The Ellison Empire Strikes Back: Paramount Goes Hostile

Summary

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Podcast Summary: “The Ellison Empire Strikes Back: Paramount Goes Hostile”

The Town with Matthew Belloni
Date: December 9, 2025
Host: Matthew Belloni (The Ringer)
Guest: Peter Supino, Managing Director & Senior Analyst, Wolf Research

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Episode Overview

Matthew Belloni breaks down a seismic Hollywood business moment: David Ellison and Paramount’s surprise “hostile” all-cash bid for Warner Bros. Discovery, directly challenging a previously announced deal with Netflix. Peter Supino—returning financial analyst and industry expert—joins to clarify the nuances of the competing bids, regulatory concerns, and what’s really at stake for the future of Warner Bros., Hollywood, and streaming giants.

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Key Discussion Points & Insights

1. The Paramount Hostile Bid vs. Netflix’s Deal

• Overview of the Situation

  • David Ellison (Paramount) has gone hostile in a direct all-cash $30/share bid to buy Warner Bros. Discovery (“WBD”), versus a Netflix offer valued near $28/share (mix of cash and stock).

  • Netflix’s bid only buys the studio and streamer; Ellison wants it all: studio, streamer, and the “ShitCo”—WBD’s low-growth cable networks (CNN, TBS, TNT).

    “Ellison sent a letter to our guy David Zaslav and his board…arguing that it’s all cash…$30 a share offer for the owner of HBO Max and the Warner Brothers studio is a better deal.”
    — Matthew Belloni, 01:00

  • The value split comes down to how you value “ShitCo,” the soon-to-be-spun-off cable channels. Analysts’ per-share estimates range from $1 to $5.

    • Netflix says the cable bundle is worth more ($3–5), propping up its bid.
    • Ellison claims it’s only worth $1/share, making his offer bigger on a total basis.

  • Real-time drama: Ellison appeared on CNBC defending his offer; Netflix’s Ted Sarandos responded at a UBS conference, touting Netflix’s deal as “great for shareholders and consumers” and avoiding job cuts (01:50).

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2. Timeline & How the Bidding Went Down

• Bid Sequence & Confusion

  • Supino outlines that Netflix and WBD agreed on terms Dec. 4; Paramount submitted its (superior) $30 bid late that day or right after the Netflix agreement, possibly missing the window.

    “Maybe Paramount’s best offer…came right as or after the board made an agreement with Netflix, which they announced the next day.”
    — Peter Supino, 05:25

  • The mood grew awkward—texts from Ellison to Zaslav reportedly went unanswered, with Ellison feeling jilted (“jilted lover style texts”).

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3. Breaking Down the Two Bids

• Netflix Proposal (07:04)

  • $27.75/share: $23.25 in cash, $4.50 in Netflix stock.

  • Excludes the “Global Networks” (aka “ShitCo”).

  • Residual value for WBD shareholders is what the spun-off cable networks will fetch (est. $1–3, sometimes up to $5/share).

    “So no shitco, 2775 for the good stuff. Reasonable range…ShitCo’s value is 1 to $3 per share…”
    — Supino, 07:26

• Paramount Proposal

  • $30 cash per share for everything (studio, streamer, AND cable).

  • Includes financing guarantees from Ellison, Redbird Capital, and others; no financing contingency.

  • Paramount matches Netflix’s $5+ billion breakup fee guarantee.

    “Paramount has offered $30 of cash for the whole enchilada, including Shipco…includes financial guarantees…the deal does not include a financing contingency.”
    — Supino, 09:38

• Disputed Issues

  • Warner’s board claims Ellison’s side lacked proof of financial support and raised “foreign money” scrutiny (from Middle East backers).

    “There’s all this issue of the foreign money… it did raise questions as to whether they would be above a threshold to require an inquiry… there’s an ick factor to that, right?”
    — Belloni, 11:16

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4. Synergies & Hollywood Jobs Anxiety

• Paramount’s Promise: $6 Billion in Synergies

  • Translation: Major job cuts.

    • “Synergy” = staff consolidation—executives, crew, all merged with significant layoffs.
    • Hollywood insiders fear the impact.

    “Most of that comes from people getting fired, plain and simple. Two studios mashing together…everyone is duplicative.”
    — Belloni, 13:58

• Netflix’s Promise: Gentler Touch

  • Netflix claims less duplication, more focus on technology and existing content deals; less risk of staff slaughter, more preserving Warner’s/HBO’s unique identities.

    • Ted Sarandos: Netflix won’t disrupt Warner or HBO’s creative engines.

    “Ted said it today…we’re not going to disrupt those businesses. This is why we’re buying the company.”
    — Belloni, 14:45

    • Belloni notes: Netflix gets a “pro-Netflix” argument similar to how Disney let FX and Searchlight retain autonomy despite mergers.

