Warner Bros. Plans to Reject Paramount Offer Next Week

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2:34Hey, folks, you want to get back to that breaking news story involving Warner Brothers Discovery, planning to reject a takeover bid from Paramount Skydance after the company amended the terms of its offer. This breaking news story by our own Lucas Shaw. Lucas is Bloomberg News Managing Editor of Media and Entertainment. Also, the writer of the Screen Time newsletter. He joins us from, I believe, the West Coast. Lucas, the back and forth continues. Give us an update here. Yeah, so for those who haven't been paying extra close attention, Paramount has now made seven or eight bids for Warner Brothers Discovery.

3:10This was the latest since it went public with its offer a couple of weeks ago. The main difference with this bid was that it addressed concerns about whether Larry Ellison, who, along with his son David, controls Paramount, was fully backstopping the bid, which he is. But Warner Brothers says it is still not enough. They haven't made a final decision. The board will meet next week. There'll likely be a filing next week when they make that decision. But Paramount hasn't really increased its offer in a few weeks. It keeps amending it by sort of tweaking things around the margins. And I think the Warner Brothers board is waiting to see if Paramount wants to offer more money because they still feel like their deal with Netflix is better.

3:47Yeah. So, Lucas, why not just say that then? Why not just say this is not valuing the company highly enough and give us more money? Why add the part that they're not really sure about the financing? And it seems like that's a little bit aggressive to, you know, a group of bidders that were already planning on potentially launching a lawsuit over this. Yeah, I mean, they've they've, I think, tried to enumerate a number of concerns about the Paramount bid so that it gives them cover, given the threat of lawsuits. And that Paramount has been on kind of this public campaign. Right. They've had one of their big shareholders, Jerry Carnelli.

4:23went on a very popular podcast and talked about why he thought that the Warner Brothers board was making the wrong decision. They have appealed directly to shareholders. They've threatened lawsuits. So Warner Brothers has created a pretty substantive paper trail laying out many concerns to explain. And it gives them, it gives Paramount kind of more to do. They don't understand why I think Paramount's not just saying, we'll match, we'll kind of agree to everything Netflix has agreed to, and here's even more money. That seems to be where Warner Brothers is at right now. I mean, do we have any indication, Lucas, of what really Warner Brothers wants and what they think?

4:54Is it just coming down to money or is it actually who is the buyer? Money is the biggest thing. The Paramount offer and the Netflix offer are fairly comparable. A lot of it depends on how much value you assign to the cable networks that Warner Brothers owns. That's CNN, TNT, among many others. Warner Brothers thinks they're worth more than Paramount, hence the disagreement. I think there's some concerns about Paramount as a buyer because, look, Paramount's a very small company, right? If they didn't have the Ellisons behind them, this would not be a deal that it could contemplate. But it does have one of the wealthiest families in the world behind them.

5:33So, and that helps get the deal done. But what does that mean, or I guess I should say, what does Paramount look like at the end of it? It is still a company sitting on a bunch of kind of troubled cable networks and some studio and some streaming services that are kind of in the third tier. Netflix, you know what you're getting. You're getting the most valuable company in the entertainment business, one that's been run very well. And so I think they feel good about that deal. There are also some concerns about the limitations that Paramount would place on Warner Brothers in the interim period if they were to do that deal, limitations around what they could do with their debt.

6:06We saw this play out actually with the Ellisons and Paramount where they kind of got in some fights with the leadership at Paramount, including and also with the creators of South Park over what they should do. It's up to a third party, I guess, to decide if a lot of these are window dressing and it's really just all about the money. I would assume that, you know, at the end of the day, most of these deals are about who offers us the most money. If Paramount came and offered$32 a share,$34 a share,$35 a share, they'd get the deal done. I was just going to say, it feels like they want to go with Netflix and they just will go with Netflix.

6:38But I guess if Paramount, there's a price for everything, right? Paramount will be able to do this deal if it meets a certain price goal. But where will the bidding stop? Because Netflix could probably raise some more money too for this. Well, I think that's one of the concerns or things that Paramount is trying to work through, right? If they are going to come back and offer more money, how do they do that in a way where they don't just end up in another bidding war that they lose? I think they've long felt like they were the favorite to win this. They were surprised by how aggressively Netflix came after it.

