David Ellison Bought Paramount. Now He Wants Warner Bros. Plus, the 2025 Emmys Recap.

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1:52The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. To learn more, check out Accenture.com slash Spotify. It is Monday, September 15th. I gotta say, talking to people at Emmy parties this weekend, there was yet another little mini wave of distress over Hollywood. All stemming from the news last week that the Ellison family is preparing a majority cash bid to buy Warner Brothers Discovery. The Ellisons just bought Paramount, as we've been chronicling, and as I've been discussing in my Puck newsletter for a while now, David Ellison wants to go after Warner Brothers and its stable of franchises, plus HBO Max and its 150 million or so subscribers worldwide.

2:36If this deal happens, and it's still a big if, there's not even a formal bid yet, it would almost certainly mean the end of Warner's and HBO as we know them, and a questionable future for yet another legacy Hollywood studio. Remember, Fox was sold to Disney, and MGM was acquired by Amazon, the consolidation of Warners and Paramount in some form under one owner would be very, very impactful to the business. Lots of anxieties and questions here because of that. Namely, why would the Ellisons want Warner Discovery, especially all those garbage cable networks when they can wait and bid just for the studio and streamer next year after they're split from the TV networks?

3:10It's true that Paramount is still a subscale company competing with Netflix and Apple and Amazon and YouTube. HBO and the Warner Studios would give it a lot more scale. And more importantly, the Ellisons have nothing but money. Larry Ellison was briefly the world's richest man last week. But the combination of AT &T and Warner Brothers didn't catch Netflix, so why should the Ellisons think Paramount and Warner's has a better shot, even with all that Oracle money behind it? Or is this just the beginning of something even bigger? Today we're going to get into both why this bid is happening and also some of the implications throughout the industry if it does happen.

3:45And for that, we've got two guests, Lucas Shaw, our normal Monday guy from Bloomberg, and Rich Greenfield, the analyst from Lightshed, who's been writing a bunch on the topic. And then it's the big Emmys 2025 recap with Lucas, including everything that Craig ate at the Emmy parties. It was a lot. It was a delicious cookie at HBO. Today, it's Ellison plus Paramount plus Warner Discovery plus the Emmys. Is the deal really happening and all the ramifications? From The Ringer and Puck, I'm Matt Felony and this is The Town.

4:18Okay, we are here with a very big show. So big, so much to talk about that we have two guests. We have Lucas Shaw, our normal Monday guy. And we also have Rich Greenfield, the analyst, the partner at Lightshed Media, the poster of various workout videos on Instagram. Welcome, guys. I'm letting Rich go first. He's the special Monday guest. I'm just the normal Monday guest.

4:43Rich Greenfield:I'm honored. I'm honored to be included on Monday with my two favorite reporters. So I'm very excited. That's nice. That means a lot. Thank you. All right. So we're going to get into some Emmy stuff with Lucas at the end of the show. But we are devoting the majority of the show to the big news of the past week. The coming bid, which has not even arrived yet, but just the news confirmation of what we kind of already knew that David Ellison is now not content just with Paramount. He wants to go after Warner Brothers Discovery. And I got to say, guys, at these Emmy events last night and over the weekend, chatting up people in town about what they think of this.

5:24And it's amazing the turnabout. Ellison was considered this savior of sorts. Oh, he's going to put billions into Paramount, save the studio. He's going to release 20 movies a year, going to spend tons of money on streaming. And everyone's excited about this new player. and then it's like, whoa, whoa, whoa, wait a second. You're going to do what? You're going to buy another studio and potentially combine them and eliminate one of the biggest buyers in town, potentially? The sentiment, not great. People freaked out about this. I feel like it's mixed. Oh, really? Okay, well, tell me who is excited about this and why.

6:05Some of the people who work for Warner Brothers Discovery are excited about it. Other than that, other than the people who are like, He has put us out of our misery, this long national nightmare of having to endure a stock price that is cut in half and the management that seems to be positioning us for a split and a sale anyways. Who besides those people is excited about this?