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5. Regulatory and Political Entanglements

• Which Bid Is More Likely to Get Approval?

  • Paramount touts “lower regulatory risk,” but realism is murky.

  • Paramount’s ties to Middle Eastern cash and Jared Kushner (Trump’s son-in-law) make the optics complicated and add political uncertainty.

    “Already the Ellisons have brought in Jared Kushner…Trump…wants to insert himself into any possible deal…”
    — Belloni, 17:01

  • Trump and regulatory approval are wildcards—he signals skepticism for both bids and seems motivated by self-interest.

    “What he’s actually projecting is: Where’s my piece? Where’s my cut? What are you gonna do for me? And that is exactly the problem here…”
    — Belloni, 17:36

  • Market definition matters: streaming vs. linear TV has big implications for anti-trust/regulatory review.

    • Netflix wants the biggest pool possible for market share comparisons; Paramount’s case is stronger when examining linear TV and overall exposure, which remains below ~10%.

    “If the regulator is concerned about a market definition of streaming, then the Paramount merger is a lot easier to get through.”
    — Supino, 18:55

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6. Deal Mechanics: Will Bids Escalate? Will Netflix Respond?

• Raising the Bid

  • WSJ reports Zaslav invited Paramount to raise its bid to $35/share to compensate for the Netflix break fee and sweeten the terms.

    “Zaslav invited paramount to offer 35…the Post’s opinion was that would cover the breakup fee payable to Netflix…”
    — Supino, 22:51

• Stock Collars and Market Sensitivity

  • Netflix’s offer includes a stock “collar”: if Netflix shares drop, WBD gets more stock to preserve value. But if Netflix’s stock underperforms, the justification for the merger could dissolve.

    “At lower Netflix stock prices, Netflix owes Warner more shares.”
    — Supino, 23:53

  • Supino: At a high enough price, shareholders would surely opt for Paramount, but the deal is close. Netflix’s lower “synergy” (i.e., layoffs) projection and “gentler” integration appeals to insiders.

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7. Impact on Warner Bros., Hollywood, and the Market

• Morale and Creative Stability

  • The Netflix approach is less disruptive to the creative workforce, likely preserving more of Warner/HBO’s talent, thus keeping the business vibrant amid regulatory review.

    “That may be relevant to the political and regulatory review.”
    — Supino, 13:27

  • The risk of “brain drain” and chaos during years-long regulatory limbo is acute for Warner Bros., echoing previous, disruptive mergers.

    “If the Paramount deal ends up failing…all the studios have been anticipating being fired for two years, that’s a worse outcome…”
    — Supino, 25:13

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8. Lightning Round: Who Should and Could Win?

• Paramount needs the deal more; Netflix doesn’t.

• But according to Supino, easier regulatory review in US/EU slightly favors Paramount.

  “Paramount should win this because Paramount is the easier regulatory review in the United States and in Europe. And they need it the most.”
  — Supino, 28:19

• Still, Netflix is now publicly motivated to “finish the job,” given their once-secret desire for WBD is out in the open.

  “Now that they’ve shown the world that they want it, the world will be concerned that they might also feel that they need it. The market’s now worried…”
  — Supino, 28:41

• Could this be an unforced error for Netflix? Not long-term—one or two good quarters would quickly restore market confidence.

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9. Notable Quotes & Memorable Moments

• On the True Stake for “The Town”:

  “Everyone in town is like, which of these is better for me? That is the question everyone in town is asking.”
  — Belloni, 13:27

• On Hollywood Layoff Fears:

  “6 billion in synergies. Most of that comes from people getting fired, plain and simple.”
  — Belloni, 13:58

• On “ShitCo” and Cable Decline:

  “A reasonable range of estimates for ShitCo’s value is 1 to $3 per share…For a decade it has paid to take the under on all forecasts of anything in the cable network arena that wasn’t called ESPN.”
  — Supino, 07:26 & 08:27

• On Trump’s Involvement:

  “Maybe that’s what he think he’s projecting…What he’s actually projecting is: Where’s my piece? Where’s my cut? What are you gonna do for me?”
  — Belloni, 17:35

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Timestamps for Important Segments

• [01:00] – Belloni lays out Ellison’s hostile bid, Netflix’s competing offer, and what’s at stake.
• [05:25] – Supino explains the bid timeline and potential communication breakdown.
• [07:04] – [10:29] – Deep-dive on the details and mechanics of each bid, including the crucial issue of “ShitCo” value.
• [12:03] – [15:43] – Hollywood's fear of layoffs, synergy numbers, job cuts, and the contrasting corporate cultures.
• [16:13] – [19:58] – Regulatory landscape, Trump’s unpredictable role, and Paramount’s vs. Netflix’s strategic advantages.
• [22:27] – [25:25] – Does Paramount need to raise its bid? Role of break fees, Netflix stock “collar,” and market impacts.
• [28:19] – [29:03] – Who should win and why? Paramount’s existential need for the deal versus Netflix’s strategic calculus.

