Warner Bros tells Paramount to make an offer it can’t refuse

0:29Good morning from the Financial Times. know, and here's the news you need to start your day.

0:43Meta will spend billions of dollars on NVIDIA chips in a multi-year deal announced yesterday. It's a big break for NVIDIA. The company is facing more and more competition from rivals like AMD, as well as customers, including Meta. The social media group is developing its own in-house hardware. Last month, Meta CEO Mark Zuckerberg announced the company would double its AI infrastructure spending this year to a whopping$135 billion. Yesterday's announcement sent both companies' share price a little higher in after-hours trading. We'll get a closer look at how NVIDIA is doing when it reports quarterly earnings next week.

1:25The saga over who will buy Warner Brothers Discovery has taken another twist. On Tuesday, the company told Paramount it has a week to make its best and final offer for a takeover, or it needs to get out of the way of Netflix's agreed$83 billion deal. We have the FT's Chris Grimes, our LA Bureau Chief, to discuss whether or not this will ultimately pave the way for Paramount to take control of the storied Hollywood studio. Hi, Chris. Hi there. So yeah, catch us up to speed. What has been going on? So what's been going on for months is basically Paramount has been trying to buy Warner Brothers Discovery.

2:01Warner Brothers has rebuffed multiple times, instead choosing an$83 billion bid from Netflix. And this has made Paramount really frustrated. Warner Brothers has also expressed frustration that basically, if you want the company so bad, you should offer more money. And so this week, Warner Brothers finally decided to reopen sale talks with Paramount. And this is basically an attempt by Warner Brothers to say, put up or shut up. You've got a week. Sell us on this thing or forever hold your peace. And how has Paramount responded? So Paramount is saying, although Warner Brothers' actions are unusual, Paramount's going to engage in good faith and constructive discussions.

2:48But at the same time, they're going to continue with their hostile bid and they are talking to shareholders and trying to get them to vote against the Netflix deal. Chris, do we have any idea what a sweetened Paramount offer could look like? Because as you've mentioned, there have been quite a few offers so far. Well, in its filing yesterday, Warner Brothers talked about how a Warner Brothers executive was contacted by a senior representative from Paramount who suggested that Paramount could raise its offer to$31 a share from the current$30 a share. And then the representative said it could go higher even than that.

3:35But Warner Brothers said after that conversation, nothing happened. The fact that we're even having this conversation, Chris, does that tell you that Paramount might actually get its way? Well, I think nobody would ever really bet against Larry Ellison, who's the father of David Ellison, who is the CEO of Paramount, and who's been pushing for all of this. This is David Ellison's dream. First he bought Paramount, and now he's trying to buy Warner Brothers and have two of Hollywood's most legendary studios under the same roof that he controls. In the end, whatever offer Warner Brothers takes will undergo regulatory scrutiny.

4:18Would Paramount be an easier or harder sell than Netflix on that front? Well, Paramount insists that it is an easier sell to regulators because they point to Netflix's high market share in the streaming market. They say that putting HBO, which is owned by Warner Brothers, together with Netflix, they would just have an overwhelming market share. Netflix argues that this is not a real reflection of the streaming market because YouTube is by far the dominant streamer, and so forth. There's also a counter argument. You would be combining two movie studios in Paramount and Warner Brothers, but regulators are already looking at these deals.

5:03And then there are other regulatory reviews that both companies are going to have to overcome with regulators in Europe. So this is a sticky fight. Both companies say that the other one is a bigger regulatory risk. But I think definitely there's also a political point here. There's a belief that the Ellisons, because they're closer to Trump, may have an advantage on the regulatory front. But we'll have to see how all this plays out. That's the FT's Chris Grimes in Los Angeles. Thanks so much, Chris. Thank you.

5:40Christine Lagarde wants to leave the European Central Bank a little earlier than expected. Her term as president expires in late 2027. But a source tells the FT that Lagarde would like to head for the exit before next April. Now, it's not exactly clear when Lagarde would depart, but the source said the idea is to leave before France's elections. That way, outgoing French President Emmanuel Macron and German Chancellor Friedrich Merz can name the next head of the central bank. The ECB declined to comment. The FT surveyed European economists in December about who they thought would be the next head of the central bank, and they believe Spain's former central bank governor, Pablo Hernandez de Costa, and his Dutch counterpart, Klaus Knaut, are frontrunners.

