01:30 JVL Hello, everyone. 01:30 This is JVL here with my Bulwark colleagues, Catherine Rampell and Sonny Bunch. 01:35 And there is big news in Hollywood land because Warner Brothers, the storied movie studio, has maybe been sold to Netflix. 01:48 which like 10 years ago would have been really bad and made Hollywood upset. 01:54 And now has Hollywood sort of upset, but for other reasons, because Paramount and Larry Ellison and his son have maybe missed out on the deal. 02:06 It's all very confusing. 02:08 And Sonny, can I just let you set up 02:11 the story, the state of play, and then we can let Catherine go to town on it. 02:15 Sonny Bunch Yeah, the very short version here is that Paramount Skydance wanted to buy Warner Brothers. 02:21 They came in and they said, we're going to pay you $22 a share. 02:25 And then it was $25. 02:26 They made a series of private bids to Warner Brothers, all of which were rebuffed. 02:31 And then there began an official bidding process. 02:34 And Netflix was always kind of on the periphery of this. 02:37 All the industry watchers that I... 02:40 know of and listen to and talk to were like, Netflix is just trying to drive the price up. 02:44 They're not actually interested. 02:46 This is not their business. 02:47 The owning a theatrical first movie studio is not their business. 02:52 And so I think people were kind of surprised when it shook out this way, because the other thing the other thing to consider here is that it's not just a movie studio. 02:59 Of course, there are also cable networks. 03:01 There are parks there. 03:03 There's all sorts of other elements to this. 03:05 When Netflix came in with a deal that was worth 03:08 more just for Warner Brothers Studio than Warner Brothers and the cable companies. 03:13 The sense is that Warner Brothers has kind of a fiduciary duty to take that. 03:17 I think Catherine can handle the actual finances of this better. 03:20 But the reason Hollywood is like 03:23 both kind of freaking out and also kind of like, well, let's see what happens here is because Netflix has been spending tons and tons of money in Hollywood over the last decade and a half making new original things. 03:34 For lack of a nicer way to put it, they don't have to deal with all the Trump shenanigans that are going on with Paramount and Skydance. 03:40 Everybody in Hollywood is very nervous about what the Ellisons are doing with Trump. 03:45 And I think that that is a that's a big part of this story. 03:48 JVL Yeah, and we're going to get to the politics of this in a minute because you can't escape the politics of it. 03:55 Catherine, can you explain to us a little bit 03:59 Do we know how much of Warner Brothers is being sold? 04:03 Do we know how Warner Brothers Discovery is being split here? 04:06 Do we know? 04:06 I mean, it's not a cash offer, right? 04:09 Like it's stock exchange. 04:11 Catherine Rampell It sort of depends on what happens with all of this. 04:13 It looked like all of this was resolved. 04:17 As Sonny mentioned, there was a big bidding war. 04:19 where you had Paramount and Netflix and potentially some others interested in buying Warner Brothers Discovery, which was putting itself up for sale. 04:28 And as of Friday, it looked like this was resolved, that Netflix had won the bidding war and they were going to take part of Warner Brothers Discovery, particularly the film assets, but they didn't want 04:42 The part of it that includes linear cable and CNN, for that matter. 04:47 It looked like this was done. 04:48 Paramount kind of threw a hissy fit and was mad that they had been rebuffed. 04:54 They wanted to buy the whole kit and caboodle, including CNN, you know, which maybe would fit in somehow with their own news gathering operations now that they... 05:04 own CBS and are making some big changes there. 05:09 But they didn't win out. 05:10 Today, there was a hostile takeover bid, which does not usually work out, but we have to see how it plays out. 05:20 And in today's hostile takeover bid, they have the backing of, just coincidentally, the president's son-in-law. 05:29 JVL Oh, yeah. 05:29 Catherine Rampell Yes. 05:31 I know you said to leave the politics aside, but it is really difficult to talk about this without getting into these strange alliances with various grifting Nepo babies who are involved. 05:44 JVL Well, the president's son-in-law is a big media guy because he himself once ran the New York Observer. 