Netflix Walks, Paramount Wins, and the Ellisons Take Hollywood

Summary

Podcast Summary

Channels with Peter Kafka

Episode: Netflix Walks, Paramount Wins, and the Ellisons Take Hollywood

Date: February 27, 2026
Host: Peter Kafka (Vox Media Podcast Network / Business Insider Chief Correspondent)
Guest: Alex Sherman (CNBC)

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Overview

This emergency bonus episode breaks down a stunning turn in the Hollywood media consolidation wars: Netflix has withdrawn its bid to acquire Warner Brothers Discovery (WBD), resulting in Paramount emerging as the new owner-in-waiting. Peter Kafka and CNBC’s Alex Sherman dissect the reasons behind Netflix’s exit, the ramifications for all the major players (Netflix, Paramount, WBD), and what the Ellison family’s expanding Hollywood ambitions mean for the industry. They also address the regulatory, financial, and cultural impact of this mega-deal—and what it says about media, politics, and power in contemporary America.

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Key Discussion Points and Insights

1. The Unfolding Drama: Netflix Exits, Paramount Prevails

Timestamps: 01:05–04:37

• Initial Expectation: Most industry observers thought Netflix would raise its bid to acquire WBD after Paramount’s offer.
  • “Everyone thought Netflix was going to buy or had a reasonable expectation that Netflix might buy Warner Brothers Discovery.” (Peter Kafka, 01:09)
• Surprise Decision: Alex Sherman recounts how he found out—25 minutes before public news broke—that Netflix was walking away.
  • “It’s over. Netflix is walking.” (Alex Sherman, 01:59)
• Paramount’s Bid: Their revised offer was “only a dollar more” ($30/share to $31/share) than Netflix’s previous offer.
• Stock Market Signal: Netflix stock “shot up 10%” on the news they were dropping the bid, suggesting shareholders were relieved (Alex Sherman, 04:13).
• Regulatory Hurdles: Uncertainties in both the US and Europe, with Netflix realizing the process would not be “smooth sailing” (Alex Sherman, 04:48).

2. Why Did Netflix Walk?

Timestamps: 03:25–07:59

• Shareholder Backlash: The modest bump in Paramount’s offer and negative response from Netflix’s own shareholders were significant factors.
• Regulatory Quagmire: Increasing recognition that this was going to be a difficult and drawn-out regulatory slog, particularly with the current US administration and potential European hurdles.
• Bidding War Avoidance: Netflix did not want to engage in a long, escalating contest that would drive up the purchase price.
• Strategic Spoiler: Sherman notes some at Netflix expressed their main concern was ensuring WBD didn’t get sold “for cheap.” Placing their own bid helped drive up the price, inflicting financial strain on competitors—even if that wasn’t the only reason for their involvement.

“Netflix leadership became enamored with Warner Brothers Discovery the more and more they looked into it... I don’t want to say this was all just a ruse to drive the price up, but... always in the back of Netflix’s mind they felt like, worst case scenario here, if we walk away with a breakup fee and we force Paramount to pay up the nose for this, that is not a bad situation.”
(Alex Sherman, 06:25–07:02)

3. Inside the Paramount-Warner Bros. Discovery Deal

Timestamps: 10:11–14:00

• Regulatory Outlook: Paramount pre-cleared the deal with Pam Bondi (Trump administration DOJ), making regulatory challenges less likely than for Netflix. However, job loss-driven protests (notably from California’s AG) and possible European pushback remain wildcards.
• Employee Anxiety: WBD employees reportedly would have preferred a Netflix acquisition—seen as less threatening to current jobs—over Paramount’s, which comes with expectations of significant “synergies” (read: layoffs).

“There is a lot more anxiety, depression among Warner Brothers Discovery employees with this going to Paramount than… had this gone [to Netflix].”
(Alex Sherman, 12:27)

• Overlap Equals Cuts: Paramount’s overlapping businesses (studios, streaming, news, sports) signal major restructuring and job losses.

4. The Ellison Move: Motives and Risks

Timestamps: 15:55–21:56

• Strategy Unknowns: David Ellison’s only clear ambition so far is to “make more movies” (as many as 30 a year), but specifics about plans for marquee assets like HBO or CNN are lacking.
• Financial Risks: The combined company takes on massive debt, reminiscent of previous legacy media mergers that largely destroyed value.
• Different Rules?: While Larry Ellison’s fortune gives him the latitude to “play for years and decades,” debt markets and Wall Street will still watch closely.

