The bidding war for Warner Bros. Discovery is over…for now. Netflix shocked Hollywood by announcing a deal to acquire the storied studio and its crown jewel, HBO Max, beating out a massive $108 billion hostile bid from Paramount.
But in this episode, we argue that the $87 billion mega-deal is nothing more than a desperate move by Hollywood to consolidate power. David Zaslav’s WBD was a "fiasco," and the merger of "prestige" content like Succession with Netflix's data-driven content has the industry freaking out. The real threat to Hollywood isn't a rival studio, but Silicon Valley. We explain why Netflix and Paramount are fighting each other while the true watch time beast is YouTube and TikTok.
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You might not think of YouTube as competition for Netflix and
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and HBO and and Paramount and stuff, but the fact is, when it
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comes to watch time, Silicon Valley is just dominating.
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Netflix wants to buy Warner Brothers Discovery, which would
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create one of the most consolidated, singularly
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powerful media companies in the world.
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We're here On the Newcomer podcast.
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We have Tom Doton who lived in Hollywood.
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Your Twitter handle I believe is still city of a town, which is
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some LA reference. I I don't.
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Even I never want to explain it, but sure as far as people.
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Were you're like a page? Is that the right on AGI?
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Joe, I think you got it. Fire was an assistant.
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Hollywood job. I was an assistant.
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I worked on movie sets. I I did the whole thing.
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I. Want to be.
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Screenwriter I drove people around.
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I never put this in my official bio, but I once held an HVAC
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event over David Hasselhoff's head during a taping of a
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unaired pilot episode of American Top Gear.
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So Tom's spent time in Hollywood and now is a business reporter.
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So who who is more expert to talk about this deal than Tom?
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Then you have Madeline and I, who we cover Silicon Valley.
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I don't understand Hollywood. Madeline, you, you just spend
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much time in LA. I have a very limited
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understanding of the business of Hollywood.
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My my film knowledge extends beyond just, you know, my high
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school and college filmmaking prowess.
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Alright. You're a theater kid.
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That's your Yeah, you're a, you're a movie person.
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You're like, kind of like a New York hipster A-24 type, right?
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Yeah, I'm a we see the glasses, Madeleine.
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We know I I say actually I'm more of a neon type.
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Thank you. But but yes, I am interested in
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the world of movies, however it's not been my Forte on
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reporting. However this deal we love when
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all of our worlds can collide in one mega conglomerate bidding
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war. A last succession.
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I feel like most most people following along have the
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context, but you know, we all write for newcomer, we host this
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podcast together. We're technology journalists,
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but sometimes the things that happen in Hollywood are so big
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and have the potential to change the technology world.
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And Netflix is sort of a technology company that we are
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going to spend some time giving you sort of the tech world
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business angle on Warner Brothers Discovery.
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Tom, you wrote a whole piece about it for Newcomer.
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Give us some of the facts here or what you know, it's not just
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Netflix. Obviously there's already this
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competing offer from Paramount. Just give us some of the fast
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facts on what's going on. So everyone's been talking about
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this deal, basically the fight between Netflix and now
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Paramount over who's going to buy this asset.
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And what I guess I kept thinking about in writing the story was
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like, they've all lost. You know, there's no good
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outcome for Hollywood. And the real beast that they're
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all fighting against isn't but isn't among each other.
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It's YouTube. And you might not think of
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YouTube as competition for Netflix and and HBO and and
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Paramount and stuff, but the fact is when it comes to watch
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time, Silicon Valley is just dominating right now.
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They dominate on television. They obviously dominate on your
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phones. And I am very pessimistic about
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the future of high quality content when the game is
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increasingly about watch time on television.
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I don't know how you guys feel about like generally, like what?
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What do you guys spend most of your time watching in your kind
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of consumption era? Like what?
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What takes up most of your like, waking hours of entertainment?
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Tick tock number. It's tick tock.
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It's tick tock. And YouTube, I would say take up
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the most time for me. We put YouTube on the TV, on our
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smart TV. But YouTube has, you know,
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creators with informative documentaries.
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And I watch all of those historical documentaries about
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like the Roman Empire meme core stuff.
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And I watch like political explainers and fascinating
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recaps of podcasts and podcasts on.
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On the big screen, like you just sit back on the couch and watch
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like. I don't watch a lot of YouTube,
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like I don't I don't understand it personally.
