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Speaker 1: Bloomberg, Audio, studios, podcasts, radio news.

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Speaker 2: Some of the biggest names in tech and Hollywood are

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Speaker 2: training their sites on Warner Brothers Discovery, the media and

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Speaker 2: entertainment conglomerate that owns HBO, Max, CNN, and TNT. Earlier

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Speaker 2: this year, Warner Brothers Discovery announced plans to split itself

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Speaker 2: in two to separate its declining cable networks business from

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Speaker 2: its faster growing streaming division. But on Tuesday, Warner Brothers

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Speaker 2: said it's starting to consider a broad range of options

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Speaker 2: because of unsolicited interest from multiple parties. Bloomberg has learned

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Speaker 2: Netflix and Comcast are eyeing pieces of Warner Brothers and

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Speaker 2: Paramount Sky Dance, as Bloomberg first reported, made an offer

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Speaker 2: for Warner Brothers Discovery, which the company rejected. It's the

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Speaker 2: latest in a new round of potential consolidation and deal

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Speaker 2: making involving old Hollywood studios and new streaming services. Paramount

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Speaker 2: scis itself, a newly merged company, is led by David Ellison.

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Speaker 1: David Ellison is a movie producer turned movie mogul media

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Speaker 1: mogul who is initially known as the Sun, or perhaps

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Speaker 1: known to many as the son of Larry Ellison. The

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Speaker 1: co founder of Oracle, the second richest man in the

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Speaker 1: world depending on which day, and various net worth calculations.

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Speaker 2: Lucas Shaw writes the screen Time newsletter for Bloomberg and

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Speaker 2: hosted Sanuel Conference, which took place earlier this month.

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Speaker 1: His whole thing was, I'm going to invest in your

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Speaker 1: biggest franchises, which are the biggest risks because they cost

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Speaker 1: the most, but also probably the best bets. And as

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Speaker 1: of earlier this year, merged with Paramount not just the

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Speaker 1: movie studio of Paramount Pictures, but the larger company, Paramount Global,

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Speaker 1: which also owns a lot of cable networks like MTV

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Speaker 1: and Comedy Central, and as a streaming service called Paramount Plus.

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Speaker 2: That was an eight billion dollar deal that just went

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Speaker 2: down in August. I Wison succeeds in putting together a

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Speaker 2: deal that's acceptable to the Warner Brothers board and federal regulators,

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Speaker 2: what he'll have is a media behemoth, one that reflects

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Speaker 2: both his reverence for Hollywood and his dad's success in tech.

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Speaker 1: He's sort of trying to bridge those worlds. Now, that

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Speaker 1: sounds kind of great as a talking point. What that

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Speaker 1: means in practice is less clear to people, right, you know,

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Speaker 1: if you go back twenty years the assets Viacom and CBS,

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Speaker 1: they were among the crown jewels and media. They've since

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Speaker 1: been lapped and passed by many others, and he wants

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Speaker 1: to kind of restore to them to their final glory

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Speaker 1: by being the youngest and most tech savvy CEO around.

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Speaker 2: I'm David Gerra, and this is the big take from

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Speaker 2: Bloomberg News Today. On the show, why David Ellison, the

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Speaker 2: chairman and CEO of Paramount Skydance wants to buy Warner

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Speaker 2: Brothers Discovery, we'll hear from Ellison himself, plus what other

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Speaker 2: companies are interested in the business and what more consolidation

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Speaker 2: would mean for Hollywood, the news business, and for you

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Speaker 2: and me. Bloomberg's Lucas Shaw has been tracking Paramount's guidance

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Speaker 2: his interest in Warner Brothers Discovery very closely. Earlier this month,

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Speaker 2: Lucas and his colleagues broke the news Warner Brothers rejected

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Speaker 2: Paramount's unsolicited bid.

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Speaker 1: Warner Brothers Discoveries in the process of splitting into two entities,

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Speaker 1: but it became clear sort of late summer early fall

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Speaker 1: that David Ellison made an offer to Warner Brothers Discovery

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Speaker 1: of about twenty dollars a share, which is well below

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Speaker 1: what we believe the board and management thinks it's worth.