“All evidence suggests that this is going to be a slog for a long time now... I don’t know how anyone could say the answer to [is this a good investment] is yes.”
(Alex Sherman, 21:56)

• Personal Upsides: David Ellison “gets the job of a lifetime” while Larry Ellison gives his son control over “one of the largest media companies in the world.”

5. Netflix’s Next Chapter

Timestamps: 25:12–28:26

• “Winner”—But Is That Enough?: Netflix will collect a $2.8 billion break-up fee and is praised for “financial discipline.” Yet, there’s an argument that if they were ready to pay up to $83 billion, walking away betrays some underlying strategic vulnerability.
• IP Shopping?: Netflix’s interest signals it may pursue more legacy content/IP. However, few attractive targets remain unless companies like NBCUniversal put assets up for sale.
• No Immediate Moves Expected: Given shareholder skepticism, don’t expect a quick pivot by Netflix to another major acquisition.

6. The Bigger Picture: Politics, Media Power, and Culture

Timestamps: 28:26–31:52

• Political Alignment: The deal’s success is attributed in part to “one of the President's closest allies” (Larry Ellison), closely aligned with the Trump administration.
  • Kafka asks directly about the implications for democracy and culture when such deals hinge on political favoritism.

“This is a deal blessed by the Donald Trump administration. How should we feel about that? And how should we feel, just as consumers of culture, to have all of these assets controlled by one person, regardless of who it is?”
(Peter Kafka, 28:59)

• Industry Concentration: Alex Sherman argues that while concentration is concerning, most legacy media properties (e.g., MTV, VH1) are declining in relevance. Control by Ellison is not categorically different from Big Tech’s dominance, and the younger generation is largely indifferent to these particular brands.

“You need to have a little bit of perspective that these assets are dying... for the younger generation, these [legacy] assets are no longer meaningful.”
(Alex Sherman, 31:20)

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Notable Quotes & Highlights

• On Netflix’s exit:
  • “Netflix shares went up, which is a real signal saying, ‘Hey, Ted Sarandos. We would like it if you didn’t buy Warner Brothers Discovery.’” (Peter Kafka, 04:37)
• On regulatory “blessing”:
  • “Pam Bondi works for Donald Trump. If Donald Trump wants this deal to go through, Pam Bondi is not going to stop it by filing a suit.” (Peter Kafka, 10:11)
• On industry precedent:
  • “There is not a single example I think that you can point to of a large mega media merger between two legacy media companies that has really gone well.” (Alex Sherman, 20:25)
• On Ellison’s ambition:
  • “His son has gone from running a borderline irrelevant film studio to one of the largest media companies in the world. Do I think that's a nice gift? Yes.” (Alex Sherman, 21:59)
• On the changing media landscape:
  • “This deal will outlast [the Trump administration]... and the CNN of today is not going to be the CNN of five years from now anyways, Donald Trump aside.” (Alex Sherman, 29:12)
  • “You need perspective that these assets are dying. ...They do not hold nearly the cultural relevance they once did.” (Alex Sherman, 31:20)

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Timestamps for Key Segments

• 01:05 - Episode setup, initial reactions to deal developments
• 01:59–03:25 - Alex Sherman on how the news broke
• 04:13–04:37 - Market reaction to Netflix dropping out
• 04:48–07:59 - Explaining the logic behind Netflix’s exit
• 10:11–11:52 - Regulatory outlook for Paramount’s deal
• 12:27–13:57 - Hollywood job fears, culture clash between companies
• 16:27–17:48 - Ellison’s potential strategy for Warner Bros. assets
• 18:46–21:56 - Debt, risk and precedent for media mega-mergers
• 25:12–27:54 - What’s next for Netflix? Implications and alternatives
• 28:26–31:52 - Political implications, media consolidation, consumer/cultural impact

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Conclusion

Kafka and Sherman chart the reverberations of Hollywood’s biggest deal in years, highlighting the complex brew of shareholder machinations, political influence, employee anxieties, media history, and massive ego that drives such consolidation. While Paramount’s victory may appear decisive, the challenges of integration, debt, and value creation loom large. The episode closes on a cautionary but clear-eyed note: media empires are shaped by power, money, and timing—but the cultural assets they amass may matter less to up-and-coming generations than to those paying closest attention today.