6:26Rich Greenfield:Well, just remember, Matt, at the very beginning of the Warner Brothers merger with Discovery, remember how everyone was sort of being talking about the excitement of Zaslav coming to town. He was going to spend all this money. He was excited about Hollywood. And how quickly did that turn into cost-cutting? Well, he was talking that way. There had been frustration with the previous regime because of Jason Kyler's approach to movies, because there were a lot of people who felt like he didn't get Hollywood. And so they're like, okay, David Zaslav, he's going to love movies. He's moving into Bob Evans' house.

7:00He gets us. And guess what? He didn't get them. I know. I thought Lucas was going to say, people like Rich are excited about this. Well, bankers, consultants, it's going to be great for McKinsey or Bain and Company or whoever it is that David works with for the restructuring. Well, the fact of the matter is he's tried for three years to raise this stock price, which has been significantly hurt. And the only thing that's really done it is now this speculation of a sale. So I want to get into that. I want to know why this is happening now. I want to talk about the ramifications across all of Hollywood.

7:38And let's get into the first part. Rich, why is this happening now? Why not just wait for a split? They say they're going to split the company into the good stuff, studios and streaming on one side, and the bad stuff, the crap co, the cable networks on the other. Why not wait until that happens and then take only the stuff you want?

7:56Rich Greenfield:The betting logic would be, you know, you're looking at the future and there's two things that are going to happen. One, because of the leverage challenges facing the Warner Brothers split, they were about to bring on a partner. So originally they had said, hey, we're going to basically spin this out, break these two companies. The global linear networks, which is going to be called Discovery Global, was going to keep a 20 % stake in HBO, which contains HBO and Warner Brothers Studios. Now they're saying, hey, we're going to sell 20 % of that soon. And soon might be like within weeks. I don't know who that 20 % owner is going to be, but that might have spooked Paramount.

8:35You didn't think that was just posturing on the part of Gunnar and the company that they had? He says he has a buyer lined up. He said that at a conference. Well, he said he's gotten offers. He did not say he had something set.

8:48Rich Greenfield:Okay. From what we've heard, the leverage math didn't work on the spin. And the reason they shifted to doing the sale before versus after, because you got to take a discount to do it before. You're not getting the same type of value creation, selling it now versus after it trades publicly. So the idea is they did the math wrong on the split and they had to raise more capital cash to actually delever it. But look, that may be secondary. Lucas may be totally right. Are we trying to answer why Warner Brothers Discovery wanted to do this now or why Paramount? I think the logic for Warner Brothers Discovery is obvious.

9:24They would love someone to buy them. I mean, maybe not David Zaslav, but the company, the board would love someone. The question is, why is Paramount moving now? But my take on that is they see the opportunity now to go after everything because A, they can, they have unlimited money, and they know that there are some potential buyers for the good half of the company. Netflix, Apple, Amazon, they're not buying cable networks. But if they're available, perhaps they're going to buy just the studio and streamer. And if they can get ahead of that and put in their bid now and potentially scare away some of these companies like Comcast or others that are potential bidders and go for the entire company, including the bad stuff, then it doesn't give those other companies a chance to come in.

10:16And the big tech people aren't going to get a chance to bid on the good stuff. Isn't that the reason? do you buy that Apple, Amazon, or Netflix would bid on the studio and streaming business, Rich?

10:26Rich Greenfield:If those three companies really wanted to buy this, are we really to believe that for the last three years, while Warner Brothers has been on its ass, that they couldn't have stepped in, bought the whole thing, and spun off what they didn't want? I mean, all of that was theoretically possible. They could have bought it in 2017 when they approached Jeff Bukas to buy it, and they didn't want the cable networks. They only wanted HBO. You're not just buying Warner Brothers. Like Amazon basically bought a pure play studio in MGM. Even after the split, is it really a pure play? I mean, you're still getting, HBO has deals with MVPDs like Comcast and Charter and DirecTV for years.

11:05Rich Greenfield:They have bundling arrangements with Disney and Hulu. Like it is not a pure play studio. You're definitely buying a platform that I don't think Netflix, Amazon or Apple necessarily, I don't think they want the HBO Max piece of it. They want the HBO content. They want Sopranos. They want House of Dragons. But do they want everything else? I agree with Rich. I don't think that these companies are that serious of bidders. Yeah, no, I agree with you as well. But they are potentials out there. Sure. I don't think that David Ellison has that much competition for this thing. Talk to David Zaslav. He's out there talking about bidding wars.