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Tone & Style

The conversation is fast, wonky, and laced with humor and Hollywood insider frustration, especially around “synergies” (code for layoffs), the “ShitCo” cable asset, and Trump’s opportunism. Belloni and Supino don’t pull punches on industry personalities or the brutal math at play for staffers and shareholders.

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Bottom Line / For Listeners

If you haven’t listened:
This episode breaks down the business, political, and human drama behind two titans vying for Warner Bros. Discovery—why Paramount is fighting dirty, why Netflix’s first-ever “major buy” is so controversial, and why the outcome will shape not just a studio, but a whole industry. Want a primer for your holiday parties? This is your cheat sheet.

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This summary skips over the ads, intro plugs, and podcast/award talk at the end, focusing exclusively on the business drama and its significance for the industry.

Transcript

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[A]

It is Monday, December 8th.

[C]

It's a war.

[A]

As I predicted on this show, David Ellison and his Paramount studio have gone hostile for Warner Brothers Discovery. This morning the Ellison sent a letter to our guy David Zaslav and his board at Warner Discovery arguing that it's all cash. $30 a share offer for the owner of HBO Max and the Warner Brothers studio is a better deal for the company and more likely to pass regulatory hurdles. So they're going directly to the shareholders. Now. This is days after Warner settled on a deal with Netflix for nearly $28 a share in cash and stock. $30 obviously bigger than 28, especially in cash. But remember, Ellison will be buying all of Warner Discovery, including the low value cable network cnn, tbs, TNT and Netflix has agreed to buy just the studio and streamer. So the difference in the bids here kind of comes down to how you value those cable networks that are about to be spun off into a separate company. Are they worth a dollar a share like Ellison says? Or three, four or even five dollars a share, as Netflix hopes? The higher the value assigned to them, the more likely Netflix made a comparable bid because it leaves behind all these valuable assets to prop up the overall value of the company. The lower the value of those assets, the more likely the Ellison's bid is bigger with those assets included. Got that? It's a little confusing. Ellison went on CNBC this morning to plead his case and Netflix co CEO Ted Sarandos happened to be speaking at the UBS conference in New York. So we got A real back and forth in real time. Today we're really here to finish what we started, Ellison said. And later, Sarandos countered by saying the Ellison move was, quote, entirely expected. We have a deal done and we're really happy with the deal for shareholders, for consumers, it's a great way to create and protect jobs in the entertainment industry. That reference to jobs was not an accident because Paramount's execs have boasted that they expect $6 billion in synergies from the combined company. That's a lot of jobs lost. And of course, Donald Trump has now entered the process and Jared Kushner, too. Kushner, of course, the son in law of Donald Trump. So lots of questions and lots of anxieties. I wanted to have someone to go through it all with me. Peter Supino is here. He's an analyst at Wolff Research, has been following the sale process closely. He's been on the show before. Today it's Netflix versus Paramount for Warner Brothers. Let the hostilities begin from the ringer and puck. I'm Matt Bellamy and this is the Town.

Okay. We are here with Peter Supino, who is the managing director and senior analyst at Wolf Research and a returning champion on the town. Welcome back.

[D]

Thank you. I'm delighted to be called a returning champion.

[A]

You are. And honestly, you were here in October and we were talking about who might bid for Warner Discovery and you said on this very show that you thought that Amazon and Netflix were for real as bidders. So one for two, not bad.

[D]

Be a good batting average in baseball at least.

[A]

You were much more bullish on Netflix than I was. I didn't think they were serious.

[D]

Well, we didn't have any special insight other than focusing on the numbers. And economically, Netflix was always the bidder that brought the most scale to this transaction if they wanted to do it. So that's all we said, was that they were the best buyer economically.

[A]

And I, and my take was that I didn't think, I mean, nothing in their past suggested they would have any interest in doing this, but we, we were proved differently. We were proved wrong. Or I was at least.

[D]

The other thing about Netflix is that they've proven the generality that then the facts change, smart people change and they, they've been willing to change at every step in the way. They've been very entrepreneurial and as their business has evolved and the competitive environment has been involved, they've been willing to do things they previously said they wouldn't do.