Transcript

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[Peter Kafka]

From the Vox Media podcast network. This is Channels with Peter Kafka. That's me. I'm also chief correspondent at Business Insider. And this is a bonus emergency podcast. For very obvious reasons, on Wednesday, everyone thought Netflix was going to buy or had a reasonable expectation that Netflix might buy Warner Brothers Discovery. On Thursday, we learned that they're not going to buy it, which means Paramount's going to buy it. Here to explain all of this is CNBC's Alex Sherman. Welcome back, Alex.

[Alex Sherman]

Thanks, Peter. You pretty much just explained it there.

[Peter Kafka]

Yeah. Podcast is over. Thanks for doing it. When, when did, when did your perception go from. Paramount's made it made a bid now Netflix is going to counter. That's what we all sort of thought was going to happen this week to Netflix is going to walk. Did you expect that this. Did you have an inkling, I guess is a more polite way of asking.

[Alex Sherman]

I did not expect it to happen yesterday at all. I actually got a call about 25 minutes before the announcement. Well, I didn't get a call. I was, I was reaching out to sources and I got one to call me back and that was a plugged in person who told me, it's over. Netflix is walking.

[Peter Kafka]

And so you learned before the news.

[Alex Sherman]

I learned about 25 minutes before the news. Then I started frantically calling for a second source. Didn't quite get there in time for the announcement. I think I just tweeted out Netflix. I heard. I should have just tweeted it out. But that's not the way we do things at cnbc. So, you know, I think, I think Netflix at that point knew that I was onto the story. And they were, they were, I think they were already going to publish their thing anyways. But look, the whole thing caught Me off guard, I will say I don't think anybody was expecting this to happen. You know, the same day that Warner Brothers Discovery's board decided that the Paramount offer was. Was superior. That's the word that they use, a superior offer.

[Peter Kafka]

And to be clear, the table set, the idea was we sort of expected Warner Bros. To say, hey, we've got a bid here from Paramount, Netflix. Now it's your turn to respond.

[Alex Sherman]

Four days.

[Peter Kafka]

They had said four days. They had basically had until Wednesday, end of day, next Wednesday to return. And Netflix had said, this is the offer we've made is we can go higher if we need. So everyone, I think, expected them to go higher. Why do you think they didn't come back?

[Alex Sherman]

Yeah, so, you know, look, I think there were. First, there was a little bit of mixed messaging there. You also had Ted Sarando saying just a day or two ago that they were going to be very disciplined on their bid. But the Paramount offer, to your point, Peter, was only a dollar more than their previous offer. They went from $30 a share to $31 a share. So I think because the offer, the revised offer was not that much more, there was a decent chance that Netflix would be like, well, all right, well, we'll bump our bid a little bit and then we'll turn it back over to shareholders. You decide there's a shareholder vote. Was only going to be in a few weeks from now, really. So we'll put out our offer. We'll put out your offer. If you decide you want to go in Paramount's direction, go for it. Don't vote our deal. And if you like our deal, then approve it. I did think that was an. It was an inkling that that was going to happen. I think in the end, Paramount probably decided we can definitely see where our own shareholder base thinks of this deal. The Netflix stock has tanked since all of this started happening. You go back to, you know, early December, it's down quite a bit. And in fact, cheers shot up 10% upon the news that Netflix was walking.

[Peter Kafka]

Even this week, when it looked like Paramount's chances were improving, Netflix shares went up, which is a real signal saying, hey, hey, Ted Sarandos. We would like it if you didn't buy Warner Brothers Discovery.

[Alex Sherman]

Right. So I'd have to think that that was part of it. I think it's also likely that when Netflix first announced the deal, perhaps they thought the regulatory process would be easier for them. It certainly appeared as though this was going to be a lengthy regulatory process, not to say Netflix wouldn't have been able to pull the right levers and make the concessions needed to get a deal done down the road. But it was not going to be smooth sailing. I think that part was quite clear both in the United States and in Europe. And maybe that was another part of this where the Netflix leadership decided, you know what, if this is going to be that challenging for us, we just don't want to also have to get into a bidding war here. That I'll say part three, to answer your question, is that because the bid was only a dollar more, I think Netflix also felt this could in fact get into a bidding war where if Netflix upped its bid, perhaps then Paramount would up its bid again and then this would be a back and forth situation where Netflix was like, we don't even need to get into that. We're not comfortable with that. We'll just call it quits here. And then the last point, I would say, and I know that there's like a, a section of social media out there that likes to poo poo this one, but I can tell you that I had private conversations with people that I trust around the Netflix universe or in fact that work at Netflix, who told me initially that when Warner Brothers went up on the block, they were concerned only that it didn't go into the hands of somebody for cheap. That's what I was told directly. And so Netflix decided to take matters into their own hands with that. And in fact, they put in a bid. And in short, it did not go for cheap. And I think that Netflix leadership became enamored with Warner Brothers Discovery. The more and more they looked into it and realized and thought about it was like, how would this fit with us? And certainly I don't want to say that they didn't want the asset or this was all just a ruse to drive the price up, but because that's pretty extreme, right?

[Peter Kafka]

And there's actually legal, there's legal consequences. I don't think that's true, but I

[Alex Sherman]

do think it's true that always in the back of Netflix mind they felt like, well, worst case scenario here, if we walk away with a breakup fee and we force Paramount to pay up the nose for this, that is not a bad situation necessarily for us. Or at least it puts, it's, it's sort of the, the least bad situation. If Warner Brothers Discovery is going to go to a competitor, right?

[Peter Kafka]

Make, we have to lose. But we've, we basically wounded you by getting you spend all this money and, and, and the Netflix people for years When Fox and Disney combined, other mergers are being floated. I would say, hey, how come you guys aren't bidding on this? And they would say, well, we don't want to buy companies, you know, we want to buy, we want to spend money on. Tal would also say, and by the way, we're very happy for Fox and Disney to spend two years integrating and going through regulatory clearances. We're very happy to see what was then called Time Warner get tied up in court for years when AT&T was buying it. We can just move ahead.

[Alex Sherman]

But by the way, one of those companies, one of those companies that said that over and over again was Netflix to like every other company.

[Peter Kafka]

No, Netflix. Netflix always said that and then of course forgot that when they wanted to buy WarnerMedia. But back to why they walk, right. So there's the price stuff. But we always knew that Paramount was going to spend more. Paramount said over and over, we're going to spend more. You would think if Netflix had already said we're going to spend $27 in change per share that they could add another dollar. It is surprising to me that they are surprised by the blowback enough not to bid more. And similarly, on the regulatory stuff, I know that Ted Sarandos had made a lot of entreaties Trump, but he knew that Trump and Ellison had a tighter bond. It is surprising to me that they were surprised. And you never know. A lot of this is just the power of images and photos. But that those shots of Ted Sarandos leaving the White House yesterday afternoon looking kind of glum. There's actually, if you can look on Getty, there's also amazing shots of him taking a selfie with some guy in front of the White House. And Ted Saranos looks like he would rather be anywhere else than taking a selfie with that guy in the White House suggests that they underestimated how much political pressure there would be. Do you think this is more of. If we had to make you choose, do you think this is more of a money thing or we can't get this deal done thing?

[Alex Sherman]

Yeah, I don't want to. The cop out answer is both. I think. I do really think the answer is,

[Peter Kafka]

by the way, that's what I wrote. So I think that's a fair answer.

[Alex Sherman]

I mean the clearly shareholders didn't like the money aspect of this. And tied into that was there was inherent risk that the deal wouldn't get done and they'd be tied up in this for a long time. So I think I, you know, and look I think the other part of it is, call it political or whatever, but I do feel like Netflix did not want to have this thing drag out for a long period of time and then be forced into a position again where in order to get the deal done, it had to make all of these concessions. It didn't want to. And I think that the tea leaves suggested that's where we were headed.

[Peter Kafka]

So Paramount has already basically said this deal has been pre approved by Pam Bondi and the doj. That's not officially true. In theory, the DOJ can, can, can review this and they might, but you know, Pam Bondi works for Donald Trump. If Donald Trump wants this deal to go through, Pam Bondi is not going to stop it. I, by filing a suit. You've heard rumblings from the California State's Attorney general saying, hey, we're going to try to stop this. We don't know what Europe's going to do. Again, we're just speculating. But is there any reason to think this deal gets stopped for regulatory reasons now?

