The Six Toughest Decisions David Ellison Faces With WarnerMount

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0:52Backyard tradition now available behind the counter. Visit your local deli today. Discover the craftsmanship behind every bite. Boarshead committed to Kraft since 1905. It is Monday, September 28th. The settlement of the Paramount Warner Brothers antitrust litigation isn't quite approved yet. The judge overseeing the state's case against the merger has yet to sign off on the consent decree. And as of this taping, she's demanding that the parties reply to a letter from a very skeptical Senator Cory Booker on the issue. But it's heading that direction. And I think both sides would agree at this point that this merger is almost certainly happening.

1:31So now the question is, what now? David Ellison and his team, they have an integration plan. They've got those$6 billion in promise synergies, about$80 billion in debt they will need to contend with. And it raises many, many questions about how these companies will be merged. What will the streaming product look like? After all, the combined company would have had about 13 % of overall TV viewership in the first half of this year, tied with YouTube for the lead. In streaming, though, they'll be seventh. So a lot of work to do there. They've got a third of U.S. linear TV viewership, thanks in part to all those cable networks and CBS.

2:11But how much does that actually matter now? And most importantly, to people around town, who will run these media assets? Everything from HBO to CNN to the Warner Brothers and Paramount Studios and much, much more. Many, many questions. So we've got Lucas Shaw here from Bloomberg to discuss. Today is the Warner Mount merger. What will the biggest player in Hollywood look like? Who's going to be in charge? And now the hard reality sets in. From The Ringer and Puck, I'm Matt Bellany and this is The Town.

2:44Okay, we are here with Lucas Shaw from Bloomberg back again. Lucas, I'm very excited for your big screen time event. We are doing a live episode of The Town. On Thursday. That's Thursday, correct? Yeah, Thursday. Thursday lunchtime. Is that a prime slot? Are you giving us the everyone's halfway out the door slot? I don't think so. You're speaking before Jerry Cardinale, before Donna Langley. People stay the whole day. That's the program throughout the day. Alright, so we're not talking about that. We're talking about where we are in the Warnemouth merger. And I want to stress here, this deal has not been approved yet.

3:24The judge still must sign off on this settlement, the consent decree. And she seems to be giving it a pretty hard look, mostly, I think, because she's going to have to oversee this as the judge in the case. I have to ask you a question before we get started, only because I was not allowed to do this previously. But now that you've started to disclose, do we need to have a disclosure sure in every podcast that you are Jerry Cardinale stooge or what is the I'm on the payroll. No, for those who did not see puck where I work my day job, we have a majority of the investor now in Redbird Capital, which was a previous investor.

4:04It now is our majority investor. So in all my newsletters about Paramount or one of the 50 I've now learned companies that Redbird invests in, we'll have to have a little disclosure. We've had disclosures in the past. I think you should disclose it every time, but it doesn't have to be a major thing. Yes, if you are talking, drop it in. And I don't think you necessarily have to do it if you're talking, obviously, if you're just like talking about the movie business writ large. But if, as we are going to do today, spend most of it talking about Paramount and Warner Brothers, the fact that one of Paramount's biggest shareholders is also your owner is relevant.

4:40Yes, I know. Not that it's going to get him any favorable coverage. It's annoying, but you've got to do it. It is annoying. David Zaslav can tell you all about how much he got favorable coverage when he was an investor in Puck. But, all right. So that out of the way, let's talk about the status here because the judge has not signed off on this deal. We anticipate that she likely will. She's got to, you know, they've got to address the Cory Booker stuff that he raised. They've got to put up, you know, some explanation here about how this is all going to work to her satisfaction. So we're taping this before this has happened.

5:14We are going to assume that they will deal with this in some way and that this transaction will close. And there are many, many things on the table that we'll call like the first decisions or the first moves that will need to be made once this merger closes. So I want to get into those and get your take on where you think we are going to be headed here. So let's start right away with the thing that everybody in town is talking about. But I know, do you think this is decision number one? Who's going to run streaming? No, I mean, it's the thing that people care about. Okay. But it's not the thing that like, I mean, decision number one is going to be like the overall org chart and mashing these two entities together and who's going to do what.