[A]

Yeah, true. Although their stock is down double digits since they have been interested in this company. So it's yet to be seen whether this is a net positive for them. But I want to talk about that because now we have an official hostile bid for the company. Um, we kind of knew this was going to happen. But the Ellisons are not going away. Comcast is going away. It's just the Ellisons versus Netflix. And I think a lot of people in town in Hollywood are kind of confused as to why these two bids are different, why Ellison feels like he was screwed over here. So I just want you just off, right off the bat to walk us through the two bids and how they are different. So start with the Netflix bid, which we know about.

[D]

So based on the company's testimonials, on December 1, Paramount sent Warner Brothers an offer. And Netflix and Warner Brothers seem to have made an agreement on December 4, which was announced on December 5. The reason I'm sharing that timeline with you is, is because Paramount's second offer was made on December 4th. So if you agree with our guess that Netflix and Warner had agreed verbally on their deal on December 4th for announcing it to all of us on the 5th, then it might explain how we got into this situation. Because maybe Paramount's best offer, their $30 offer with the financing guarantees that the Warner board wanted and didn't feel like they'd gotten in the December 1st offer. Maybe that second offer came right as or after the board made an agreement with Netflix, which they announced the next day.

[A]

Yeah, although there's some back and forth in the statement they filed with the SEC about how David Zaslav was like not responding to David Ellison's texts. He said, by the way, offer is not best in final. By the way, would love to work with you. What's going on here? It's sort of jilted lover style texts. And what we now know is that they had been talking to Netflix and agreed to do the deal there. Let's not get into the machinations here and whether Zaslav and the board like screwed over the Ellisons. Just give us what the bids are.

[D]

All right, so Netflix bid 2775 comprised of 23 and a quarter of cash and 450 of Netflix stock. That deal does not include the purchase of the Global Networks division of Warner Discovery.

[A]

You can call it Shitco, we call it Shitco or capco or Crapco.

[D]

Do I get to use that term on this podcast?

[A]

You can use that on this podcast.

[D]

Okay, so no shitco, 2775 for the good stuff. A reasonable range of estimates for ShitCo's value is 1 to $3 per share. And so Warner Brothers shareholders can imagine that they're getting total value from the Netflix proposal of 2775 of proceeds from Netflix cash and stock, plus whatever the residual value of ShitCo is after factoring in all the debt.

[A]

Right, because they're taking on a lot of the debt.

[D]

Yes. So ShitCo generates lots of cash, it's going to play lots of interest, it's going to have lots of debt. And 1 to $3 per WBD share is a reasonable guesstimate of what it'll trade for.

[A]

But that, that's key because that is a guesstimate. And some analysts, including Jessica Reif Erlich at V of A have said that that could be as high as $5 a share the value of that company. And if so, my colleague Bill Cohen was writing about this yesterday. That would change the calculus here pretty significantly.

[D]

It would. For a decade it has paid to take the under on all forecasts of earnings and multiple as it relates to anything in the cable network arena that wasn't called espn.

[A]

I mean that's sort of why we got into this problem in the first place is that all of the estimates that David Zaslav and the Discovery people put on the linear cable business when they took over Warner Discovery, all of those have been short and that's where they are today in this situation because they were not able to generate enough cash to pay the debt and everything imploded.

[D]

Brief sidebar. Fox also deserves recognition, the current Fox portfolio for being one of the cable network portfolio that has actually met in some cases beaten expectations. But that's a digression. Go ahead.

[A]

All right. But they're a state sponsored media propaganda arm that has benefited from ways that go beyond the fundamentals of the cable television business. They have one cable channel that is incredibly powerful and and then they have a broadcast network that has football. And that's basically it.

[D]

The things you just said in sports.

[A]

Yes, yes. Okay. So, all right, so that's the Netflix offer. Explain the Paramount offer and why they believe it's superior.

[D]

So paramount has offered $30 of cash for the whole enchilada, including Shipco. So just to revisit, you can compare that $30 offer to this 2775 for from Netflix, including whatever you think ShitCo's worth. And the Paramount offer is very, very interesting because it matches the enormous breakup fee of over $5 billion that Netflix provided. And it also includes financial guarantees by the Ellison family and Redbird Capital to close the deal. And the deal does not include a financing contingency. And so this offer from Paramount achieves appears to address the major concerns of the Warner Discovery Board.

[A]

Right. So the Ellisons are saying that not only is it a better offer, it specifically addresses the issues that they had when they were negotiating. And Warner's didn't give them a chance to present this offer before they took the Netflix offer.

[D]

That's your intel, which I have no disagreement with.

[A]

Well, no, that's. That's in the SEC filing. If you look at the timeline presented in that SEC document, they believed that they were still negotiating. And then all of a sudden Warner's went quiet and then announced Netflix.

[D]

Yeah, the. The Netflix Warner agreement seems to have gained enough steam that Warner stopped talking with Paramount. I agree with you.

[A]

That's.

[D]

That's known now.

