Larry Ellison’s Big Stupid Gift to His Big Son

Media is a business all about dreams, and Larry Ellison’s son has big dreams. This may explain why the case for Paramount buying Skydance for Warner Bros. doesn’t hold up. Discovery.

In October, Warner Bros. itself for sale, Which resulted in a number of bids. The two shows we’re concerned with are one from Netflix and another from two Nebo kids: David Ellison and Jared Kushner. David Ellison is the head of Paramount, but he is best known for being Larry’s son. Jared Kushner is best known for being Donald Trump’s son-in-law, although he also started out in the business Taking over his criminal father’s company When Charles was in prison; His company is involved in financing.

Netflix won the bid. Warner Bros. has signed a deal. An agreement to sell most of its business – the studio portion – to the streaming giant for $83 billion, including debt. (This number is slightly more than Five times the market value of Paramount.) Warner Bros. felt… It divides itself into two companiesThe acquisition of Netflix and the cable networks gave shareholders a value of $31 to $32 per share, instead of the $30 per share that Paramount was offering, according to The Wall Street Journal.

However, Paramount announced a hostile bid to acquire Warner Bros. for $30 per share, making the total With a value of $108.4 billionIncluding debts. Apparently, Paramount was after Warner Bros. Over the past couple of years, even before Ellison père et fils entered the picture. But it is now backing the deal with the Ellison Family Fund, which includes a treasury of about 1.16 billion Oracle shares. The current offering from Paramount is not the “better and last” – at least, according to New York Times – So this stupid fight will likely continue for a while.

Let’s stop here and note that what Paramount is doing makes no sense. At least, it doesn’t make business sense. maybe I can see a reason for the streamers to merge, switch HBO Max to Paramount Plus, and get a bigger library. But HBO Max isn’t that big, and its library isn’t exclusive. So why would Larry Ellison trade Oracle stock (at most, the AI ​​multiples that rule the world) for trash media multiples? If the elder Ellison is serious about this, I’d love to get some of what he’s smoking.

In fact, it appears that Warner Bros. She also worries about how serious Ellison Sr. is. Part of the reason why Warner Bros. agreed. On Netflix’s offer is that its board was “concerned that Mr. (Larry) Ellison did not personally underwrite the offer in his name and plans to contribute shares to the deal through a trust with properties that could be amended at any time.” books New York Times. Yeah, I’d be worried about that shit too!

There are indications that Larry Ellison does not see his son’s vision as a certainty, as he is not the only funding involved. The transaction relies on third party funds, which include $24 billion from three Middle Eastern funds. This is in addition to Kushner Affinity Partners and Apollo Global Management, both of which manage significant funds from other investors in the Middle East. Larry Ellison’s confidence, which he can change at any time, is just A Support on this financing.

However, Larry Ellison called the White House to complain about antitrust concerns in the Netflix-Warner Bros. deal.

At this point, you’re probably wondering what David Ellison’s argument is for combining Paramount and Warner Bros. Here’s what he had to say: “Unless you can build a technology product that can really compete with what’s coming out of Silicon Valley, you won’t be able to compete,” said David Ellison: according to Hollywood Reporter. “And that’s been one of the big problems with legacy media, is that they don’t actually understand this skill set and how important it is, and that it’s actually a combination of great content working with a technical product side by side, and that’s how you get this business to grow and scale again, and you need both.”

This is empty nonsense. In an open letter about his company Skydance’s acquisition of Paramount, David Ellison A It plans to integrate Pluto TV with Paramount Plus – wowie zowie, combining streaming platforms! There is also some way to plan for the use of AI “augment” the Company’s intellectual property and “content.”(You hear, directors? You don’t make TV shows or movies. You make slopes for the slope production machine.) And it likely means improving recommendations Trying to use the TikTok algorithmsince the father is involved — at least, if the TikTok deal goes through. This is Paramount Stadium. This is also likely to be a Warner Bros. presentation.

David Ellison’s plan for Paramount, as much as it is one, reveals two things. First, David Ellison wants to bring Netflix into his company. Second, he doesn’t understand how anything works.

If I wanted to turn Paramount into a technology company, I might try to tie product placement in Paramount’s existing library to actual shopping, for a modest fee to the brand, and perhaps a portion of any sales made. Or figure out how to make streaming faster and more reliable, or invent new compression methods to make delivery less expensive. Maybe I’ll move into video game streaming, opening up a huge market for my platform – which it is Exactly what Netflix is ​​doing now. To do everything – or anything! — With that in mind, I’d probably hire an impressive tech employee.