6:03Thing number one is raising the debt, right? They got to get people to buy into the debt of this company, which given the tightrope that they are walking here with the Middle East money and Larry Ellison putting up$40 billion to backstop this, all the major debt questions they need to resolve. But let's say they do that. Let's talk about the operation of the company. The first one, I think, is the executive structure. How is this going to work? are they going to have one person over all of streaming? And who is that person going to be? Are they going to bring over the leadership team at Warner Brothers, Mike and Pam, Mike DeLuca and Pam Abdi at Warner Brothers?

6:47Are they going to keep or set aside the top executives at Warner Discovery, all of this? So give me your macro take. Well, yeah, I mean, we didn't even touch the TV studios because they have three different ones. There's what happens with all the network groups. You have a lot of kind of high profile executives that are now going to be at one company and they cannot all be there. And they know, they know, Ellison knows. They have a plan. They have not shared this widely within the company for obvious reasons, but they know how they're going to mash these companies together. Yes, they've had months to prepare.

7:24Exactly. I think it's going to be similar to what happened with Paramount. It's not going to be all at once. It's going to be a, not a slow roll, but a roll over the next couple months where they'll have some immediate changes. This is what we're doing. This is the strategy. And then after a couple months, oh yeah, by the way, these entire teams are going away. And oh, by the way, we're shutting this down and we're selling this. And by the end of this year, let's say this closes in two weeks, we will have a good sense, I think, of what the new Warner Mount organization it's going to be. Sure. So between, if you kind of break it down by category, streaming, do you think that both Casey and Cindy will be at the company January 1st, 2027?

8:10Casey Bloys, who runs HBO, Cindy Holland, who runs Paramount Plus. I do not. Not that they won't offer Cindy something. I think that Casey has made it clear that he does not want a repeat of what happened at HBO Max when that service was launched. Because if you remember, he was put in charge of it with Kevin Reilly. And they were both sort of dual operators of this service. And from people that I've talked to at HBO Max, it just didn't work. There needs to be one decider at these companies. One person makes a decision on programming. Exactly. Because at Warner Brothers Discovery, he's had this sort of J.B.

8:55Perrette has run the business side of streaming and also runs video games. And there is, you know, there is a version of this where they offer that job to Cindy, even if that has not been her historical role. I think they will offer that to her. Yeah. Or offer her some kind of elevated and separate job. And don't get me wrong. I think they are happy with Sydney, and they like her. But when you have the opportunity to bring in the head of HBO, which not only has had the prestige over the last 10 years, but they've pretty successfully managed to broaden out the content offering to become more populist, more IP driven and broader tense shows along with still being a dominant player at the Emmys.

9:41So I think you do that if you have the chance. And not only that, Casey's deal is up and he can leave after the transaction. So last thing you want is him going to Netflix or somewhere else. Yeah, there is a conventional wisdom in Hollywood that Casey is the most important to keep. I think that that is supported by the fact that he's viewed as the kind of the best. HBO is, despite Apple's recent success, viewed as the best place to work in town. The only wrinkle in all of this is all the people who feel this way are not David Ellison. Yeah, and he values loyalty and he values his team. And Cindy's been there from the first transaction and he made a promise to all these people, help me get Warner Brothers and we're going to run this town together.

10:26And I'll take care of you. Yeah, exactly. But I imagine he can also be pretty ruthless. Okay, so your prediction will be that - Yeah, that's what the money's for. Cindy, that Casey will be put in charge of streaming. Cindy will be offered something, but not keep it. I want to stress, I have no inside information on this. This is pure speculation. No reportable - No reportable facts, yes. This has not been revealed to me. I'm not floating it here because I'm going to report it two days later. This is based on my impression of what's going on. Okay. But you don't disagree. I don't disagree. Okay.

