The government’s job is to interfere only in the affairs of the aggregate economy. However, in the historic deal between Paramount Skydance and Warner Bros Discovery (WBD), two major companies in the streaming service industry, it may have overstepped the line.
David Ellison, son of the second-richest man in the world and the CEO of Paramount, met with the Paramount board to discuss acquiring WBD. Thinking that the coveted catalog of Warner Bros would make them a true competitor, the board agreed, and Ellison met WBD CEO David Zaslav to discuss the acquisition. All three offers — $19, $22, and $22.50 per share — were rejected by WBD.
WBD next announced it was reviewing acquisition options; it received interest from Netflix, Comcast, and Paramount. In a second round of bidding, Netflix won with the offer of $28 a share; WBD and Netflix entered into exclusive negotiations. When this happened, Paramount launched a rival, hostile bid targeting WBD shareholders directly; WBD unanimously urged shareholders not to sell, shutting down the possibility.
The Department of Justice’s (DOJ) Antitrust Division then opened a case arguing that Netflix’s acquisition was anticompetitive, prompting Netflix to give Paramount a seven-day window to propose another deal. Paramount submitted its final offer: $31 per share, totaling around $108 billion. The WBD board accepted the offer.
Ted Sarandos, the CEO of Netflix, traveled to Washington, D.C., to meet with Attorney General Pam Bondi regarding the deal, though the exact purpose is unknown. The meeting was cancelled. Words were exchanged, but nothing has been revealed to the public, a detail that has been cited as a sign of foul play. Netflix dropped out of the race shortly after.
Paramount won the battle, and the deal now awaits regulatory approval. But the manner in which it was won has drawn scrutiny. President Trump spoke openly about his friendship with Larry Ellison, David’s father, and stated he would be “involved” in the deal, then abruptly shifted to neutrality following a private meeting with David Ellison at the White House. Many speculate that Trump politicized the DOJ to target Netflix, though the DOJ insists its case was purely anticompetitive. Senator Elizabeth Warren was among those who raised the alarm: “What did Trump officials tell the Netflix CEO today at the White House?… [It] looks like crony capitalism with the President corrupting the merger process in favor of the billionaire Ellison family.”
Trump’s motives were not difficult to identify. His friendship with Ellison is well-documented, and his position on the deal shifted immediately after meeting David Ellison privately. CNN, owned by WBD, is another factor; Trump has made no secret of his contempt for its leadership, stating, “…the people that have run CNN for the last long period of time are a disgrace… it’s imperative that CNN be sold.” Having CNN fall into friendlier hands would serve him directly.
Whether the DOJ acted independently or as an instrument of political will, the Paramount-Warner Bros deal sets a consequential precedent for how government power intersects with private industry at the highest levels.
For more information:
Trump enters Warner Bros. fight, says it’s ‘imperative that CNN be sold’
Trump met with David Ellison days before saying he’s ‘not involved’ in Paramount’s Netflix battle
Elizabeth Warren Press Release
Netflix CEO Sarandos visited White House before WBD offer pulled
