The Daily - A New Media Empire

Episode Date: March 4, 2026

The bidding war between Paramount and Netflix over the acquisition of Warner Bros. Discovery appeared to come to a close last week, when Netflix backed out. The Times journalists Nicole Sperling, Lauren Hirsch and Jonathan Mahler discuss this Hollywood drama fit for the big screen, and why it could reshape our political and cultural landscape. Guest: Nicole Sperling, a New York Times reporter in Los Angeles, covering Hollywood and the streaming revolution. Lauren Hirsch, a New York Times reporter who covers the biggest stories on Wall Street, including mergers and acquisitions. Jonathan Mahler, a staff writer for The New York Times Magazine. Background reading:  Paramount raised its bid for Warner Bros. Discovery last week. Netflix lost Warner Bros., but maybe that’s a good thing. Photo: Ricardo Nagaoka for The New York Times For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.  Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify. You can also subscribe via your favorite podcast app here https://www.nytimes.com/activate-access/audio?source=podcatcher. For more podcasts and narrated articles, download The New York Times app at nytimes.com/app. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

From the New York Times, I'm Rachel Abrams, and this is The Daily. For months, a Hollywood drama has been unfolding that's fit for the big screen. It's a corporate love triangle, with a cast of characters, including a billionaire Scion, a tech giant, and the president of the United States. Now that story appears to be coming to a close, but with a twist ending. Today, my colleagues Nicole Spurling, Lauren Hirsch, and Jonathan Marce. Moller, explain why the merger between Paramount and Warner Brothers has left Hollywood in a state of shock and why the deal could reshape our political and cultural landscape. It's Wednesday, March 4th. Lauren, Nicole, Jonathan, good to have you here.

Thanks for having us. Good to be here. Happy to be here. So we have gathered the three of you here today because for months now, there has been this looming question over Hollywood about who was going to buy Warner Brothers. And we finally seem to have our answer. It's going to be paramount with the winning bid. Lauren, you've covered every inch of this corporate dealmaking so far. Nicole, you have been paying close attention to how Hollywood is reacting to all of this.

And Jonathan, your extensive reporting on the Murdox means that you are pretty well positioned to comment on what it means when billionaires come to town. So, Jonathan, I want to start with you. Can you explain why this deal matters? I mean, on the most basic level, this deal matters a ton. because we are talking about the creation of an enormous media empire here. We're talking about under one single roof, Paramount, CBS, HBO, Warner Brothers, CNN, Nickelodeon, MTV, and on and on and on. We are talking about a huge media company.

And we're also talking about Larry and David Ellison, who are new media power brokers. Larry, of course, was the founder of Oracle in the 70s, an original kind of legacy software company, you know, a billionaire many, many times over, who has in recent years gotten very close to the president to Donald Trump and his son David, who was at one point an aspiring actor, who then went on to become a film producer and financier, and then bought Paramount. And now with his new deal, Warner Brothers Discovery,

he's going to become one of the most powerful media moguls in the world almost overnight. And so the two of them together are now emerging as a new kind of father's son duo, really, you would have to say, kind of outstripping the influence of Rupert and Lachlan Murdoch. They are the new Murdox, but quite possibly a lot more powerful. So we're going to talk more about the Ellison's influence and how this deal positions them. But first, I want to talk a little bit about how this deal even came together. Lauren, the last time you were on the show, you were talking to us about this deal.

And it looked at the time like Netflix was going to be the winning bidder, right? And at the time, Paramount was in the middle of trying to swoop in and outbid them. So catch us up on what has happened since then. So I was on the show shortly after Warner Brothers announced that it had signed a deal with Netflix. Paramount at that point was saying to Warner Brothers board, we think you made a terrible decision. And so what they did was they did something called a hostile bid, which they went to Warner Brothers shareholders. It said, your board isn't doing right by you. We're giving you a better option.

it became so loud and so frankly compelling that the Warner Brothers board was forced to open a dialogue with Paramount. And they said to Netflix, we're going to talk with Paramount and see what they can get. Any time, you can come in and offer a higher bit if you want, but we're going to talk to them. And basically got to the point where the Paramount deal was so good in Warner Brothers mind, they'd made enough changes that they decided that Paramount's deal was now the better deal. They're like, not only did they give us everything we wanted, but they threw on a $7 billion fee that they would pay if regulators blocked it. So they said, all right, this is better than Netflix. Netflix, Paramount's better than you now.