05:51 So I can see why they would have gone to him. 05:53 To be a partner in this, Catherine. 05:56 Catherine Rampell It's his skill set. 05:57 It's his journalistic skill set, clearly. 06:00 That's what this is about. 06:00 Sonny Bunch It's a real legion of doom, by the way, this consortium that is backing this. 06:05 It's because it's not just, you know, Kushner's involved. 06:08 There's also the Saudi Arabian, you know, investment fund, their sovereign wealth fund. 06:13 JVL Their sovereign wealth fund, too. 06:14 Sonny Bunch is uh in in into this for something like 24 billion dollars uh tencent which is a chinese owned firm uh is also involved with that tencent has some dealings with paramount skydance through other skydance productions uh which is kind of interesting in and of itself so it's like it's not just uh trump and kushner it's also the south the saudis and the chinese which you know who would be better to own superman 06:40 Then these this this group. 06:41 JVL OK, there's so many things here now that we saw a report just minutes before we came on that both Netflix and Paramount had sought to hire Jason Miller to help represent themselves. 06:54 I guess we just don't even pretend that the government doesn't corrupt anymore. 06:59 Catherine Rampell No. 06:59 Well, and to be clear, we've mentioned, sorry, moving on. 07:06 We mentioned, well, we've mentioned Kushner's involvement. 07:09 You mentioned Jason Miller, clearly a Trump whisperer of sorts. 07:14 There's also the fact that David Ellison at Paramount Skydance is the son of Trump's BFF, or at least BFF tier friend, Larry Ellison. 07:30 So there is a lot of involvement here from Trump land. 07:35 And that's part of the reason why Paramount thought that they had the leading edge. 07:40 They've been trying to get... 07:42 These goodies from Warner Brothers for quite some time have been failing and meanwhile are basically asking Trump and Trump's DOJ to put their thumb on the scale as a favor to Larry and David Ellison. 07:59 And they've also like thrown in some other favors in that favor bank as well, including promising to distribute rush hour for 08:07 which Trump and apparently no one else on on Earth wants. 08:11 But I definitely saw that through the lens of they wanted Trump's help in getting this deal done. 08:17 JVL And what role would Trump appointing Barry Weiss to run CBS News was done to make Donald Trump happy. 08:23 Right. 08:24 In fact, he CBS interview, he talked about how much he approved of that hire. 08:28 That's right. 08:28 It's good for her. 08:29 I'm glad that she she can take that to herself with her fierce independence. 08:34 Sonny Bunch Catherine, can I ask Catherine a question? 08:36 Because this is something I don't know very well. 08:39 Sam Stein Bulwark Takes is sponsored by Calm. 08:41 There's a lot out there telling us how to be better. 08:44 Be a better parent, a better partner, a better worker. 08:47 better version of yourself, it's honestly exhausting. 08:50 When I need to hit pause and reset, Calm is the tool I reach to to release that stress and find a space to breathe, even on the busiest days. 09:00 Calm is the number one app for sleep and meditation. 09:03 It's here to help you feel better. 09:06 If you're feeling like you could use some support navigating life's ups and downs, get the relief you need with calm sessions. 09:13 They include guided meditations to help you work through anxiety and stress and boost your focus, to build healthier habits, and to take better care of your physical health. 09:23 or sleep stories, sleep meditations, and calming music to help you drift off to restfulness, grounding exercises to help you reset and relax when you're feeling overwhelmed, and so much more. 09:34 Calm has over 2 million five-star reviews and can help you stress less, help you sleep more, 09:41 Hope you live mindfully. 09:43 Calm your mind. 09:44 Change your life. 09:45 Calm has an exclusive offer just for listeners of our show. 09:49 Get 40% off a Calm premium subscription at calm.com slash Bulwark Takes. 09:55 It's an amazing value, folks. 09:56 Go to calm.com slash Bulwark Takes for 40% off unlimited access to Calm's entire library. 10:05 Calm.com slash Bulwark Takes. 10:08 Tell Comm you heard about them from me. 10:11 Sonny Bunch Both Netflix and Paramount Skydance included a, I think it was $5 billion chunk of money if the deal doesn't pass regulatory muster, which feels like, I don't know enough about this world. 