Larry Ellison Guarantees Paramount’s Bid for WBD

Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Eva Though in San Francisco.

This is Bloomberg Tech coming up Paramounts, Guidance amend it's been for Warner Brothers Discovery, this time including a personal financial guarantee by Oracle chairman Larry Ellison. Plus Chinese chip makers are rushing to the IPO market after back to.

Back listing surge.

We discuss the ongoing global AI race and New York Governor Kavie Hokel signs a bill to restrict the most advanced artificial intelligence.

We discuss a regulatory landscape.

Building in the United States, but first we check in on these markets at the moment that are building too. We're building towards what has been a spectacular year for the NASVAQ one hundred and more than twenty percent. We're up four tens percent. We're fading some of the initial gains at the open. But really, more broadly, this is about big tech AI anxiety.

Just pulling back a little bit and actually people putting.

Money on towards this shortened trading week. We delve into the individual movers. One is being driven by breaking news. Right now, Alphabet, we check in on their particular shares.

In a moment for you.

But now I'm looking at the media landscape. Let's go to Alphabet because we're trading flat. But this is news breaks that is actually making a big acquisition in the world of energy, Intersect Energy, helping them develop their overall well data centers that are becoming sprawling and ever more necessary here in the United States where they need the energy infrastructure.

With wit to do that.

Four point seventy five billion dollars including debt for this particular private equity backed company which is still building out in Texas for other clients than Alphabet. So keep an eye on what's happening in the world of energy and Alphabet. Move on from Alphabet and look at what's happening in the media industry because that's what drives the trade and all the talk on the day. Paramount skuideouts basically the Ellison's.

Back with an amended deal.

They will pay more if indeed they were able to clinch Warner Brothers Discovery, but it failed to go through to five point eight billion dollars. If the deal didn't happen. But more broadly, they're saying, by the way, we're good

So extraordinary amount of steps on Paramount's part to address the concerns that Warner Brothers had identified last week and why they didn't pick them to begin with. So quite a lot there. The personal guarantee from Larry Ellison. One of the issues was this was being backed by a

And then four does it all come down to what you think the cable networks are actually worth? Chris, if they indeed managed to convince David Zaslov that they're good for the money, is this more personal for David or is this more about the price of the networks?

You know, it does go beyond all of that for sure. Right now there is this difference in how you because you know, Netflix is not buying the cable networks any their worth paramount says only a dollar is share, other people say three or four dollars a share. That's a

Chris Palmury running us through what is a very complex Hollywood shakeup. Look in fact, we talked about this last week. Remember Kevin Maher joined the show is Candel Media co CEO, former TikTok CEO, but also a Disney executive. Here's what he had to say about a potential Paramount comeback.

Even though Netflix won the first round. Don't count out the Allison's. They're incredibly smart and aggressive. Don't count out don't count out Jerry Cardinal Redbird. These guys are very serious. I think they're going to come back with a higher bid and when approached, and remember shareholders still haven't spoken yet. I think the likelihood of here is that Martin Brothers ends up with Paramount, and I think it's ultimately it's

He found Disney plus what therefore for Born and Brothers, Discovery Saga. John clins with US, co founder of Hang Media of course, the former president of CNN. You know the inner workings of media right now, John, do you think that the deal has to be sweetened? It can't just be about more for a breakup fee or good for.

The money in terms of Larry Allison.

Yeah, you know, it's a very clear picture of who's got the leverage here.

Clearly WBT has suitors.

David Zaslav could just sit and fold his arms and say, look, you're not talking in my good here yet paramount and it's a it's not a dumb way to try to drive their offer up even higher than that wouldn't surprise me.

What do you think could be the quibbling around the cable network.

That's the area that you knew, you love.

You performed in and there has been, of course the regulatory concern about who ends up owning CNN, but more broadly about.

What they really are basically priced at. John.

Yeah, And you know, value really depends on the acquirer, and there could very well be acquirers out there in the universe of media who value those cable networks much more highly than a Netflix would or even Paramount would. And you know, you could see where Versant, for example, which is being spun off from comcasts, which is identical to the cable.

Spinoff that WBD is doing.

You could see them valuing TNT, TBS, True TV, CNN much more highly than these current players are.

So value is in the eye of the holder.