What do you want to do? And Netflix said, actually, we're just going to walk away. And now we're here. And Lauren, how much did Paramount agree to buy Warner Brothers for? Paramount has agreed to buy Warner Brothers for 31 a share. And just to give a little bit of context, that is a hundred. and 50% premium to the share price of Warner Brothers before any of the M&A talk, which is nearly unheard of in deals.

And so just to translate a little bit here, I have read that what you just described, Lauren, adds up to a total purchase price of $11 billion. And a lot of the coverage has basically made it seem like that is way too much to pay. The Paramount has basically overspent on this asset. Nicole, can you just explain that a little bit? Like, why is that the criticism? Well, last spring, the stock was worth $8 a share. And Paramount, when it made its initial bid, offered $19 a share.

And it went up to 31. They also added a $2.8 billion breakup fee to send to Netflix for walking away from the deal. Wow. So that's a lot of money. The combined company is going to be carrying a debt load that's close to $80 billion, which means they're going to have a lot of debt on their books moving forward. Yes, they will have $200 million. subscribers globally, so they will be in a more effective place to compete against the big streaming

services, but it still cost a lot of money to get there. If we go back to 2019, which was the time when Disney bought Fox for $71 billion, and flash forward to this acquisition, yes, Warner Brothers is bigger than Fox, but this is seven years later, and the movie business is not in a healthier state than it was back then pre-COVID. Yeah, I mean, this is a business that is facing serious structural challenges. I mean, there's so much competition now for eyeballs, even beyond streaming, just, you know, TikTok and social media, and everyone's attention is so fragmented. And yet, the box office numbers are just consistently down every year.

So just, you know, a couple years ago, even a year ago, Warner Brothers Discovery seemed like it was a sinking ship. I mean, the head of the company, David Zaslov, was kind of doing everything in his power to cut costs to removing movies from the platform, removing episodes of Sesame Street from the platform so he wouldn't have to pay residuals. It was like a... Really penny pinching. Yes.

It was a kind of a desperate situation where he seemed to be basically throwing everything overboard. And it's just a staggering turnaround over the course of this negotiation. I mean, hearing you describe all of this, I'm wondering if there's actually a way to think about this as kind of like a huge coup for Netflix, because it sounds like they essentially forced a huge competitor to overpay for one asset and, as you said, also walk away with a $2.8 billion breakup fee. So, like, they got paid nearly $3 billion for not winning this bidding war. Yeah, they are certainly going to market it like that, particularly to their investors who

were very mad of them for looking at the deal to begin with. You know, they lost billions on their market cap as part of these efforts. Not only are they getting money from Paramount to walk away, but they're walking away from a company that's going to have about $80 billion in debt. Jonathan just walked through a lot of the challenges that Warner Brothers was facing, and a large part of those was it's dead load. When you have a lot of debt, you have to pay that debt. That makes the cost of doing everything else much more expensive, and your margin for error is much more slim.

So Netflix is surely going to tell the market, we made a smart deal in not overpaying and leaving one of our competitors at Bruth, or that kind of in limbo in the process. So it sounds like what we have here is Paramount buying a company that is saddled with debt, paying top dollar, potentially making Netflix look like

they're playing 40 chess pretty well, actually. And all of this, I think, begs the question, why are the Ellison's doing all of this? And we're going to get into that after the break. I want to talk about the Ellisons for a minute, just given how risky this deal sounds. Nicole, why do you think they are so desperate for this deal?

Well, David Ellison was really interested in buying Paramount. He closed that deal six months ago. But what he got in that acquisition was a company that was also struggling that had started its own streaming service years ago, that had its own share of debt, that had its own library of assets that were kind of underutilized, that hadn't been exploited as well as they could have been. It was a company that had changed hands over time and was not. in a very strong situation. It's got close to 80 million subscribers worldwide. They're not big

enough to compete with the big streamers. They're still need more to really be a player in this game. They look at HBO Max, which has a subscriber base of 132 million people worldwide, and they see a opportunity to combine their forces, and then now they will be a behemoth that can actually fight in this battle for subscribers. That is what every entertainment company is desperate for at this moment in time. Right. But I would also say, so there are kind of two levels to this. One is, you know, the one we're just talking about here, which is competing in the kind of streaming entertainment ecosystem space. But then I think you can kind of go up a level. And when you ask the question of, you know, why do the Ellison seem so, so desperate to have this company making a deal that, you know, that Netflix is

happy to kind of wash its hands of. And I think that there's obviously like a bigger plan here, that the Ellison's have a bigger plan. And I think we're all still trying to understand what the kind of political ramifications of all of this is going to be. How much of this is about Larry Ellison wanting to put himself in a more favorable position with the administration to get more government contracts, which Oracle does a lot of. And is that going to entail moving these news outlets, CBS and now CNN, toward the center or to the right? And is that what is going to be expected of David in order to kind of keep his father's business operations running as he would like them to be in Washington? And that's something that we're all kind of looking at and

waiting to see. Right. And we've already seen some evidence of how the politics could affect the media business, right? Like, look what happened to CBS, for example, after David Ellison acquired it last year. We've already seen CBS make some moves. that have positioned them a little bit further to the right. Yeah, that's exactly right. I mean, when David Ellison took control of CBS, he put Barry Weiss in charge, you know, the founder and creator of Free Press,

and she immediately started making changes to the news network. She, in a now kind of somewhat famous, infamous incident, she temporarily shelved a report that was about to go on 60 minutes about a detention facility in El Salvador where the Trump administration was sending deportees. Of course, the Stephen Colbert show was terminated pretty quickly after Ellison took over. So, you know, you don't want to go too far with this,

but there's certainly been an effort and an ongoing effort. We're seeing it now with the war in Iran, too, where a lot of free press contributors have been on the air, on CBS, putting a kind of a positive spin on America's engagement in Iran. So, you know, there has certainly been a change at CBS,

and there is a lot of anxiety that something similar is going to come to CNN. But just to point out, CNN is not the same thing as CBS, right? How do you think things might play out differently at CNN? Yeah, I mean, they are very different. CNN has a very different identity than CBS and CBS News does. CNN is a kind of democratic liberal network.

This is a network that, first of all, drives Trump crazy, but also has really positioned itself against Donald Trump much more overtly than CBS News ever did. So when you think about how David Ellison might try to pivot at CNN, it would both be more challenging because the business model is really built around a democratic audience. I mean, that is the viewership. But also it would be a lot more seismic if it actually happened. So that, of course, is the news business side of this deal, but the news business side is not the only side of this deal.

A lot of the reaction to this is coming from Hollywood. Nicole, talk to us about what you are hearing from your sources there, about what they are anticipating, concerned about or maybe even happy about. You know, it's interesting. When Netflix won the deal in a big surprise back in December, people were appalled and scared and thought, okay, here comes the big bad tech giant who's going to come in and just flatten the theatrical movie business because they never believed in it. But over the months, Ted Sarandos and Greg Peters, the co-CEOs, did everything right. They went to Warner Brothers, met with top leadership. They gave significant interviews, one of which was to us. And they talked really in detail about how they were going to move forward. And what they were saying were all the things that people wanted to hear. Oh, no, we don't hate the movie business. We love the movie business. We're going to put all of Warner Brothers movies and theaters. We're going to put movies and theaters for 45 days, which is a lot of days nowadays. People must have been thrilled. People were thrilled. Oh, we have a television