[Alex Sherman]

Probably less likely than Netflix, I would say. I think the California AG1 is real. I mean, there's going to be a lot of job losses, I think, attached to this in Hollywood that probably were not going to happen in a Netflix deal.

[Peter Kafka]

Have we ever seen an attorney general suit stop a merger?

[Alex Sherman]

Right. I mean, I'm trying to think now. That's a good question. I don't think it's unprecedented, but I cannot think of a deal off the top.

[Peter Kafka]

Rare. Rare. If ever.

[Alex Sherman]

It's rare.

[Peter Kafka]

You can't think of it.

[Alex Sherman]

It's rare. Yes, it's, it's.

[Peter Kafka]

And Europe, Europe might try to stop it. Europe is, has stopped other deals in the past, although it seems like Europe's less interested in stopping deals Donald Trump likes right now.

[Alex Sherman]

Yeah. Think Europe is particularly attuned to big tech, not getting all that much larger. Netflix, I think, fell into that bucket much more so than Paramount, which is really not big tech at all. It's legacy media. So I would imagine the regulatory path is probably smoother from that end in Europe than it would have been for Netflix.

[Peter Kafka]

Okay, let's, let's walk through what happens to each of these three players. Now. Warner Brothers Discovery, we assume, is going to get bought by Paramount. So the big assets there, there's the TV movie studio, there's hbo, and there's this collection of TV networks. The one everyone in my world and your world cares the most about is cnn. David Ellison hasn't said what he's going to do with any of these assets, more or less, except, I guess, make more movies. That's been his pitch to Hollywood. But we don't know what that means for leadership at any of these companies. Who's going to run them? Do you have any sense of what happens to any of these?

[Alex Sherman]

No. I mean, I' run my own story here that I'm currently working on real time for cnbc. There is a lot more anxiety, depression among Warner Brothers Discovery employees with this going to Paramount than. Than what I picked up on in terms of had this gone.

[Peter Kafka]

A lot of them. A lot of them had said, if we have to get bought, we'd prefer to get bought by Netflix.

[Alex Sherman]

Correct. And so why is that? Well, Netflix is not really in the business that Warner Brothers Discovery is in for most of their businesses. I mean, they're not really in the theatrical business. They're not really even in the prestige TV business. So a lot of those leaders would have been left alone de facto because there aren't existing leaders at Netflix that do those jobs. That is not the case at Paramount, and that goes across the board.

[Peter Kafka]

So we're talking they have a movie studio, have a streaming, have a news business business.

[Alex Sherman]

They have a sports business, they have a streaming business. There's just so much overlap here that this is why Paramount has put out the $6 billion synergy number or whatever the latest version of that is, because there's going to be a lot of job cuts that are involved here. And so part of the whole premise of this deal is that there's so much overlap that we need to suss out who's going to run all of these divisions. And then whoever doesn't run these divisions will lose their job. So that's.

[Peter Kafka]

Yes, along with thousands of other.

[Alex Sherman]

Along with thousands of other employees. Yes. So there'll be a lot of cuts at the leadership level and there will be a lot of cuts at the rank and file level, for lack of a better term. So that leads to kind of a depressing scenario from the Warner Brothers Discovery standpoint. So I don't think anybody has a good sense yet of who's going to run these divisions. It's just so early on at this stage. But as my story will say, that's kind of assuming this deal does, in fact, get done. That's the next chapter here. The next chapter is to figure out, okay, we've got all of these people now, how are we going to restructure this thing so that we put the right people in charge? How fair is that process going to be from a meritocracy standpoint versus, you know, well, we're Paramount, we're coming in and so we're making the calls here. And you know, it'll just be. It'll be old school Paramount buying Warner Brothers Discovery. And we're going to take over from a cultural standpoint and a relationship standpoint. Like, we'll see. But that's why there's so much anxiety on the WBD employee side.

[Peter Kafka]

As an aside, the idea of, of combining in particular CNN with CBS has been around for years and years under many different ownerships. I don't know why it's always cbs, but this is not the first time people have contemplated that. And I think there's an alternate reality where you go, it makes perfect sense to take a big news gathering operation that's on broadcast TV and one's on cable. And yes, there'd be some cuts, but you could make something really, really strong if you combine those two assets. In theory.

[Alex Sherman]

Yeah. Just a quick note about why it's cbs. Well, it's not going to be NBC because they already have msnbc and it's not going to be Fox because they already have Fox News. So really it was just ABC or CBS in terms of network news that didn't have an associated cable news network. And I think the thinking always was it's more likely to be CBS than, than Disney. So that's why I think it's been cbs.

