Chapter 1: What is the main topic discussed in this episode?
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It's Balance of Power on Bloomberg TV and radio. I'm Joe Matthew. Thanks for joining us on the Friday edition. After a month-long battle for Warner Brothers, Paramount has officially outbid Netflix by agreeing to pay $111 billion for the Hollywood studio and paying Netflix for the $2.8 billion breakup fee to terminate its initial merger agreement just a short time ago.
merger raising concerns about market consolidation of course job losses you've heard about it on bloomberg still pending regulatory approval with paramount chief david ellison already asked to testify before congress next week as democratic senator corey booker announces a probe into the potential paramount warner brothers merger and booker is not the only one with california's attorney general rob bonta warning paramount's wbd takeover is not a done deal yet vowing
a vigorous investigation, and he's with us right now for more. Attorney General, is this deal not over? What are you looking at?
Not a done deal. The regulatory process still needs to be completed. There are hurdles there that have not been traversed yet by this proposed deal. And we have a job to do, and we're going to do it. We have an investigation. We're looking at the deal. We're looking at its potential anti-competitive impacts. And we know that corporate consolidation tends to...
increase prices, lower wages, lower competition, lower quality and limit choice. So we're going to take a close look at that, as is our job, and make an independent assessment based based on the law and the facts.
I suspect that's an investigation that could take some time. This is a massive and sprawling deal with a lot of properties. Attorney General, the critics say the problem with this deal and those who favored the idea of Netflix buying it is that this takes an entire movie studio off the table. Is that how you're looking at this? And what would that mean for California's economy?
Well, one of the we are looking at that for sure. One of the first questions is what is the appropriate market issue? It's the market definition. And one is studio. You know, it will be a studio market consolidation. There's also a streaming service market consolidation here.
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Chapter 2: What is the Warner Bros./Paramount deal about?
So there's a lot at stake here for the 40 million Californians. But these companies, they're so large, there's going to be impacts nationwide and worldwide as well.
You know, it's of course not just studios, not just streaming services. It's also news. And we start talking about information on public areas in the case of CBS or otherwise on cable with CNN. Do you worry about consolidation in that business? Do you need promises that that would not take place?
I do worry about that. I think we all are worried about that and should be worried about that. We've seen what's happened to our independent objective news that we so value, and we need to take steps to protect that. So that is an important... area that we're looking at among the many other broader areas.
And we haven't gotten ahead of ourselves as to what the potential remedy is or conditions or whether we think there's no way that there could be a set of conditions or remedies, or maybe we like it exactly the way it is. So we're not prejudging it, but we're looking closely as we should, as is our duty and obligation.
I want to move on to some other topics, but do you have a sense of how long it'll take before you make that determination?
Because the two companies, Paramount and Warner Brothers, are moving so quickly, we're going to have to take some action, at least to maintain the status quo soon, if that's what we decide we need to do.
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Chapter 3: What regulatory hurdles does the Warner Bros./Paramount deal face?
And then we'll continue the ongoing investigative process and any other action to follow. But we can't let this get too far without some action. So you'll probably see something sooner than later.
Weeks, not months? Correct. Great. Attorney General, I want to ask you about tariffs. It was one week ago today, kind of hard to believe that the Supreme Court ruled to strike down the president's tariff regime. He's, of course, taken some series of actions since then to try to reinstate across the board global tariffs. And he talked about this at his State of the Union address this week.
Let's listen.
They're a little more complex, but they're actually probably better. Congressional action will not be necessary. It's already time tested and approved. And as time goes by, I believe the tariffs paid for by foreign countries will, like in the past, substantially replace the modern day system of income tax.
Of course, that was a loaded statement on its own. Attorney General, you called it a tremendous win, the way the Supreme Court ruled. But if the president is following up with 301 or some other mechanism to put more tariffs in place around the world, how does anything change?
Well, let me first say I expected the U.S. Supreme Court to decide almost exactly the way they did, having been at the argument for the U.S. Supreme Court that, you know, the 6-3 decision of the majority, as well as the reasons. It was basically tracked the reasons we advanced in our briefing to the U.S. Supreme Court. Of course.
Trump is absolutely dead set, even after suffering this embarrassing loss on his centerpiece economic policy, to continue to try to raise prices for Americans, unfortunately. And so our role here is to see if his current tariffs are lawful or not.
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Chapter 4: Why is California's Attorney General concerned about the merger?
And we're looking. We're looking with other states. We're concerned. There are global tariffs that he has imposed based on a statute for which it does not necessarily appear that he's met the requirements. There are requirements before you can impose those tariffs. There needs to be a balance of payments deficit.
There's also limits about how high they can be, the tariffs themselves, and how long their duration can last. So there are limits set by Congress. And right now we have some major red flags that have been raised around whether those requirements are being met here.
Well, I'll tell you, it's been pretty amazing. We're going to have to get some more lawyers, Attorney General. Since the ruling, more than 100 companies have filed new lawsuits to try to get refunds here. And, I mean, these are some big names. You already knew about Costco. You had FedEx, Dyson, Dollar General, Bausch & Lomb, Brooks Brothers. This is quite the list.
Knowing that the justices were silent on refunds, is this what we're going to do for the next three years?
I mean, it should be done quickly and expeditiously. Trump unlawfully raised costs for these companies and these costs were passed on to Americans. They deserve a refund with interest, period, full stop. You should get to them as soon as possible. And, you know, he shouldn't fight it in court. He was deemed to be wrong by the highest court in the land, a court where he appointed three justices.
Two of those justices were in the majority opinion against him because they're following the law. And because he's done something so clearly unlawful, the authority he cited gave him no right to impose any tariffs. That authority never used the word tariffs in its statutory language, and it was never used in nearly its 50-year existence to impose tariffs before.
So yeah, he did something unlawful. He did something wrong. He victimized these companies, Americans, by raising prices. He should make it right by providing prostitution and refunds immediately.
Well, I'll tell you, we'd like to stay in touch with you on both of these issues. Come back and talk to us when you decide what to do with Warner Brothers. Attorney General Rob Bonta of California, we thank you for the insights.
The news doesn't stop on the weekends.
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Chapter 5: What are the potential impacts of the merger on the market?
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