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Like I listen to podcasts like, but it's just like if I'm
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consuming podcasts, I want to be out and about.
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Like, you know, I don't know that I'm.
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When YouTube absorbs the entire Western media sphere, you'll
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watch more YouTube. Well, I was just gonna say
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you're gonna watch more because Esther's just gonna be like
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cranking that shit constantly. Like she's gonna be all about
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Coco Melon. My 2 month.
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Kid baby content and children's TV content.
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Children's TV doesn't really exist anymore.
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It's entirely YouTube. That's another big piece of the
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market too. So they're kind of taking the
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the meta, you know, we're not a monopoly because TikTok exists
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argument here. And I think that's a fair
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comparison. I think that's a fair take.
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Yeah, the, what's interesting, I guess from the, the media side
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of things you're seeing, you know, this is really a, a great
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cycle for media reporters. There's all these scoops and
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fascinating stories about, you know, David Ellison went to
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Trump and begged for, you know, his, you know, basically begging
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him for, for his sign off. And, and Larry Ellison met with
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him too, and, and, and Ted Sarandos all went to Trump.
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So the political angle for it, which media reporters don't
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always get to, you know, indulge in, is like very at the
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forefront of this whole thing. And to me, it's kind of like the
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last story of media. It's sort of like the last
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studio that really is in play that's going to be some sort of
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a, you know, football passed around, you know, the the
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various players. And it's kind of, I don't know,
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I'm very negative on media reporting.
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And generally I stopped doing it because I kind of saw.
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This whole thing, it's so funny to follow Hollywood from Silicon
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Valley because the companies are so small and, you know, it's
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like business reporters profess to cover things because of how
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valuable they are in the scale of their business.
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And it's like, there's no way the amount of obsession over
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Hollywood matches the actual value of the companies.
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Now, obviously, you know, they move the culture and they're
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hugely important just societally, which is I think
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part of the issue here that like we all come at it from a
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business story perspective and sort of like, oh, maximizing
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shareholder value, whatever. But really what matters is like
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Netflix doesn't seem like it has very good taste.
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Warner Brothers at least has some high quality movies.
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And here we're going to hand it over to like Netflix, which just
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is going to make more slop. And Netflix is the worst of both
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worlds, right? Like this deal.
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One take away is that it highlights that Netflix isn't
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like a real technology company. As you wrote in your piece,
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Netflix sort of shrugged off being a technology company and
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sort of realized that it was still in the movie business or
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in the small phones staring at your iPhone screen business.
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And so it's it's not like an interesting technology company
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where they're really betting on the future and yet they don't
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have like the taste of old Hollywood studios.
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And so they're just ruining movie theaters, the quality of
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the content, while not being an interesting, innovative company,
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the press. Release that Netflix had when
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they announced their, you know, agreement to acquire WBD.
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And they were talking about, like, how we're going to be
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combining our IP, and they're like HBO, which has produced
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some of the greatest stuff. Yeah.
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It's like the greatest shows in history combined with Netflix,
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which I know I remember was is it, which is to do Stranger
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Things one of them. Yeah.
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Stranger Things, which fine, I'll give it.
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I'll give that to. Most viewed shows of all time?
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Is it cake like where you see if it's a cake?
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I don't know if it's one of the most, but it is one of their
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shows. It's 1.
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Of it was a top show for a while.
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I'm sure it's a top show. Yeah, so they mentioned Stranger
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Things. I'll give them a pass on that.
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I wouldn't put in my top 50 best shows of all time, but sure,
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right. And then the next two were K
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Pop, Demon Hunters and Squid Games.
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And like, this is the press release.
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This is them championing 15 years of original content that
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granted they've had other. Demon hunters they didn't even
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shepherd right? Like they sort of bonded out
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from. Under they just acquired.
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I actually don't know. Yeah, I like K pop demon
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hunters. It did remind me how much their
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prestige brand has fallen and that they've become the mass
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commercial brand because if you remember, you know, 10 years ago
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when they went into television for the first time, they dropped
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with Orange is the New Black and House of Cards.
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Like those were their two first major shows and they were
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playing the. Prestige TV game Breaking Bad in
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some way. Sure, they had no hand at all in
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that. I mean, you know, everyone has
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their one Netflix show that they claim is like, oh, but that's
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the good one. That's the one I like.