10:59I think that there's a world in which it shapes out differently, but if I had to put money on it, what you are outlining would also be my prediction. And I do think people tend to discount some of Cindy's skill sets, but there's just sort of this rush to crown Casey which I understand. Let's go to the movie studio because this one's more interesting. You've got Mike DeLuca and Pam Abdi who run Warner Brothers. They're on sort of a kind of not great run this year. They had their 2025 that they were dining out on until well into 2026. And probably not the best time for Digger to come out either.

11:40We haven't seen the reviews yet, but probably not gonna perform what you would think a$150 million plus Tom Cruise movie will perform at. But they have talent relationships. They have the backing of CAA. They have all of these things going for them. And they are in the A-list filmmaker business, whereas Paramount, for the most part, is not. And you have the Skydance people, Josh Greenstein and Dana Goldberg, who are running the film studio and arguably the television studio as well. and they are fine, but they don't have those kinds of top level relationships or at least not as much. Well, but they have relationships with the person who matters, which is David Allison.

12:26Exactly. It's this tension again. And they were told, come to Paramount and we're going to run the town. And now you've got a decision. Is there a world where Mike and Pam coexist and run Warner Brothers? They're supposed to operate these things separately. now, or at least release movies separately. So do Mike and Pam report to Josh and Dana? Do they coexist and all report to Ellison or some kind of chief content officer that is yet to be named? How do they, how do you manage this? Well, do you think, two questions before we get into that related one, do you think that they will name one person to serve as the Donna Langley, Dana Walden, Bella Bajaria, person in charge of all programming at the company?

13:12I think you've got to. I think you've got to. The only difference here is that I think David Ellison considers himself to be that person. Yes. And someone needs to sit him down and say like, dude, you are going to be running, you know, a third of the output of Hollywood. You cannot be this person. Right. You need somebody to be this person. You're now a CEO. You are not running a production company. You need to delegate this part of the job. You can still go to lunch with Tom Cruise. Sure. You can still go flying on the weekends. Everyone knows you're the boss. Yes, but we need somebody to come in here and do this.

13:52I don't know who that person would be. Maybe they go after Donna Langley. Maybe they elevate somebody from another job elsewhere. Or that would be the argument for some of the people internally. Or a Casey Bloys. Not that he's a movie guy. Well, that's who I was referring to. Yes. You can say, okay, Casey, you don't want to... You take the really big job, and then Cindy stays in charge of streaming. Now, Cindy might not want that. So that's one question. The other question I had is, and I think is sort of relevant to what they're doing with the studio. What is the strategy for their movie studio?

14:27Because I feel like Skydance was all about just big tentpole IP movies. They haven't really been... Well, not really. that Skydance has made a lot of streaming only movies for Apple. They were genre, they were big scale. They were movies that aspired to be a theatrical wide release, even if they didn't get there in a lot of the cases. My question is, what is, you're now going to be releasing 20 wide releases a year, 30 total movies. Most of these companies have a clear strategy, right? Like we know what Disney's movie strategy is. It's the IP with a few bets. Donna's at Universal is more of sort of a portfolio.

15:06They go from small to really big. Paramount has frankly been confused for a little while. And I feel like Warner Brothers under Mike and Pam has been a little more kind of like high-class filmmakers. So are they trying to do a little bit of everything? Are they going to be mimicking Donna's strategy? Is it Donna plus Disney? I think what they're going to do is lean into Warner Brothers as the IP and tentpole focused studio. I think that Paramount, they realize that they have a lot of singles and doubles. They have very few movies that even have the opportunity to deliver a home run and they want home runs.

15:42So what you do is you lean into the Warner Brothers IP, you get as many DC, Harry Potter, Lord of the Rings, those types of movies in development even more so than they already have. And then you sort of supplement that with the Paramount movies. Because I don't think, as much as they have tried, Paramount is somewhat limited in the IP, unless they go out and buy a bunch of stuff and they're trying with Call of Duty and they're trying with some other things. But the Warner's library and the Warner's franchise cupboard just is a lot more stocked. So that's where you lean in, which then begs the question, do you believe that Mike and Pam are the people to best exploit that cupboard?