[A]

Yeah. Well, the other side of it, the Warner side says that the Ellison deal was not what they promised, that there was no written document saying that Larry Ellison was backing this. They were just like saying it without proving it. Then there's all this issue of the foreign money, because while the Netflix offer was cash, you know, they took out some loans and then they had the stock, the Paramount money is coming from the Ellisons, Redbird Capital, and then all of these other funds in the Middle east, which shouldn't be a huge issue, but it did raise questions as to whether they would be above a threshold to require an inquiry about whether they would have control over the company. And it just sort of. There's an ick factor to that. Right?

[D]

Yes. The Paramount team would argue, and I think reasonably, that they will face a lower or less regulatory scrutiny than Netflix. But we're not convinced that the Paramount path is as easy as that narrative suggests, because Paramount's Synergy forecast is $6 billion, while half of that 6 billion probably comes over on the cable network side, which. Which is not as sensitive in Hollywood. The reality is Most of that 6 billion is going to be headcount. And the Netflix synergies are 3 billion. And of 3 billion, a billion is just recapturing payments that Netflix makes to Warner Brothers for HBO content and other studio content.

[C]

Yeah.

[D]

And so actually Netflix synergies are 2 billion. And of that 2 billion, we know reportedly, or at least we are told that a lot of the savings are in technology. Netflix spends three and a half billion on a run rate annually on technology. So there's a lot of leverage in that combination through tech. And so ultimately, we think the Warner board believes that the combination.

Between Netflix And Warner will result in a much better path for morale and for human capital at Warner and hbo. And that may be relevant to the political and regulatory review.

[A]

It's certainly relevant in Hollywood. And I want to make clear here what you're saying and the documents back this up, is everyone in town is like, which of these is better? For me, that is the question that everyone in town is asking.

[D]

Is there any debate?

[A]

Yes, there is. People are very afraid of Netflix. They see Netflix as the interloper. They don't like them, they've come to town, they've taken over. They don't put movies in theaters.

[D]

They should be afraid of Paramount's pro forma leverage and they should be afraid of that 6 billion number.

[A]

Well, that's what I'm saying. 6 billion in synergies. Most of that comes from people getting fired, plain and simple. We said this last week, two studios mashing together. Everybody is duplicative. So the best business affairs exec, the best gaffer, the best craft services person, all of those people are going to be put together and the person who's not the best is out. That is 100% going to happen. Whereas the Netflix offer is things that they don't necessarily do. They don't do licensing, they don't do theaters, they don't do a lot of the HBO style content. So the perception at least is that those things, and Ted said it today, whether we believe them or not, yet to be determined. But he did say that we're not going to disrupt those businesses. This is why we're buying the company. We want to have these ancillary businesses that Netflix doesn't currently have. Now, I don't know if I believe him on theatrical distribution, but I kind of do believe him on HBO and I kind of do believe him on producing shows for other platforms, which is the specialty of Warner Brothers Television. And with Paramount, that is a non starter. It's all mashed together to serve their combined service on hbo.

[D]

I completely agree with you on an analogy I've been alluding to is the way Disney has managed fx. Despite the general dissolving of the Fox studio within Disney, FX has been left with a lot of autonomy because it's perceived to be a very special creative engine that requires a boutique structure to continue to be what it has been.

[A]

Same as Searchlight.

[D]

Yeah. And so it seems like that's what HBO can be within Netflix.

[A]

And HBO is even bigger than FX because HBO has been a standalone streaming service, whereas fx, they didn't start a streaming service based on fx, they put it into Hulu. And I think HBO is way more valuable than FX as a brand. But that's the pro Netflix argument. Give me the pro Paramount argument here. Other than David Ellison stomping up and down saying, we got screwed, what is, what is the argument here for why this is better for shareholders to take that deal?

[D]

The shareholder driven pro Paramount argument is simple. More money with less regulatory risk.

[A]

Yeah, but is that true? Let's get into this on the regulatory thing, because I don't think we know. The impression that they left was that our path through Donald Trump is easier than anyone else's path. Then boom. Netflix reports that Ted Sarandos was meeting with Trump in the Oval Office. Trump goes on television and says that Ted's a great guy. Netflix is a great business. Yes, they're going to have to look at it because of the market share, but it's certainly not anti Netflix, which some might have thought, given that Ted is a very prominent Democrat and was one of the big donors to Kamala Harris and his wife was Obama's ambassador to the Bahamas, then you'd think that Trump would be in bed with the ellisons. But then 60 Minutes airs an unflattering story that has Marjorie Taylor Greene in it, and Trump is going on saying that the new owners of CBS are just as bad as the old owners. So, like, what are we supposed to make of that?

[D]

It seems possible to me that Trump wants to appear politically as if he's skeptical of all of the interest in this company and that he's going to look out for the common man's interest.