I could see the local station giants like Nextstar and Sinclair also loving the idea of having both a national footprint as well as their ever growing roster of local stations.

So you know, there could be even.

More money available to WBD if they go ahead and sell those two components separately.

I see, what would you think would happen if and it's a big if Paramount's guidance got hold of all the assets because Netflix we know if that deal gets done, the cable networks would be spun off.

But if Paramount's guidance took hold, would you think then would be the evolution here?

Well, they could still do a spin off of their own cable properties and broadcast properties. There's all kinds of financial engineering that could then take place.

I don't know that it would happen overnight.

Although this new paramount management team has moved extremely quickly. You know, David Ellison gets a lot of attention, but Jeff Shell, who was the chairman of NBC Universal, it is a fantastic operator and and I could see them moving quickly. However, it sort of reminds one of the snake that eats the deer, you know, it unhinges its jaw and it spends the next three months just trying to move that thing down the tunnel.

And it could take a while for all of these synergies to be realized.

How important is the Ellison relationship with the administration at this point, John, because that's in many ways what they thought would clinch the deal.

It's been reported well, much as David's ass lab is able to sit there and play one side off the other, so is Donald Trump in a similar position.

Where he has not put his finger on the scale yet in favor of paramounts offered, despite his relationship with Larry Ellison. And he has said very nice things about Ted Sarandos, the co CEO of Netflix. And I think that Donald Trump is enjoying being a position to see who can curry more favor with him, so there's no reason for either President Trump or David Zaslav to pull a trigger on anything just yet. They want to see how these deals all get sweetened.

I suppose the other contingent of stakeholder who has sat there with their arms folded is the investor base. Right now, they've got one until January the twenty first to digest whether this go direct in way the Edisons have approached them Warner Brothers Discovery shareholders to be clinched versus going with Netflix.

What would you say to.

An investor who's holding Warner Brothers Discovery shares right now.

That there's plenty of time for this deal from paramount to go even higher. So one way or another, WBD is going to be making out very nicely. History has shown us that the sellers in these media deals tend to make out better than the buyers, so they're in

What's so interesting about your trajectory and media is you've sort of been able to see around the corners. You were in the heart of news, in the heart of production, then you went into the world of AI selling while helping manage a business, eventually went to Apple.

You're with hang Media at the moment.

What does all of this mean for Hollywood and for content creation right now?

Well, we're on at the very beginning of a content creation explosion, and this deal, however, it turns out, is taking place within a much larger environment in which the creators who are being distributed by you tube and TikTok are commanding much more viewing time than the traditional producers, writers, directors and most of all studios and so in a lot of ways, this battle for the assets of WBD is really all about the way media used to be.

I think all those tech.

Giants are going to be running media and all of these other companies will be significantly smaller.

And we're just seeing the beginning of this.

So in a lot of ways, this matters a lot to the shareholders for the for WBD, Netflix, Paramount, etc. But in terms of the long term trajectory of the media industry, that's all happening somewhere.

Else, and suddenly that's one the regulators how to digest what really is the market that a Netflix plus Warner Brothers Discovery would be competing in chunkline of hang media. It's always great to catch up with you. Happy holidays, Thank you. Coming up, Google is buying Intersect Power to help build out its energy infrastructure for AI products. We delve into that next the Springberg Tech Google is agreed to buy power provider Intersect Power for four week seventy.

Five billion dollars in cash plus existing debt.

This as the tech giant makes a push to grow its data center presence.

Bloomberg's Joshua joins us.

Now to discuss that Sharzo moving higher up about five ten percent.

Josh, why is alphabet getting ever more into the world of clean energy.

Ever since we saw tech companies needing a lot of electricity for their data centers, there's been a conflict between utilities. Traditional power providers which move slow make sure that nothing ever breaks. Grid reliability is paramount for them. Tech companies want to move really fast. They want to get a ton of power. They're not against breaking things. This is an example of a big tech company saying we're just going to bring a whole a whole power generation company.

Intersect Power is an interesting company.

It's been backed by private equity players such as TPG, but they actually build out, particularly in Texas, not just for Alphabet, so they've got other clients on their books.

How is this actually going to work from an M and A.

