outcome from that.
Incidentally, Disney announced it's raising streaming prices, and Warner Brothers Discovery just increase the price of HBO Max this week. Lucas says a deal involving Paramounts, Guidance and Warner Brothers would have implications for the news organizations at those two companies.
It would put CBS News in CNN under the same company and under the control of a family that I think feels that both of them are a little too liberal, and so it would likely change some of the news put out there by both CBS News and CNN.
How is this deal being seen or talked about in Hollywood? What would it mean for the film industry and for the TV industry if this sort of go through.
People don't like it, I guess, is the simplest answer. They were all very excited about David Elson buying Paramount, and all very worried about him buying Warner Brothers Discovery, but a lot of them see it as a FATA complete and that there's not a lot they can do about it.
And that's a fear of the size it would amass. It the principally has to do with just how much it would control how big it would be.
No a fear that another studio is going away, fear that just more consolidation will mean more job losses, fewer buyers, fewer projects being acquired. Nobody's I think, is worried about like the scale, because even that combined company wouldn't be bigger than Netflix or Disney or Apple or Amazon. It's just that Hollywood has lived through two and a half years of what's about like kind of constant bad news, and this feels like it would just be more of the same. I guess to them, it feels like a
shrinking industry. And even though if you look, if you really zoom out, like there's a lot of discussion of the loss of a studio. And what I have to sometimes remind people is like, well, yes, you lost Fox, and you may lose either Warner Brothers or Paramount, but you gained Netflix, Amazon and Apple, and so the total number of studios hasn't really shrunk. But that argument doesn't work well with people who've seen, you know, their friends lose jobs and seen overall output go down.
So you're going from having kind of four separate companies coming together. Perhaps is as one what is the last time in history you've had so much concentration in the entertainment industries? Is this at all novel? Is it a return to something we've seen before? So how do you see this in kind of the sweep of entertainment history in the US.
So there are more ways to inform and entertain yourself than ever before. You know, you can go on YouTube and TikTok and and Twitter and all these social media platforms. You can go on any number of streaming services and TV networks those god knows how many podcasts. But there are also entertainment and media companies that own more assets
than anything that we've seen before. Right, But if you add in streaming and you consider all TV viewing as presently constructed, Paramount and Warner Brothers Discovery combined, what account for less television viewing than YouTube? And that's just in the US. YouTube is much much, much, much much bigger abroad, So it's a big asset. But a lot of these tech platforms like Google, Facebook, These companies still have way more control than any of these other media companies that
we seem to be very worried about. Would a company that has CBS and NBC have more control over what people think than Alphabet, which owns Google and YouTube and Google Maps, or than Meta which owns Instagram and Facebook and WhatsApp?
Like?
Does Netflix have more control and power than CBS did at its peak in the US? The answer is clearly no. More people watched CBS every night than watch Netflix every night by a lot. When you consider Netflix's global reach, which CBS didn't have. Are more people watching Netflix on any given night globally than watch CBS in the US. That is more of an apples to apples comparison, but it's a different type of influence.
Before I let him go, I asked Lucas what he thinks isn't getting enough attention as this story develops, as he and our colleagues report on the next steps for Warner Brothers Discovery.
We're just in the very early stages of seeing what David Elson plans to do with Paramount, and I'd have a lot more thoughts about what that means for Warner Brothers Discovery if I had a clearer handle on what's happening with Paramount, because the first month or two has been we're going to spend a lot of money to show it's a new regime, right, and then the next couple of months are going to be we're going to fire a lot of people and restructure, and we'll have
a really clear feel for kind of what David Allison as chairman CEO of a major media company looks like after twelve to eighteen months. I think a lot of Warner Brothers Discovery people feel like it can't be worse than what they've been through. Like, while most of Hollywood is against the deal, a lot of people who work at Warner Brothers Discovery are pro even if they are
worried about losing their jobs. They didn't love being owned by AT and T, they haven't loved being led by David Zaslav and so if David Allison can be different, you know, maybe that's better.
Do you have a sense from your reporting of what would be palatable to the Warner Brothers Discovery boards they rejected that initial offer. Are they simply looking for a higher number here? What are they considering that might make this something that could come together.
I think it really comes down to the number. It's not like there's another, you know version. Maybe they want certain assurances, but they will say we have a fiduciary responsibility to shareholders. And I have been told that they have a number at which they would say yes.
This is the Big Take from Bloomberg News. I'm David Gura. To get more from The Big Take and unlimited access to all of Bloomberg dot com, subscribe today at Bloomberg dot com slash podcast offer. If you like this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow