Front Burner - The politics of the Warner Bros. bidding war

Episode Date: December 10, 2025

Two of the biggest media companies in the world are going to war over Warner Bros. Discovery, a massive media conglomerate that owns a historic Hollywood studio, as well as the likes of HBO and CNN. This week, Paramount put in a hostile all-cash takeover bid for Warner Brothers worth more than $108 billion. This followed Netflix’s announcement a few days earlier that they had won a bid to buy the company’s film, studio and streaming divisions, which alarmed many people in the industry. The Paramount bid is led by big time MAGA donor Larry Ellison and is backed by U.S President Trump’s son-in-law, Jared Kushner. Trump has already signaled he will be involved in whatever deal comes through. Lucas Shaw, who writes the Screentime newsletter for Bloomberg, talks us through what this means for media concentration, influence over the news and the future of the entertainment industry. For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

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Stream your playlist, scroll, text, navigate, and video call home, all without watching your phone bill explode. Plus, Aero Lo works in over 200 destinations and is trusted by over 20 million travelers. So, if you have an international trip, download the AeroA app or visit Aero.com. That's A-I-R-A-L-O-com, and use the code Roamsmart for 15% off your first ESIM. Terms apply. This is a CBC podcast. Hi, everyone. I'm Jamie Poisson. So this week, two of the biggest media companies in the world are going to war over Warner

Brothers Discovery, a historic Hollywood studio that also owns the likes of HBO and CNN. On Monday, in a move that feels straight out of the show succession, Paramount put in a hostile all-cash takeover bid for Warner Brothers worth more than $108 billion. That sent shockwaves through an industry, already reeling from Netflix, announcing that it had won a bid to buy Warner Brothers film, studio, and streaming divisions. All of this raises a ton of questions around media concentration, influence over the news and the future of the entertainment industry. The Paramount bid is led to.

by big-time mega-donor Larry Ellison and is backed by Trump's son-in-law, Jared Kushner. And the president has already signaled that he'll be involved in whatever deal comes through. So today, I am joined by Lucas Shaw to talk through all of this. He reports on the arts and entertainment industry for Bloomberg News. Lucas, hey, it's great to have you. Yeah, thanks for having me. Good to be here. So before Paramount came in with their hostile takeover bid on Monday, Netflix had already announced that it would be acquiring Warner Brothers Discovery. So let's start there, kind of at the beginning, I guess. The Netflix deal would combine two of the biggest streaming platforms with one of the largest traditional movie and television studios. And this came after Warner Brothers rebuffed multiple offers from Paramount. Still, we saw a number of pieces online saying that this could be the death of Hollywood as we know it. And so why the blowback to the Netflix deal?

Yeah. So I think there were two levels of resistance in the entertainment business. One is on the idea of Warner Brothers being sold at all. The industry had already seen Disney swallow most of the entertainment assets owned by Fox, which resulted in the elimination of one of the major Hollywood studios. Warner Brothers being sold again, whether it was to Paramount to Comcast or Netflix, I think it was seen as once again an elimination of another studio. So there were six major studios, suddenly you'd be down to four. People don't like that. Competition is good if you're a seller, if you're a producer. And I think more than anything can, even though the TV business at Warner Brothers is much bigger than the film business, the film business just looms large and everyone's mind because of its history and its cultural significance. And so a feeling that the movie business, losing another movie studio would be bad for theaters, which have really struggled, especially since the pandemic. I think you, Netflix added it. another layer of concern. Because Netflix is still seen as something of an outsider,

you know, it came from Silicon Valley. It has caused a lot of change and turmoil in the entertainment business over the last 10 or 15 years. Now, I would argue that it created a great product. People liked it. And, you know, there are ways in which the business changed that may not have been good, but it was going to change anyways. And it was incumbent upon these other companies to respond to it and they've largely failed. But that doesn't, that argument, even if it's true, doesn't really, like, feel great to the average writer who's having a harder time getting a job right now. I mean, we've gone through these cycles where there was a kind of a decade-long boom in output and in just every year more shows being made. In the last two or three years, there's been a

real retrenchment. And so, and a lot of people blame Netflix, I think somewhat unfairly, but to have this company that kind of caused all this carnage in the industry, then going to swallow one of the great studios. It just makes people very nervous, especially on the movie front, because Netflix doesn't really release its movies and theaters. And just on this theater point, if we could just dig into it a little bit more. Last week, there was this letter, right, signed by a bunch of anonymous Hollywood A-listers that got sent to Congress speaking out against the Netflix Warner Bros. Acquisition saying that it would effectively hold a noose around the theatrical market. And just tell me a little bit more about why people are lamenting that so much.

