The Bidding War for Warner Bros. Discovery Has Begun

According to Reuters, Warner Brothers has received preliminary buyout bids from Paramount, Sky Finance, Comcast and Netflix. This isn't just another Hollywood transaction. This is hbo, Warner Brothers, DC Comics and a century of American storytelling suddenly on the auction block. Paramount, backed by billionaire Larry Ellison son, want to buy the whole company, including the fading cable networks. Comcast and Netflix are mainly eyeing the studio and streaming business. However this ends, it almost certainly means fewer companies controlling what Americans see, hear and believe in entertainment and news. So what's the real message here? We're going to see more and more consolidation, seemingly bad, but every single day when new superstars get millions and millions and millions of followers and subscribers to their podcast. I'm not sure any of it really matters right now. We're going to turn to our favorite guest of the show who's a media expert and really knows his way around the legal world, political world and media worlds. We're joined by Adonis Hoffman. Adonis is a former senior legal counsel to the Federal Communications Commission and is an attorney, expert consultant on all matters of consolidation and media. Adonis, thanks for joining us today.

Good morning, T.J. nice to be with you.

Thanks for joining us. Give us your assessment of the players involved. We've got the Ellisons and Paramount. There's Comcast, there's Netflix, all big three well known media companies, not all with as deep a pockets as perhaps Paramount. Give us your overall assessment of who's the leading candidate to win this bidding.

I would have to say TJ and great introduction. I would have to say that the leading candidate at this point in time, where we are today would be the Paramount Sky Corporation led by David Ellison. And I say that for a couple of reasons. One, they were first to throw their hat in the ring. Number two, they have the wherewithal, financial wherewithal to be a serious bidder for this property. And, and three, they've got the political capital, seemingly political capital with the good graces of the Trump administration.

That to me, let's break, let's break that down. Let's break that part down a little more. Larry Ellison, longtime supporter of Trump and the administration. Brian Roberts, head of Comcast, is one of the big donors for the new, whatever you want to call it on that East Wing, the big ballroom, but supposedly is not liked Trump. And then you have Netflix, Netflix, Reed Hasting, perceived as the worst of all things, a Democrat in the Trump circle. So that that arguably would be a rationale for Warner Brothers in the case of a tie, saying we want to go to Paramount, but do you think it's going to be a huge consideration.

The political aspect, I think is a, is a serious consideration for this administration, which is imposing different conditions, different set of conditions. You know, the rules are not necessarily changing, but the conditions for adopting deals and making them go through are very much in play. And I do think that, you know, let's assume all things are equal, then you got to give the edge to Paramount. And I'm, but, but that, my caveat is that I'm not sure all things are equal. So I, I, you know, having not having seen the bids, the bids are not public. But assuming that Paramount comes in with a strong bid to acquire the entire Warner Brothers discovery enterprise, the studio, and.

You'Ve been involved, you've been involved with mergers and sales before. What. How much of an incentive does Warner Brothers have to just one sale be done with it versus okay, they want this P. They want this studio. And this network would like CNN and this network would like another piece. What's the, I mean, ultimately they want the most money. Does it really matter to them if some one person buys it?

That's a good question because it's a balancing test. So on the one hand, you're right. One sale gets rid of the regulatory burden. It gets rid of the administrative hassles and very importantly, it signals to the capital markets, to Wall street, hey, look, this transaction was done. Our valuation, is it done and finished. A piecemeal transaction or, you know, doing it in parts would tend to draw out the process from a regulatory perspective. Number one, two there, it raises the question marks to the capital markets, the investors. Well, you know, we know what the studios are worth. We know what the content is worth. But you know, if you strip them apart, it's like, you know, selling a car for parts. Well, you know, it may or may not be more than the sum, but it could be some. So I would say that the board of directors at Paramount is going to consider that. And keep in mind this has not been, it's not just a, you know, come lately process. Paramount has been courting potential suitors for a little while now. And I've got to think that Mr. Zaslav would like to get a nice package and maybe stick around, but his board certainly would like to see their shareholders get compensated and, and rewarded for their patients.

