Ben Thompson at Stratechery yesterday:
It’s important to note that the President does not have final say
in the matter: President Trump directed the DOJ to oppose AT&T’s
acquisition of Time Warner, but the DOJ lost in federal
court, much to AT&T’s detriment. Indeed, the irony of mergers
and regulatory review is that is that the success of the latter is
often inversely correlated to the wisdom of the former: the AT&T
deal for Time Warner never made much sense, which is directly
related to why it (correctly) was approved. It would have been
economically destructive for AT&T to, say, limit Time Warner
content to its networks, so suing over that theoretical
possibility was ultimately unsuccessful.
Thompson also makes clear that Paramount itself couldn’t possibly launch a credible bid for Warner Bros.:
Paramount’s bid, it should be noted, was for the entire Warner
Bros. Discovery business, including the TV and cable networks that
will be split off next year; Netflix is only buying the Warner
Bros. part. Puck reported that the stub Netflix is leaving
behind is being valued at $5/share, which would mean that Netflix
outbid Paramount.And, it should be noted, that Paramount money wouldn’t be from the
actual business, which is valued at a mere $14 billion; new owner
David Ellison is the son of Oracle founder Larry Ellison, who is
worth $275 billion. Netflix, meanwhile, is worth $425 billion and
generated $9 billion in cash flow over the last year. Absent
family money this wouldn’t be anywhere close to a fair fight.
It’s not illegal or even sketchy for an acquisition to be backed by family money from an entirely separate source (in the Ellisons’ case, Oracle), but it certainly makes more business sense for Netflix to make this acquisition than Paramount. There’s a strong argument that David Ellison doesn’t really know what the fuck he’s doing in the media racket; no one would argue that Netflix doesn’t know exactly what they’re doing.
