Chapter 1: What is the main topic discussed in this episode?
This is Andrew Ross Sorkin, the founder of Dealbook. Every year, I interview some of the world's most influential leaders across politics, culture, and business at the Dealbook Summit, a live event in New York City. On this year's podcast, you'll hear my unfiltered conversations with Gavin Newsom, the CEO of Palantir and Anthropic, and Erica Kirk, the widow of Charlie Kirk.
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From The New York Times, I'm Michael Barbaro. This is The Daily. To hear the CEO of Netflix tell it, his $83 billion offer to buy Warner Brothers Studios will benefit everyone.
We think this deal with Warner Brothers is good for shareholders. We think it's good for consumers. We think it's good for creators. We think it's great for the entertainment industry as a whole.
To hear the CEO of Paramount tell it, that same offer is a monopolistic disaster.
Allowing the number one streaming service to combine with the number three streaming service is anti-competitive. That's like saying Coke can buy Pepsi. Today.
The blockbuster deal that is rocking Hollywood, the competing hostile takeover bid that it's inspired, and what it all means for the future of TV and film, and for all of us, the viewers. I spoke with three of my colleagues, Nicole Sperling, Kyle Buchanan, and Lauren Hirsch. It's Tuesday, December 9th.
I want to welcome the three of you to the first ever edition of the Roundtable Hollywood Edition. Lauren Hirsch.
Hello.
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Chapter 2: What is the significance of Netflix's $83 billion offer for Warner Bros.?
Okay. So just to give us a little bit of a roadmap, we're going to spend a lot of time in this conversation talking through the implications of Warner Brothers' discovery ending up in the hands of either of its current major suitors. But I think we have to start at the boardroom level first. because that's literally where it begins.
There are a lot of moguls and multi-billion dollar media brands involved in this battle. And so we're going to bring each of the major players on stage one by one. Kyle, give us the Cliff Notes version of the protagonist of this story, Warner Brothers.
Yeah. Warner Brothers is one of Hollywood's crown jewels. It's been around over 100 years. It was founded in Hollywood's golden age. It's made movies from Casablanca to Batman. You know, I was on that back lot the other day, and you're walking past film and TV history wherever you go. It's run by a guy named David Zasloff, who came over when Warner Brothers merged with Discovery.
And it's been a little bit of a rocky road since that merger.
Why?
Well, you know, Discovery has a lot of flailing television channels at this point, a lot of cable channels, which includes CNN, that they're trying to get rid of in some fashion. So there's been an expectation that Warner Brothers Discovery would be up for sale or broken up into parts.
And of course, one of those parts is HBO, the gold standard of television. Yes. Lauren, I think this is where you come into the conversation because the realization that Warner Brothers Discovery is going to be broken up, potentially sold, brings in our second protagonist in this story, which is Paramount. So just give us the quick backstory of Paramount's place in this showdown.
Before Paramount Skydance, as it's now known, there was Skydance, which was run by David Ellison, the son of Oracle founder Larry Ellison.
Really rich family.
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Chapter 3: How does Paramount's hostile bid challenge Netflix's acquisition?
The undisputed leader of streaming is Netflix with about 300 million. I think Paramount Plus is at about 80 million subscribers. So, so many fewer.
Right. And so key to Ellison's strategy, frankly, even before they closed his purchase of Paramount, was buying Warner Bros. Discovery. So once Warner Bros. Discovery made clear that it might be considering some kind of option, like splitting its business in half, David Ellison pounced, and he has made a number of bids trying to buy Warner Bros.,
Great summary. And that, of course, brings us to Nicole Netflix, which clearly understands that Warner Brothers is kind of in trouble, maybe up for sale, and that Paramount has its eyes on it.
Yes, and it's the giant. It is the one that has transformed the movie industry. Netflix was the upstart. It was the disruptor. And when they came in and started streaming content, it has prompted every other studio in town to start their own streaming business, to take on their own loads of debt in order to create this huge infrastructure.
