Paramount Skydance may have won the battle to buy Warner Bros. Discovery — but its war against rival Netflix is still raging.
That, at least, is what some executives inside the media giant known as PSKY are privately saying about the plight of their $80 billion deal to buy WBD, which in February edged out an offer from Netflix.
Specifically, they believe a bombshell lawsuit from 12 state attorneys general filed last week to block the mega-merger has Netflix’s fingerprints all over it.
I must admit that this assessment, described to me by multiple people inside PSKY, has a ring of paranoia to it.
The evidence, such as it is, is more surmise than tangible.
The gist is that the leaders of the suit, California Attorney General Rob Bonta and New York AG Tish James, are both fellow travelers in the progressive ecosystem — just like Netflix — and that they are being coaxed by Netflix to bring a case that could disarm a right-of-center competitor.
True, Bonta may share some of the same politics as people at Netflix, but he doesn’t need CEO Ted Sarandos to tell him how this case is a gold mine for him.
For a California politician who aspires to be governor someday, it’s a no-brainer to make hay out of the fact that Larry Ellison, the mega-billionaire behind his son’s deal, is a close ally of Donald Trump.
DOJ Antitrust greenlighted the deal in record time in the hopes of MAGA ownership over the likes of CNN, CBS and lots of cable channels and studios.
And yet Paramount Skydance appears to think some studio executives are pulling those strings.
It seems that every press release in response to Bonta’s lawsuit has a Netflix reference, highlighting how the deal will create a viable competitor that can prevent Netflix from overpricing the most popular way entertainment and news is now consumed.
“I will say it is odd that Paramount seems weirdly obsessed with Netflix,” Rich Greenfield recently told me and my partner Bob Sloan on our “Risk and Return” podcast.
“Everything they put out has ‘Netflix’ multiple times.”
Leave La La land?
This “obsession” might explain why the company on the eve of the lawsuit leaked an odd bit of news: That David Ellison is being advised simply to move his headquarters out of Los Angeles, rather than deal with people like Bonta.
Left out of the overheated coverage of this “move” has been a simple reality check: It’s one thing to, say, take Tesla’s Gigafactory out of Cali for the friendlier confines of Texas, as Elon Musk did.
But try doing that with a media company that will own a pair of iconic, century-old studio lots if the deal is consummated.
“It is sort of funny when you have all of your talent basically in New York and LA, you’re going to have all of your senior management team flying around the country to do meetings with talent?” Greenfield added.
“Give me a break.”
That said, everyone in the media knows Netflix is loving the drama.
The suit could weaken a competitor even if the deal closes.
A ticking fee of $650 million every quarter if it doesn’t close by September is just one problem.
Another is that integration is time-consuming and could be delayed until 2027 if a Biden-appointed federal judge grants a preliminary injunction against the deal, setting the stage for a lengthy court battle.
The Ellisons understand not only this, but also the fact that their strong legal hand doesn’t really matter here.
Just read the complaint and you get the feeling Bonta is living in the 1990s — ignorant of YouTube, streaming, the rise of Amazon, Apple and social media, everything that has upended legacy media.
With cord cutting rampant in the streaming era, where’s the monopoly pricing power in controlling more than 50 cable channels or maintaining two studios?
The ‘Trump’ link
It’s all beside the point, of course.
Bonta wants a political spectacle.
He has all but admitted it.
Just as Paramount doesn’t miss a chance to mention Netflix in its defense, Bonta doesn’t miss a chance to mention Trump in his rationale for bringing the case, that the president relishes one of his best buds in charge of a vast news and entertainment empire. It’s as if in suing the Ellisons he’s suing The Donald.
So despite his tough legal hand, Bonta will milk this for all it’s worth.
The Ellisons’ inability to integrate CBS, CNN, studios and streaming services would certainly make Sarandos’s year after his humiliating defeat in the months-long WBD bidding war.
And who knows what the future has in store if this deal fails?
Maybe Netflix will be back.
“I say there’s a 20-to-1 chance,” one person inside the deal told me.
“But all that it takes is one crazy, left-wing judge.”
Reps for PSKY and Netflix didn’t comment.
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