11:41And certainly not competition that stands as good a chance as he does of getting it through the regulatory regime. I do think there's probably something to the fact that normally this is the kind of deal that the DOJ and FTC would look at twice. I don't know that they do under Trump. And I certainly don't know that they do with Larry as the buyer. Yeah, I don't think David moves on this unless he has some kind of idea or assurance that he can get it through. And remember, there's no FCC review on this because there's no transfer of broadcast licenses. So the Brendan Carr issue is not a thing. the DOJ and FTC are a thing.

12:18And these days, whatever Trump wants, he seems to be getting with his people. So if he says, let it through, let it through. You say it's not a thing, but Brendan Carr could just say, hey, CNN, fairness, I'm going to make this a thing. I'm not saying, you know, you never know.

12:34Rich Greenfield:He's got no authority, but he could, I mean, I guess. Yeah, he could, but even on the Time Warner sale, it didn't go through the FCC. It went through the Justice Department. But let me ask you two a question. You're Brian Roberts. CEO of Comcast. You've wanted to merge NBCU with WBD Warner Brothers for years, going back even before the Discovery transaction. There is no FCC approval for that transaction either. You combine these two companies. Same idea would be true. Do you make a run? I think you do not try because you're going to be embarrassed because Ellison has more money and does not have to adhere to any kind of fiscal discipline.

13:15Unlike other situations, like when he bid up the price of the Fox assets, when Disney was going after that, just to kind of make them pay more. So what if Ellison has to pay more? Like, it's funny money when your father is worth$250,$300 billion, right? We're up to like$380 for him. Rich, I guess, how do Comcast shareholders respond if they make a bid for it, since I think they're already tired of what's happening with Peacock and NBCUniversal?

13:44Rich Greenfield:I'm sure they hate it. On the flip side, they did put a lot more debt on Disney's balance sheet than Disney wanted, right? That's true. And look, isn't Peacock sort of, I don't know what the word is, but like odd bird out? Ass out is the word. Well, Peacock and Paramount Plus are the two that everyone sort of agrees that Peacock, Paramount Plus, HBO Max, two or all three of them need to come together because we don't need them all. Yeah, David Zasla says we don't need them all. Right. So what do you do now? Like if you're Brian, you know, your studio looks smaller now. Your Peacock looks sort of stranded or alone.

14:18Rich Greenfield:I don't think they were really going to merge their cable networks at Versant into anything else. But, you know, certainly Wall Street hoped for that. Like none of that's going to happen if this merger occurs. And so, again, I don't see how Brian could ever win against Ellison. I think that's the challenge mathematically. I just wonder if he feels compelled to be part of the process. He's the only one that I think could bid now for everything. The others, I just can't see. At a minimum to make David and Larry pay more. Yeah. Okay, great. Congratulations. Like they get to pay more. It's like two days of Oracle stock.

14:53I want to talk about the price here because we do not know what this bid will even be. And I talked to an insider this weekend at an event who was basically saying, if the offer is in the 20s, in the$20 range, then it's a conversation. And Zaslav can go to the board and be like, well, we have growth potential here. Why are you doing? If it's above$30, was this what this person talked about? The threshold was$30. If the$30 per share bid comes in, it's over. There's no way the board can dismiss that, and it will be an easy process, and they will start the diligence, and Zasloff will be done. Rich, you put out a note this morning saying no investor we have talked to believes WBD CEO David Zasloff and the board of directors could vote no on a Paramount bid, assuming a$20-plus offer with the vast majority in cash.

15:51So you think it may be over even in the$20 range, not the 30 range. No, no, no.