16:29And do you believe that they're filmmaker first in trying to eventize certain filmmakers and star combinations, that that is the right strategy for you. We're also assuming there's someone out there that he has his eye on, which we don't even know. I mean, who else is qualified these days? Well, no, I think, I don't, I actually do think that he plans to put Josh, at a minimum, keep Josh and Dana in charge of Paramount, if not expand their purview. He clearly likes them, even though the movie studio hasn't had, you know, they haven't had a big hit this year. They've had, to your point, a lot of like nice singles, maybe a double.

17:03But that's been paramount for the past decade. We all talk about Mission Impossible and Top Gun Maverick. Yeah, they have one of those movies every two or three years. That's like three movies in the past decade. They have one huge movie every two or three years. And otherwise, they release a bunch of small stuff. You need two or three of those a year. Well, but that's like to your point, what I think they're expecting Warner Brothers to provide. Yeah, exactly. But that's the question is, do the Skydance people do they run Warner Brothers and find someone who will report to them and run Warner Brothers as they want it to be run?

17:40The tricky part with that is, okay, so let's say you put them over both movie studios, which I might violate. I'd have to look again at the consent decree and see how that would work. So then are you going to have different people in charge of both paramount? That just creates even more high-paid jobs. I find it hard to believe that they're going to have four different movie studio chiefs. Especially if there's also going to be a content chief over everybody. If. If, yeah. This episode is brought to you by the new movie, The Social Reckoning. This electrifying thriller from Aaron Sorkin is based on the true story of the Facebook insider who uncovered what the company knew about the harm its platforms were causing and the Wall Street Journal reporter determined to expose it.

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19:38Together last year or together this year, Paramount and Warner brothers have generated 10 % of us box office. 10 % together. It's anemic. Unbelievable. Usually that, now this is an anomaly. Usually at this point in the year, they would be in the mid twenties together. But this year they've just had not a lot of luck. It's universal, it's Disney. And then it's like hits. Everyone has a hit. A24 has, maybe A24 has a couple. Amazon has a hit. All right, so let's, next one. Layoffs. One fell swoop or waves and waves and waves? Waves and waves and waves. obviously yeah i agree nobody nobody wants the headline saying we just david ellison who just did all these things and pissed everyone off then fires 25 of the staff yeah although to be honest to make the math work on the deal they've got to get rid of people pretty quickly so i think that it won't be insignificant the the the waves it will be just in this era and entertainment of the layoffs never stopped the layoffs at warner brothers discovery never stopped it was like every three months there was some new slight restructuring yeah disney as well they're having more layoffs this week.

20:50And it's just a drip, drip, drip. So yeah, but I do, I agree. It will not be, the headlines will not be Paramount eliminates 30 % of workforce. It'll be Paramount eliminates 5 % five times or whatever. Yeah. Yeah. Yeah. Even though I bet Larry Ellison would probably love the 30%. And to be honest, I bet the stock price would probably jump if they announced that. It would be the Elon approach. Yes. Speaking of Elon, do you believe this report that Elon may invest in the combined company? I'm sure there's been a conversation because of the friendship between Larry and Elon. I know. That's why I hate these have discussed stories.

21:27Literally everything has been discussed. I hear you, but I think you and I both know that if we'd gotten a call saying they'd talked about it, we would have reported it. Oh, sure. No, no. You do the story, but I'm asking you whether you think it's real. And I don't, I think even these guys know that this would be so poorly received and create such a microscope on the company that it would not be worth it. Unless they absolutely need the money. I have a related question to that. Do you think that David Ellison feels or worries that they are now viewed as too Trumpy? Yes. Okay, so what do you do about that?

22:10Because not that he particularly cares. He cares about how the company, If the Democrats win in the midterm and they spend the next two years calling him to DC hearings, all that stuff. Exactly. Which is likely going to happen. And if Elon Musk is an equity owner of the company, it's going to be even worse. So that's why I think, you know, we can move up. We can move directly on to the next one, which is the combination of CBS News and CNN. Because I think that, yes, they are going to combine forces and they're going to have a very robust series of layoffs and have news gathering combined among them.