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It's like Ozark or I don't know, the crown.
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I'm sure people have their one thing that they can claim is
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like, well, at least they have that.
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But by and large, in your press release, if you're championing
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Squid Games and K Pop demon hunters, you have not added to
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the artistic, you know, But this is how it's going.
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And this is where it is. And and like, honestly, even HBO
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hasn't. I mean, you can you can point to
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Succession in Veep as great shows, but in general my like
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snobby whatever film guy take is like television has generally
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been going downhill as a as a medium like kind of series.
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It just hasn't been that good. I find myself just watching
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movies more anyway. I'm so down.
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I like the series format. And also, this is where a
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culture is going among all of these apps, and it's all very
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sad to me. I love severance.
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Severance is great. That's Apple.
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TV though, yeah, I know he, but he just, he just attacked all of
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television. Yeah, fucking come at me.
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I think Severance is a fucking mediocre show.
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I think it had a fun first season.
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I think season 2 went like majorly downhill.
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And like, the Season 3 is going to prove me right that it's that
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it's that it's trash, that there's nothing really.
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Had a very artful ending, I thought.
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But then you see Apple got Vince Gilligan to do Pluribus for
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them, so it's all going to come back around and they'll be OK.
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Which I like. I mean, Vince Gilligan is is the
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GOAT and you know, he's also very anti AI, which I find
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funny. He's definitely holding out.
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And there's an interpretation of Pluribus as like an anti AI
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show. Like that's kind of the core
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theme of it is, is AI is sort of conformist.
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And oh, it's I mean, as I trash TV, I'm like, yeah, it's worth
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watching. It's good, but I'm not bullish
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on the medium. And I think, you know, Hollywood
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is when I was doing that piece for Vanity Fair that everyone
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should go read about AI in Hollywood.
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One of the most interesting things that a director told me,
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David Ayer, who did training day and and end of watch the kind of
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this gritty police procedural movies was like Hollywood 2
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decades ago. 3 decades ago was where all the smart people used
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to come, all the best lawyers, all the best business people.
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They wanted to come to the industry and like you can really
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judge like which industries have momentum by like where the Ivy
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League grads frankly want to go, you know, and and there was a
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time where if you were a smart guy or what smart, whatever, if
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you were an accomplished, you know, type a freak, you would
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want to come to Hollywood and you would want to be a studio
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chief or you'd want to be an agent or you'd want.
00:11:06
To Silicon Valley, maybe? I mean, I think I went to the
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financial industry for a while, like up 2008, the
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financialization, all those companies and that imploded and
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we found out that they were, you know, evil at their core.
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Then it was Silicon Valley now and, and clearly that's where
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the momentum is. And Hollywood is like third
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tier, 4th tier. I mean, no one really wants to
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work in the industry. And it's like that's, that's a
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real kind of, you know, death. I know I had a friend who I
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really wanted to be a movie producer and he's he's running a
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start up, but it's. Just where things go.
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And it makes me sad because I love movies and and like this is
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all very indicative of, you know, like the reason Succession
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was such a funny show was because it was all these people,
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you know, a family, obviously. But fighting over this like
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shrinking ice cube of an industry.
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It's like there's so much deterioration and degeneration
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of a business that it's just, you know, personal family peak
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and fights over. Totally.
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But is that not why we're intrigued by the Warner Brothers
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deal right now? Like it kind of captured that
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moment where it was like the intrigue of this family voices,
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you know, fighting over tooth and nail of controlling a dying
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industry with less power wielding and strong leaders for
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this next generation. Well, the, the family is the
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Ellisons, right? It's like Larry Ellison putting
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in the call with for Paramount to sort of step in the field and
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David Ellison to who's, you know, been all around a source
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of fascination in LA. Like why is why is David Ellison
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looming so large in LA? Because no one knows what to
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make of the guy. I mean, he was running Skydance.
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So the whole Ellison drama is really interesting because
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you've got David Ellison who ran Skydance, which was a fairly
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successful, as far as these things go, media company made
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the the Mission Impossible movies.
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And and then you have Megan Ellison, his sister, who ran
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this very high end, very high end, just like an independent
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kind of boutique media, indie media studio called Annapurna,
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which made, you know, pretty high quality movies.