And they have not been able to do it as well as Netflix has done when it comes to acquiring subscribers all over the place. They also have the ethos of they have to constantly grow. Right. And they are constantly going into new areas of business. They went into games. They started an advertising tier. And they are constantly in that growth mindset.
And now they feel that the best way to do so is to acquire this storied legacy studio that has an incredible library of content that Kyle mentioned earlier. Right. And to exploit that content in the ways that only Netflix can. They have the best optimization. They have the best tech. They can do things with content that the other streaming services can't do.
And Lauren, why is it that amid all these offers, it's Netflix offer that Warner Brothers accepts, not Paramount's?
So Warner Brothers board ran a process and they spoke to bidders. They asked Paramount. They asked Netflix to tell them what they were willing to put up, how they were hoping to finance it.
And it came to the conclusion that Netflix's offer, which was only for part of Warner Brothers' discovery, its streaming and studio business, was better for its shareholders than the offer that Paramount put on the table. Now Paramount doesn't agree with that. Right. They don't agree with that so much. Yeah.
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Chapter 4: What are the implications of Warner Bros. being controlled by Netflix?
I don't think anyone has a real answer. You can go out and ask people what their favorite Disney movie is, or you can ask them what their favorite movie was they saw in theaters last year. And even if you don't see it in theaters, you know that Barbie was on 3,000 screens and was a huge deal, and then you at some point will find that movie.
That whole cultural conversation really starts in the movie theater. And while it is completely inefficient, it's kind of the way it's been working all this time.
Kyle, are you really convinced that a Netflix-owned Warner Brothers doesn't really put any movies in the theater? I mean, it could in theory very easily do both if for no other reason to create a cultural conversation, to create buzz, to create buzz for the story you end up covering every year, which is awards season, Oscars, Golden Globes.
Yeah.
Yeah, I mean, it's been amply proven that movies that come out in theaters tend to do better once they make their way to streaming because there has been that cultural conversation already because it did feel like an event. Movies that just appear on streaming often make no noise whatsoever. So you would think it would be in Netflix's best interest to still put movies out in theaters.
They do a very perfunctory theatrical release for their Oscar contenders, but they'd really rather people see those movies live. in the comfort of their own home, those are really just done to satisfy Oscar rules and filmmakers who are agitating to have some sort of theatrical component.
But I think once there's no more theatrical component to be had, if theaters really do go the way of the dodo, that's not going to be something that Netflix is crying about whatsoever.
Right. And, Carl, you've actually explained this to me. When you send a movie to the theater, the theater takes a lot of the money. So if you're Netflix, giving up whether it's 50 or 40 or 30 percent of your revenue to some theater doesn't make a whole lot of sense when your central business is sending a streaming video to my bedroom in Brooklyn.
Right.
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Chapter 5: How does Paramount's history impact its bid for Warner Bros.?
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Okay, welcome back to our Hollywood edition roundtable. Nicole, Lauren, and Kyle, I want you all to conjure this second possibility that it's Paramount that wins Warner Brothers. Somehow the Netflix deal blows up. And what it would mean if Paramount prevails for all the constituencies that we have been talking about so far. The movie makers, consumers, and regulators.
So Kyle, let me start with you. Who wins and who loses Paramount? in a paramount victory here?
To forecast what that might look like, I'd already look at how Skydance has treated Paramount since they made that merger. You know, David Ellison has signaled a sort of willingness to accommodate Trump. He has installed Barry Weiss to run CBS News. It has taken on a little bit of a rightward slant.
There's also speculation that part of the reason that Ellison wants Warner Brothers Discovery at all is to remake CNN, and no matter, that would please Trump. When it comes to the film studio, it's hard to imagine then that Ellison would be as eager to greenlight films like One Battle After Another or Sinners.
Right. One Battle After Another, the only one of the two I've actually seen, is clearly a movie about a world where revolutionaries take on a Trump-like administration.
Yeah. And not shy about those things at all.
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