Dem
47
GOP
53
One of the first things all wannabe authoritarians do is capture the mass media. If TV and radio stations and
newspapers tell it like it is the way the regime wants people to believe it is, it is harder for the opposition
to grow. The fight over Warner Bros. Discovery illustrates that very well.
WBD is a media conglomerate that owns many media properties. These include a large number of movies, as well as studios, production facilities, and dozens of cable channels, from Animal Planet to Turner Classic Movies. Since cable is not a growing business, to put it mildly, WBD is not doing well financially and put itself on the auction block. Netflix bid $83 billion for the movies, which makes some sense, since Netflix needs content to stream. Management of both companies agreed to the deal. All that was needed was for the stockholders to ratify it.
One teeny weeny itsy bitsy part of WBD that is totally irrelevant from a business perspective is CNN, which makes too little money to matter. Netflix was not interested in it but Donald Trump was really, really interested. It was the movies and studios he didn't care about. So he injected himself into the process. He talked to Netflix CEO Ted Sarandos. They haven't said what was on the agenda, but Trump might just have dropped a hint that the DoJ would never approve the deal. CNN has reported that Sarandos left the White House with a glum look on his face.
At the same time, Larry Ellison, a crony of Trump and usually the 6th richest person in the world (depending on Oracle's stock price on any given day), asked his son, David Ellison, who runs Paramount, to bring a bid for WBD. He bid $111 billion for the whole company (including CNN). Guess what? Netflix dropped out of the bidding, so Paramount will end up buying all of WBD, including CNN. Then the Ellisons can install a Trump-friendly CEO who knows nothing about media or news to run CNN, analogous to their installing Bari Weiss to run CBS News, which Paramount already owns. Trump will be pleased as punch and the DoJ will approve the deal in a heartbeat.
If CNN becomes Fox Lite, viewers will leave and eventually Paramount might just kill it off altogether. From Trump's point of view, he couldn't have hoped for a better outcome. CNN is small potatoes for Paramount and it could subsidize it forever if it wanted to. If it can successfully turn it into Fox Lite and draw enough viewers away from Fox News, it might survive in that form. But probably not. The three cable "news" channels are competing for slices of an ever-smaller pie, as some people cut cords, and other TV viewers (particularly the type who like Fox) go to the big living room in the sky. There may not be a market for three such channels much longer, particularly for the one that has lurched around from editorial viewpoint to editorial viewpoint for most of the last decade.
Let's take the 10,000 ft view here. The government doesn't want company A to take over company B because it wants company C to take over company B for political reasons. This is how things work in China, where President Xi Jinping makes all the big decisions about how businesses operate. We call that communism. How is that different from the U.S. now? And then there is government ownership of the means of production. Will history record Donald Trump as the first communist president? It should.
How will this work out for the various parties? Paramount is going to have to borrow $90 billion to pay for the deal. At (for example) a 5% interest rate, that is $4.5 billion a year just in interest payments for some movies and a bunch of dying cable channels. And Paramount was already deep in debt even without the deal. As a consequence, Paramount is going to have to go through a drastic round of cost cutting, which is going to cause the company to lose a lot of talent. Also, in addition to betting heavily on cable TV, the Ellisons are also betting heavily on people going to see movies in theaters. It plans at least 30 new movies a year. With WBD studios, it will have the capacity to make them, but are people really going to stop streaming and go to the movies enough to make the deal work? Count us as skeptical. (V & Z)