22:48But I do not think that Barry Weiss is going to run everything. Oh, no, I don't either. It just doesn't. I mean, why? Like, you made your point. She's doing what she's doing at CBS. And you don't need that. I think it's more likely that in, I don't know, three years or whatever, that Barry Weiss is gone than she ends up running all of CNN. I could be wrong. but why because she doesn't like it or i don't know i mean depending on which media reporter you read 60 minutes is either doing fine or a total disaster this season well you can i think you can say that about just about every day yeah i know but but my point is like other than the bad press it's not like cbs news is like a total calamity like it's it's chugging along no it's just a massive fucking headache that he doesn't really need.

23:41It's a huge headache and it generates outsized media coverage, uh, you know, that, that I don't think Ellison wants to fan those flames. You put Barry Weiss in charge of CNN, it ramps it up to 11. I know, I, I agree. I don't think she's getting put in charge of CNN. I think they'll keep Mark Thompson. Oh, you think they'll keep him? See, I was going to say, I don't know if they'll keep the current guy. I think with a lot of these people, it's a question of how long, sort of like how I wouldn't be surprised if they kept Mike and Pam in the short term and then changed it in the long term. I wouldn't be surprised if they kept Mark Thompson, especially because he's pretty well regarded.

24:19I don't think that what he's doing at CNN is really working right now, but he's well regarded. And so they keep him for the time being. But that's the thing. If you're Ellison and you want to improve the ratings at CNN, maybe you're bringing someone else in. Yeah, but I don't think meddling at CNN, to your point about the headaches, like making early dramatic changes at CNN, even if they are benign, it will be covered in a way that it will mar the start of his tenure. And I think he wants, I just think he's more focused on the entertainment part of the business. I agree. I just wonder if, you know, he'll make some change there and put in a David Rhodes or a, you know, an experienced news executive that will not draw the negative headlines that Barry Weiss did, but will also allow him to say that he's making changes.

25:11And, you know, Trump could still come after him if Trump doesn't get what he wants at CNN. Like, there's a scenario where the first thing David Ellison does is fire Caitlin Collins because Trump doesn't like her. It's possible, but I just, I don't think that's where he makes his first big changes. I agree. Okay. So I want to get to some of these other topics. We can do it quickly. The film output. Everyone's asking, are they going to get to 30, 32 a year? And I keep saying, of course they are. It's not 30. It's easy to get to 30. What do you mean it's not 30? It's 20. It's 20 wide releases. It's 30 movies.

25:4530 movies. But that's my point is like, they can throw a bunch of stuff into theaters. That's not the question. The question is what they are going to be making and what they're going to be buying and what the total expenditure and output is going to be. Because this like, oh, we're spending$300 million more in the US per year. They were already planning to do that. It's just that now they're going to spend it in the US, which great. They can go to whatever state has the best tax incentives. So do you think that we see a marked difference in the output of these two studios? Yeah, a little bit.

26:24I mean, it just, it depends on how you look at it. So 20 wide releases, 30 total releases would be considerably more than I believe they've released in 2026. What people have pointed out is that it is about the same or maybe even a little less than what they were planning to do in 2027. So I think it's a change in that Paramount pre-David Ellison was a shadow of a studio, and he does plan to keep investing. And so you're going to see, at least in the short term, an increase in what Paramount was doing, and probably not that much of a change in what Warner Brothers was doing. To me, the question isn't what happens in 27, 28, 29, especially because as you and I know, most of those are pretty much set.

27:09Like when David Ellison wanted to get the number of releases for Paramount up in 2026, he did it by, you know, buying smaller movies or finding little ways to inflate the number of releases without having like a meaningful impact on the box office. To me, it's what does it look like in 29 and 30 when you have actually integrated and you're looking at how much you can spend? And other than what you are now legally obligated to do, how committed are you to really putting 30, 32 movies a year in theaters? Are you looking at this as we expect you will and go, you know, it'd really be better if we did 22 movies a year.