TikTok’s new owners

0:00In an age of media consolidation, family dynasties are having a moment. The Murdochs, the Sulzburgers, the Roys, the Hursts, and the new kids on the block. Ellisons, meet the Ellisons, the newest right-wing billionaire family. From the Silicon Valley, Larry made his money with technology. The Ellison family, Potter, Larry, Iho, David, and their money just bought CBS Paramount, will soon take a big stake in TikTok, and are reportedly going to bid for Warner Brothers Discovery, which owns CNN. It's been said that nothing bad can happen, it can only good happen. Nothing bad can happen, it can only good happen.

0:38But is yet another Trump-aligned family having control of your grandpa's TV shows and your TikTok algo something to worry about? Answers ahead on Today Explained.

0:56Larry!

1:01This is Today Explained. I'm Amrith Ramkumar. I'm the tech policy reporter for The Wall Street Journal in Washington, so cover all things tech in D.C. We are seeing a headline that suggests America is going to get TikTok. What is America going to get here exactly? The biggest thing is certainty for U.S. TikTok users that the app will continue operating in the U.S. That's, I think, what most people care about. They're not that worried about the complex deal that made that happen or any of the geopolitical implications for a lot of people who are addicted to the app. Look, I know they're going to take TikTok from us, but can we like, can we come to an agreement, please?

1:42I thought of it just being gone. It's like sad. Like, what? Why? Why does it have to go down the drain like that? Why are you doing this? They're going to be able to continue using it. So that's step number one, I think. And that's what the administration is focusing a lot on, that they're the ones that prevented the app from going dark and any changes there. But if you dig a little deeper, it is also very important that a group of U.S. investors will now gain control of TikTok's U.S. operations. That's been something a lot of people in Washington have been pushing for for over five years. And it seems like they're on the doorstep of making that happen.

2:19I think that it's a deal that's going to be great. And it's also controlled by very powerful and very substantial American people. What are U.S. operations? What does that mean? Yeah, U.S. operations for TikTok are basically all of the users in the U.S. There are about 170 million of them. So it's all the content, all their data, and anything that is basically separate from the global operations. So the backstory is that there have been concerns for many years that because TikTok parent ByteDance is a Chinese company, that the Chinese government could potentially access U.S. user data or control the content that is used by American users.

2:59It's the fact that the Chinese government owns a company that is collecting very sensitive information from American citizens that it can use to create an algorithm that will provide very addictive information to provide messages and videos that could mislead the American people and manipulate our elections. So the deal that is being done is attempting to address both of those big concerns. Okay. And what about the thing that makes TikTok TikTok, which is the algorithm? Does the U.S. get that too in this deal? That is the billion or tens of billions of dollars question. It's a very complex setup from what we're being told.

3:41Essentially, the answer would be yes, based on what the administration and people around TikTok have said. There would be a complex way of doing this where ByteDance, the Chinese parent company of TikTok, would copy the algorithm it uses globally and then lease it to this new entity that is being created by this transaction. And so the new entity would then control it and they would run it through basically all the users in America. So it would be a U.S.-specific algorithm, sort of. And they say that lease arrangement and security provided by the cloud computing firm Oracle would make sure that there's no Chinese interference and it's totally separate.

4:22There are definitely people in Washington who don't buy that arrangement, or they don't believe that it is fully walled off from ByteDance and Chinese influence. But at the end of the day, the algorithm is a huge issue. And we don't want to make allowances for China to continue to influence, control what 170 million Americans see and their outlook on the world. So as usual, we'll see where things end up and how this gets implemented. But that's how they're selling it at this point. Can you remind us of the state of play with TikTok right up until now? What has been going on here? People have been worried about TikTok in Washington going back to the first Trump administration.

5:07We're looking at TikTok. We may be banning TikTok. Trump himself signed an executive order saying that ByteDance would basically have to relinquish control or the app would have to stop operating in the U.S. They have until September 15th to make a deal. After that, we close it up in this country. And there were deal talks involving companies like Walmart and Oracle. lawmakers have been worried that the Chinese could access U.S. user data or sway what content is seen by U.S. users. Of what nation are you a citizen? Singapore. Are you a citizen of any other nation? No, Senator. Have you ever applied for Chinese citizenship?

5:42Senator. And so those concerns really continued and crescendoed in the Biden administration, and they led to Biden signing into law something that was very similar to what Trump was talking about in his first term. Is it going to make America safer? Is it going to make the world safer? Essentially saying that Biden would have to reduce its ownership stake below 20 % or stop operating. That was sort of a key demarcation point. But as usual, Trump sort of sees all of this and he sees Biden sign this thing into law. And then he's hearing from people like his son Barron and former advisor Kellyanne Conway, who does polling and was doing work on behalf of TikTok.