[Peter Kafka]

And is there anything in David Ellen's Ellison's history, older history, and then in the last year of history when he's been talking about this deal or what he wants to do that gives you any sense of sort of what he might be interested in in terms of the movie division, which, and by the way, the, the, the Warner Brothers movie studio, it's also a giant TV studio, enormously valuable for that. And when it comes to hbo, I mean, he really has said very little. But is there anything that you can cling to and go, oh, maybe, maybe this means this for the Warner Brothers side.

[Alex Sherman]

I mean, not a lot. Like you said it, they've said they want to make more movies. So they want to make 30 movies a year. I think is the number that has been thrown out, that's a lot of movies per year. Many people have noted that you have to go back to like the 1970s for studios to make that many movies in a year. So we'll see if that actually pans out. I mean, David Ellison's personal taste appears to be these like, kind of action Movies. So I would imagine that they'll go

[Peter Kafka]

action movies, things, things that were successful before. Let's make more of them. Which, by the way, is most movie studios, for sure.

[Alex Sherman]

Yep. But no, I think the answer to that is like, there's a lot of just guessing involved there. And I don't think we have heard a coherent strategy in terms of exactly what we're going to find out for changes if there are significant changes at the Warner level. Again, Netflix, Ted Sarandos over and over again, very clearly stating he did not want to change the Warner Brothers business. He was basically like, we're going to own this, but it's going to be business as usual. And that, I think, made a lot of the Warner Brothers employees feel more calm about the situation until David Ellison says the same thing. And frankly, even if he does says the same thing, I just don't think they can believe him because of the leadership overlap that we just discussed.

[Peter Kafka]

So let's talk about what becomes of Paramount once they buy this asset. The thing that everyone is pointing out is that Warner Brothers Discovery has a ton of debt already. Paramount is taking on a huge amount of debt to make this deal done. One of the reasons Warner Brothers Discovery, in its most recent incarnation, struggled is because they had this huge debt overload. That all seems like a reasonable concern. On the other hand, even though Paramount is a public company, it's really a private company. It's controlled by the Ellisons. Do they get to play by different rules when it comes to how they service the debt, whether they care about share prices? I mean, this thing they bought was worth $7 a year ago. Now they're paying $31 for it. It seems pretty likely that at some point that stock price is going to decline again. But again, Larry Ellison is one of the richest men in the world, so maybe he's not playing by the same rules.

[Alex Sherman]

Yeah, I don't think they have to exactly play by the same rules. They do have to service the debt. So that is a factor whether you're a private company or a public company. And, you know, there's. There's a lot of this money that's sovereign wealth money. I don't know exactly how much input these sovereign wealth funds are going to have over the direction of the company or not.

[Peter Kafka]

I think, remember, remember recently Paramount said, yes, we're taking $24 billion from three petro states. But Warner Brothers Discovery, because you raised your eyebrows at this, they have. These petro states have promised to, to have zero influence over the country. They won't have a board seat, they won't have voting. They're just letting their money rise. Don't worry about it.

[Alex Sherman]

Exactly. Why, why would I be so silly to think that they might actually have a quiet opinion on how their money was being, how many, many billions of dollars of their money was being spent for a United States media company and a large one. So look again, we'll see exactly how that plays out. Yes, to your earlier point, I do absolutely feel like the rules are different because this is a quasi controlled company by the Ellison family. It is not nearly the same as a pure play publicly traded media company. That said, there's no, it is still a publicly traded company. They still will have analyst reports and investor bases. And so again the near term I think is going to be rocky in terms of how do we convince the street that this is going to be anything different than the plethora of other horizontal legacy media mergers that we have seen over the past 10 years. One after another after another. They all lead to value destruction. There is not a single example I think that you can point to of a large mega media merger between two legacy media companies that has really gone well. So I don't know why I would think this one would go all that well.

[Peter Kafka]

Netflix had an answer for that which was essentially we're Netflix that's and we're not dumb and so we know what we're getting.

[Alex Sherman]

And also just to be clear, I think Netflix was a little different in the sense that A, it's not as much of a legacy media company and B, it was more of a vertical merger in some senses than a horizontal one.