10:24 Is that a normal thing or is that an unusual thing? 10:27 Because that struck me as very weird. 10:30 Catherine Rampell So there is often a breakup fee. 10:32 That's what this is. 10:34 Put in the language of a proposed merger that is expected to face some sort of antitrust scrutiny. 10:40 This is an unusually big one and honestly would be a great deal for Warner Brothers. 10:46 I don't know that they put themselves up for sale in the hopes that it would get blocked by some sort of antitrust authority and therefore they would just get to collect their payday and move on with their lives and put it towards their operating budget. 10:58 I don't know that that was the case. 11:00 Probably not. 11:01 But if that was their strategy, it may be a very effective one, because even without Trump's involvement in all of this, this size of a merger would likely face some antitrust hurdles. 11:13 I just want to make that clear. 11:15 These are two enormous, well, all three of the parties we're talking about are enormous entities and a merger involving Warner Brothers and either Paramount or Netflix would face AT Trust scrutiny. 11:27 And in fact, when it was Netflix that seemed to be the winner of this particular drama, you saw a lot of statements from like the Writers Guild, SAG-AFTRA and other unions protesting that they didn't want these two parties to merge. 11:44 paramount with warner brothers would also present some major antitrust concerns now uh again that that would happen no matter what the question is if trump wants to put his thumb on the scale and block the merger for non-consumer related concerns uh so because he wants to 12:06 hand this gift over to his friend, Mr. Ellison, or because he wants to see Rush Hour 4 get made or whatever, that actually puts the government's case in jeopardy. 12:19 The irony of all of this is that 12:23 a merger of this size between Netflix and Warner Brothers would probably face hurdles no matter what. 12:29 But the fact that Trump has publicly weighed in and said he wants to intervene would be a very useful argument for the merged entity to make in court and say, see, they're only trying to block this match made in heaven because Trump is weaponizing the government against us. 12:48 And we know that this works, that kind of argument, you know, that this case is only being brought 12:53 for political reasons, for retribution reasons. 12:56 That argument actually worked before with some of the same entities here when AT&T merged with Time Warner a few years back during the first Trump administration. 13:10 Again, there were valid antitrust concerns there based on consumer welfare and all of that. 13:15 But there were reports that 13:17 that Trump wanted to block it to punish CNN, which was owned by Time Warner. 13:23 And that helped in court. 13:26 They actually won that case. 13:27 They were able to merge and they defeated the government. 13:29 So you could imagine the same thing happening here. 13:31 JVL Catherine, how does the hostile takeover process proceed from here, right? 13:37 I mean, I guess the question is, had the deal already been struck recently? 13:40 Or were the terms of the initial deal not yet finalized? 13:45 And so that's why they've gone hostile? 13:47 Catherine Rampell Yeah. 13:47 Yeah. 13:47 So they have to be finalized by the shareholders themselves. 13:51 So the board can agree that this is the best possible deal. 13:56 We've chosen out of our many suitors Netflix. 14:00 But ultimately, the shareholders have to approve of it because you could imagine that 14:05 Maybe the board is doing what's in their own best interests and not what, you know, they all get golden parachutes or whatever, and not in the interest of shareholders. 14:13 This is just a very standard thing. 14:15 So I thought this was a done deal. 14:17 But now that Paramount has come in and offered even more money, it may not be a done deal. 14:23 And particularly since you have Donald Trump, again, publicly saying he's going to get involved. 14:29 He said this on the red carpet last night. 14:32 Donald Trump Should they be allowed to buy Warner Brothers? 14:34 Well, that's the question. 14:35 They have a very big market share. 