Well, so Netflix produces and releases more original movies than any company in the U.S. at least. I would say the world, but there may be some companies in India or Japan or something like that that do more. But over its history, it has never improved. the model for films that the traditional studios have, which is you put it in theaters for several weeks, if not months, and it's not available for viewing at home until after that, and it's certainly not available to stream, right? Even studios that have pretty aggressive windows, which is the kind of industry jargon for that gap between the theaters and being made available at home, like Universal, they make it available for rent and purchase at a certain

point, but you still usually can't stream it at a minimum for like a month and a half. Netflix is not interested in that because their primary business is their streaming service. And so they want to put movies in theaters and on streaming at the same time. They sometimes give movies sort of a token release in theaters, either to placate a filmmaker or to have a movie contend for awards. But they haven't embraced that traditional model. And so if they were to kind of swallow Warner Brothers and have all these big movies being made available so soon afterwards, there's a lot of concern about what that would mean for theaters. Now, it's important to note that Netflix initially promised Warner Brothers that it would continue to release its movies in theaters.

Then on a call with the press last week, Ted Sarandas, the co-CEO, sort of intimated that while they would put them in theaters, that that lag would be pretty short, right? A few weeks. And then he kind of walked that back again when there was a blowback to those comments. Because it's not just those anonymous producers. It's been all, you know, the major theater chains, labor use. A lot of people have been worried about what Netflix will do to the movie business. So Warner Brothers, as you mentioned, is the studio with all this cultural cachet.

Peek under the title of Warner Brothers Discovery and find some of the world's most iconic characters. What's up, Doc? From classics like the Wizard of Oz. To a Harry Potter franchise worth $10 billion. For the last hundred years, it has acquired some of the biggest franchises in film history. We're talking about like Harry Potter, the Lord of the Rings. I can't carry it for you. But I can't carry you.

The DC universe. Why so serious? The Matrix. You take the blue pill. The story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill. You stay in Wonderland.

And I show you how deep the rabbit hole goes. And then a lot of great old movies like Casablanca is looking at you, kid. Yeah. And then also you have HBO, right? Yeah. Game of Thrones, The Wire, Sopranos. Are you in the mafia? Am I in the what?

Anyways, we could go on. But why has the studio been essentially up for sale for the last little while to begin with? Well, yeah, it's been sold three. This would be the third time in the last decade because of all the, you know, because essentially the streaming revolution in the entertainment business. So it was previously HBO Warner Brothers and these cable networks like CNN and TV, CNN and TV, were the foundation of a company called Time Warner. And Time Warner decided to sell to AT&T about a decade ago

because they were looking at the competition and saying, you know, Netflix has really sort of outstripped us now in streaming. We're not sure what the future of all of our cable networks looks like because that's where most of the profit for the company came from. And AT&T, you know, one of the big phone companies in the U.S. had a vision for making the HBO streaming service more competitive with Netflix and also using that to help their phone business. That deal got delayed by a couple of years because of a regulatory review because President Trump was trying to get in the way of basically was

mad at CNN and so wanted to make their life miserable. And since then, it's been a few different regimes and none of them have really cracked the streaming thing. The cable networks have gotten weaker and weaker. And so even though this current deal would be, be very lucrative for a lot of shareholders. The share price of Warner Brothers discovery has been in free fall for the last few years. When the Netflix deal was announced last week, a few media watchers called it the end of the streaming wars. I just want to read you this quote from a ringer piece that argues that Netflix has won the streaming wars for some time, but this would make it an annihilation. Quote, Netflix has grown into the

entertainment industry's biggest black hole. Everything else eventually get sucked into it until its own light can escape and all you see is Netflix. Like, what do you make of that? Do you think it's overblown? Is this the end of the streaming wars if the Netflix deal is successful? I have been a, I guess, a rare voice of dissent or skepticism when people say that Netflix has won the streaming wars. It is undeniably one of, if not the,

leading streaming service. But I think people need to step back a little bit when you look at competition for time. And I'm not trying to do the like Netflix thing where they compare themselves to sleep or reading or whatever, but just in video entertainment. I mean, people spend more time watching YouTube than they do Netflix. Now, in the specifically in the professional Hollywood context, Netflix is the biggest. It's twice the size of Disney. And HBO would give it a huge, huge advantage.

And so I do think that it would first. their lead and make it much more difficult for anyone to catch up because the advantage that all these other companies have had on Netflix all this time has been they have a library of all these great shows and movies that they can put on their service and exploit to remake and all of that and they would lose that if Netflix did this deal. The only flip side to that, I guess I'd say, is that Netflix has never done a deal of this size. Big media deals have a pretty poor track record and there is a world in which this could actually end badly for Netflix. Yeah, just elaborate for me a little bit on how.