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Speaker 1: One of the reasons that they are splitting is because

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Speaker 1: they feel that they're not being properly valued by the

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Speaker 1: street and that they could unlock value by essentially breaking

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Speaker 1: it up into two parts.

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Speaker 2: How does this overture stand to change, if at all,

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Speaker 2: that plan to split Warner Brothers Discovery into it sounds

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Speaker 2: like David Ellison wants the whole thing. He's not interested

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Speaker 2: in a part of the company.

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Speaker 1: It's not really clear.

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Speaker 2: Does that work with the timelet Yeah, I mean yeah.

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Speaker 1: My assumption has been that he would do that and

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Speaker 1: then spin off all the cable networks, which are the

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Speaker 1: assets that generate the biggest share of the profit, but

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Speaker 1: that are shrinking and nobody really wants, and that what

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Speaker 1: David really wants is the studio and the streaming service

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Speaker 1: and maybe the broadcast network, which she already has with

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Speaker 1: CBS at Paramount. Now, he can't do that with Paramount

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Speaker 1: as it is, because the cable networks account for the vast, fast,

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Speaker 1: vast majority of the profit, and so if you were

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Speaker 1: to do that, he'd be left with this like tiny

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Speaker 1: company that wouldn't really generate enough money to do what

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Speaker 1: it wants to do. The exact particulars of what he

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Speaker 1: would do in control still a little unclear, Like there's

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Speaker 1: no world in which it would make sense to have

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Speaker 1: two different streaming services Paramount Plus and HBO Max. You

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Speaker 1: have to assume they're very similar that you would they

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Speaker 1: would just combine them, pick one. You know, I think

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Speaker 1: they're most likely to keep the studios separate for now,

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Speaker 1: just because they're antis paiding the blowback from the creative

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Speaker 1: community if they were to say that either Paramount or

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Speaker 1: Warner Brothers were to go away, and then, yeah, a

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Speaker 1: lot of questions about what they would do with cable networks.

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Speaker 1: Warner Brothers, Discovery owns HBO, it owns CNN, it owns

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Speaker 1: TNT and TBS. TNT it got a lot less valuable

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Speaker 1: now that they no longer have the rights to the NBA,

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Speaker 1: but still pretty popular cable networks.

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Speaker 2: I asked Lucas about the timing here. It's only been

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Speaker 2: a couple of months and Skydance Media closed its merger

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Speaker 2: with Paramount Global.

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Speaker 1: Well, the reason not to do it now, and I

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Speaker 1: know some advisors of his have urged him to wait.

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Speaker 1: Is that the feeling that the price will only go down,

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Speaker 1: that Warner Brothers Discovery is a damaged company, much as

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Speaker 1: Paramount has been a damaged company. That it has all

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Speaker 1: these cable networks that are shrinking. It has a very

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Speaker 1: large studio in Warner Brothers, but the business is really

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Speaker 1: about the cable networks. And if the cable networks keep

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Speaker 1: going into the crapper, then the stock price for the

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Speaker 1: company will too. And why pay twenty dollars a share

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Speaker 1: now and you can pay fifteen dollars a share in

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Speaker 1: a couple of years. The other argument for waiting is

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Speaker 1: he just got his arms around Paramount. Why not wait

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Speaker 1: and try to execute your strategy. A lot of these

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Speaker 1: big media deals have not worked out very well. You know,

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Speaker 1: this would be the third time that Warner Brothers Discovery

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Speaker 1: has been traded in the last ten years. And it's

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Speaker 1: got all these great assets. You know, Warner Brothers is

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Speaker 1: one of the great Hollywood studios. HBO is this amazing brand,

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Speaker 1: and yet the company keeps getting less valuable because these

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Speaker 1: deals tend to be huge distractions and they prevent the

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Speaker 1: buyer from thinking long term and executing against a real strategy.

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Speaker 2: Lucas says, there are also reasons why Ellison would want

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Speaker 2: to do a deal.

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Speaker 3: Now.

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Speaker 1: I think they are two big reasons, well maybe three.