[A]

No, no, no, no, no, no, no, no. Maybe that's what he think he's projecting.

[D]

That's what he wants us to see.

[A]

Right, but what he's actually projecting is, where's my piece? Where's my cut? What are you gonna do for me? And that is exactly the problem here, is that these guys have spent so long kowtowing to this president that now he expects to insert himself into any possible deal, certainly one of this size and importance, and he wants some concession for himself. So what are they going to do? What can they do on both sides here? Already the Ellisons have brought in Jared Kushner, who's Trump's son in law, and someone asked Trump about that. He said, oh, I don't know about that. We haven't discussed it, but certainly that's going to be a factor. If Jared says, listen, do this for the Ellisons, it's going to help me and my business in the Middle East.

[D]

Doesn't it scream credulity that Kushner would have made this commitment without a point of view on the viability of Paramount's, you know, role? I mean, clearly he thinks this is going to get done and I think he has a more useful view than any of us.

[A]

Well, but even two weeks ago, we all thought Paramount was getting it. And certainly when David Ellison was on his cash tour of the Middle east, getting donors or getting backers involved, he was confident in telling them, you know, get on board, we're doing this. This is a Trump friendly media. Why wouldn't interests in the Middle east be interested in, in joining that?

[D]

Okay, I'm going to propose a different angle in this regulatory discussion, which is stepping back from the Trump factor, which of course is really hard to handicap. Let's think about market definitions. Paramount's strength as a company is television. CBS has a big audience. It's almost as big factoring in linear TV as Netflix is in streaming. And so the merger review, that would be tougher for CBS isn't streaming, it's linear TV. But Paramount plus is really small in streaming. It's 2% of total engagement. If the regulator is concerned about a market definition of streaming, then the Paramount merger is a lot easier to get through. If the regulator is concerned about a market definition, which is television, a much bigger market because it encompasses streaming, but an even larger linear TV market, then it's still easy for Paramount to get through because their total exposure would be less than 10% of the total TV market. So there is no market definition.

[A]

The definition that Netflix wants is that it's all consuming. It's everything that anybody is watching anywhere. And they would compare YouTube, they would compare Disney as a distributor. So if you combine Disney, Hulu with abc, espn, Disney's actually bigger than Netflix.

[D]

That argument by Netflix is fine from a consumer engagement sort of customer acquisition perspective, but it misses the perspective of the town. From a purchasing perspective, the market really is linear tv. The market is long form video. Maybe the market is streaming video, but it's not short.

[A]

They're different businesses.

[D]

It's not social. Yes.

[A]

And I would argue that the market for streaming video is different than the linear television market because one is going up, one is going down. And they are different businesses. When you look at them holistically, I would argue that I don't know that a regulator would.

[D]

The regulator's job is to evaluate the public good through a lot of different lenses. And if they do decide that the way video is made and distributed needs to remain competitive. Then they should look at this market definition more narrowly.

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[A]

Okay, so do the Ellisons need to go higher their bid? I mean we are taping this on Monday afternoon. Maybe they will have gone higher by the time this posts. But $30 a share to me is an increase, but doesn't seem like that much more of an increase for the board and the shareholders to re engage on this. Am I missing something there or do they need to go higher?

[D]

This afternoon in the Post, David Zaslav invited paramount to offer 35, which would. The Post's opinion was that that would cover the breakup fee payable to Netflix in case Warner would decide to dump Netflix and some incremental premium for the Warner shareholders. Stepping back, I think that there is a price at which Warner should feel well enough paid for the regulatory and financial risks that they see that they would just have to go with Paramount. And part of that is going to relate to what Netflix does next. I mean Netflix stock was down almost $5 today because the market's concerned that they might try to compete at a higher level.

[A]

Yeah, and at some point if the stock keeps going down, it gets rid of the justification for doing this in the first place. Isn't there a collar on this? Explain the collar.

[D]

The collar relates to the 15% of Netflix offer about $4 per share in stock. And at lower Netflix stock prices, Netflix owes Warner more shares.

[A]

Right. And it starts to become an issue for Netflix.

[D]

It doesn't. It doesn't. I mean you're talking about variance on.

15% of the offer price variance on 15 billion. And Netflix market cap is 500 billion. So they can handle the volatility.

[A]

But it does factor in and the Zaslav factor here. Ellison pretty clearly believes Zaslav wanted this to go to Netflix from the beginning and essentially shoehorned a deal there. How much does that even matter? Like so what if the offers are comparable and you have these flashing red lights on Paramount with the overseas money and with the Larry Ellison factor. Like so what if Zaslav wants Netflix to have it?