7:13They certainly share your belief that the Warner Brothers board just prefers the Netflix offer. And so if you're a Paramount and you come back and you only increase your bid by$2 or$3 a share, that's something that Netflix could probably match. if you increase it by even more, some of those Netflix shareholders might balk and say, why are we doing this? Because you've already seen the share price of Netflix go down over the last few weeks as investors are worried about how much they're doing this deal and what this deal means for the company. We thought it would carry over into 2026, and it looks like it will.

7:44All right, Lucas, good stuff as always. Really appreciate it. Lucas Shaw, he's managing editor of Media and Entertainment here at Bloomberg News and also writer of the Screen Time newsletter, really the keeper of the Screen Time universe joining us there from Los Angeles. Stay with us. More from Bloomberg Business Week Daily coming up after this. They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, Life MD helps you feel your best for the best years of your life.

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9:06They'll help your business grow with individual guidance and convenient digital tools all in one place. With that guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results.

9:42At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around masculinity can quietly wear men down, often without clear warning signs.

10:20In Season 3 of The Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of The Visibility Gap, a podcast presented by Cigna Healthcare. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Staying on the markets now and the minutes that just came out, obviously. Ross Mayfield joins us. He's investment strategist at Baird Private Wealth Management.

10:59Ross, obviously, you haven't had a chance to parse the minutes. But is there anything from what you heard in the last few minutes that would concern you or that would give you any more clarity about the path ahead for the Fed? No, there's a lot to parse. I think a couple of key takeaways. The division is obviously not unprecedented, but fairly unprecedented for the last decade plus. And I don't think that replacing Fed Chair Powell is going to alleviate that. So I think at some point in 2026, we'll start to see pressures at the long end of the curve again. Even in this bull market, the equity market has responded when you've seen 10-year yields press up towards 5%.

11:36I don't know if we'll get there or not, but I do think that at some point the bond market will start to worry again about the politicization of the Fed and what that might mean for rates. You know, the other key thing, I think, is, you know, the Fed, by cutting in December, gives them room to not cut in January and then get to March when we will have several more months of clean data. We'll kind of get to work through all of the shutdown idiosyncrasies and get a better picture of things as they move towards neutral. Of course, all assuming that we don't have another government shutdown before then.

12:08We hope, right? We don't know what's going to happen at the end of January, but hopefully there won't be a repeat. So, Ross, would you be more concerned right now about inflation coming down the pike, particularly with the one big beautiful bill taking effect, or the labor market, which at least so far doesn't appear to be materially weakening, but there are some signs and there are very definitely people out there that are very concerned about it. I'm far more concerned about the labor market. I think the Fed is doing the right thing by kind of resuming cutting mode to at least get to neutral, if not go a little bit below it in 2026.

12:42The uptick in the unemployment rate, some of the jolts and some of the survey data that we've seen is quite concerning. And then on the flip side, yes, inflation is sticky above 2 percent. But we really have never had inflation kind of just hover around 2 percent for a long period of time or even a medium period of time. You've got rents coming down. You've got energy costs under control. There might be some upside pressure from tariffs, but I do think that the major concern about tariffs is a bit overblown, or that's what the data would say at this point. So much more concerned about the labor market.

13:14And so I do think that the Fed is directionally right to be cutting, though I understand most of the members see it as a very close call. Hey, Ross, I just want to get into, you have done some work, you guys, and put out a note, and you talk about eight themes heading into the new year. everything from data center, electricity consumption, to ROI, return on investment, out of all of the AI spend. You look at what's going on in tariffs. You talk about, kind of reference us back to the dot-com bubble. And you also talk about Fed Chair Jay Powell. So I'm just curious. We can't go through all eight of them, but give us one or two that you think have to be top of mind in the new year.

13:54Yeah, so I'll give two quickly. I think the biggest thing next year as we talk about inflation and in a midterm year is going to be data centers and the price of electricity. This has already been kind of a burbling theme, but I think it'll come to a head next year. I think we'll see, to the extent that it's possible, government intervention in regulating or getting energy prices under control, especially in a midterm year when we know that inflation has been such a hot button political issue. So how do you do that? Do you expect the president to say, hey, everybody, stop doing the AI spend, which is a major initiative for their administration.