Perspective, that's that's interesting. I'm not sure how that's going to get worked out, but I think what it means for Google is that they'll be obviously front a line and able to build a lot of clean energy on site with its data centers, something that that allows Google to go even faster with is it won't have to build big transmission lines if you have power plants or solar and wind farms somewhere, and then you have to permit transmission lines to move that electricity long distances to

So No pitch I, chief executive officer of Google and parent company Alphabet talking about how it's going to expend, expand capacity and operate nimbly and building new power generation in lockstep with the data center need.

They are not the only player needing to expand in data centers. Is this kind of come thick and fast.

These sort of energy assets are going to be really interesting to some of these big hyperscaters.

Yes, for sure, we've seen all the big hyper scalers making different moves in the energy space in.

A way that they wouldn't have in past years.

I've reported this year on Meta getting into power trading so that they're able to help energy generation get brought online faster, more at the cadence that they want as opposed to the frequency and speed with which power generation

Josh, it's going to be a busy one for you in twenty twenty six. Thanks so much for talking us through this particular deal. We appreciate it. Josh saw the Chinese chip makers, they are rushing to IPO following some blockbuster debuts that we've just had as recently.

As last week.

This seems to be huge demand for future national champions, the analysts say could one day rival even the likes of Nvidia.

But does that.

Enthusiasm mask technological challenges facing these firms? Boombergs Maggie Eastland, who covers Chips, joins us. Now the context of this is almost a seven hundred percent pop in Metax that debuted last week. We've got other of the so called four little dragons looking to IPO, it's all about domestic national.

Champions exactly, Caroline.

So China is certainly putting a lot of support behind these chip champions, and there's no shortage of capital. Bloomberg has reported on an incentives package for semiconductors of up to seventy billion dollars. So the push for domestic chip companies is alive, it's strong and well. The questions come in when you look at the technological challenges. So Chinese chip makers, you could look at Huawei as one of

Okay, So they've got to get the foundries in place. They've got to of course, many quandering what the ISML competitor is over there as.

Well, Maggie.

But take us back to some of the other reporting that's in the market today that H two hundreds from video will stop being produced and being able to be issued into China. I mean, we haven't heard from the government, but what do you think about the need the use case of H two hundreds.

Of course, when you look at H two hundreds, I think one of the key questions going forward is how is this going to affect the ecosystem of Chinese model companies. You know, last year we had this deep sea moment and that is very intertwined with access to chips.

Of course, now it's widely.

Known that you know, deep seek access A one hundreds. Those are in video chips that are less powerful than the AGE two hundreds. So you know what is going to happen once China is able to access if they accept the H two hundreds, what does that mean for the Chinese model companies?

Will they grow more competitive?

There was a story today on Bloomberg about Zippu and Mini Max and their revenue.

We're just seeing some numbers.

They're not quite as high as Open AI and Anthropic, but this is a key area of interest going forward, right given that they're no longer going to be as hindered by their lack of access to advanced in vidio chips.

Higie Eastland it's going to be a fascinating trend you're continuing to watch for us.

Thank you.

Now, let's talk more about the geopolitical issues at play here between the US between China as it opens with US managing director at Garot Global. All of this is so interesting as to whether or not indeed in video gets access to China, whether we see a TikTok deal, whether we see continuing trade issues between US and China iron out do If we talk about chips in particular, what have you made of the ferocious focus on domestic supply chain they coming from China.

Yeah, it's a great question, Caroline, and I agree with Maggie just now that the you know, the H two hundred is really going to be a boon for some of these Chinese AI companies. As we've seen over and over again, compute is really the bottleneck. But I want to go back to what you said about the TikTok deal. You know, we heard the news a few days ago. It hasn't yet been finalized, and I think a lot of investors are going to be analyzing what is the

Really at the heart of the deal.

So what you see is as a Trump administration keeps trying to come up with some kind of a deal to end this TikTok saga and keep it in the United States, it keeps kind of lowering the bar on this deal with Beijing over TikTok to the point where now we're probably going to be settling on a deal where Beijing, through byte Dance, maintains control over this algorithm

So Elsa, are you saying when the talk is the reporting is that they will be able to license the algorithm and then rebuild it.

You don't think that they will be rebuilding.

You don't think that will be some sort of retraining, will still be dependent on byte Dances underlying algorithm.

Yeah, I mean, color be skeptical.