[Peter Kafka]

You know, we're gonna add things we don't have and also we're not taking on your declining cable TV assets which

[Alex Sherman]

is what Paramount is about. Time Warner, that was a vertical merger that was a disaster too. But you know, Comcast bought NBC. That was less of a disaster certainly. You know, I think that has, they bought NBC at the right time and that has been a, A, at least a good acquisition for.

[Peter Kafka]

And what do you think the Ellison's think? Because again this is not the first time someone will suggested to him hey the track record for these deals is pretty bad. What makes you think it's going to be better? And by the way, Larry Olson, he's not, you know, he is one of the richest men in the world. He doesn't like to lose his money. He. What, what do you think he's going to, he and his son are going to get out of this deal?

[Alex Sherman]

Well, I mean, what are they going to get out of this deal? I think his son is going to get the job of a lifetime out of this deal. I think his son has gone from running a borderline irrelevant film studio to one of the largest media companies in the world. Do I think that's a nice gift? Yes. Do I think that the Ellisons are going to make a fortune off of this investment? Again, I, I don't know how anyone could say the answer to that is yes. I just. All evidence suggests that this is going to be a slog for a long time now. Maybe there's a lot of, I mean you'd have to be wish casting to say this was some sort of, you know, genius investment on the sense of the Ellison families. Like maybe they put this stuff together with TikTok and Oracle and they, you emerge with some thing on the other end. That's amazing. But like all that stuff is so wishy washy to me that it's hard for me to, to say I believe any of it.

[Peter Kafka]

Yeah, I mean, I guess the most basic argument is, look, we, we have enough money that we can play for years and decades if we want to. These are giant assets. There's only so many of them, some of them are in decline, but we believe they will be valuable for years and years to come. And we don't really know how it's going to work out, but we'd rather own them than not own them again.

[Alex Sherman]

Like in many ways this deal is identical to the Discovery WarnerMedia deal from the Discovery side. Right. If you are David Zaslav and you are running Discovery and you have the chance to merge with Warner, of course you are going to want to merge with Warner. You have taken your piddly little media company and merged it with a much larger one to give yourself more Runway. It is the exact same scenario here. Even after buying Paramount, that Paramount Skydance company is still subscale to all of the big media companies and certainly subscale to all of the big tech media companies that either dabble or go fairly full throttle in modern media. YouTube, Amazon prime, et cetera.

[Peter Kafka]

So which by the way, when they do have regulatory hearings, they will point over, over, hey, we're small compared to

[Alex Sherman]

the big tech companies.

[Peter Kafka]

That's who you got to really work.

[Alex Sherman]

And, and they are small compared to the big guys, to be fair. And so now of course, if you are Paramount and you are a, you know, whatever the value of that company was $12 billion or so, and you have a chance to become a $100 billion company. If you combine these things with the debt, you're going to take it because you now have a fighting chance to compete with the biggest players in the industry for sports rights, for top movies, for top TV shows. Like, you just have the balance sheet to be able to do it. So it makes all the sense in the world if you want to be in this business, for the Ellison family to do this. Do I think that they are going to enrich themselves by doing this? No. Do they have to enrich themselves? Absolutely not. Larry Ellison is one of the wealthiest men in the world. So they have the ability and the Runway to be able to do this with some long term thinking. And if it all goes wrong in the end, well, like, at least they had fun doing it. There's worse jobs than running a major media company.

[Peter Kafka]

Oh, it's like you wrote a title for my story. Thank you for that. Let's talk about Netflix briefly. They get a $2.8 billion consolation fee for the deal breaking up. There's a sort of snap wisdom like, oh, they're the winner here because they didn't have to pay, they didn't get suckered into a bid. They've shown financial discipline. Maybe they could go buy something else. All that makes sense to me. On the other hand, they thought that a big chunk of Warner Brothers discovery was worth them spending $72 billion, $83 billion with that, this is clearly something they thought was important. What about the theory that if they thought this was important enough to spend $73 billion on and didn't get it, that indicates there's some weakness?