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And then that goes bankrupt and Larry has to step in and save
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this thing and like backstop the whole operation.
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It's effectively dead. And then you have David Ellison,
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who's the more successful son, but he doesn't really make high
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quality shit. No one knows what to make about
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the guy. And then he comes in with a lot
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of money to buy Paramount, this story, but also dying studio.
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And of course, the political angle of it is always like, so
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fascinating in this era because he installs Barry Weiss to be
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the head of 60 Minutes, which is funny.
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Who says she's gonna be cutting edge by having people like Alan
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Dershowitz be on TV? And they have their Erica Kirk
00:13:46
long form interview coming up too, so.
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Right, right, and. It's just like.
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A new fox, A morning anchor to put on.
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She doesn't seem to have inspired ideas like I'm.
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I'm not convinced. There are no signs so far that
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she's really like, even if you were a conservative, that she's
00:14:03
really bringing in like the heat in terms of.
00:14:05
No, she's. Kind of doing a culturally
00:14:08
exciting Fox, at least, though they, they're so like cynical
00:14:13
that they keep it exciting. Like, I'm not convinced that she
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even has sort of the level of cynicism that is going to get
00:14:19
people to watch CBS. Yeah, I don't know what to make
00:14:23
of the Free Press as a as AI mean like as a business.
00:14:25
I think it was a very intelligent niche.
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Like you must appreciate it, Eric, as like.
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Oh yeah, for what it is, because it has like it's it's a very
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clear like, you know, sort of, I don't know, resistance, but anti
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woke sort of person, you know, not so Trump and they're all
00:14:41
wealthy. So it's like telling, to put it
00:14:43
succinctly, telling wealthy people what you already believe
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is a OK, like sign up for my sub stack and we'll tell you you
00:14:51
don't. You can be angry at these people
00:14:53
telling you to change and telling you that you should vote
00:14:56
against the Republicans because of fascism.
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Just you're fine. Keep doing what you're doing,
00:15:02
rich person. And like, yes, people love that
00:15:04
message and she is great at delivering it like 50 different
00:15:07
ways. Right, right.
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I mean, we got into a bit of a fight with Mike Solana about
00:15:12
this because I totally agree with you.
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They've built a company around comforting the wealthy and
00:15:17
powerful in their world, but. Don't forget that it has this
00:15:21
posture of being like iconoclast because also the right they want
00:15:25
to hear that too. They want to.
00:15:27
Know exactly. That's why we asked to come up
00:15:29
with cool people. She can't.
00:15:30
Exactly. No, that's 100% right.
00:15:32
Yeah. Right, right.
00:15:34
And so you can have based articles about, I don't know,
00:15:37
anti trans stuff or virginity and like fixating on things like
00:15:40
that. So right.
00:15:41
They're also a little edgy in the way people like Marc
00:15:43
Andreessen think that he's really, you know, disturbing
00:15:47
your your upsetting the dinner plate by, you know, saying stuff
00:15:51
that like might get you a little.
00:15:53
You know, anyway, we got to the Free Press because Barry Weiss
00:15:55
founded the Free Press. She's running CBS thanks to
00:15:59
David Ellison, son of Larry Ellison, who's running
00:16:01
Paramount, which owns CBS. Which speaks to how, you know,
00:16:06
if you get to pull the strings in Hollywood, you get you get to
00:16:10
make a lot of decisions about the news Americans consume if
00:16:13
they're still watching TV and not free, free thinkers out on
00:16:17
YouTube chasing their own. Content and this it's all very
00:16:22
appealing in the Trump era or at least you can position it as
00:16:24
like we're mainstream because we want to have debate within like
00:16:27
the acceptable 40 yards or whatever of of of what debate
00:16:31
is. And by the way if Paramount buys
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if they managed to win and and get Warner buzz discovery,
00:16:36
they're actually going to buy the cable channels, which
00:16:38
Netflix was not Netflix is just buying the streaming services
00:16:41
and movie studio from Warner's discovery.
00:16:43
But the sort of increased offer that Paramount is making is that
00:16:47
they're also going to buy all their like, dying cable
00:16:48
channels, which nobody wants, which we're going to be spun off
00:16:51
into a different company. And that means CNN.