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Speaker 1: One is, if you're already going to go through the

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Speaker 1: pain of integration with Paramount, why not just like try

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Speaker 1: to take your lumps all at the same time. The

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Speaker 1: other two would be to regulatory and competition. The Ellison

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Speaker 1: family has a very good relationship with President Trump. If

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Speaker 1: you're going to go for a big media merger, why

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Speaker 1: not try to do it a time where you have

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Speaker 1: a regulatory regime that favors you that ties into the

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Speaker 1: other one, which is competition. This current regulatory environment would

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Speaker 1: seemingly box out a lot of other potential buyers for

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Speaker 1: the asset. You know, Comcast has been floated a lot.

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Speaker 1: The Trump administration does not like Comcast and the Roberts

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Speaker 1: family that is kind of the biggest shareholder there. It

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Speaker 1: has frowned at certain big tech companies, and so I

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Speaker 1: think there's an opportunity to act now while you are

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Speaker 1: the one clear obvious buyer, as opposed to waiting and

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Speaker 1: risking there being more competition in the price going up.

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Speaker 2: You mentioned the Ellison family's closeness with Preston Trump and

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Speaker 2: with the Republican Party. You asked David Ellison about that

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Speaker 2: relationship on stage, and what did he tell you.

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Speaker 1: He said that his family has a very productive relationship

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Speaker 1: with the administration and not a ton beyond that.

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Speaker 2: Here's some of Lucas's conversation with Ellison at the screen

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Speaker 2: Time conference earlier this month.

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Speaker 1: I think I can to answer this one. Say to

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Speaker 1: people who seem who are concerned that there's just like

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Speaker 1: an Ellison slash Ellison Trump plot to just like corner

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Speaker 1: the media business. You've got Elon with Twitter. You know

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Speaker 1: they're they're no.

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Speaker 3: I know where you're going.

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Speaker 1: Look it's.

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Speaker 3: I'm on the headline him doing better. I can uh,

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Speaker 3: I can only speak to Look, I think I can

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Speaker 3: speak to my personal state of mind, right, is that fair?

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Speaker 1: Am? I am imitted to do that.

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Speaker 3: So what I can tell you is that conversation has

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Speaker 3: never once been discussed or or brought up. You know,

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Speaker 3: when we basically approach things, it is going back to

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Speaker 3: always how do we create basically value for shareholders?

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Speaker 1: I mean, he has tried to avoid talking about politics

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Speaker 1: too much. His talking point is their company is an

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Speaker 1: entertainment company first, and their job is to entertain the world,

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Speaker 1: and getting political kind of interferes with that. But he

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Speaker 1: can't disguise the fact that his dad has a good

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Speaker 1: relationship with this administration and it does work to their benefit.

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Speaker 2: In the context of news, what has he said about

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Speaker 2: editorial independence and how have we seen that play out

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Speaker 2: in actual fact now that he's he's in charge of

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Speaker 2: CBS News, Well.

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Speaker 1: He hasn't spoken that much about news other than he

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Speaker 1: did this big deal in buying the Free Press, which

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Speaker 1: was started by Barry Weiss, kind of a former opinion

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Speaker 1: writer at The New York Times, and he has talked

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Speaker 1: about it more as a business than in terms of

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Speaker 1: the output or the content. He would like to see

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Speaker 1: the news division modernized in terms of how it gathers

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Speaker 1: news and most importantly, I think in terms of how

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Speaker 1: it distributes it after the break.

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Speaker 2: What it would mean if Paramount sky Dance or another

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Speaker 2: big company buys Warner Brothers Discovery, how it could change

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Speaker 2: news gathering, sports coverage, and what gets made in Hollywood.

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Speaker 2: I asked Bloomberg's Lucas Shaw about how significant a deal

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Speaker 2: would be between Paramount sky Dance and Warner Brothers Discovery,

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Speaker 2: or between Netflix and Warner Brothers or Comcast and Warner Brothers.

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Speaker 2: Bloomberg reported Tuesday those two companies, Netflix and Comcast are

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Speaker 2: also interested.