business that licenses content to other studios. Great. We're going to keep that. as is. Oh, HBO. We love HBO. We always wanted to be HBO. We're, of course, going to keep HBO intact. On the flip side, now we have Paramount, has acquired the studio, and no one's really clear who's going to survive and who's not going to survive. To your point, Nicole, I mentioned the debt earlier, and the only way to make the debt work is to cut costs. They expect to get around $6 billion in Synergies from this deal. Synergies is corporate speak for cost cutting. It often means layoffs. Paramount has said these synergies will come predominantly not from layoffs.

But if you've covered enough deals, and I've covered several, usually some of the easiest way they can get cost cutting in a merger is through layoffs. So that is something that I know the bankers that I would talk to certainly say that I should be, you know, keeping an eye out for. What does all of this mean, though, for us, the consumers, the people that like watching TV and movies? Like, how might we feel some of these changes, Nicole? Well, it's still unclear how this is going to all play out and how we as consumers will see movies and television from Paramount Warner Brothers going forward.

Yes, there are two separate streaming entities right now. We have Paramount Plus, and we have HBO Max. One would assume that these are going to merge together. We don't know if they're going to be called HBO Max or called Paramount Plus, But at some point in time, they will merge these two streaming services together into one, and we will probably have one app that we can all access all this content on. As for the movie studio, that too is unclear. We do know they have told us that they're going to be making 30 movies a year, at least, that they are putting in theaters. David Ellison is a big believer in the theatrical release. He made a point of it on his investor call yesterday, saying that movies that debut in theaters first have a much greater impact culturally than movies that debut in streaming first. As for how his taste goes, we don't yet know what the makeup of those 30 movies will be. In the past, he has been a big fan of Transformers and Mission Impossible and Top Gun. Those are the movies he invested in when he was

at Skydance. What his slate looks like moving forward is still work in progress. Well, just aside from the question of what kinds of movies David Ellison might like, I think there's also a question of how much politics could affect content choices. And I would be remiss here if I did not point out, Nicole, that you and I went to go see the Melania movie together with our dads. Obviously, a different studio that was Amazon. But that very much felt like an example of how somebody in charge of a movie studio might make something to make the president and the administration happy. Yes, we did see it and we survived. Our dads, maybe not as well.

on a side note. However, when it comes to what's going to happen going forward, yes, we saw David Ellison cozy up to the president to make this deal happen. We saw him at the State of the Union. We saw him taking selfies with Lindsey Graham. We've seen all these things happen. We don't know yet how that's going to impact the studio. What may in fact be the bigger issue is that this is a studio that has a lot of debt on its books and has to make safe decisions because they don't want to take big risks. And so while in Hollywood, there is no such thing as a sure thing, it is maybe safer to make movies that are based on well-known franchises that have built-in audiences than to do the kind of things that Warner Brothers has done in the past year that has won it lots of accolades and could make them the big winners at the Oscars in two weeks with movies like sinners and one battle after another, which are driven by autours. We don't know if that's the strategy they're going to make simply because it may be too risky to make those kinds of films. So it might be less about political cowtowing and more just about making

the kind of movies that are really just sure bets. Sure bets, down the middle, attracts a big audience, brings in a whole bunch of people. It's all going to be execution dependent. That's how the movie business is. There's no sure things. Many years ago, I actually covered the entertainment

business. I was a reporter at Variety Magazine, and I had a source who liked to say that every few years, a new rich person would come to Hollywood. They'd want access to the parties and the celebrities, et cetera. And each time the person would say, I know how to finance movies better than the last guy. And the only thing that ever changed was the accent of the person saying it. But the arrival of the Ellison's in Hollywood feels really different, in part because the Ellison's motivations and what they potentially have to gain feels so different. So Jonathan, can you just talk a little bit about what it could