6:23And they're saying to Trump, you can win this election if you start using TikTok, if you go on more podcasts and reach young people. They basically saw a huge opportunity there where the Biden campaign was not using those tools. And Trump was convinced of that. POV, 100 days left before President Trump delivers another knockout. And then as he's getting ready to take office and start his second term, he was hearing from a lot of users who were very upset because the line of demarcation set in the law that Biden signed was January 19th, 2025. And then Trump kind of realizes, well, I don't want to just do something that my predecessor signed who I dislike strongly and don't want to credit him or give him this win.

7:11And I can make a lot of people happy if I just do a deal and I love doing deals. So that was sort of the context for how these negotiations with China and these companies started.

7:26OK, so ultimately a deal between the U.S. and China had to be made. And what we're hearing now is it was, in fact, made. President Trump says he'll sign an executive order about it later this week. What is in the deal? What do we know? Well, first, the deal is not done. That's the first thing to understand. It's like a preliminary agreement, sort of a framework. This executive order that the president is going to sign is basically going to say, from what we can tell, that we have the contours of the deal and they satisfy the law, satisfy the national security conditions. And that's one step on the process of finalizing things.

8:01And so basically under this deal, U.S. investors and allies, essentially, they will take control of this new entity that's created to run TikTok in the U.S. So the understanding is that this new group of U.S. investors, this consortium featuring the private equity firm Silverlake and cloud computing company Oracle that we've talked about, they would be part of this group and they would own roughly half of this new entity. and then existing ByteDance investors that include some Trump allies, they and others would own, the existing group would own roughly 30 percent. And then that's what lets ByteDance's ownership stake drop just below the 20 percent outlined in the law.

8:45And it's also important to note that that consortium has been changing by the day. Trump mentioned the Murdochs over the weekend. He said, I hate to tell you this, but a man named Lachlan is involved. Do you know who Lachlan is? That's a very unusual name, Lachlan Murdoch. Yes, and we're told that basically means Fox would invest. But yes, the Murdochs could be involved. And he mentioned Michael Dell, who's also been reported around this and been around it for a while. He could be involved. But Trump loves that element, right? Because now he has this framework agreement, and then investors are calling saying, we want to be part of this deal because we know this is a very valuable company and a lucrative opportunity.

9:27And so now he can sort of pick and choose who he lets in. Okay, so Oracle has a significant stake. Others may join, others may drop out. But Oracle is a real player here. And we can't talk about Oracle without talking about Larry Ellison. Who is Larry Ellison? Oh, man, how much time do you have? Larry Ellison is one of the richest men in the world. I mean, he co-founded Oracle. Start there. Larry Ellison is now the world's second richest man, thanks to his stake in Oracle. His company, Oracle, makes a widely used database. It helps everything from online banking to airline reservations. And you came from such humble beginnings, grew up on the south side of Chicago, dropped out of college.

10:11Now you have collections of cars, jets. Well, I think my favorite line is, I had all the disadvantages necessary for success. Oracle is sort of one of the most important tech companies that most regular people have never heard about. They're experts at working with large databases, which are key to the social media industry. But more importantly now, they're a huge part of AI. So Oracle is now seen as one of the leading AI companies because they do AI infrastructure and they work with companies like OpenAI. But Larry Ellison has also expanded in other ways. So his family is now preparing a bid for Warner Brothers through their company Paramount Skydance, which they recently have been doing big deals in that space as well.

10:57He's sort of the most interesting man in the world kind of vibes. He even helped the University of Michigan get the top-ranked quarterback recruit last year. Now through the NIL system. So the top recruit in the nation is going to Michigan because of a rich guy's girlfriend? And Larry Ellison, they bought the quarterback. So he has a lot of money. He's pretty strategic in what he does with it. But yes, this TikTok deal would be his latest big win.

11:28OK, so we have the Ellison family, Larry and David, taking big stakes in big media companies. What is their relationship to President Trump? They're seen as longtime allies by the president. And we've been told he sort of sees Larry as an OG of sorts in the tech space. So as he's embraced Sam Altman and all of this new generation of tech entrepreneurs, he's kind of comfortable with Larry because he's 81. They're roughly the same age. Having that sort of solid foundational relationship that goes back to the first administration seems to be helping a lot. This has made a lot of people quite leery.

12:10You have a wealthy old man, a lot of wealthy old men involved in this consortium. Trump aligned, for the most part, controlling TikTok. Will they be able to manipulate the algorithm? Are they the ones who are going to be deciding what I see on TikTok? That's another really good question and something that hasn't been fully addressed yet. We don't know a ton about the operations and who will be doing what and what the oversight will be. I think priority one, though, is showing they can run the app. They still have to prove the basic business case. From what everyone is saying, what the investors want is for the operators to keep things roughly similar, right?

12:59To keep things the same. That's what's in their financial interest. It's not in their financial interest to come in and make a bunch of changes that overhaul things, you would think. So these people just want this deal done. They want their investment secure. TikTok just wants to operate in the U.S. And users just want the experience to remain the same. So making changes or doing things that would be very disruptive seems against sort of their own interests there.