Well, I guess the honest answer is I don't know because it'd be seeing into the future. But Netflix has a very clearly defined culture. You bring in 10, 15,000 people from another company, kind of a traditional Hollywood company. It can change the way that you do business. You get bigger. You get more bloated. One of the things that's been very impressive about Netflix in its history is even as it's gotten bigger and more powerful, it has been able to move pretty quickly.

You know, when they had, they ran into problems about three plus years ago where their growth stopped. And within 12 months, they had an advertising business and they had started to really crack down on password sharing. I think those are initiatives that at a lot of other media companies would have taken like three years. And so the bigger they get, the harder it is for them to move. I'm a bit of a spontaneous traveler, and I don't always know where I'm going to be or how long I'm going to be there. And that's where Aerolo comes in. An e-sim from Aerolo allows me to get internet coverage, whether I need it for a specific country, an entire region, or globally. It's easy to set up and I can top up as I go without having to swap out SIM cards.

It's the perfect way for me to stay connected. Just download the Aeroa app. Pick your destination E-Sim, including plan length and data amount. install and you're connected the moment you land. No surprise roaming fees, no airport kiosks, or sketchy public Wi-Fi. Instead, just pay for the data you need. Stream your playlist, scroll, text, navigate, and video call home, all without watching your phone bill explode.

Plus, AeroLo works in over 200 destinations and is trusted by over 20 million travelers. So if you have an international trip, download the AeroA app or visit Aero.com. That's A-I-R-A-L-O-com and use the code Roam Smart for 15% off your first ESIM. Terms apply. Is your home ready for the next big snowstorm? You can take action to help protect your home from extreme weather. Discover prevention tips that can help you be climate ready at keep it intact.ca. Let's do the Paramount Skydance hostile takeover. The $108 billion hostile bid to buy

all of Warner Brothers. Just tell me a little bit about what was announced this week and then the reaction to that news. Well, Paramount was laying the groundwork for this last week when it sent letters to Warner Brothers Discovery and their lawyers and the board

basically saying you're running an unfair process and that was a clear indication that they thought that Netflix was going to win but they didn't think it was right. For now, they have essentially reiterated their offer. You know, they, they submit the same bid for the most part that they had before, $30 a share. Their argument is that it's better than Netflix is. Warner Brothers Discovery feels differently.

A lot of that hinges on the value assigned to the cable networks that Paramount would buy and that Netflix would not. It's like hostile-ish, right? They can always pull it back. I don't think they've started to buy up shares in Warner Brothers Discovery yet, for example. example, they are trying to curry favor with the board and with shareholders and hope that maybe there's some changes in the regulatory environment where President Trump weighs in one way or another. You know, Netflix's share prices have been going down. Its shareholders aren't that

excited about this deal. That might force Netflix to reconsider a little bit. So there's a world in which, you know, I guess they get the board of Warner Brothers to change their mind with this offer. I think the more likely scenario is that they have to come back and offer more money, but this was just sort of a stopgap before they get there. And if the industry was worried about the Netflix merger, how are they feeling about this one? Well, the industry was worried about the Paramount merger or the prospect of a Paramount deal before because Paramount for most of the process was seen as the favorite, right? They initiated this by offering some unsolicited bids.

Even in the days before, most people were still thinking it was going to be Paramount. And people were worried for similar but slightly different reasons from Netflix. You know, you think about Paramount has a lot of overlap with Warner Brothers Discovery. So they both, in a sense, they're structured in similar ways. They both own a lot of cable networks, which is how they make most of their money. They both own kind of third tier streaming services. and they both own movie studios. And so, you know, Paramount has said there would be $6 billion in cost synergies.

That is a lot of people getting fired. And it would still result in, even though Paramount says that they're going to operate Warner Brothers and Paramount as different studios, it would likely result in there being just one studio long-term, kind of like with Fox and Disney. So there was great concern about job losses, about the loss of a studio. You don't have the same concern about Paramount. out in regards to it being sort of like a Silicon Valley interloper that caused all this change. You do have concern about the kind of political affiliations of the Ellisons and

their seeming proximity to the president and the fact that some of their, a lot of their offer involves Middle Eastern money. I mean, none of them are particularly great friends in mind. You know, I just, I want to do what's right. Right. And just tell me a little bit more about that. Larry and David Ellison. This deal would also include CNN. Jared Kushner's fund is involved in this. Yeah. Yeah, so Larry Allison, you know, one of the richest men in the world, co-founder of Oracle, this enterprise software company, he and his son David would be, are the controlling shareholders in Paramount, would be the controlling shareholders in this new combined company. Larry was long, sort of one of the