mean for one family to have so much power like what they are poised to have if this deal goes through? Yes, this moment does seem different. And I think that you really have to see this in a kind of bigger context. You know, we're focusing a lot on David Ellison with good reason. I mean, he's the principal actor behind this, but the principal backer of all this financially is his father. And I think you have to see the Hollywood piece of this and the acquisitions versus Paramount and now Warner Brothers Discovery, at the very least dovetailing with what Larry Ellison is up to at Oracle in terms of building out this AI infrastructure

and in terms of getting involved with TikTok, they now own 15% of TikTok and may very well be in charge of handling all the American data that comes out of TikTok. This is part of Larry Ellison's desire to have access to data in the form of film, news, social media, anything that he can use to train a... AI models and to build out this new AI infrastructure that he's in the process of building. And so I think that you almost have to see this through two very different lenses.

One is as, again, an example of the kind of ongoing consolidation of the media and of Hollywood. But there's a whole other lens through which you need to see this. And that is the lens of the creation of a very new and different kind of global media empire. One that's being born in an era where there's companies. out there, you know, kind of Google, Amazon, and a handful of others who are gradually amassing control of everything. That's the game that Larry Ellison is playing in. That's the field that he's competing on.

And you have to see David Ellison's moves in Hollywood and in the media as part of that bigger game. I mean, you know, when the Murdox were amassing their power, there was, you know, a lot of hand-wringing for years about how much power the Murdox had, how much political influence that power gave them, how much ability across continents to shape the political landscapes of entire countries. What we're heading into now is the rise of a new family, instead of Rupert and Loughlin, it's Larry and David, and they are amassing a media empire for the data-driven digital age. Nicole, Lauren, anything else to add? Well, I just wonder if HBO will make a sequel to

succession and feature the Ellison family or if that's verboten now. Someone else is going to have to make that one. Maybe Netflix. Netflix. Yeah, maybe Netflix. There you go. The last man standing who can make a succession property. Lauren, Jonathan, Nicole, thank you so much for being with us.

Thank you. My pleasure. Thanks for having us. We'll be right back. Here's what else you need to know today. On the fourth day of the U.S. Israeli assault on Iran, the Trump administration urged tens of thousands of Americans to immediately leave from 14 Middle Eastern countries, including Israel, Saudi Arabia, and the United Arab Emirates, citing safety risks. But Americans in those countries complained that U.S. officials were doing little to assist them in evacuating. Several U.S. embassies, which would normally organize evacuations, shut down their operations or came under attack.

The U.S. consulate complex in Dubai, and the U.S. embassy and the capital of Saudi Arabia, were both struck by Iranian drones. It's a little bit disheartening and a little bit envious to hear that the U.K. government is actually arranging transport for the British citizens to be able to extract them, whereas here for us as Americans, we feel abandoned. In an interview with CNN, a retired American general in the UAE said that many Americans felt stranded. Speaking from the White House, President Trump said that many. of his preferred candidates to lead Iran after the killing of its supreme leader have already been killed in the conflict.

Well, most of the people we had in mind are dead. So, you know, we had some in mind from that group that is dead. And now we have another group. They may be dead also based on reports. So I guess you have a third. Meanwhile, in Iran, thousands gathered to mourn the victims of an airstrike on a girls' Elementary School over the weekend. The bombing killed at least 175 people, many of them students. As of Tuesday afternoon, according to government officials and rights groups, the death toll from the conflict had risen to nearly 800 people in Iran, 31 in Lebanon, 10 in Israel, and

six in various Gulf states. In addition, six U.S. service members have been killed. Today's episode was produced by Rob Zipko, Alex Stern, and Austa Chattervady. It was edited by Brendan Klinkenberg and contains music by Rowan Neimisto and Marion Lazzano. Our theme music is by Wonderly. This episode was engineered by Alyssa Moxley. That's it for the Daily. I'm Rachel Abrams. See you tomorrow.