[D]

Warner Brothers is a non controlled company. It's a common stockholder driven company. And David Zaslav is a loyal servant of the board of directors who were there to oversee Sheryl.

[A]

Although we also learned that John Malone was like in some of these conversations, he seems to be a loyal servant of John Malone who controls the board.

[D]

My point is that at a wide enough spread, David Zaslav will sell this company to the highest bidder. The ord's view seems to have been that the offer by Paramount was close enough to the shareholder outcome that would come from Netflix plus the residual value of global networks that in such a close call you could value the Netflix synergy forecast. You could do the deal with Netflix on the basis of the much gentler Synergy strategy at a much higher price. It will be harder to convince shareholders that that should be their driving motive. And just to be clear, the synergy strategy, the preference of the Warner Brothers board for Netflix synergy approach is not just meant to benefit Hollywood. It's also meant to support the continuing vitality of Warner and HBO as businesses during the pendency of the merger. Because one really valid concern of the Warner boards is that none of these deals, none of might pass regulatory review. And if Warner's board chooses Paramount or Comcast for that matter. And if the Paramount deal ends up failing, regulatory review and the human capital at the studios have been anticipating being fired for two years, that's a worse outcome for the ongoing value of this business. Yes. Than if they're in Netflix hands expecting to have a bright future.

[A]

And we know this because Warner's has been through a couple of these mergers before and nothing on this scale where you're Literally putting together two studios, but they've had new owners coming in, promise synergies, promising synergies before, and it does lead to chaos and brain drain. It's a. It's a problem. So why, if this is, if the whole valuation of the spinoff companies is such an issue here, why doesn't Ellison just revise his bid to go after studios and streaming only and compete with Netflix mano a mano?

[D]

Because Ellison doesn't have a stock like Netflix does that trades for 35 to 40 times earnings. And as a result, he just doesn't have the currency to compete purely on price for the same asset as Netflix.

[A]

You think that's true, even with the second richest man in the world as his backer?

[D]

He has the money, but he doesn't have the financial accretion. I mean, that money of his father's has a cost of capital, and it's lower than a stock that trades for 40 times earnings.

[A]

Okay. All right. So this has been very wonky. And I want people in Hollywood to have a takeaway here where they can go to lunch and dinner parties this holiday season. And when people say, who's going to get this company? They can have an answer. So what is your answer?

[D]

Paramount should win this because Paramount is the easier regulatory review in the United States and in Europe. And they maybe. And they need it. And they need it the most.

[A]

And they needed the most. Okay, that's. That's what I've been saying from the beginning, that Netflix doesn't need this. Paramount does.

[D]

Netflix ought to be extra motivated, though, because now that they've shown the world that they want it, the world will be concerned that they might also feel that they need it. The market's now worried about Netflix motivation being somewhat offensive and somewhat defensive. And so you might, if you're Netflix, you've let that cat out of the bag, you might want to finish the job. So this is going to stay interesting.

[A]

I know. Is this. Is this a scenario where Netflix might have, like, mortally wounded itself? Like, is this an unforced error that is going to lead to them, like, driving off a collaboration?

[D]

In the short term, they may have morally wounded themselves. From a stock market sentiment perspective. They've done nothing to their business that will cause them any harm. And all it would take to repair stock market confidence is a couple of good quarters.

[A]

Exactly. Yeah. This is not Quickster.

[D]

It's not.

Good reference.

[A]

Yeah. All right, thank you very much, Peter. Appreciate the time.

[D]

You too, Matt. Thanks.

[A]

We are back with the call sheet. Craig, a little Lighthearted diversion here from the seriousness the Golden Globes nominations came out.

[C]

I take the Golden Globes very seriously.

[A]

Sorry, I did not mean to insult you. The Golden Globes, the bane of my existence. The worst award show, the most. The for profit enterprise known as the Golden Globes that seeks to extract money in every single aspect of what they do. Down to the fact that they have six nominees in all the categories. Why? Because they can get another star in the room and they can get more submission money out of all of these.

[C]

People and they have added podcasts of which a ringer show. The ringer is now a Golden Globe nominated entity. So that's fun.

[A]

Good for Amy Poehler. I'm very happy for her. My only takeaway is from looking at the nominations. We're not going to go through it. If you want to go through the Globe zombs, go to the big picture at other pods. But my one takeaway was I think this, the way it's set up, it actually potentially helps Michael B. Jordan a lot because he's nominated for best actor in a drama and he doesn't have to go up against Leo or Timothee Chalamet because they are both in the comedy category. Their movies are classified as comedies. So Michael B. Jordan can beat out like Wagner Mora or Joel Edgerton in Train Dreams. He I think will get a win and will position himself to gain in the best actor race.

[C]

Yeah, it's a great three headed race. I mean just from a star power perspective, it seems like this year is going to have a pretty decent race. Leo versus Timmy's awesome.

