Netflix v Paramount: Trump wades into Warner Bros battle – The Latest

0:00This is The Guardian.

0:13I have to see what percentage of market they have. We have to see the Netflix percentage of market paramount. I mean, none of them are particularly great friends, have they? He said he'll be involved, so we can assume that he and his shadow will really loom over this entire process. It is telling that both in Hollywood and in Washington, there has been quite heavy resistance to a deal actually involving either side. How Donald Trump could be involved in a Hollywood multi-billion dollar bidding war and what it means for your TV viewing. From The Guardian's today in Focus, this is The Latest with me, Lucy Hoth.

0:52Joining me is Callum Jones, Deputy Business Editor at The Guardian. Hi Callum, nice to have you with us. Hi, nice to be here. So, Callum, let's look at what happened just before the weekend when one of the biggest deals in Hollywood history really looked like it was on the brink of being wrapped up. Netflix had agreed to spend over 80 billion US dollars to buy Warner Brothers Discovery, which owns Warner Brothers Studios, which owns so much of what we watch and love on TV, Friends, Game of Thrones, HBO Max and Succession, etc. But the picture is now much more complicated. There's been a hostile bid to last night.

1:30Talk me through what's happened. So you have to wind back to the start of this summer when David Ellison finally bought Paramount Global with the backing of his dad, Larry, who's one of the richest men in the world. Yeah, a tech billionaire founder of Oracle has briefly overtaken Elon Musk as one of the richest men in the world. That's right, yeah. And there were a ton of questions about what the Ellisons would do with Paramount and all its assets. the US TV network CBS, Channel 5 in the UK, and of course the Paramount Pictures movie studios, all those questions still remain. But it quickly became clear that they were also interested in another big Hollywood prize, the Warner Bros.

2:11Studios. And Warner Bros. is owned by Warner Brothers Discovery, which is another big legacy media conglomerate, which has struggled for the past few years. And his bosses really saw a lot of interest from the likes of the Ellisons and decided to have this private bidding process, which was ultimately, like you say, won by Netflix on Friday. So we know that there has been this private bidding war going on for some time now, but Warner Bros decided to settle with Netflix for a deal that was worth just over 80 billion and would involve keeping hold of the prestige parts of the business, but selling off the old cable news channels and crucially which will come to CNN the news channel but what Paramount's come forward with is a cash offer to buy all parts of the business.

3:01That's right yeah the Ellisons weren't prepared to give up they see the way they see it they teed this deal up and they wanted to take they still want they still want the whole business so they went straight to the shareholders of Warner Brothers Discovery over the heads of the board, produced this hostile bid worth$108 billion for the entire company. And now they're making their case to investors in the company. Yeah, and I just want to talk for a second about why this matters, because it all sounds a bit sort of boardroom mergers and acquisitions, kind of succession episode type stuff. But this is about plurality, isn't it?

3:40It's about what we're watching on our screens. It's about two huge media companies trying to buy out a slightly smaller media company, which has huge implications. I mean, the US Senator Elizabeth Warren has called this an anti-monopoly nightmare. Talk me through some of the situations that we can see from either eventuality, whether this is won by Netflix or by Paramount. Whoever wins a deal this big inevitably will affect a lot of people. When you have, like you say, consolidation of this scale between two massive players in Hollywood, be it Warner Brothers and Paramount or Warner Brothers and Netflix.

4:14It has a huge impact on the people who make movies and TV shows. Pairing two big streaming platforms would have a big impact on people who watch movies and TV shows, too. And also, like you said earlier, potentially combining two of the biggest global newsrooms, so that would be CNN and CBS, would have a big impact on people who either make or consume news. Absolutely. And we should talk about the Paramount deal, which has some additional concerns, shall we say, because of who is behind it. It's being funded by a group of sovereign wealth funds. And there is also involvement from one Jared Kushner, who is, of course, Donald Trump's son-in-law.

4:56That's right. If you read the press release that landed on Monday morning in everyone's inboxes, it was really presented as an offer from Paramount with backing from the Ellisons, one of the richest families in the world. But then the regulatory filing started to come through and the small print revealed they'd amassed a pretty fascinating group of backers to fund this bid. It includes Affinity Partners, the private equity fund of Jared Kushner, Donald Trump's son-in-law, like you say. It includes Saudi Arabia's public investment fund. It includes the Qatar Investment Authority. this really interesting group of investors and funders behind the deal and really making it possible for the Ellisons right now.

5:37What do we know about how Donald Trump may or may not have been involved in this? We know that he's been talking to executives from both companies, but his messaging has been a bit confusing to say the least on what he would like to see happen. We know what he said, and he said he'll be involved. So we can assume that he and his shadow will really loom over this entire process. Both sides have tried to engage him. I think it's safe to say the Ellisons have tried a bit harder. They've been working since they first got hold of Paramount. And we know that the Netflix co-CEO Ted Sarandos made sure to meet Trump around the timing of the announcement of their deal for Warner Brothers last week.

6:18So I think it's safe to say that he will be very involved in this whole process and make sure that he's across every detail. And for CNN, I mean, we're reading that there was some relief in CNN newsrooms when the deal was agreed with Netflix, not least because CNN has given the opportunity to be spun off on its own and to be set up as its own company in whatever form that might take. But under the Paramount deal, it would be folded in under ownership of David Ellison. Of course, Paramount owning CBS, as you said earlier, which has been taken over by Trump approved executive Barry Weiss. So there's going to be a lot of anxiety within CNN about what that means for the US news landscape, isn't there?

7:01And a fair bit of anxiety inside CBS, too. I think there were three days over this weekend when I think staffers in both newsrooms breathed a bit of a sigh of relief. They looked at the Netflix deal. They thought, OK, maybe the Ellisons won't get hold of CNN. Maybe CNN could continue broadly as is in this spun off entity from Warner Brothers Discovery. and then of course the paramount bid was announced on Monday morning and so which leveled this whole new layer of anxiety over the whole process for for staffers in both newsrooms who are worried about what what a merger between the two would look like what uh what what being run by the Ellisons would look like if you're CNN and there are a lot there is a lot of uncertainty and a lot of unknowns right now that people inside those operations are grappling with Yeah, so, you know, we're facing a lot of political pushback.

7:54We're facing much jitteriness from the creative industries about the implication on, you know, mid-budget films, for example, on adult dramas. But also there's pushback from trade unions. So we're facing months of uncertainty, of continued limbo, aren't we, given the scale of a deal of this size? Of course, yeah. I think one of the key things that we've just discussed is the looming spectre of Donald Trump and which side he will back and who he will choose to support over the coming weeks and months. But it is telling that both in Hollywood and in Washington, there has been quite heavy resistance to a deal actually involving either side, be it ultimately won by Netflix, be it ultimately won by Paramount.

8:43This idea of such a significant consolidation in Hollywood is causing a lot of concern, whether you're an operator in Hollywood, a producer, a director or one of the unions, or actually whether you're in Washington and you really care about monopolies and whether you care about competitive markets. Thank you so much for your time. Thank you.

9:36This is The Guardian.