00:16:54
And it, you know, however you feel about CNN as like a
00:16:57
important cultural news institution, it would be the
00:17:00
same thing. Like they're going to shift CNN
00:17:02
in the way that they're trying to supposedly shift 60 minutes
00:17:05
into this kind of centrist right wing center, right, you know,
00:17:08
media organization. And so that's of course, got
00:17:10
liberal Hollywood, you know, freaking out because it's, you
00:17:14
know, the Trump approved media deal that's going to change all
00:17:17
their cable channels. So it's really a nightmare for
00:17:20
these people. So Hollywood loses either either
00:17:22
way. It's just the direction of the
00:17:24
industry and from, like, as a Silicon Valley reporter now, you
00:17:29
know, doing what we do. Like, I don't want to be
00:17:33
condescending about it, but it's hard not to feel like they're,
00:17:36
yeah, they're fighting a battle that's already lost.
00:17:38
And you want to talk about numbers like we've we're, you
00:17:42
know, we're dealing with companies that are valued at
00:17:44
hundreds of billions of dollars at this point, you know,
00:17:47
anthropic and, and open AI. And what does actually turn out
00:17:51
to be is unclear, But the amount of money and power imbued into
00:17:56
like tech industry is like vastly greater than media.
00:18:00
And this is the result. What's sad about the whole
00:18:02
situation is that we desperately need good popular art, clearly,
00:18:10
like I I think there's something like not to be a normie
00:18:14
millennial, but like Andor, which is, you know, good, like
00:18:18
anti fascism programming in the sort of popular wrapping of a
00:18:24
Star Wars franchise. Like, I think that is important
00:18:29
content and stuff we need more of, you know, And so it's sad
00:18:35
that Hollywood's weak because Silicon Valley has no cultural
00:18:39
answer for where we should go as a country.
00:18:42
They just know it's like bad as they like fuck it up even more
00:18:46
by, you know, trying to introduce social features or
00:18:48
whatever into, into AI. And yeah.
00:18:53
And I don't know, it's, it's to me, Hollywood is, is such an
00:18:57
important American institution. And yeah, I don't think the
00:19:01
consolidation is going to be good for it.
00:19:04
Right. And and the approaches to
00:19:05
engagement, I don't want to like give Hollywood a free pass and
00:19:09
say like they're engaging us by making us think and feel good.
00:19:13
Like there's a lot of garbage, obviously that is appealing to
00:19:17
the masses that gets churned out regularly by Hollywood, but at
00:19:20
least there's like a core of art and, and, and an approach to
00:19:24
storytelling that comes from the engagement process from movie
00:19:27
studios in Hollywood that from the tech industry.
00:19:29
It's just like, it's a slot machine, it's a casino.
00:19:32
It's like, how can we, you know, eke out a couple more minutes of
00:19:35
attention from you by algorithmically pleasing you,
00:19:38
but challenging you in zero ways.
00:19:41
And, and, and basically like getting you addicted like a drug
00:19:45
to our products rather than like giving you some sort of like
00:19:49
cultural nourishment through storytelling that, that
00:19:52
Hollywood is, you know, built a business off of for 100 years.
00:19:56
It's a. Pretty and also, I mean, even
00:19:58
though it's been brutal after the strikes, Warner Brothers
00:20:02
just came out with the winning slate of popular and interesting
00:20:07
thematic movies like Sinners and 1 Battle after another, both box
00:20:11
office successes this year and. Both you know bets on a tour
00:20:17
creators to do complicated you know, stories for adults.
00:20:20
Is 1 battle. I didn't think 1 battle after
00:20:22
another was a huge success. Definitely not a huge success.
00:20:25
I think you could defend it. I mean, Sitters was a
00:20:27
blockbuster, but I mean for it's it was a big budget expense for
00:20:32
a movie that will earn them tons of prestige and awards and is
00:20:35
like on everyone's list of like culturally significant movies
00:20:38
this year. Definitely glad they spent the
00:20:39
money on it. I haven't seen it yet, but yeah,
00:20:42
seems like it's awesome. I need to see it.
00:20:45
Yeah, well, you would have missed your chance to see it in
00:20:48
a theater. Yeah.
00:20:49
But anyway, I just, it's, it's for a studio like Warner
00:20:52
Brothers to put out these hits this year and to have, you know,
00:20:57
this culturally setting the tone of culture this year.