[Alex Sherman]

Yeah, I think there's a little bit of truth to that. I think it caught people off guard that they were so interested in this and so willing to pay that much money. And so it's only logical that you would think, well, why, why was this so important to them? I think you can rationalize or justify some of it at least by very simply saying, well, they felt this was amazing Generational ip. It doesn't come up for market all that much. We should, our equity is, is valued quite high at this stage. Not to say it wouldn't be down the road, but it is. Right now the market thinks very highly of us. It's time to flex a little bit and prepare ourselves for the future in a way that we can do it and the blowback won't be devastating. So even if our shares do go down 25 or whatever, that's. We'll live with it. And then as soon as we integrate this thing and people see that we keep growing. You know, our. Our stock price will bounce back, and that'll be it. The signal to me is not so much that Netflix shareholders should be freaking out over this, but more of that. I think Netflix is in the market for legacy ip, and so I've heard that.

[Peter Kafka]

Although I think, what else would they buy?

[Alex Sherman]

What else? Great question. And I think that will probably be the subject of stories the next week or so. You know, I like, if, If. If Universal and some of the NBC library were ever to be put up on the market, I could see Netflix potentially being interested there. I don't think they would want to run the NBC Broadcast Network, so you'd have to figure out how to suss that apart. But, you know, beyond that, there's not all that much out there. And I think that was maybe one of the reasons they were so interested in this deal, because there simply isn't all that much out there. And this was out there, so. Right.

[Peter Kafka]

Because the bankers are all saying, well, now you've taken out your checkbook, it'd be a shame to put it away. Why don't we do. Why don't we. Why don't we bring you over to this show?

[Alex Sherman]

I'm not sure that's gonna happen. I would certainly say in the near term, you're not gonna see that. We already know what the Netflix shareholders think of all of this. So it just strikes me as illogical that Netflix would run out and make some other big IP purchase and go down this road again. But again, if there was some sort of media company that said, we're for sale, take a look, I think Netflix will be there looking.

[Peter Kafka]

Let's step back for the whole thing. You write about business, I write about business, but there's also, like, a culture component to this story, and I would argue something about America in this story too. Right. This is a deal that, when you step back, looks like it was engineered by one of the President's closest allies, who's also one of the richest men in the world. And this deal was put through, was constructed so it would be approved by the President, United States, and a rival bid that wasn't approved by the United President of the United States didn't go through. And so this is a deal blessed by the Donald Trump administration. How should we feel about. About that? And how should we feel, just as consumers of culture, to have all of these assets controlled by one person, regardless of who it is?

[Alex Sherman]

Yeah. I mean, on the first front, I think while any rational Thinker should be concerned by levers that are pulled that are borderline illegal or veer toward bribery or anything like that. I also think people need to keep a longer term mindset over this. So you know, again, assuming laws are not changed, Donald Trump will only be president for another, what is it, three years now, however long it feels like this media deal will last for far longer than that. So the, the CNN of the next three years will not be the CNN of the next 10 years, 15 years, 20 years. Certain changes will be made to certain parts of this media company that may very well completely be undone five years from now. So and also frankly, the world of modern media is changing so much that the there's no doubt in my mind that the CNN of today is not going to be the CNN of five years from now anyways, Donald Trump aside. So that's what I would say basically in a long term thinking here, which is that this deal will outlast all of that. And yes, there are concerns that so many of these media assets are controlled by the same person. But like again, you know, that's really no different than all the other big media companies as well. Like Amazon owns so much, Google owns so much, Apple owns so much. That these are concerns because they're giant companies. But this one in particular to me strikes me as not all that much different than the other major media companies. A lot of these assets, like Elizabeth Warren has done it a couple times and I think Bernie Sanders too, where they've shown, look at all the assets that are going to be owned by this. And it's like MTV and VH1 and Comedy Central. Like you do need to have a little bit of perspective that these assets are dying. They are dying assets that do not hold nearly the cultural relevance that they once did. So while that may be scary to somebody who's 50 years or older, it is not at all scary to the younger generation who are much more involved with other.

[Peter Kafka]

You don't think your kids are concerned about the future of VH1?

[Alex Sherman]

Yes, exactly. So I tend to be less of an alarmist on this one, I think than a lot of other people are.

[Peter Kafka]

Alex Sherman, it's been a busy 24 hours. You've got a bunch more to do. I'm gonna let you go. Thank you for joining us. You can follow Alex on air and on the Internet at cnbc. Thanks Alex.

[Alex Sherman]

Always a pleasure. Peter, thanks for having. Lifelock.

[Peter Kafka]

How can I help?

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[Alex Sherman]

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[Alex Sherman]

No problem.

[Peter Kafka]

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