rare Silicon Valley billionaires to be kind of an outspoken conservative. That is now far more common in that industry. And so he has a pretty good relationship with President Trump. And they, according to some reports, I haven't confirmed this one myself, like they have made assurances about how they would change the programming at CNN, certain people they might fire and hire. They have already acquired this website, the free press, and put a woman named Barry Weiss, who's a kind of a conservative political pundit in charge of CBS News, which has made people very nervous. And then, yes, as part of the bid, a large chunk of the financing comes from sovereign wealth funds of three different Middle Eastern countries, including Saudi Arabia. And then

there is also money from Jared Kushner, the president's son-in-law. You know, when asked about it, President Trump, said, I don't know. I've never spoken to him. He's really trying to work on Gaza. His primary thing is Gaza. sensitive to the fact that all of that, all those kind of financial ties might be worrisome. Paramount has insisted that all of those entities, the Middle Eastern funds as well as Jared Kushner, have surrendered any governance rights, which means that they would not, you know, have board seats or anything like that. You mentioned earlier that people are concerned about the regulatory environment. And on Sunday, Trump weighed in saying they have a very big market share.

and when they have Warner Brothers, you know, that chair goes up a lot. So I don't know. That's going to be for some economists to tell and also, and I'll be involved in that decision too. The president says he'll be part of the vetting process here. What would his role be traditionally in a deal like this? Like how much of a thumb could he potentially put on the scale here? I mean, traditionally the president would not have a role in vetting a major merger. It's just not their job.

There are federal agencies that are technically part of the executive branch that would, like the Department of Justice. When it comes to antitrust, which is sort of the primary area of concern here, at least in the U.S., that is shared between the Department of Justice and the Federal Trade Commission, both of which, again, are executive agencies or parts of that branch, but usually none. But President Trump, as I think most listeners know, doesn't really govern in the traditional ways of a president. And it seems like his opinion tends to sway the behavior, in particular of the Department of Justice. So I think his opinion will matter quite a bit. I think, and right now, he seems to be keeping his options open, right? He has been, he was complimentary towards Netflix co-CEo, Ted Sarandoz, and towards the company, while saying that the deal would need to be studied.

He has been complimentary towards the Ellison's in public, but also said that that deal would need to be examined. And so he's in a situation that he probably loves right now where, where assuming that one of these deals gets to the regulatory stage, you know, he gets to play a little bit of Kingmaker where he's going to use his, his power and authority to try to. influence the behaviors of these two very powerful companies. I saw The Guardian was reporting that White House officials have discussed their preference for Paramount to win the bid internally, and that, like, a White House official was discussing accessing certain CNN hosts with Ellison, which is, you know, highly unusual. Last week, actress and activist Jane Fonda wrote this op-ed, ahead of Netflix's announcement. In it, she said, we don't know yet which company will buy Warner Brothers discovery, but we do know what's at stake.

Our jobs are creative freedom and the constitutional promise that every American has the right to speak, report, criticize, satirize, investigate, and imagine without fear. And in a media landscape where more consolidation and another mega merger always seems to be around the corner, Is there any hope for like a more varied competitive and free industry or do you think it's over? I don't think it's over. I mean, the problem with the Jane Fonda op-ed is she is making the case, which I understand a lot of people in the entertainment business feel or share, that it shouldn't be sold at all, right? And I agree that if I were a producer, I would rather there be more buyers, more outlets. I don't really know what you're supposed to tell the board or shareholders of a company if someone is coming around and offering them a lot of money to buy it.

It's sort of their fiduciary duty to do that. So I don't, I guess I don't know that the sale of Warner Brothers represents the demise of the entertainment business, I think what we're seeing and what is hard for a lot of people who work in the industry to accept is that the traditional film and television business kind of share of the culture business is shrinking, right? It has more competition from gaming, from social media, from all these other places. And if your industry is kind of flat to down, what tends to happen is it consolidates because it's just the easiest way for the players to keep growing

and to survive. Is there some way that like we could wave a magic wand and have there be 10, 15, 20 thriving independent companies? That would be really interesting to see. But I guess what I would, I would like to see for that to happen is like instead of producers lamenting what is happening and trying to stop it, I'd like to see them kind of propose a real alternative and say this is what we could do to make the industry more vibrant in the way that we want it to be. That feels like a good place for us to end. Lucas, this is great. Thank you so much. Yeah, thanks for having me. All right, that's all for today. I'm Jamie Poisson. Thanks so much for listening.

talk to you tomorrow.