from the merge-ALL-the-things! dept
We’ve repeatedly noted how the Ellison family’s acquisition of Warner Brothers (after their recent acquisitions of CBS and a part of TikTok) would be very bad for a long list of reasons. The gargantuan debt load will result in unprecedented layoffs and price hikes. And the Saudi funding, and Larry’s anti-democratic interests, raise no limit of propaganda and foreign influence concerns.
It’s also worth noting that absolutely nobody in charge of this new Paramount appears to be competent.
But because our federal government is currently too corrupt to function, there’s zero real hope this merger gets blocked on the federal level. That leaves a fleeting coalition of states, who’ll likely have to band together to file a long-shot lawsuit to try and scuttle the deal.
To get out ahead of such a lawsuit, Larry Ellison’s nepobaby son David, freshly gifted not one but two giant Hollywood studios, has been making the rounds in California insisting to everyone that the merger will be great for Hollywood and for jobs. This was what he said in a response to California lawmakers about the precarious nature of the deal:
“I firmly believe that uniting Paramount and Warner Bros. Discovery presents a unique opportunity to build a true champion for the creative community, one that can and will bring more stories to life, support filmmakers and talent with real scale, and compete effectively on the global stage as an independent media leader,” Ellison said in response to a question about the merger’s impact on California and Hollywood specifically. “That is the true legacy of Hollywood, and my promise to you is to build a stronger Hollywood, by keeping both of these legacy studios operating separately, thereby preserving and potentially increasing jobs.”
None of that, to be very clear, will be happening. And outside of some (more) tax incentives thrown at the already rich, neither California Sen. Adam Schiff nor Rep. Laura Friedman (who peppered the Ellisons with some light performative questioning), can or will do anything meaningful to thwart the consolidation or hold the new, bigger company accountable for false pre-merger promises.
Any real hope rests with a handful of state AGs, and their road will be a very rocky one now that the federal government has rubber stamped the deal.
Hollywood is already rocked and reeling from COVID, previous pointless consolidation, and massive migration of production overseas. You’ve got numerous high level technically skilled production folks resorting to driving Ubers amidst historic layoffs.
Enter Warner Brothers, a company that’s been acquired four times in the last two decades, with each acquisition being more pointless and devastating than the one that preceded it. With this merger having just unprecedented levels of debt at a very precarious time for traditional TV:
“Look, there is incredible IP sitting inside of Warner Bros. Now, the flip side is, you paid a lot for it. You also leveraged up to seven times. Seven times debt to EBITDA leverage; that’s a lot of debt that you’ve got to work off over the course of the next five years. Plus, you got a lot of linear TV, and like we were just talking about earlier on the podcast, nobody’s watching linear TV. And so you spent a lot of money to get assets that are in secular decline.”
That debt does not get paid off by Larry Ellison or the Saudis, or by a massive boon in badly-automated AI batman slop.
It gets paid off by brutal layoffs, corner cutting, production cuts, and consumer price hikes. That’s not up for debate. There’s also zero indication that the kind of folks leading CBS and Paramount are any more competent than the kind of folks we saw at AT&T who loudly and repeatedly demonstrated they had no idea what they were doing.
The accumulated debt from the CBS and Warner Brothers mergers, combined with Larry Ellison’s precarious footing atop the AI bubble, combined with a potential economic collapse at the hands of our bumbling kakistocracy, together form a super unstable cocktail that could result in this merger being one of the more disastrous “business” exercises conceived by modern man.
Every single time Warner Brothers changes hands the press and public are peppered with claims that this will unleash vast new innovation and jobs, and every single time that winds up being a lie. Anybody claiming this time will magically be different is either lying or not particularly bright.
Filed Under: consolidation, david ellison, film production, hollywood, larry ellison, layoffs, mergers
Companies: paramount, warner bros.