And Paramount was the first one to sort of raise their hand and say, we want this. And for a while it looks like they might be the only ones. But Netflix, Comcast, they all have certain interest there. The, the attraction to Netflix is they could now do deals with Hollywood and say, hey, we're going to have your movie get in actual theaters. We're going to have your movie on tv, TV networks, something they can't really do now. Comcast could really expand its footprint and have a lot more content. And Paramount just continues to gobble up everything and become arguably the largest player in all of Hollywood. So they all have certain strategic interests as to why this would really help them walk our viewers and listeners through the process. They were all asked to give a bid by this past 30 Thursday. Is it strictly whatever the best bid is? That's it. Or can. Can Time. Can Warner Brothers say, hey, Paramount's given us $26 a share, and then go to Netflix and say, we'd really rather work with you? Can you just match it? Can they, can they go back and forth? Is that how these sorts of deals are typically done?

Well, so I'll, I'll say a couple things. Number one, there are synergies for each one of these particular suitors. So for Paramount, there are synergies with the, with the. For Netflix, there's a synergy for getting their content, another very, very significant distribution channel. And for Comcast, Comcast has been in the business of media, so there are synergies there as well. That having been said, to borrow a phrase from my good friend and brother, Denzel Washington in his latest movie, not all money is good money. Right? So, you know, so you've got a situation where, yeah, a bid may come in at near close to $30 per share, but the underlying architecture of that bid may not be what the shareholders and the leaders at Warner Brothers really want to see. At the end of the day, they're keeping their cards very close to the chest, obviously for good reason, and that's a prudent move. But they have, they know what they want to get at the end of the day. And you may, you know, you may have a situation where, and I've seen this before, where a very strong financial bid comes in, but the conditions underlying that bid are not what the, what the shareholders and the leadership would want to see happen. So we could, you know, we just have to wait and see. I got to think again as we started. It sounds as if everything I read, and I have no inside information, just as a matter of disclosure, everything I read suggests that Paramount has a very strong bid and is in a. In. Is in the pole position.

It's. It certainly seems like if they were told, okay, you're a little under what Netflix did do you really want this? They could just say, the Ellison boy could go to dad and say, hey, dad, got a couple billion dollars more of change in the sofa we could just put into this. We could get it. You know, he could say, yes, because they've got so much more money than the other two players. So it will be interesting to see. Now, there's also been talk, I don't know how relevant it is, you put your political hat on. Senator Elizabeth Warren has said she's very concerned about a, more consolidation, more monopoly in content people see on their screens. B, the consolidation of news under essentially one person, an Ellison, where it wouldn't just be CBS News, what they've already gained control over, but this would be cnn. So those are two of the premier properties of what most people would consider serious, traditional journalism in America, all being run by someone with close, close ties to the current administration. Now, you can make a case that Elizabeth Warren has no more influence than I do at this point as a Democratic member of the Senate. But do you think there will be any more vocal opposition from anyone in either party because of these issues?

Well, I have the utmost respect for Senator Warren. She is a bright mind, a thought leader, a true leader in the Senate and has been so for a while, particularly in terms of corporate responsibility, corporate governance and the like. She's a powerhouse there. But that having been said, she's never met a merger that she liked. So, you know, she. We can go back. I mean, I've been doing this for a while. Senator Warren has been on record opposing almost every possible merger over every. Every merger going back over the last, let's say, 10, 15 years. So, you know, you have to take that with a grain of salt. Is she influential? Absolutely. Within the Senate Caucus and Senate Commerce Committee and Judiciary Committee, Very influential. And she tends to lean into all of these. She, Senator Mark and others tend to lean into these. These transactions in a way that many other senators don't. She gets involved in the details. She sends letters to the fcc. She's involved with oversight. So she's got a. Certainly has something to say about it. And I'm sorry, I lost my train of thought thinking about this.

That's okay. So we should. We should know by the end of the year who. Who Warner Brothers Discovery decides to go with. So we'll update all of our viewers and listeners there. Moving on. MAGA podcast turned politics into a shopping cart. Bloomberg reports that YouTube's biggest conservative podcasters now run what amounts to a permanent ideological qvc. Joe Rogan, Ben Shapiro, Candace Owens and Tucker Carlson's read ads selling gold doomsday food kits, anti woke apparel, Christian nationalist cell service and manliness razors. Advertiser now spend about $5 million a month on these Host red ads. Everyday purchases are framed as political acts. Vote with your wallet. Defend freedom, support the cause. The right has quietly built a parallel media economy while mainstream outlets still underestimate how powerful this is. Adonis, you've been following the media for a long time. I mean you and I certainly remember the rise of Rush Limbaugh because of deregulation and syndication allowing stations to carry content. I mean I believe his show started in 87. I was on one of his original stations hosting a show in Tallahassee, Florida of all places. So I was an early listener to him. But he essentially was a real trailblazer in something like this. This ideologically positioning of a lifestyle and brands. What do you make of these current iterations? And are we going to get to the point where there's real backlash? I mean, Ben Shapiro, you could say has an intellectual approach to issues that fair minded people would say, well I don't mind being associated with that. But Candace Owens spews the most hatred, vile nonsense, talking about the, you know, the sexual body parts of the first lady of France, on and on and on. Just spewing nonsense about how the first lady is really a man. Where do you see this going as far as advertisers and the rise of the conservative media commentariat and the BRO podcast.

So earlier this year I did a deep dive. Our firm did a deep dive research on the future of conservative media. What we found was really interesting. That was published by the Media Institute. If anyone wants to go there and find it. It's fairly comprehensive. Look at that particular market. And what we found were a couple things. Number one, conservative media, as you put your finger on, has been evolving and growing. It is, it is a distinct discrete media marketplace, number one. Number two, it is developing its own set of rules in the sense forget about the content just for a moment. Just looking at the, again, the architecture of conservative media. A lot of podcasting, streaming outlets that are blooming and advertisers have taken note of that and they're getting, you know, advertisers go where the eyeballs are, plain and simple. Advertisers for the most part, unless there's some other really, really sort of unique circumstances that surround a media or the content they don't want to get, they would, where they would not want to get close to that for the most part, the more eyeballs there are, that's where you're going to find the advertising dollars. That, having said, think about the names you just mentioned. Joe, Rogan, Shapiro, These guys have, even Candace. Oh, they've got millions of eyeballs. And so advertisers want to be there. Now, certain advertisers are drawn to certain content. So I'm not sure if Procter and Gamble and, you know, Huggies is going to be there, but they're going to be other kinds of advertisers that certainly gravitate. And the last thing I'll say about this is that we live in a market where there is complete financial liberalization with a small L. So where anyone can become a media company, in a sense, and where as long as you.

Are, I'm proof of that, as long.

As you're producing what people want to see or hear, you have the opportunity to build a big audience and to monetize that in the marketplace. That's what's happening. And so we also see the proliferation of, you know, not, not quite a million voices, million flowers blooming up to draw an old cliche, but, you know, various content producers and providers that say, we've got something to say about it. Now, again, I don't get, I won't get into the content wars. We all have First Amendment rights and, you know, freedom of expression. And I'm a big First Amendment proponent. I serve on the First Amendment Advisory Council at the Media Institute for many years. Strong, strong proponent. So as long as you're not harming anyone with your speech, and there are some Supreme Court decisions that talk about that, but have at it, go at.

It marketplace, at what point, at what point is democracy itself harmed if most of the ideas circulating through the public is just absolute nonsense? It's just absolute bs. Part of, you know, part of a founding principle of a concept like democracy is that people can more or less get some sense of accurate information of what's going on in their society and hold elected officials accountable if every single thing is fake or wrong. Can a democracy really exist?