They are.

They've been working on this you know, so called security deal for quite some time. But the reason that the Congress, on a bipartisan basis passed the law in the first place, and then the Supreme Court upheld it was because they did not see it as viable for US national security for a adversary controlled company, you know, Byteedance and TikTok

Eliza, very briefly, is national security at risk?

If that Scot's yeah, you know, it's you know, we can make an analogy perhaps to the Cold War. It's almost as if, you know, during the Cold War we let the Soviets take control over some of our major newspapers. Or imagine today if Bloomberg TV were up for sale to the Russians of the Iranians. What's somewhat ironic is that last month the Trump administration put out its National Security strategy. You can see it on the White House website, and it makes the point over and over again that

With TikTok, with Beijing maintaining control.

Lisotoven, managing director of god Global, it's great to catch up with a thank you as a Blue meg Tech. Welcome back to Blue meg Tech. Let's check in on these markets because we're on risk one mode. It is a shortened week ahead of the holidays, people selling up the books and just trading into this tech market. We see that's that one hundred up five tens of a percent. In fact, it's on course to delivering more than twenty

AI anxieties around.

We're seeing less anxieties around crypto today. We're up more than two percent, but look it is down on the year by some four percent. We have only seen that a handful of times for the OG in the crypto space.

Keep an eye at the ninety thousand dollars level.

Let's move on to look at the individual players in the NAZNAK one hundred.

They want to keep an eye on.

Because it's all about MNA in media and the tussle at the top for what is a prize asset a Warner Brothers Discovery. It's straining up to two point nine percent because we seem to have an amended offer coming from the Ellison family. This one paramount's guidear't saying, look, we're paying more if there's a breakup fee, and also we guarantee the money coming from Larry Llison, David Ellison's father Mewe.

Netflix off by seven tenths of a percent.

As it looks as though they might have to be hear a bit more of a bidding war or indeed some sort of worry that they might not clinch the deal.

Let's talk about it all.

We've got Bloomberg Tech editor Tom Giles with us. So it seems as though Larry Ellison, to the rescue. A lot of the worry from Warner Brothers Discovery have been around how good Paramout's guidance was for the money.

That's right, when you've got the backing the personal guarantee of one of the world's wealthiest people, that's bound to make a difference. Remember that one of the bones of contention between the two companies was the idea of where this money, how this money would be held. Previously, it was going to be held in a revocable trust, and as the name implies, there was a little bit of room there for it to be moved around, for the

Just remind us of extraordinary nature that Larry Ellison has been playing in the world of techomedia.

Just the entirety of twenty twenty five.

He's ordered at the root of nearly all stories that we're covering at the moment, Tom, is that competitive instinct there. Do we think that they'll actually raise the bid, not just amend it.

Yeah, well, you know, right on your show, including with Kevin Meyer, former Disney executive, you've had several people speculating that they will have to sweeten their bid. As of right now, they're amending some of the terms, but in terms of the dollar value that's going to go into the share into the hands of shareholders, Warner Brothers shareholders, that.

Has not changed.

There's a lot of speculation that in order to get Zoslav Warner Brothers CEO back to the table, they're going to have to sweeten the bid, that these terms they're going to help, they're going to address some of the concerns, but that the number has to rise. Remember that there's a disagreement between Netflix and Paramount as to.

Whose bid is superior.

David Ellison's CEO of Paramount will definitely say his is period puts more money into the hands of shareholders, But it's difficult to assess on an apples to Apple's basis because one of them places a value on the cable networks, the other one dozen the other one presupposes that those cable networks are going to be spun off. So there's

Meanwhile, Netflix has been tidying our its own financing for the deal today as well, Tom Jiles, very busy end of the year for you. Thanks so much for joining us on this deal. And look, let's talk about how the deal for Warner Brothers really is upending potentially the future of Hollywood. But there's a bigger shift at play as well simultaneously, and it's artificial intelligence. It is rewriting

And Open AI. Was that for positive Do you.

Think I asked them Mickey Mouse deal. Well, it's hard to know whether there's much substance to that deal.

If you look into it, we.