6:26Offshore wind companies are trying to capitalize on momentum in the sector. They recently won some big legal battles after the Trump administration tried to cripple the multibillion-dollar industry. And now these companies are trying to get their projects up, running, and sustainable until U.S. President Donald Trump leaves office. The FT's U.S. energy correspondent, Martha Muir, has been covering this and joins me now. Hi, Martha. Hey, Mark. So what is the latest with these American offshore wind projects? Yeah, so shortly before Christmas, the industry got a bit of a nasty surprise when the administration shut down construction of five wind farms on the East Coast.

7:01Right now, though, the industry is on a bit of a cautious high due to a clean sweep of legal victories, which allowed them to continue building. Now, these are injunctions, so the underlying cases will continue, but the stoppage was costing these companies millions per day, and now they can get moving again. The important thing to note is that these projects are really close to completion and the industry is kind of banking on it being a lot harder to stop a wind farm that's actually producing electricity and hopefully lowering customer bills than one that's just in construction. So the focus is really on getting these projects across the finish line.

7:35Let's back up a little bit. What did the Trump administration cite when trying to stop these projects and what has the industry been doing to get them back online? So the Trump administration said that the turbines could interfere with radar and that's a national security threat and it could make it easier for the US's adversaries to interfere with its intelligence systems and make it harder to kind of anticipate and block any potential attacks. The industry strongly disputes this, and the administration's evidence for this has so far been classified, and they're coming under increasing pressure to share it.

8:14In general, the strategy has shifted a bit since Trump first started messing with wind. And this is a strategy that the industry feels pretty good about. Last week, I went to the biggest offshore wind conference in North America. And unless everyone had, you know, really good poker faces, it's just felt that the government's case regarding national security isn't that strong. Okay, so definitely, pardon the pun, some wind in their sails here. Right. Does it seem feasible that these offshore wind companies can complete these projects by the time Trump is out of office? Yeah, so for the projects that are due to come online soon, it should be feasible and it'll certainly be a lot easier.

8:54The rest, such as Empire Wind, which is due to commercialize in 2027 could be in more danger because, you know, the administration have a few different tricks up their sleeve. As I said, now that they're able to continue construction again, it means that they're not burning through millions of dollars per day. But, you know, there is some concern that in terms of the industry's health, in terms of investment and supply chain, things look a bit bleak. And the states are trying to step in to prop up the industry, like with New York taking co-investment in future projects and investing in ports. And, you know, there are opportunities north of the border in Canada that the supply chain could find things to do on.

9:34But a lot of companies say that for the meantime, they're going to be focusing on Europe with the UK and Poland being seen as great markets and Asia Pacific. Martha, you mentioned some tricks up the Trump administration's sleeves to stop these projects. What would that look like and how big of an impediment would that be? So Interior Secretary Doug Burgum has said that he's absolutely going to appeal the results of the injunctions and the underlying legal cases continue. It's also possible the administration could order other stop work orders. And it's kind of hard to say what justification they would use, but they've so far proved that they're willing to get a little creative.

10:12And so there is a kind of a sense that if they have any arrows in their sling, they will try and fire them to kind of interfere with the progress of these projects. And on top of all of this, investors are pretty cold on offshore wind. Bloomberg NEF has cut its 2035 forecast by 85 % after Trump's election and are predicting the delay or cancellation of$114 billion of investment. That's the FT's Martha Muir. Thanks so much, Martha. Cheers.

10:46Before we go, it looks like America's super-size-me approach to food is starting to slim down. U.S. restaurants like P.F. Chang's, Olive Garden, and KFC are introducing smaller portions to get in line with evolving customer preferences. One, cheaper options because of America's affordability crisis. And two, people just aren't as hungry anymore because weight loss drugs are getting so popular. No sign whether this will be the beginning of the end of another American staple, the to-go box. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing.

11:22Check back tomorrow for the latest business news.