Prof G Markets – Episode Summary

Episode: Paramount Goes Hostile With $108B Bid for Warner Bros.
Date: December 9, 2025
Hosts: Ed Elson
Featured Guests:

• James King (Senior Research Fellow at Chatham House, co-host of China Decode)
• Jonathan Kanter (Former Assistant Attorney General for Antitrust, U.S. Department of Justice)

Overview

This episode tackles two major capital markets stories:

1. China’s historic $1 trillion trade surplus – analysis of its global implications, with expert input from James King.
2. Paramount’s hostile $108B bid for Warner Brothers Discovery – breakdown of the deal, antitrust concerns, and political context with antitrust expert Jonathan Kanter.

The episode explores how economic power shifts globally, the future of Hollywood mergers, the role of U.S. antitrust enforcement, and the intriguing influence of President Trump on blockbuster deals.

Key Discussion Points

1. China’s Record Trade Surplus

Segment: 03:06 – 11:44

What Happened?

• China racked up a $1 trillion trade surplus for the first time, driven by a 6% export jump in November.
• Trade imbalance with the U.S.: Chinese shipments to the U.S. are down 29%, reflecting supply chain shifts.

Why Does It Matter?

• Historical Significance:
  “This is the biggest ever peacetime trade surplus since the Second World War.”
  — James King (04:15)
• China’s Advantage:
  • Strengthens Chinese companies and economy.
  • Bolsters foreign exchange reserves (> $3 trillion), a “war chest” for economic/political leverage.
• Europe’s Disadvantage:
  • EU trade deficit with China continues to grow (over $300B).
  • “All the positive things…go into reverse. You’re bleeding money, you’ve got money going out, your companies are earning less, your GDP is being run down by your trade deficit.” — James King (06:20)

Global Implications and Response

• Tariff Talk:
  • EU leaders talk about tariffs but are constrained by European companies benefiting from China.
  • Unlikely Europe will aggressively follow the U.S. in a trade war soon (07:59).
• On Trump's Tariffs:
  • U.S. tariff rates rose to 145%, but since dropped to ~45%.
  • James grades Trump’s China policy:
    “I would have to give him a D minus. I think he lost the tariff war with China.” (09:14)
• Global Trade Realignment:
  • China’s exports shift toward Africa (up 28%) and the Global South.
  • “The world is being created sort of almost without the west.” — James King (10:24)
  • Suggests new, non-Western trade partnerships catalyzed by China.

2. Paramount’s Hostile Bid for Warner Bros. Discovery

Segment: 14:44 – 36:03

The Deal

• Paramount offers $108B all-cash for Warner Bros. Discovery, outbidding Netflix’s $72B bid.
• Markets react:
  • Netflix down 3%, Warner Bros. up 4%, Paramount up 9%.
• Antitrust is central: Will a Paramount or Netflix deal clear regulators?

Political Intrigue

• President Trump indicates the deal “could be a problem” but expresses respect for Netflix CEO Ted Sarandos (17:48).
• Jared Kushner (Trump’s son-in-law) backs the Paramount bid—potential internal influence on the outcome.

Antitrust and Regulatory Breakdown

With Jonathan Kanter

• On Netflix-Warner Antitrust Risk:

  • “Netflix, which is largely considered the 800 pound gorilla in video streaming…is proposing to buy what is probably the number three player in the market…The antitrust issues there are obvious.” (16:21)
  • Risks:
    • Higher prices for consumers
    • Weaker bargaining power for content creators
    • Example: DOJ’s challenge to Penguin Random House-Simon & Schuster under monopsony claims (22:23)

• On Paramount’s Bid:

  • Faces less severe but still real antitrust issues, especially library and news overlaps (23:44).

• Presidential Overreach & Process:

  • Trump’s involvement is highly unusual; the President should not act as law enforcement (18:46).
  • “Ultimately, if the Department of Justice does challenge the deal, that will have to be fought in the court of law on the facts and the law and the merits of the case.” (19:37)
  • Other authorities: State AGs, foreign regulators, and private plaintiffs will play a role.