See Disney promising to invest money into open Ai, but it's a drop in the bucket compared to the amount of money that open Ai says it's going to spend on infrastructure and chips. And then for open AI's part, open Ai says that it is licensing the Disney characters, but it's not paying any cash in the deal, just stock warrants, which is the opportunity for Disney to invest more money in the future if it wants to. So when I look at this deal, it reminds me a

We're living in fantasia or fantasy in some way. I'm interested in, Province Professor. Look, actually, Warner Brothers, not only is it fending off simultaneous deals some Netflix and Paramount at the moment, but also it's busy suing other AI companies in lockstep with Disney and with Universal. They've been taking on a Chinese AI company, in particular Minimax. How are we seeing IP being at the root of legal ramifications?

Here is IP being protected.

So the Minimax case is fascinating because the lawsuits in the United States between content creators and the generative AI companies are completely different from the one that's happening with Minimax in China. In the US, we're talking about training.

The models using the content.

What's a little like traveling all over the world and looking at museums and studying the great artists to figure out how.

To create things.

But Minimax, now that's different when you talk about the output. When the output mirrors the creative content and potentially competes with the creative content, courts are likely to be much more critical of activity like that with Minimax. We also

Well.

This comes in the context of actually the United States President in one speech saying, look, you can't win all your IP battles at the moment, we are in a race with China, and in many ways intellectual property has to take some sort of sideline for national security sake. And if you can just summarize, is IP safe for this man, Robin?

Can it work together with a innovation?

IP has to change. Technology rarely moves backwards. So the challenge for intellectual property and content holders is to figure out how to work with it, use it, manage it, and take advantage of it.

Wow, professor, we thank you so much. Roan Fellman of you c law SF out with the book as well, we appreciate you.

Talking us through it. New York Governor Kathy.

Hokol has signed a state bill into law restricting the most advanced AI, making New York the second state to pass AI curbs opposed by the tech industry. Let's get the details with Blue Megs Miles Meller. This took months in the making.

Why did it take so long?

Yeah, the Reis Act was passed in June. But it took so long because there was significant lobbying from tech industry. Right, they really wanted to see changes to this law number one, but number two, they were cognizant that California was coming out with its own law, and they wanted to see what was in that bill so that they could make

Right.

I was at Meta and just we would think about, okay, so if this state's going to do this, how do you do it in this state? And then you've got the Trump component to it as well.

Right, But I mean, banks might say, well, we're regulated in fifty different states, but there is an element that the federal level is coming in here. They hope cal took hits on either side, many confronting that feeling that she did water it down, others feeling that this is one of the most strict laws out there. So how does it come in with the executive order that was just to.

Pass last week?

Right?

You know, the executive order, which is sure to have some court challenges, will also be met with probably some significant backing or opposition in Congress. Right, Congress is going to have to figure out a way to regulate all of this. But when it really comes down to it, this is about what the tech industry says is stifling innovation, but what local government says is all about trying to figure out if these models are facilitating fraud or misinformation.

Well, said Miles Miller, Thanks so much, for running us through it today. Well, let's talk about AI regulation and more broadly about the moves in the market that have seen AI pessimism perhaps easing on the stock prices today, but longer term anxieties that remain, particularly around the debt issuing side as well. Tomash Strong gooz is with us, his general partner at Theory Ventures. You're here to talk

One of the big drivers of USGDP growth in the last year has really been the data center build outs. About one percent one point six percent of us GDP, probably three percent next year. It's funded a lot by debt, about sixty to seventy percent of it.

Okay, funded by debt.

How does you, as a VC backer, someone who's found unicorns out there, who keeps I can gold, how does that matter to you if some of the biggest companies out there are financing the AI infrastructure with that.

Lot. Because the startups that we backed rely on these data centers in order to run AI, and if those data centers are ultimately healthy or unhealthy, it dictates whether or not they're GPUs the processors to.

Execute the AI.

For example, we've been watching Oracle credit default flops. You can see the spread on that CDs that is growing to about one hundred and fifty percent, trading out or near junk levels, and that's because there's broader concerns about whether Oracle can.

Repay that debt. If you look at the cash flow.

From operations is negative and they have eight years about an eight year time horizon to repay that debt before they went cash negative, and so as a result, they're trading at junk and that can be a concern if the ultimate demand for their data centers doesn't.

Exist, wellmatch what about the ultimate demand?