15:56Rich Greenfield:I'm saying investors believe that. I actually agree with you, Matt. I think Zaslav feels like he's figured out Hollywood. Oh, please. I know he says that, but come on. You and Lucas and I, we all just sat here and talked about the fact that in theory, there are more bidders later than now. There may not be, but in theory there are. So you can talk yourself into a story of, hey, if we split and we keep having success in Hollywood and HBO with the pit and sort of the momentum from the Emmys and all of this, you can lead yourself into a into a world of, oh, let's say no now. And in two years, we'll have not just Paramount bidding in two years, but we might have an Apple or we might have a Netflix.

16:42There's a big difference between how David Zaslav feels about it and how the board feels about it, right? You would think so. Although he's saying to people that Malone is off the board and they're much more in line with him. But I disagree. I think they're going to get sued. They're going to get shareholder lawsuits if they don't look seriously at an Ellison bid that takes them out at a very attractive price. They're trading at almost$20 a share after they had a run-up because of excitement about the deal. Yeah, if there's an offer in the mid to high 20s, they're going to have to go down. It doesn't have to get the 30 for them to seriously consider it.

17:18I'm not saying it'll happen.

17:19Rich Greenfield:Anything above 20, I would say yes, like mathematically. But I don't make these decisions. There are humans who are looking at this. And David Zaslav is yelling in their ear, saying, I can make this a double of Emmys. The movie studio's had a great year. HBO's growing. But you know what? He has had three years to do this. but he could say it takes time. And Pam and Mike, it took time. The company has never traded on the success of the movie studio. We know that. He promised$14 billion a year in EBITDA in 2023 when he came into this company. Where is it now? Rich, what is the EBITDA going to be this year?

17:57Rich Greenfield:It is not a 10, right? You are a sub 10. That is the answer. Weapons does not move that needle. Superman does not move that needle. So my fundamental view is these are tough businesses, not just Warner, but this whole sector. I mean, Disney stock is where it was a decade ago. If you can get a lot of cash, like 70 plus percent cash at a big number where this stock hasn't traded in years, you should take it, thank David Ellison and the Ellison family fortune, and just go do something else.

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19:08Right now, get up to 15 % off select storage solutions. Put heavy-duty HDX totes to good use, protecting what's important to you. The solid, impact-resistant design prevents cracking, and the clear base and sides make items easy to find even when the totes are stacked. Find select shelving and tote storage up to 15 % off at the Home Depot to organize every room in your home, from your garage to your attic. Visit HomeDepot.com How doers get more done Do you guys make anything of Zaslav Sitting next to Ted Sarandos At the boxing match On Saturday night Which is a thing that happened I had multiple people texting me That Zas was sitting next to I asked Ted about this At the Netflix party He said David is a friend I invited him But I'm pretty sure Zaslav enjoys the optics Of his cozy relationship with the co-CEO of Netflix to get potentially the rumor out there that Netflix may want to buy them.

20:09I think yes, but it might be as simple as a reciprocal offer where David invited Ted to go to a Knicks playoff game with him. And then when Ted had a big sporting event, he was able to offer this in return.

20:25Rich Greenfield:I have a slightly different take on that, Lucas. I actually think the reciprocity was actually hanging out at Wizard of Oz in Vegas. and getting to see what... No, I mean, I think for Netflix content, is there opportunities to use that as sort of an event venue for films or content in general? Yeah, but Zaslav doesn't own The Sphere. They have a movie there. But if Sarandos wants to do a deal with Sphere, he's got to call Jim Dolan. I understand. Okay. What can Zaslav do here? Clearly, he does not want this Ellison deal to go through. He wants to be crowned, as I wrote, the king of all Burbank and have his studio and streamers company where he can then auction it off and potentially get other bidders and have more time in the limelight here.

21:18What can he do to forestall this, if anything?

21:22Rich Greenfield:I think it really comes down to what does the board believe? Does a majority of the board believe that after the split occurs, so the split set for sort of April through May, June of 2026, does this board actually believe that Apple, Amazon, Netflix, or at least one of those, maybe two of those, are real bidders for HBO and Warner Brothers? If they do, they have an actual path as crazy and as insane as this is, they have a path to saying no. If they don't believe they're credible bidders, there is no path fiduciary-wise to say no. I have a different question from the Paramount perspective. Do we actually think that this is the best use of the Ellison family fortune?