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Speaker 1: In It would be seen as something like the Disney

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Speaker 1: Fox deal, where you'd have these two entertainment companies combining.

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Speaker 1: It would put a lot of cable networks under one roof.

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Speaker 1: But perhaps more importantly to producers and sellers in Hollywood,

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Speaker 1: it would combine two major streaming services, two major movie studios,

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Speaker 1: and two major television studios. And typically when assets like

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Speaker 1: that combine, they're not gonna make more, Right, Like if

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Speaker 1: one company makes twenty movie in one company makes twenty,

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Speaker 1: when they combined, they might make thirty, but they're not

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Speaker 1: going to take the forty they are making to fifty.

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Speaker 1: So there's a lot of concern that output will only

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Speaker 1: go down further, that job cuts will continue, and that

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Speaker 1: it will be a kind of a net bad for

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Speaker 1: the creative community.

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Speaker 2: If we were to get this giant media company of

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Speaker 2: paramounts Guidance and Warner Brothers Discovery, what does that mean

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Speaker 2: for me as a consumer of video content? What's going

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Speaker 2: to change if we have a company of that's scale

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Speaker 2: and size.

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Speaker 1: Well, the most likely outcome would be you'd have one

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Speaker 1: fewer streaming service to pay for, but the resulting streaming

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Speaker 1: service that you almost certainly want would be more expensive,

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Speaker 1: I'd say is the most likely outcome from that.

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Speaker 2: Incidentally, Disney announced it's raising streaming prices, and Warner Brothers

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Speaker 2: Discovery just increase the price of HBO Max this week.

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Speaker 2: Lucas says a deal involving Paramounts, Guidance and Warner Brothers

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Speaker 2: would have implications for the news organizations at those two companies.

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Speaker 1: It would put CBS News in CNN under the same

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Speaker 1: company and under the control of a family that I

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Speaker 1: think feels that both of them are a little too liberal,

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Speaker 1: and so it would likely change some of the news

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Speaker 1: put out there by both CBS News and CNN.

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Speaker 2: How is this deal being seen or talked about in Hollywood?

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Speaker 2: What would it mean for the film industry and for

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Speaker 2: the TV industry if this sort of go through.

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Speaker 1: People don't like it, I guess, is the simplest answer.

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Speaker 1: They were all very excited about David Elson buying Paramount,

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Speaker 1: and all very worried about him buying Warner Brothers Discovery,

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Speaker 1: but a lot of them see it as a FATA

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Speaker 1: complete and that there's not a lot they can do

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Speaker 1: about it.

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Speaker 2: And that's a fear of the size it would amass.

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Speaker 2: It the principally has to do with just how much

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Speaker 2: it would control how big it would be.

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Speaker 1: No a fear that another studio is going away, fear

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Speaker 1: that just more consolidation will mean more job losses, fewer buyers,

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Speaker 1: fewer projects being acquired. Nobody's I think, is worried about

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Speaker 1: like the scale, because even that combined company wouldn't be

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Speaker 1: bigger than Netflix or Disney or Apple or Amazon. It's

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Speaker 1: just that Hollywood has lived through two and a half

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Speaker 1: years of what's about like kind of constant bad news,

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Speaker 1: and this feels like it would just be more of

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Speaker 1: the same. I guess to them, it feels like a

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Speaker 1: shrinking industry. And even though if you look, if you

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Speaker 1: really zoom out, like there's a lot of discussion of

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Speaker 1: the loss of a studio. And what I have to

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Speaker 1: sometimes remind people is like, well, yes, you lost Fox,

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Speaker 1: and you may lose either Warner Brothers or Paramount, but

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Speaker 1: you gained Netflix, Amazon and Apple, and so the total

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Speaker 1: number of studios hasn't really shrunk. But that argument doesn't

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Speaker 1: work well with people who've seen, you know, their friends

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Speaker 1: lose jobs and seen overall output go down.

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Speaker 2: So you're going from having kind of four separate companies

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Speaker 2: coming together. Perhaps is as one what is the last

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Speaker 2: time in history you've had so much concentration in the

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Speaker 2: entertainment industries? Is this at all novel? Is it a

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Speaker 2: return to something we've seen before? So how do you

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Speaker 2: see this in kind of the sweep of entertainment history

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Speaker 2: in the US.