You're the person who's helping finance the companies that want to use the data centers or need build upon models that are using them.

Well, right now, you see the major hyperscalers, they're sold two years out on their GPUs. Neo clouds, which are the smaller GPU data center companies are also growing incredibly quickly. The vast majority of AI today is text. As we heard just a little bit before, we will see significant use of.

AI and the use of video.

And as we've seen with Netflix and others, video takes about one hundred two one thousand x the overall consumption. So right now, as of this moment, there's no real concern around overall AI demand. We see plenty of it.

What about the regular shoe landscape.

We were just talking about that with Miles Miller and AI oversight in New York, SF, well on the West Coast in California.

Does it matter to your startups?

Absolutely matters.

One of the dynamics around regulation is the idea of regulatory capture, where the largest companies actually benefit from regulation. They have bigger balance sheets, they can sustain the regulatory costs, lobbying costs in order to advocate for their for their long term goals, whereas a smaller companies, say a business that we back to the tune of twenty five to fifty million, may.

Not have those resources.

So we would like to see very simple regulations that are at an extremely high level with a single regulatory body, and that way it starts to continue to thrive just the way they did in the early days.

Of the Internet.

Do you think the federal government will help pass that Congress?

I hope so. David Sachs, who's the AISR, has indicated that that is the intent that the federal government pass up over arching regulatory regime and ideally that simplifies the eliminates all of the state regulation because if there's this panoply of different state regulation, just as there is with money transmitter licenses or within banking, the cost of doing business in each of these states increases, and that reduces the pace of innovation and ultimately our competitiveness, US competitive

How is AI innovation from your viewpoint right now, Tomash, how are we seeing some of your companies perform?

So the companies are growing at rates that we've never seen zero to one hundred million in run rate in a year that is now still rare, but it was unthinkable maybe five years ago in the previous generation of software. So these companies are growing unbelievably quickly. Another data point that I'll share is that the pace of the models themselves, their sophistication, is only accelerating. So Gemini, it was just

Going to keep you busy and keep us busy, come back and talk to us about it. More than six hundred million dollars and as its center management for three Aventures, tomash Tongos, thank you very much for your enterprise and your expertise.

Today we are coming up.

We're gonna be joined by Ted Morderenston, Manage the director over at BED. We're thinking about how you're going to trade AI in twenty twenty six.

This is a really big tech time around for talking tech.

First up, Walt Disney's Avatar three It's top the weekend box office, taking in eighty eight million dollars in US and Canada.

The film also opening at number one in China.

Taking fifty seven point six million dollars there. The numbers come in the low end of projections. Avatar three is expected to dominate the box office for weeks plus. JP Morgan Well It said to be considering offering crypto trading for asistitutional clients Quinator sources. The Wall Street Giant is looking at potential products and services to expand the crypto footprint.

Well, that's a great question, and thanks Carolyn for having me and happy holidays. Listen, this cycle is probably the most robust I've seen in thirty thirty plus years of doing this, So the overall JENNYI infrastructure is not going to change. The spend is still robust, but in reality you have the socks up forty two percent, you have the NDX up twenty one percent, and you have the IGV index, which is the software kind of index for software only up seven point six percent.

If you look at.

Beyond that one step down. Most of the performance in twenty five has been really focused on optical memory quantum and some of the bigger semiconductor companies like a Vago or Broadcom like Navidia and AM as well as some of the big cloud Titans, Ali Baba being one in China,

So do you think some of the previous winners, the in videos, the broadcoms, the Microns are going to fare badly in twenty twenty six or is it more we're going to pivot more into a software era.

I think there's a that's a great question, and I think the right one. When you have optical names up three hundred percent, there is a worry about two things in kind of the semi food chain. One is pricing. If you look at Micron's last report last week, d RAM prices were up twenty percent sequentially, not you over year, sequentially, we have a price issue. The other thing, if you listen to the Dell call a few weeks back, the CEO is very adamant that we're going to potentially run

Maybe at Salesforce has time to shine. Ted Walterson of BED, it's great having you please come back in twenty twenty six, or is you push towards whether those themes start to erupt into existance? Meanwhile, that does it for this edition at Blomberg Tech. You don't want to forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify, and iHeart from New York and back again, same time, the same place tomorrow. This is Bloomberg Tech