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Mary Louise Kelly (2:45)

It's Consider this from npr. One way or another, Hollywood is getting upended. It was just this past Friday that Netflix announced a deal to take over Warner Bros. Discovery to hits from Casablanca to Batman. Now Paramount is mounting a hostile takeover bid, so we've invited our resident authorities to come help explain what is going on. NPR's Maria Aspen covers Wall Street David Folkenflick covers the media. Hey to you two.

Maria Aspen (3:15)

Hey there.

David Folkenflick (3:15)

Hey, Mary Louise.

Mary Louise Kelly (3:16)

Hey. So David, you kick us off. My jaw dropped this morning when I saw the Paramount offer because it upends everything that we thought was going to happen just a few days ago when you were on the show. What is the latest on the fate of Warner Brothers?

David Folkenflick (3:30)

Right, don't nap because the billions are ascending.

Mary Louise Kelly (3:33)

Billions are rolling in.

David Folkenflick (3:34)

Yeah, they're rolling in. The Netflix bid was valued deal at $83 billion including debt to take over. Really? Warner Brothers Studios, the HBO streaming service, the intellectual property behind DC Comics and as you say, Casablanca and everything in between, as well as the HBO streaming service. Meanwhile, Paramount Global, the Ellison family this morning upped the ante. They've offered to buy all of Warner Bros. Discovery, including the cable channels such as CN. That deal is valued at $108 billion.

Mary Louise Kelly (4:03)

In all the Ellison family who, who own Paramount. Just how big a deal would this be whenever it finally sells? What are the stakes for Hollywood?

David Folkenflick (4:13)

Well, so this is a brawl of epic proportions. As you say. The Ellison's, Larry Ellison, the co founder of Oracle. His son David Ellison, who had been with Skydance Media, they took over Paramount earlier this summer. But Paramount thinks it's still too small. And with this they think they can compete with the like of Netflix. Here's how David Ellison, the CEO of Paramount, describes why he's interested in the deal. We love the movie and entertainment business. We believe deeply in its future and we want to help preserve and strengthen it. Movies are one of America's greatest exports and yet they fear they're just too small. Think of the fact that Disney bulked up to take on Netflix by buying most of Fox's Hollywood assets. You know, Netflix is already the world's largest streamer, already the nation's largest streamer. Netflix is saying, look, we can just sort of preempt this whole fight. Get hbo, there's a streamer on board. Get Warner Brothers Studios on board. We've kind of closed the fight before it started.

Mary Louise Kelly (5:09)

Well, and as news journalists, I will note there are big stakes here for the news business too. Cnn.

David Folkenflick (5:15)

Yeah, right. Netflix isn't interested. You know, nor would Amazon or Apple appear to be the big digital titans. But for a place like Paramount, which already has cbs, they want to fold CNN in and presumably slash a lot of job lines to make this deal work.

Mary Louise Kelly (5:32)

Okay, Maria, you hop in here on the Wall street end of this Paramount, the tactic they're using here is a hostile takeover. The A, why? And B, how Would that work?

Maria Aspen (5:42)

Well, as the name implies, Paramount is essentially saying to Warner Brothers Discovery, well, we tried asking you nicely. Now the gloves are coming off. It's going directly to Warner Brothers Discovery shareholders. And this is where we see a difference between the executives of Warner Brothers, who usually call the and its owners, who are all the investors who own the company's stock. Warner Brothers executives chose to go with the Netflix deal. So now Paramount is going to the shareholders and trying to make them a better offer. There are a couple of different kinds of hostile takeovers, but this is what's known as a tender offer. Paramount is essentially telling Warner Brothers shareholders, okay, Netflix promised you roughly $28 a share in cash and some stock, but we'll give you $30, all cash. It's not a huge difference. But wouldn't you rather make more money? I would, and it'll be all in cash. And a Paramount deal would likely be faster to get regulatory approval. So Paramount is hoping its deal will convince enough shareholders to come over. Enjoy it.

Mary Louise Kelly (6:49)

Hostile takeovers in general, are they effective?

Maria Aspen (6:53)

They have a mixed track record. You may remember JetBlue, for example, tried to take over Spirit Airlines a couple of years ago and that deal started with a host takeover bid. A judge did eventually block the deal on antitrust grounds, but there have been some hostile takeovers that have been successful. The Brazilian Belgian brewery InBev took over Budweiser and Anheuser Busch. That was a hostile takeover. Of course, more recently, we saw Elon Musk acquire Twitter now X in a deal that started as a hostile takeover.

Mary Louise Kelly (7:30)

One more question to you, Maria, and it's about foreign investors. If you read deep into the small print of this latest offer, the Paramount offer, it suggests significant foreign investors. Who are they? How would they be involved?

Maria Aspen (7:45)

There is a lot of Middle Eastern money in this deal. The fine print, as you point out, says that sovereign wealth funds from Saudi Arabia, Abu Dhabi, Qatar would all have a stake as well as an investment firm that's tied to China, there's also another investment that would have a stake in the steel. Jared Kushner, of course, that is President Trump's son in law. We should point out a couple of things. First of all, Paramount, as David mentioned, is run by the Ellison family. Larry Ellison is one of the wealthiest people in the world. He's currently worth more than $275 billion. So it's interesting that Paramount is seeking foreign money for this. Now, it's important to note that the tender offer says these investors won't be involved in running the company. Also, Jared Kushner's involvement in this deal is a reminder of just how much President Trump looms over corporate America and especially all major corporate transactions right now.

Mary Louise Kelly (8:45)

Hmm. David, what role is President Trump poised to play? Do we know?

David Folkenflick (8:49)

Listen, in normal times, regulators don't take their cues from the president. These aren't normal times. Trump has clearly indicated for months that he thinks the Ellisons, who are allies, should have an inside track. Yesterday he said Netflix bid would require him to be involved in thinking about it. But today, interestingly enough, he lashed out at Paramount for airing an interview with an ally turned critic of the president on CBS's 60 Minutes. CBS, of course, the Ellisons recently acquired. That could throw things in doubt as well.

Mary Louise Kelly (9:18)

Reporting there from NPR's David Folkenflick and Maria Aspen. Thanks to you both.

David Folkenflick (9:23)

You bet.

Maria Aspen (9:23)

Thank you.

Mary Louise Kelly (9:24)

And a note, Warner Brothers Discovery is a financial supporter of the of npr. This episode was produced by Jordan Marie Smith, Mia Venkat and Karen Zamora. It was edited by Pallavi Gogoi and Christopher Intagliotta. Our executive producer is Sammy Yenigun.

Mary Louise Kelly (9:48)

It's Consider this from npr. I'm Mary Louise Kelly.

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