00:21:00
You know, to have this be sort of the concluding story of their
00:21:04
journey. To your point, Tom does kind of
00:21:06
feel like we're at the end of something rather than the
00:21:08
beginning of something else. Last point on this Who owns
00:21:13
Warner Brothers Discovery in two years?
00:21:16
Well, it looks like the process is going to play out for the
00:21:19
next six or seven months. I think there was a really good
00:21:24
article in Semaphore that reported that Ellison and
00:21:30
Paramount has overplayed their hands in terms of our closeness
00:21:33
to Trump. And, like, there's a lot of
00:21:35
resentment on the part of the Trump circle sort of saying,
00:21:38
like, you think you can just get everything you want because, you
00:21:41
know, Larry talks to Trump every so often and you sort of have
00:21:43
curried favour and they may have actually blow up in their face.
00:21:46
But that's until Trump says something.
00:21:48
I feel like all this staff is saying that.
00:21:51
But then, if Larry does get Trump to to be convinced of
00:21:54
something, they'll change their tune.
00:21:57
I mean, Larry obviously is is an obsession of mine and and I
00:22:00
think he cares a lot more. Larry Ellison owning TikTok, I
00:22:06
mean, you want to talk about like where the power lies right
00:22:08
now. Like that's something Oracle is
00:22:10
on the path to being, you know, a, a significant owner of.
00:22:13
He cares a lot more about making sure Trump is continuing down
00:22:17
that path. I think that like making sure
00:22:18
his son's media play, you know, has slightly larger scale.
00:22:22
So I, you know, obviously it's an investment.
00:22:24
It's going to cost them a bunch of money.
00:22:26
But I think things like that are, are where the energy is for
00:22:29
for for Larry Ellison. I want to say I think it's going
00:22:33
to be Netflix. I, I think getting out in front
00:22:38
with the acquisition announcement, you know,
00:22:42
Paramount is launching A hostile bid.
00:22:44
How often do hostile bids work over the course of time?
00:22:47
I don't. I don't have the answer to that
00:22:48
but I think. And it's not a true hostile bid.
00:22:50
Matt Levine had an assessment of it.
00:22:52
It's like the ultimately, Warner Brothers Discovery still has to
00:22:56
come all around to the idea that it's a good YEAH proposal for it
00:23:01
to work. Right, right.
00:23:03
Yeah. And and I don't know how the the
00:23:04
shareholder structure works, you know, with those.
00:23:06
Guys, do you have a prediction? Oh, my prediction.
00:23:10
I mean, I, I don't want to keep it all consensus, but I think
00:23:13
it's going to be Netflix. I also think there's just, you
00:23:16
know, some I think they're further along.
00:23:19
The deal is announced. That seems like the teams are
00:23:21
working more closely together and just on on a personal level,
00:23:26
you know, I'll I'll take, I think there's a lot of public
00:23:30
that would take that ownership and have the money there and
00:23:33
it'd be solid and done. And we'll be sad about movie
00:23:35
theaters compared to, you know, whatever happens with the
00:23:38
Paramount financing. And if that gets done, too many
00:23:40
uncertainties. What do you think, Eric?
00:23:42
Well, I do. I do think Netflix wins either
00:23:44
way. I mean, they jam this whole
00:23:45
thing up and like undermine A competitor.
00:23:49
So I think it's savvy from Netflix, you know, never bet
00:23:53
against Trump corruption. I don't know those Netflix guys,
00:23:57
They're, they seem like Democrats to me.
00:23:59
They are. I know, yeah.
00:24:02
And they're, I don't know if they're willing to hold their
00:24:04
tongues on it. I mean, they have a pretty big,
00:24:06
the break up fees, like $5 billion.
00:24:08
So it would be brutal for Netflix to just have to pay
00:24:10
that. But yeah, I wonder I I'm I'm
00:24:14
betting against Netflix. Or in a lonely nation.
00:24:17
A lonely nation turns its eyes to Lena Khan, the ascendant Lena
00:24:21
Khan. I know.
00:24:24
Early Democratic dark horse, 2028.
00:24:26
She's, like, part of the Momdami trans transition team, right?
00:24:31
Yeah. Yeah.
00:24:32
We got to get Lena on the podcast.
00:24:33
I want to talk. To you.
00:24:35
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