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Speaker 1: So there are more ways to inform and entertain yourself

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Speaker 1: than ever before. You know, you can go on YouTube

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Speaker 1: and TikTok and and Twitter and all these social media platforms.

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Speaker 1: You can go on any number of streaming services and

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Speaker 1: TV networks those god knows how many podcasts. But there

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Speaker 1: are also entertainment and media companies that own more assets

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Speaker 1: than anything that we've seen before. Right, But if you

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Speaker 1: add in streaming and you consider all TV viewing as

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Speaker 1: presently constructed, Paramount and Warner Brothers Discovery combined, what account

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Speaker 1: for less television viewing than YouTube? And that's just in

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Speaker 1: the US. YouTube is much much, much, much much bigger abroad,

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Speaker 1: So it's a big asset. But a lot of these

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Speaker 1: tech platforms like Google, Facebook, These companies still have way

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Speaker 1: more control than any of these other media companies that

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Speaker 1: we seem to be very worried about. Would a company

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Speaker 1: that has CBS and NBC have more control over what

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Speaker 1: people think than Alphabet, which owns Google and YouTube and

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Speaker 1: Google Maps, or than Meta which owns Instagram and Facebook

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Speaker 1: and WhatsApp?

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Speaker 2: Like?

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Speaker 1: Does Netflix have more control and power than CBS did

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Speaker 1: at its peak in the US? The answer is clearly no.

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Speaker 1: More people watched CBS every night than watch Netflix every

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Speaker 1: night by a lot. When you consider Netflix's global reach,

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Speaker 1: which CBS didn't have. Are more people watching Netflix on

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Speaker 1: any given night globally than watch CBS in the US.

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Speaker 1: That is more of an apples to apples comparison, but

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Speaker 1: it's a different type of influence.

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Speaker 2: Before I let him go, I asked Lucas what he

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Speaker 2: thinks isn't getting enough attention as this story develops, as

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Speaker 2: he and our colleagues report on the next steps for

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Speaker 2: Warner Brothers Discovery.

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Speaker 1: We're just in the very early stages of seeing what

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Speaker 1: David Elson plans to do with Paramount, and I'd have

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Speaker 1: a lot more thoughts about what that means for Warner

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Speaker 1: Brothers Discovery if I had a clearer handle on what's

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Speaker 1: happening with Paramount, because the first month or two has

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Speaker 1: been we're going to spend a lot of money to

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Speaker 1: show it's a new regime, right, and then the next

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Speaker 1: couple of months are going to be we're going to

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Speaker 1: fire a lot of people and restructure, and we'll have

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Speaker 1: a really clear feel for kind of what David Allison

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Speaker 1: as chairman CEO of a major media company looks like

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Speaker 1: after twelve to eighteen months. I think a lot of

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Speaker 1: Warner Brothers Discovery people feel like it can't be worse

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Speaker 1: than what they've been through. Like, while most of Hollywood

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Speaker 1: is against the deal, a lot of people who work

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Speaker 1: at Warner Brothers Discovery are pro even if they are

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Speaker 1: worried about losing their jobs. They didn't love being owned

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Speaker 1: by AT and T, they haven't loved being led by

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Speaker 1: David Zaslav and so if David Allison can be different,

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Speaker 1: you know, maybe that's better.

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Speaker 2: Do you have a sense from your reporting of what

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Speaker 2: would be palatable to the Warner Brothers Discovery boards they

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Speaker 2: rejected that initial offer. Are they simply looking for a

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Speaker 2: higher number here? What are they considering that might make

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Speaker 2: this something that could come together.

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Speaker 1: I think it really comes down to the number. It's

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Speaker 1: not like there's another, you know version. Maybe they want

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Speaker 1: certain assurances, but they will say we have a fiduciary

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Speaker 1: responsibility to shareholders. And I have been told that they

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Speaker 1: have a number at which they would say yes.

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Speaker 2: This is the Big Take from Bloomberg News. I'm David Gura.

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