Well, one of the wonderful things about America, this country that we both live in and love so much, is that we have, you know, we have a constitution, we have a First Amendment, and we have the legacy that says, you know, government should not be in the business of telling you and me and anybody else what we think. So I might disagree completely with what, you know, my neighbor has to say, but that my neighbor has the right to say, to say that within certain limitations and Boundaries. Do we want the government to be in the business of the content police? I mean, that's, you know, that's, that's a, that's a current issue that's being discussed at all levels in law schools and, you know, within, within the legislatures, et cetera, because we've seen now the, the development of, of situations that test that very theory. So, you know, that, that, let's, let's put that out there. And the last I'll say is that, you know, in terms of dangerous content, I'm reminded of many years ago, thinking how we looked at certain political movements in other countries, and the phrase that comes back to me all the time is, you know, one man's terrorist is another man's freedom fighter. Right? So, you know, obviously we can, we can say they're terror. And that's not to, that's not to endorse terrorism at all. But there's a perspective we have to.

Keep in mind that's fundamental to the very nature of anyone fighting a civil war. I mean, I don't think it's surprising that people have differing opinions on that. But I look now at polls as recently as a couple of years ago showing a majority, or certainly at least in excess of 43% of Republican voters didn't believe Barack Obama was born in the United States. Now, when he ran for office in 2008, the smartphone had just really come out. Social media had nowhere near the influence, and you certainly heard Birther rumors in 2008. But I think if, if he were running exact same ideological positions today or even in 2016, I think the misinformation campaign would have been so dominant that he wouldn't have stood a chance. And I do think there's simply because the misinformation about where he was born would have permeated the culture in a way it wasn't able to in 2008. We'll have to table this conversation for another time because there's lots more news to talk about.

And that was briefly, I'll put on my law. Law professor had just for one moment, you know, when you got to take, take a closer look at opinion. And so advertising is very much bound by facts, substantiation, truth, proof, proving you can't say something that's not true. As an advertiser, as an opinion producer, you could say whatever the heck you want, and it could be true or could not be true at all. And that's, you know, it could be lying like a rug, as my kids would say, but, you know, you Just you have the right to do that.

Yeah, right. Another big media issue this week. AI pop stars are signing seven figure deals. The Wall Street Journal reports that an AI avatar named Zanya Monet helped Mississippi poet Talisha Nikki Jones land a seven figure record deal after an AI generated R& B ballad she created hit Billboard's hot R and B songs chart. Jones admits the AI sings more powerfully than she can. At least now. Here's the thing that really struck me and shocked me Frankly. At least 10 AI generated songs have hit the charts. Recent tools like Suno let anyone type a lyric prompt and receive a polished track ready for Spotify. Major labels are suing some platforms and artists like Collini and SZA say they despise the technology, but consumers seem to care more about the melody than the ethics. So what's really going to happen here? I remember just two weeks ago, one of my friends said I would never listen to AI music. That's fake, that's phony. And then she said that she had listened to the number one song on the country music charts last week and loved it. And it was great. And oh, by the way, it was completely generated by AI where is this going? I'm sure you, you remember back in the days of the ria, all they did to fight the Napster in the world, but, but they ultimately lost that battle. Is this another battle where the music industry is just going to fight, fight, fight, entrench until it's too late?

So I'll start at the end and then kind of work my way back. I think for, if, if I was advising an artist today, I would say embrace AI technology. Learn it. Get in front of it or get behind it or get your arms around it. Use it to your advantage. Do what? Keenan Allen. Keenan, yeah. Kenan the kid, the young man on Saturday Night Live, and Mark Wahlberg, they've said, look, we, we're going to lend our voices to AI we're going to license our, our, our voices and, and, you know, let. We're going to get behind this thing. So I would say that now going back to AI as a, as a technology utilizing AI, I would say, listen, it's here to stay. And if the industry is going to, it's going to fight it on the, on the, on the margin. But for the most part, the technology's here. Engineers love it. By the way, you know, as an interesting story, I'm a Spotify user and I have my playlist. One day recently, I was listening to one of my favorite songs and it Just didn't sound quite right. It's an old song from the 1970s and one of my favorites, but the rendition was a little bit off. The more I listened to it, it sounded as if it were synthetically produced. I mean, it could tell, you know, the strings weren't quite as vibrant, etc. And I suspect, I don't know for a fact, I suspect it was AI re reproduced or etc. And pushed out. I don't know what the economics of that would be for in the Spotify context, but I do know that that happened. And I listened to a couple of other songs and they were seemingly AI Produced and they actually sound a little better than the original. So I'm not sure if that was good digital mastering or AI but my point is that this is happening and we've got to understand it as a society. If consumers will embrace this technology, embrace the output that it, that it produces, at the end of the day, then I think that the industry has nothing, has no other recourse but to accept it and figure out a way. And it may be they're going to.