13:34He's Amrith Ramkumar, the tech policy reporter for The Wall Street Journal in Washington. Ahead, Like Father, Like Son, Ellison Jr., and Weird Times at CBS.

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18:13Ben,

18:17go ahead, give me your full name and tell me what you do. Name is Benjamin Smith. Sorry, I got my name wrong. Huh. Good start. My name is Ben Smith. I'm the editor-in-chief and co-founder of Semaphore. Oh, and I co-host the Mixed Signals podcast about media with Max Tani. So we're here today to talk about the Ellisons, possibly America's newest media barons. In the first half of the show, we talked about Larry Ellison and Oracle getting a stake in TikTok. But David Ellison, Larry's son, has also been getting some media properties. Yeah? Yeah, that's right. And in particular, the company that he created called Skydance has swallowed Paramount, sort of a big, older studio that also includes the old CBS assets, including CBS News.

19:07And so what we're going to do is restructure our business to run significantly more efficiently. And then we're really going to invest into our growth areas like studios and streamings and sports. The hot trend in the streaming business is bundling. And that's because, as you know, you have too many damn streaming apps. And so you're only going to have three and you can't have seven.

19:30And so it makes sense sort of commercially for them to combine. Right now, the company operates three independent streaming services on three separate stacks on multiple clouds. That is the most ineffective way to do it, and it is also the most expensive way to do it. Skydance, which purchased Paramount, is now looking to swallow an even bigger target. Warner Bros. Discovery, which is the old legendary Warner studio, which currently operates the Max app and also happens to own CNN. This is CNN Breaking News. Yeah, happens to own CNN. Talk about the stakes and importance of that. Well, in ordinary times, there was a sense that you don't want to go kind of combining all your news outlets under the same ownership because somebody could wield too much political power.

20:26And it would have been unlikely, I think, for the government to approve two broadcast networks like CNN and CBS combining under the same owners. Now, I think all bets are off, and there is a world where CBS's ownership now operates CNN as well. I should say, I mean, an important caveat here is that you, dear listener, are getting your news from a Vox podcast and may not have watched CBS News or CNN in a while. Like, these are struggling companies, and there is kind of an argument that you all need to, for any of them to survive, they all need to be crunched together, because the TV news business is pretty rough right now.

21:00What did David Ellison have to do to close the Paramount-CBS deal? Well, he won't say. But Donald Trump said that they made a deal under which he would air a bunch of PSAs for Trump administration initiatives. 16 million or maybe more than that in advertising. And he also, again, says this is not some part of a deal, but he did settle an absolutely ridiculous lawsuit from the Trump administration claiming that they had committed fraud by editing an interview with Kamala Harris in what turned out to be pretty innocuous ways on 60 Minutes. Tonight, a$16 million settlement. Paramount, the parent company of CBS, announcing it will pay President Trump's legal fees and give money to his future presidential library.

21:45I think there's a lot of fear over there. Fear of losing their job. Fear of what's happening to the country. Fear of losing the First Amendment. But CBS paid up for, you know, I think the glory of what will ultimately be like the CBS, Mark Zuckerberg, Jeff Bezos presidential library to get the administration off their back. And it was successful. Do we know what David Ellison's political leanings are? No. You know, I think there, it's been reported that he is a big supporter of Israel and a big fan of Barry Weiss, a conservative columnist who left the New York Times in a kind of like anti-woke backlash.

22:31I'm Barry Weiss. And today, an introduction to America's cultural revolution. So I think it's safe to say that those are roughly his politics. But he's not, like, fundamentally a political character. I think people often, people like us, sort of pointy-headed East Coast news types, can kind of misinterpret people on the West Coast as being primarily about politics. David Ellison's life has been primarily about making, like, big, stupid movies, which I personally love. Like the Jack Reacher movies, which are great. Remember, you wanted this. He did the Top Gun remake. I give you Captain Pete Mitchell.

23:11Call sign Maverick. Big poppy action movies that some have bombed, but more recently some have been really successful. And that's fundamentally the reason that you go and try to acquire a company like Paramount. And people said of CBS, which also, by the way, CBS is mostly primetime entertainment. You know, the news division of CBS for the executives, I think, represented something like 4 % of the revenue and 95 % of the headaches. So that's kind of how these folks see news. Let's talk about Barry Weiss, because we're hearing news that David Ellison might want a sort of serious role for her at CBS.

23:47You mentioned her leaving The New York Times. What's her background and where does she sit today in all of this? In the first Trump term, Barry was a young editor and writer in the opinion page of The Wall Street Journal. And I think a friend and ally of Brett Stevens, another opinion writer there, who left the journal when the journal just basically made its peace with Donald Trump and both went to The New York Times. And Barry was an editor on The Opinion Page and also wrote sometimes about mostly about kind of emerging intellectual trends on the center right. And she was, as the Times, like I think basically every social institution in the U.S., or many of them, or corporate institutions in the U.S., went through these spasms of conversation around racial justice and around the limits of speech and the role of media, particularly in the summer of 2020.