Instead, the flamboyant Ellison was hired Fellow know-nothing Barry Weiss. Weiss is the head of CBS News and is on TV for a reason Record interviews flop Instead of doing her actual job, which is running a news organization. Hey, did you hear? That David Ellison promised the White House that he would do for CNN what he did for CBS News? It’s pretty funny that he’s offering to pay a bonus to get the TV business off the ground faster, don’t you think?

I think we could engage in a culture war argument: Both Ellisons are simply endorsing Trump’s desire to destroy the supposed bastion of leftist cable news. (The revanchist right was particularly angry about their inability to control cultural products as they control politics.) Very stupid. It was a television broadcast Its importance has declined for some time now. As of October, streaming accounted for nearly half of monthly TV viewing. In the streaming wars, there are only two platforms that matter: Netflix and YouTube. Combined, these two broadcasters represent just over 20 percent of the total television audience; TV broadcast As a whole It represents 23 percent. Paramount Plus and Pluto TV together account for approx 2% of the market.

Netflix, as a streaming platform, is stealing viewers from cable and streaming TV. David Ellison’s big idea for the competition is to bring together streaming platforms and make vague noises about AI — and, I guess, television? Without any actual ideas, there won’t be any Netflix multiples coming into Paramount stock.

Now let’s think about Netflix, which… In reality Technology company. Making a direct comparison between the deals is a bit complicated by the fact that Paramount wants the entirety of Warner Bros., while Netflix wants to spin off its declining cable properties, which includes CNN. Maybe that’s clever! What Netflix gets in the deal is a massive movie library to which it doesn’t have to negotiate the rights — and from which it may be able to generate royalties, if it chooses to continue licensing to competitors. However, historically, Netflix doesn’t do this, which could mean it would give consumers a fairly strong reason to switch streaming services.

By comparison, it’s not clear what the Ellisons think they’re doing. Sure, merging with HBO Max and forming a single streaming service could be helpful, but that takes Paramount Plus from 2 percent of the market to 3.5 percent of the market. Likewise, Paramount could make a bunch of Hollywood history exclusive to its streaming service, but so what? You’ve already got movies, TV shows, and the means to achieve more. Is David Ellison really trying to buy his way to relevance?

Another thing about Netflix. It has two CEOs: Ted Sarandos, who is Mr. Hollywood, and Greg Peters, Which deals explicitly with technology. David Ellison has the experience and talent that neither of them has. Before founding Skydance, Ellison personally paid a third of the amount Budget of $60 million For the bomb AirmenWhich starred Ellison and James Franco. The film grossed $18 million. He subsequently founded Skydance, and his father allocated $150 million of the $350 million the company had raised to finance films with Paramount. Skydance’s run has been uneven, with hits like True grit Bad smells like Terminator: Dark Fate. Ellison quit acting in 2010 Taylor Lautner has backed out of the film Ellison wrote after discovering that Ellison also planned to act.

So David Ellison took his imagination elsewhere. His new vision seems to be to become a mogul on a par with Sumner Redstone, Barry Diller, or Rupert Murdoch; We have a real life Kendall Roy On our hands. The question now is how committed Larry Ellison is to buying this dream for his son. It is certain that he was involved in the early negotiations for Warner Bros. Yes, he phoned the White House to try to sabotage the Netflix deal. But none of this is nearly as serious as Oracle stock. The acquisition of Warner Bros. It doesn’t do what’s needed to turn Paramount into a technology company either. So, much like Warner Bros. Board of Directors, I don’t think Larry Ellison would trade Oracle stock for a media company. This doesn’t make any sense.

Under what circumstances would Larry Ellison decide to do this anyway? There are two things I can think of. Both have to do with Oracle, which I turned to Availability of artificial intelligencewhile taking on a massive debt load in the process. The company spends honestly Shocking The amount needed to build data centers, Based on the revenue you expect from OpenAI – Which may not be able to fulfill its obligations.

We are in The era of guerrilla technology regulation. Buying the parent company of CNN, which It is known that Trump hatesAnd rephrasing it to flatter him maybe Get the political capital Larry Ellison needs to bail him out if OpenAI fails to meet its obligations. It may also make him the first line in federal contracts. Who can say? to Our TV-addicted presidentHaving two channels is probably the most effective form of compression. But if that’s true, then Paramount’s bid to buy Warner Bros. It’s not about turning a media company into a technology company, it’s about finding another way to support a staggeringly corrupt administration. It’s also a risky gamble that no one who opposes Trump will come to power any time soon.

The second possibility is that Larry Ellison has already realized that AI will not live up to its hype. If so, he’d better spend the money while he has it. Maybe buying his son’s love is worth it. After all, Larry Ellison already is The most important shareholder in Paramount. Why don’t you expand the stage a little?

revision: Netflix’s offer is worth $31 to $32 per share, not $31 to $31.