14:38 And when they have Warner Brothers, you know, that share goes up a lot. 14:41 So I don't know. 14:41 That's going to be for some economists to tell. 14:44 And also, and I'll be involved in that decision, too. 14:48 But they have a very big market share. 14:49 Did he make any guarantees to you about the merger, if they do merge? 14:53 No, no, not at all. 14:54 He came up. 14:55 He was in the Oval Office last week. 14:57 I have a lot of respect for him. 14:58 He's a great person. 15:01 But he's done one of the greatest jobs in the history of movies and other things. 15:06 And he's got a lot of interesting things happening aside from what you're talking about. 15:11 But it is a big market share, there's no question about it. 15:15 It could be a problem. 15:16 Catherine Rampell That may be a red flag to shareholders because they're like, well, even if it's political and maybe the judge will throw it out ultimately because the lawyers representing 15:29 the merged entity or the trying to merge entity will say this is being done for political reasons. 15:35 Even if all of that happens and they ultimately prevail, it will be a very long, drawn out process. 15:40 And so they may say to hell with it, like, let's choose the suitor that Donald Trump wants because we think that that's going to get through. 15:48 JVL I don't know. 15:48 We'll have to see. 15:49 That was my question, right? 15:50 Does the very fact of Trump saying he will do this 15:55 pressure Warner Brothers into going with Trump's preferred partner. 16:01 Catherine Rampell Well, he's been hinting at that for a while, and the board still rejected Paramount's offer, which is why it's a hostile bid, and now it's left off to the shareholders. 16:12 Right. 16:12 JVL Do we think this gets done any time in the near term one way or the other? 16:16 Could it could it resolve quickly? 16:18 Like if Netflix pulls out, can that if Netflix just says to hell with this, I'm out? 16:23 Catherine Rampell Does that if they do let it resolve? 16:25 I mean, that would that would certainly be one fewer hurdle for Paramount, which, again, has been salivating over this for a while. 16:33 And they have not only Donald Trump threatening various antitrust action against their competitor. 16:41 But they have Jared Kushner involved, as we were discussing, and I guess, you know, some other leading lights from Trump land. 16:50 So all of that should be working in Paramount's favor. 16:54 Now, just as an aside, 16:57 The very fact that Kushner is involved makes me think it is not a good deal for Paramount because Jared Kushner has not had the best instincts on profitable investments. 17:08 Folks who are watching this can Google 666 Fifth Avenue and see about his investment record there. 17:14 So it may not be ultimately a good deal for shareholders for Paramount to buy Warner Brothers, given the folks who are involved to make it through. 17:23 But like, I don't know that it's going to work out. 17:25 But that said, this may not be about profits for. 17:30 JVL Right. 17:31 Well, that's what I was going to ask you. 17:32 Right. 17:32 I mean, you say this may not make sense in terms of like dollars, but there are in in the Trump era, many business deals, which don't really make sense if you're thinking about like value and return on investment in the near place. 17:49 And I think of Elon Musk's purchase of Twitter. 17:52 which was a financial disaster for everybody involved. 17:55 All the people who are holding debt on that are eventually going to have to write it down. 17:58 But it was very useful for Elon Musk's project of getting involved and partaking in ownership of the United States government for a short time and for all the things thereafter. 18:12 It strikes me that that's what this play means for the Ellison's. 18:18 Catherine Rampell Yeah, I think that's absolutely what it's about. 18:20 It's not about getting a dollar figure return on the investment in Warner Brothers per se. 18:27 It's about buying all of that influence with potentially CNN, with CNN coupled potentially with CBS, controlling a lot more of the media ecosystem, which will help them ingratiate themselves to Trump further. 18:46 and potentially further the interests, the financial interests of the other properties that they have. 18:53 JVL Right, of Oracle. 18:54 It's all about AI. 18:55 Catherine Rampell Exactly. 18:56 JVL That's great. 18:57 Sonny, not that anybody but us cares about this, but how bad is this for the cinematic arts? 19:03 Is everything going to look like Red 1 and Red Notice? 