[D]

Michael B. Jordan's great.

[C]

So I hope he does win and that increases his odds of getting nominated.

[A]

Good for Dwayne Johnson got nominated for the Smashing Machine. See this is the problem with having six nominees in two separate acting categories. Twelve actors are nominated for best actor at the Globes. So you're going to let in someone like Dwayne Johnson who's a big star and has been campaigning relentlessly. There is no way he is making it to the five that get nominated for the Oscar.

[C]

Yeah, but, but who cares?

[A]

He'll be able to say I'm a Golden Globe nominated actor and I'm a serious actor now that doesn't bother me.

[C]

To me, what's the point of the Globes if not to put as many celebrities in a room as possible and we get to watch that and promote the movies and that's fine.

[A]

Yeah. The problem is people talk about it like, like it matters, like it's a real like entity. It's a for profit entity voted on by 300 random foreign journalists. Now, we used to know who the HFPA was. Now we barely even know who these people are. And yeah, I mean, they put a Netflix movie in the outstanding Achievement in Box office category. K Pop Demon Hunters nominated for best Box Office Movie, as was Avatar, which.

[C]

Is not out yet.

[A]

I know. Which has no box office yet. At least we know that one's gonna be a huge hit in theaters. K Pop Demon Hunters didn't even get released in theaters until it was already a hit and then they made, you know, a couple million bucks just putting it in as a stunt.

[C]

Yeah, Netflix should hold onto that as they bring in Warner Brothers and be like, look, we get, we get Box office achievement awards at Netflix.

[A]

People are going through the nominations and noting if Netflix and Warner Brothers were combined, how much market share they would have over the globes. And it's pretty significant. Not that the globes matter, but my prediction for today, let's look at the best podcast category. Let's do a non, non winner prediction. I think the whole point of the category was to get more stars in the room. And I think the way that they made these nominees, they're going to get them. I think all of the nominees are going to show up in the best podcast category.

[C]

I think I agree with you. I mean, you can run through it really quickly. Armchair expert. I think Dax Shepard will be there.

[A]

Dax is going to go.

[C]

His, his wife is nominated for. Nobody wants this and the show is nominated. I think Alex Cooper.

[A]

Alex Cooper will go. She loves attention and media. Right.

[C]

I don't know why you wouldn't go if you got nominated for a Golden Globe, even if it's ridiculous. I mean, you get to sit next to Amy.

[A]

Well, if it's off brand, by the way, the people that were upset about Joe Rogan not getting nominated. Joe Rogan didn't submit. I looked at the portal. Someone sent me a screenshot of the portal that the voters had to, you know, sample all the podcasts. Only 19 out of the 25 that were eligible and shortlisted actually submitted, and Joe Rogan was not on that list. So Joe Rogan did not submit the time. The New York Times didn't submit for the Daily either. So these nominees, they are the best 6 out of 19 eligible podcasts.

[C]

So congratulations, Amy Poehler and the smartest guys I could see going.

[A]

I think one or two of the smartest guys will go. Will Arnett will go because he's in contention for his other Thing for. Is this thing on? I don't see Bateman going, to be honest.

[C]

Oh, I don't know. If you're already nominated for. You can go to support Will Arnett and also your own podcast. I think they'll go Polar, I feel like usually goes to things like this. And if she's nominated, maybe, maybe that feels weird for her to go when she's typically nominated for something else, but.

[A]

Maybe they'll have him present. They've done that before. And Bateman's also the star of Zootopia too, which is nominated.

[C]

And then the remaining two shows are the Mel Robbins podcast and up first, which. Do you have a feel for those two?

[A]

I don't, but I got to assume it's up first is an NPR podcast. So they're. I'm sure they're gonna go. And Mel Robbins, I don't know. I don't know anything about her.

[C]

It's. This is one of those things where on its surface, when you first heard about it, the best podcast category seemed lame. And then I'm sure once you actually get nominated, you go, ah, you know what? Maybe I'll go, what if I win?

[A]

Of course it's a party. You know, what's promotion? Why not? You know, it's only if it's off brand. Like if it's Theo Vaughn or Joe Rogan. Those people. And Ben Shapiro was campaigning, didn't get it. They couldn't. After all the attention on the campaigning and the money he spent, they couldn't nominate him because then it would have just been, oh, great, he bought his spot.

[C]

Well, it's an important category and this is a big year to kick it off.

[D]

So I'm excited.

[A]

This is the most important category. Perhaps now something to look forward to. Who will show up at the best podcast nominees? That's the show for today. I want to thank my guest, Peter Cipino, producer Craig Horbeck, artist Dusty Lopez, and I want to thank you. One more show this week.

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[A]

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