• Timeline and Certainty:

  • Regulatory review could take over a year (28:15).
  • “Certainty of closing” is crucial for Warner shareholders (21:00).
  • Changing political/economic climates may influence the final outcome.

• Breakup Fees:

  • Netflix willing to pay Warner $6B if blocked by regulators:
    “In this situation you can almost make an argument that Netflix, if it has to pay…they might make some of that…back just on its stock price.” (24:27)

• Consumer Impact:

  • Mergers often reduce competition:
    “Increase in concentration often leads to higher prices and it leads to less choice.” (29:09)
  • Kanter’s warning: If Warner is “too small to survive,” the only way to compete may be to get even bigger—“symptomatic of a bigger problem.” (30:48)

Market Analysis & Host Reflection

• Host Ed Elson admits to misjudging the auction and underestimating Netflix’s and Comcast’s seriousness, citing rising skepticism about the effectiveness of U.S. antitrust enforcement:
  • “It seems as though Big Tech has learned a very important lesson this year, and that is monopolization is okay.” (34:31)
  • “David Zaslav, the CEO of Warner Brothers Discovery…has essentially tripled this stock in one year…He is proof that sometimes, in business…sales and negotiation are all that really matter.” (35:44)

Notable Quotes and Timestamps

• James King:

  • “This is the biggest ever peacetime trade surplus since the Second World War.” (04:15)
  • “Every surplus has its deficit…your companies are earning less, your GDP is being run down.” (06:20)
  • “I would have to give [Trump] a D minus. I think he lost the tariff war with China.” (09:14)
  • “The world is being created…almost without the West.” (10:24)

• Jonathan Kanter:

  • “It’s kind of like UFC for M&A and antitrust.” (16:21)
  • “When the top streaming player gets more dominant because of an acquisition, you’re worried about prices going up, something that we’ve seen…in the context of streaming.” (22:23)
  • “It’s not the job of the President of the United States to engage in law enforcement…decisions should be made on the facts and the law.” (18:46)
  • “Increase in concentration often leads to higher prices and it leads to less choice.” (29:09)
  • “If Warner is too small to survive, I think that tells us something about our economy. It shouldn't be the case that the only way to compete is to be so massive that Warner is considered subscale.” (30:48)

• Ed Elson:

  • “It turns out that Netflix actually does believe all of that. In fact, they believe it enough that they are willing to pay Warner Brothers $6 billion if this gets struck down. Which tells you something about the state of antitrust right now.” (34:31)
  • “David Zaslav is proof that sometimes, in business…sales and negotiation are all that really matter.” (35:44)

Memorable Moments

• “UFC for M&A and antitrust.” (Jonathan Kanter, 16:21)
  • Captures the high-stakes, competitive drama unfolding between mega-corporations.
• Elson’s on-air self-correction and humility:
  • “I probably could not have been more wrong about how this Warner Brothers situation would all play out…This was very real.” (31:18–32:13)

Timestamps for Key Segments

• 03:06 – China’s trade surplus background and implications with James King
• 14:44 – Paramount’s $108B hostile bid for Warner Brothers Discovery
• 16:21 – Jonathan Kanter on antitrust risks of Netflix and Paramount deals
• 21:25 – Analysis of the legal merits and risks of the mergers
• 27:19 – What’s next: likely timeline for regulatory review
• 28:53 – Kanter on consumer impact and the problem of industry concentration
• 31:18 – Ed Elson reflects on earlier predictions and lessons learned

Summary

This episode illuminates two global shifts shaping markets today: China’s ascendant economic power and the aggressive consolidation of U.S. entertainment giants. Expert guests break down the stakes, the power plays, and the regulatory uncertainty at the heart of both stories, offering clarity for investors navigating a world where politics, economics, and corporate ambition collide.