19:06 Yes. 19:07 Right? 19:07 Sonny Bunch Well, everything was going to look like that. 19:09 JVL Is Warner Brothers, which put out Oppenheimer, now we're going to get everything that looks like it's shot on a handheld screen? 19:16 Sonny Bunch Yeah, no, I would say, well, so it really just depends. 19:20 It depends on so many different things, right? 19:22 Like the biggest question from my perspective as a lover of the movie theater experience is what happens to theaters here? 19:29 And theaters are already in a very perilous state, right? 19:32 The one, two, three punch of the rise of streaming, the covid shutdowns and then the strikes like have have just like really hammered the the theatrical ecosystem pretty badly. 19:44 And knocking out 16 percent of the of the box office take, which is what Warner Brothers represents, would be disastrous. 19:53 It would lead to a bunch of multiplexes closing. 19:56 You would see fewer screens. 19:57 Fewer screens means fewer people going to the theaters. 19:59 which means fewer movies being made for theaters. 20:02 It just creates a whole vicious cycle. 20:03 It's bad. 20:05 And I am not convinced that either of these options is good for stopping that. 20:11 I mean, look, on the Netflix side of things, you have Netflix's natural aversion to theaters. 20:17 Theoretically, maybe the FCC can make them promise to do a universal style 17-day window with longer windows for bigger movies. 20:25 I don't know. 20:26 But I don't think Paramount's really the answer here either, because as we saw with the 20th Century Fox Disney merger... 20:33 That led to a massive reduction in the number of movies and theaters, because why would you as a studio compete with yourself by putting more movies? 20:42 Right. 20:42 So so what will end up happening if Paramount does buy Warner Brothers is that Paramount will put out Batman and Superman and the big IP plays for Warner Brothers, Harry Potter spinoffs, et cetera, et cetera. 20:55 That is not good for anyone. 20:58 That's not good for anyone in the business. 21:00 It's not good for the 150,000 people who work in movie theaters around the country, right? 21:05 Like that is in and of itself bad. 21:07 The other question here is what happens with HBO? 21:10 HBO is the biggest and best of the, you know, kind of prestigy type TV channels, cable streamers, et cetera. 21:17 And I think that, you know, 21:20 I think a lot of people are worried about what happens with HBO if you send it to Netflix and it gets the standard Netflix treatment, which is binge-style releases and content that you can watch while also scrolling through Instagram. 21:35 That's the Netflix model. 21:37 Nobody wants that for HBO. 21:39 Now, I will say that Ted Sarandos is a... Ted Sarandos has often spoken very fondly of HBO. 21:45 I think he respects what they do and would be... 21:50 hesitant to mess with that in any real way. 21:53 And, you know, I don't know. 21:54 I hear a lot of people, folks like the Entertainment Strategy Guy, good source on this sort of thing. 22:01 He says, look, maybe this is an excuse for Netflix to change their whole strategy. 22:04 They could do more theatrical. 22:06 They could do weekly releases. 22:08 Maybe. 22:08 I don't know. 22:09 But regardless, I have no faith in Paramount doing anything good with this either. 22:16 It's a mess all around. 22:19 And as Catherine mentioned, the best option for Warner Brothers might be just to pocket that $5 billion and use it to pay down their debt and keep doing what they've been doing. 22:29 JVL Great. 22:30 Well, we're going to be in a place where we have consolidation and declining competition in 22:38 a sector that is near and dear to American hearts. 22:42 And that's the good option. 22:43 The bad option is one of our beloved movie studios becomes part of a tool of the oligarchs who are aligned with Trump. 22:53 Fantastic. 22:54 Fantastic. 22:56 Catherine, Sonny, thank you for being here to unpack this very niche boutique issue. 23:01 Everybody, if you want to hear stuff like this all the time, hit like, hit subscribe, follow the channel. 23:05 It really helps us when you hit the subscribe button, actually. 23:09 And we'd love to have you ride with us as we catalog all the terrible things that are happening in America on a daily basis. 23:15 Good luck, America.