Why Paramount went looney tunes for Warner Bros.

0:01Stacey Vanek Smith:NPR.

0:11Cardiff Garcia:It is a high-stakes, enemies-to-lovers story with enough political and corporate intrigue to satisfy the most discerning of drama fans. And it's not over yet. We are, of course, talking about Paramount Skydance's proposed$110 billion takeover of Warner Brothers' discovery.

0:31Stacey Vanek Smith:There was a time in this saga when it looked like Netflix would emerge victorious. Warner Brothers kept rebuffing Paramount's offers. And then, last week, Netflix was out. Warner Brothers accepted Paramount's bid. This is The Indicator for Planet Money. I'm Adrian Ma.

0:47Cardiff Garcia:And I'm Waylon Wong. If the deal goes through, two legendary Hollywood studios would merge. CNN would be in the hands of Paramount CEO David Ellison, the son of a tech billionaire and an ally of President Donald Trump. And the HBO Max streaming service would probably get renamed again.

1:05Stacey Vanek Smith:So today on the show, we break down the basics of this Hollywood corporate marriage. Who is David Ellison? What does he want? And how might this deal reshape our polarized media landscape?

1:17Cardiff Garcia:Plus, we learn about a unique maneuver that Paramount is using to try and gain speedy government approval in the U.S.

1:47Stacey Vanek Smith:Subject to credit approval. Apple Card issued by Goldman Sachs Bank USA, Salt Lake City Branch. Terms and more at apple.co slash benefits. This message comes from ADP. ADP knows any new technology, any old competitor, any trendy thing, even a trendy thing that everyone knows isn't a great idea, but management just wants us to give it a try for a bit, can change the world of work. So whether it's a last-minute policy change or adding a new company holiday, ADP designs forward-thinking solutions to help businesses take on the next anything. ADP. Always designing for people.

2:27Cardiff Garcia:Today, we are bringing on a marquee name to help walk us through the Paramount Warner Brothers deal.

2:32Stacey Vanek Smith:I'm Dave Folkenflake. I cover the media for NPR.

2:35Cardiff Garcia:Hi, Dave. You're having a very busy few weeks here.

2:38Stacey Vanek Smith:Why, anything come up?

2:39Cardiff Garcia:I don't know. Why are we here? Dave has been busy writing about another David, David Ellison, chairman and CEO of Paramount Skydance. Can you give us the TV Guide capsule summary of what we need to know about Mr. David Ellison?

2:54Stacey Vanek Smith:Sure, and TV Guide's not a bad place to go for it because he's somebody who's fascinated with all things Hollywood. David Ellison is the son of Larry Ellison, one of the richest people to walk on the planet. Larry Ellison was the co-founder of the software Titan Oracle, which provides much of the digital backbone for the nation's commerce and government. David Ellison, as a young man, wanted to become an actor. It didn't pan out. And he started being interested in developing movies. And over time with his ambition, but also definitely with his father's extraordinary, immense wealth, he was able ultimately to become a producer.

3:32Stacey Vanek Smith:And he helped being one of the lead producers of the Mission Impossible franchise and Top Gun. And he put himself in place just a year ago with his father's financial backing to take over Paramount, which was best known as the parent company of CBS, Paramount Studios, Paramount Plus, and also cable channels like Comedy Central and Nickelodeon.

3:54Cardiff Garcia:What was his, like, most famous IMDb acting credit before he got involved in the production?

4:00Stacey Vanek Smith:Oh, I knew you were going to ask me this. He had a minor role in a sort of fighter pilot movie. I'm trying to remember what it was called, but it was not to be. I don't think there were casting directors who looked at it and said, that's the guy I want in my film.

4:13Cardiff Garcia:That fighter pilot movie, by the way, is a World War I film called Flyboys. It came out in 2006. David Ellison pops up briefly in the trailer, providing some comic relief as an American soldier. The Germans are moving to World War II. Cassidy will be your squadron leader.

4:32Stacey Vanek Smith:Any questions? Will we be back by lunch?

4:35Cardiff Garcia:And if that movie sounds like an old-fashioned Hollywood project, well, Dave says David Ellison has somewhat old-fashioned ambitions.

4:44Stacey Vanek Smith:I think it is a sort of mindset and a passion and a belief set, and I can be a great leading figure of Hollywood.

4:51Cardiff Garcia:The goal here is scale, to be a huge player. Warner Brothers currently has five times the market value of Paramount. So acquiring Warner expands David Ellison's dominion to include not just a mega movie studio, but also cable networks and other properties. And he needed his father, Larry Ellison's money to get there.