14:26How do we do that? I think the administration, at least in the near term, will lean on deregulation to kind of get some costs under control. That's been a theme in more traditional fossil fuel energy sector as well. But obviously, the administration can't risk losing the AI race to adversaries like China. So you can't stop. But I do think that they're going to be very hypersensitive to electricity inflation when they won an election in 2022. I'm sorry, on 2024 on the back of inflation, affordability, cost of living that has people so up in arms. The other point I would just make is I think that the concerns about a bubble, while they make sense to me, I think we are so far from a bubble at this point, especially the dot-com corollary.

15:11We're in a nice bull market. The market has roughly doubled off the October 2022 lows. But if you overlay it with what the market did in the late 90s, I mean, the market went up eightfold into the 2000 top. I don't think that the sentiment is bubbly. I don't think that the price action is bubbly. And I think that the fundamentals of the underlying companies show that this is just a bull market driven by profits and not a bubble yet. That will be very good news to a lot of people out there that are investing. What about the metals? Is there a bubble there? Are we in bubble territory for any of them?

15:46Gold, silver, any of them? To me, gold was, you know, we were talking about an AI bubble at a time when the real bubble in markets was in gold. Now, it's deflated a bit. You know, we had the parabolic price move into the fall, a bit of consolidation here. And you tend to see that, you know, whether it's in gold or other assets, you have a parabolic price move, goes vertical. You need a period to consolidate to reset sentiment. So I think, you know, over the intermediate term, you know, bullishness on metals and using it as a diversification part of a portfolio makes a lot of sense. But I don't know that we resume that uptrend maybe until the middle of 2026.

16:21I think there's some sentiment that has to be reset and price action that has to be consolidated. But it certainly had a lot more signs of a bubble over the summer than we're seeing in AI stocks right now. Still up 57 percent year to date. So there's a bubble. I'll take that. It's crazy, right? All right. Good stuff. So appreciate it. Thanks so much for joining us. Ross Mayfield, Investments Dragos over at Baird Private Wealth Management. This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app.

16:56You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. All right, everybody, we're back on Bloomberg Markets. Carol Messer along with Bonnie Quinn live here at Bloomberg headquarters. There is a lot going on geopolitically. Was this past year, will be probably again in 2026. Here's just a few of our stories that have crossed the Bloomberg on this Tuesday. The United Arab Emirates said it will withdraw forces from Yemen following a flare-up in tensions with Gulf ally Saudi Arabia over military operations in the conflict-hit country. You've got U.S.

17:30Central Command coming out saying U.S. forces and partners killed or captured nearly 25 Islamic State operatives following large-scale airstrikes across Syria earlier this month. And then also, European leaders held a call to talk about Ukraine after Russia said it would revise its negotiating position, claiming Ukrainian drones targeted a residence of President Vladimir Putin. There's a lot going on. So good to have back with us Ed Price. He's senior fellow non-resident at NYU, former British trade official. He has advised members of the European and British parliaments. He also teaches jujitsu in New York, which I had no idea.

18:02I did not know that either. Oh, my Lord. I kept that quiet, didn't I? What? I kept that quiet, yeah. That could be useful in your trade talks, no? It would have been, yes, if you're allowed to wrestle. But you just have to sit there and listen. I don't know. We've seen that in some, I feel like, parliaments overseas, maybe in Asia. Hey, how are you? I'm good, thank you. Very well. How are you? Doing okay. Like, it's amazing that we are here in December. It was a year that felt like we had weeks that would never end and a year that would never end. And yet, here we are. How's the world doing right now?

18:32And what are the parts of the world that you're watching most closely? What are the leaders that you are watching or who are? Well, I mean, I'm always watching President Donald Trump. He lives in my head rent-free, and I think that's probably true of a lot of people. And then, of course, Putin. I'm watching Putin, Zelensky, and that nexus. It's interesting that I'm not really watching Xi Jinping at the moment, which I know— Should you be? I mean, we saw those exercises the last few days. It's really popping off again, if you like. I mean, is he just prodding the Japanese and the U.S., or is he actually working on a plan?

19:05Well, I think he's biding his time. And someone like me, who's always very excitable about the downside, and I could list all the times I've got that wrong. I'm always watching China for its potential invasion of Taiwan. And it does seem this year and in the last few years that that doesn't seem as imminent as you'd think. Now, you're right to point out that there's visual data and there's military data that would suggest otherwise. But I think that's probably part of a strategy, as you suggest, to ratchet up the pressure and remind Japan and remind the United States that China has this new foundability.