Have to adapt faster. They're going to have to adapt faster than they did to streaming music, because that was an unmitigated disaster. I mean, it was great for people like Drake and Taylor Swift, but for so many artists who made their money primarily through CD sales, album sales, it's destroyed their whole careers because they didn't adapt quickly enough. My advice.

Tj, go ahead. I'm sorry to interrupt just on that point. So, but think about the, the. What it, what is done to the, to the market. It's, I think, allowed for a little guy, a small guy, a new. A new artist to get into the game in a big way and produce content and get it out there in a way that perhaps never before. They've never been able to do it before or compete with the bigger incumbent artists in the market.

It's definitely changed. I mean, that's how Justin Bieber came about. He just started playing every day, releasing a new song on YouTube and got discovered. So it is good opportunity for some people. But when you look at the actual amount of money coming into record, you know, record companies and all the traditional sources, it was, it was destroyed. I mean, it was just cut in half. And I don't think that's coming back. If I were putting my hat on to advise a musician, I would say use the technology in a couple of ways to do more songs. Instead of an album a year, maybe you're putting out an album a week. Maybe you're creating your own AI singing voice. I mean, I have my own AI clone where people can have me coach them on their speech or presentation. They see what looks just like me, but it's my AI clone. Maybe the secret is going to be to develop a fan base and then they pay $4.95 a month and you can sing directly to them. Where you incorporate your customer's name in the song is one. The other thing that I think we're still a long way off.

Great idea, by the way.

Thanks. The other area where I think we're not that far off is artists using the AI to generate more of a crowd for their live performance. Because AI can't yet fill a stadium. Maybe at some point people will pay to just see a hologram. And they've done that with a few groups like abba. But people still want an excuse to occasionally get off the couch and get out of the house. And a lot of people like to go see live music. And the biggest rock stars of the world, the Rolling Stones, the who, they learned a long time ago the real money is in the touring. And yeah, you like selling albums, that's great. You like radio play, you like streaming. But if you can create a brand for yourself enough to get people to come see you live, to me, that's the real opportunity for musicians is they've got to use this AI to be anywhere and everywhere to build a following so that people want to go see them live. That's what I think. Adonis, let me give you the final word on this and any other media issue you want to talk about this week.

Oh, thanks. Great to be with you. I would just say on. On this, I agree with you that the artists are to have. The newer artists are going to have to find a way to really embrace this technology and make it and customize it for them. I can envision an artist who's built up an audience and then monetizing their audience by speaking, going to advertisers to say, we've got a voice, here's my voice, it's unique, and put it into your commercials, et cetera. That's one. Just in terms of, generally speaking, interesting times with media consolidation, as you know. So. So again, the mergers are going to continue. Not to be so hyper focused on that, but these are big deals. Nexstar, Tegna, Sinclair, Scripps perhaps are going to be. We'll be watching those things very closely in the coming days. We're coming up on the end of the year where anything can happen. And we're going to be entering into the what they call in Washington the silly season, politics, electorate, election time in 2026. So a lot to be watching out for, TJ and hope you hope you will.

All right, Adonis Hop. And thank you for being our guest today. For more information, go to adonishoffman.com that's a dash o n I s h o f f m dash n dot com for more information. Did I get that right, adonis?

Thank you, T.J. you did great.