5:11Stacey Vanek Smith:Larry Ellison came forward and said, look, I'm going to put extra tens of billions of dollars backed up by my personal trust so that you know that this money is there. There still are foreign investors, including a sovereign wealth fund of Saudi Arabia, including an emirate investment fund. And these have complicated questions that attach to them as well. Let's not forget also that Larry Ellison is sort of a lead investor in TikTok U.S. David Ellison will in a very short amount of time have gone from his little boutique studio to potentially, if regulators approve this, Skydance, Paramount and Warner together.

5:50Stacey Vanek Smith:But also layered over that, although it's separately held, are Ellison's other major stakes in the software giant of Oracle and in the social media giant of TikTok. And these are not incidental interests. These are all about data and consumer habits online.

6:05Cardiff Garcia:Dave tells us there's also an ideological component to this deal. Warner Brothers owns CNN, a network that President Trump has repeatedly attacked.

6:14Stacey Vanek Smith:The Ellisons, father and son, particularly Larry Ellison, the father, is an advisor and a friend of President Trump. Trump has made clear any number of times how much he loathes CNN. The Ellisons need the Trump administration not to intercede in court and try to block this takeover Warner Brothers discovery. And they are allied with him, or at least are for the time being. And so that's the fear you're also hearing within CNN. They're fearful what's ahead. They believe there'll be job cuts and they think they could be targeted if they were to be named publicly.

6:43Cardiff Garcia:There could be job cuts in other parts of the new megacorporation, too, if regulators approve the deal. And Paramount took an unusual step in trying to get the green light from antitrust authorities. That's according to Matt Stoller. He's research director at the American Economic Liberties Project. It's a nonprofit that opposes corporate monopolies. And here's how Matt describes antitrust law in the U.S.

7:07Stacey Vanek Smith:If you're looking at a company and you're saying those companies are too powerful, you're basically right. And then it's about figuring out the relevant nerds to explain to an out-of-touch judge why that's true.

7:19Cardiff Garcia:The antitrust approval process has lots of nerdy details. And one of them is something called the Hart-Scott-Rodino process. It's where companies involved in large mergers submit information to the government even before a deal is finalized.

7:34Stacey Vanek Smith:You have to tell the government if, hey, we want to merge, and you have to give the government a bunch of information. And then the government has 30 days to look at that information. And if they want more, they can ask you for more in what's called the second request.

7:47Cardiff Garcia:Matt says compiling all the documentation for this second request can take between 12 and 18 months. Then the government has 30 days to review the new information and decide whether to bring an antitrust case or let the merger happen.

8:02Stacey Vanek Smith:Paramount did something that is astonishing, or at least what I was told from experienced lawyers is astonishing, which is that they completed the second request before they even won the bid for Warner.

8:14Cardiff Garcia:Paramount said it had, quote, substantially complied with the second request back on February 9th. That's almost a month ago. It means that it already sent over extensive documentation to the Justice Department, paperwork that Matt says can take over a year to pull together.

8:31Stacey Vanek Smith:At least to me, it indicates that they feel very confident that the Trump administration is not going to challenge this merger, no matter what they find. And they want to close it really quickly so that the other potential entities that might challenge it, which is to say state level enforcers who are Democrats, can't bring a challenge in time to stop the closing. It's a very savvy political move. It's very insidery. It's very kind of nerd stuff. But it does matter.

8:57Cardiff Garcia:And in fact, some politicians are already speaking up. The Democratic attorney general in California, which is of course home to Hollywood, said last week that his department has an open investigation of the deal. Democratic lawmakers like Elizabeth Warren of Massachusetts and Chris Murphy of Connecticut have also expressed grievances. The deal also needs approval from European regulators and Warner Brothers shareholders. On Monday, Paramount said it expects that vote to happen in the spring. with the deal closing by the end of September. This episode was produced by Julia Ritchie with engineering by Robert Rodriguez.

9:35Cardiff Garcia:It was fact-checked by Sierra Juarez. Kicking Cannon is our show's editor and the indicators of production of NPR.

9:44Stacey Vanek Smith:Will we be back by lunch? This message comes from NPR sponsor Charles Schwab with its original podcast on investing. Each week, hosts Lizanne Saunders, Schwab's Chief Investment Strategist, and Kathy Jones, Schwab's Chief Fixed Income Strategist, along with their guests, analyze economic developments and bring context to conversations around stocks, fixed income, the economy, and more. Download the latest episode and subscribe at schwab.com slash oninvesting or wherever you get your podcasts. This message comes from Capella University. That spark you feel? That's your drive for more. Capella University's FlexPath Learning Format lets you earn your degree at your pace, without putting life on pause.

10:33Stacey Vanek Smith:Learn more at capella.edu. This message comes from Greenlight. Parents say financial literacy is the hardest life skill to teach. Greenlight's debit card and money app for families makes it easy for kids to learn to earn, save, and spend wisely. Start today, risk-free, at greenlight.com slash NPR. Thank you.