19:43It doesn't necessarily mean that if it deploys its forces, it will employ them. So my conclusion after a while is that I've probably been a bit hysterical about the China-Taiwan issue. Well, no, but there is a deadline on it, right? I mean, Xi Jinping wants this done at the back end of a 10-year plan. But yeah, continue, Carl. No, no, no, you continue. Well, I mean, again, for me, I thought for a few years that it was imminent. I mean, I've said this before. The reason I think it isn't is that China understands that you can't just float a force over the 120 miles to the west coast of Taiwan without also confronting the Americans.

20:17So it's harder than they think, I think. Ed, who do you think fears President Trump? Who do you really think considers he and the United States still an ally? Well, on the first one, who fears him? Vulnerable members of our labor market, possibly Spanish speaking, people who are here in good faith working hard to create the GDP that we need to confront China or Russia. That's a bad thing, right? If your labor market is shrinking and afraid in a geopolitical confrontation. And the second part of your question is, I think, who respects him? Yes. Well, I mean, I'm exhaling. I don't know that he's respected.

20:55Because, listen, we talk about your relationships that you've had, certainly in the UK and with European officials. I'm assuming you still have confidants and folks that you talk to. I mean, do they fear him? Do they respect him? Do they consider him, certainly members of NATO, still an ally? Well, I can't speak for NATO. I mean, I was in the economic side of government. Fair. But, yes, rendering them anonymous, friends of mine who are still serving in various parts of the world do not respect President Donald Trump. and they don't respect him for one reason, which is that whereas Nixon presented a very effective madman routine, Donald Trump doesn't actually stick to his guns.

21:32And if you go through his record, I mean, I was talking in the green room about Liberation Day. Every single time he's said, thus far and no further, or this will happen, you know, if X happens, Y will happen. It hasn't really. So I think that people have now sort of realized that there's no incentive with him to do as he asks necessarily because he doesn't follow through. Well, so is it so that the bark is worse than the bite, ultimately, for President Trump? I mean, right at times, Vani, we've certainly felt the bite, Liberation Day and markets. Investors believe it. He struck Iran. Yeah. He struck Iran.

22:04But I mean, I put it like this before. Teddy Roosevelt famously said, speak softly and carry a big stick. Yeah. And it seems that President Trump, with as much respect as I can muster, speaks incoherently and sort of occasionally carries a stick. And you can't infer as a rival power or an adversary or even an ally exactly what his behaviors are going to be. Right. But that's what makes it so terrifying, especially if you're a Venezuela. And, you know, there's so many warships and carriers and troops basically stationed off your coast. What's going to happen with Venezuela, Ed? Whatever we do, we are damaging our power.

22:42Whatever we do in showing hard power in the way that we are and moving away from soft power, we are reducing the overall power of the United States. That's because the hard power of the United States is in part based on our soft power. People like us, they trust us, they lend us money, and we debt finance the military. So I don't know exactly what's going to happen in Venezuela. I imagine there's going to be more extrajudicial killings. But at some point, that is going to seep into the market for U.S. debt. And at some point, people are going to notice in the next decade. Why has it not so far?

23:13I mean, for a president who said we're not getting involved internationally in any international wars, we're, you know, in Russia, Ukraine, we're in, well, we're not in Taiwan yet, but maybe we would be, Nigeria, Venezuela. I mean, where else? There's so many going on. Well, in striking people from the air, that's the Obama playbook. So I think there's some continuity there with President Trump. He hasn't put boots on the ground. So that would be the marker for a real sea change in his policy if he put boots on the ground in Venezuela. But back to the point on treasuries, I mean, I think that the dollar is on a structural course to some form of run on the dollar, some form of massive correction this century, perhaps even in the next quarter century.

23:57And that is going to be very difficult for economic policymakers to deal with. Is that why we've seen gold go up? Like, what's your take on the gold trade? Or do you have one? Well, I mean, I think as the dollar smile potentially weakens, it won't completely go away, but it will fade. People are going to want what they consider to be safer assets. I think that's gold. I think that's being Bitcoin, even though, of course, Bitcoin has speculation attached to it. But what I really scratch my head about is if there was a new thesis that emerged that there were too many dollars in existence per se, what exactly would the economic policy response be?