December 8, 2025 • 43 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss Paramount Skydance’s $30 per share bid for Warner Bros. Discovery that comes just days after the company agreed to a deal with Netflix. Plus, President Trump wants to limit state-level AI regulation with an executive order aiming for "one rule" on artificial intelligence, and IBM is buying data-streaming platform Confluent for about $9.3 billion in one of its largest takeovers yet.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Vla low in sentrances.
Speaker 2 (00:19):
Go, this is Bloomberg Tech coming up. Paramount making a
hostile bid for Warner Brothers Discovery, just days after the
company agreed to a deal with Netflix.
Speaker 3 (00:31):
Plus, President Trump wants to limit state level AI regulation.
He plans to approve an executive order this week aiming
for one rule on artificial intelligence.
Speaker 2 (00:40):
And IBM is buying the data streaming platform Confluent for
about nine point three billion dollars, one of its largest takeovers.
Speaker 3 (00:47):
Yeah, look at that share market reaction for Confluence.
Speaker 4 (00:50):
Let's check in on the broader market.
Speaker 3 (00:52):
So anticipation, anticipation of the macro perspective that is the
Federal Reserve policy making later this week. We're down by
about a quarter of a percent, But so much is
happening underneath the hood at the moment, ed and you're
going to dig into our story of the day of
the week, maybe the year.
Speaker 2 (01:06):
Yep, Warner Brothers Discovery. This is the state of play
this morning. Paramount Skuydowance comes in with a hostile bid
at thirty dollars per share for the entirety of Warner
Brothers Discovery. At the end of last week. Netflix had
come in with an offer of twenty seven dollars seventy
five cents a share, but that was largely for the
streaming and studio businesses, with the plan that Warner Brothers Discovery,
(01:30):
who entered into those talks with Netflix, would divest and
spin off some of the remaining legacy cable units. There
is so much to discuss in this, the financing in
both senses, where's it coming from, and what does the
President of the United States have to say about it?
Speaker 3 (01:43):
Character There are so many angles to get into. Let's
go to our key reporter on all of this, Bluebogs
Entertainment reporter Lucas. Sure, you head the entertainment coverage for
this network.
Speaker 4 (01:53):
And I'm interested. What's the standout for you?
Speaker 3 (01:55):
Because we are unfolding who's behind the money, what's behind
the attitude to go so hostile?
Speaker 5 (02:00):
Take us there first, I guess the part that stands
out to me is that David Ellison is coming back
and going hostile with the same bid that was just
rejected by the board.
Speaker 6 (02:11):
Rather than sweetening the offer.
Speaker 5 (02:13):
You know, paramounts Guidance has now made six different attempts
at buying Warner Brothers Discovery. They've been rejected every single time.
But they are adamant and have been for days now,
that their offer is better than Netflix's, that the board
is not factoring in certain things that are confused by
the valuation on the cable networks, for example, which would
(02:34):
be spun off in the Netflix scenario.
Speaker 6 (02:37):
And so they're you know, they're not going.
Speaker 5 (02:38):
Down without a fight, but I still think that they
will end up probably having to raise the offer.
Speaker 6 (02:44):
Lucas.
Speaker 2 (02:44):
Over the weekend you reported in detail a meeting that
took place between Netflix co CEO Ted Sarandos and the
President of the United States. Then the President Sunday Night said,
and this is before the Paramount Skuydance bid came in,
that from an antitrust or market share perspective, this has
got to be looked at. Would the same not apply
(03:06):
to Paramount Skydance.
Speaker 6 (03:09):
It would. It just is a different type of market
I guess right.
Speaker 5 (03:12):
So the President's comments I thought were notable because he
had not spoken out against the Netflix bid at all,
despite the fact that the Paramount people were convinced that
Trump was going to try to block it and was
against it, And I would say his comments were sort
of balanced. On the one hand, he praised Netflix and
praised Ted Sarandos, but he did say that it would
need to be reviewed. You know, Netflix is the biggest
(03:34):
player in Hollywood in streaming, and so if we're to
add on HBO and Warner Brothers, who would make it
even stronger there. In Paramount's case, they'd be combining two
movie studios. They'd be combining huge amounts of television networks.
Speaker 6 (03:47):
The respective share of either.
Speaker 5 (03:49):
Combined company in terms of TV viewing would be quite large,
would be somewhat similar, and yet both I think would
still be smaller than YouTube.
Speaker 6 (03:57):
So a lot of this, if.
Speaker 5 (03:58):
We get to you know, I trust case is going
to depend on what market you are defining.
Speaker 3 (04:04):
Let's just think about the storyline that's capturing a lot
of attention today is the money.
Speaker 4 (04:09):
And we're all about the money for these things.
Speaker 3 (04:11):
Lucas was involved previously. It looks as though Chinese money
is now being put to one side, but Middle Eastern
money coming to the fall, and Jared Kushner's money private
equity at least which is also about by Middle Eastern
money coming to the fall.
Speaker 5 (04:25):
Yes, the Middle Eastern money is probably the most interesting
part of it because there had been a report, you know,
at this point, maybe a month ago in variety of
the Holly Trade publication saying that there were three prominent
Middle Eastern sovereign wealth funds involved in the Paramount bid.
Paramount initially didn't really engage, then later that day said
that the report was inaccurate, And then it turns out
(04:46):
the report looks like it was pretty accurate, because yes,
I had heard and that they have since disclosed that
you do have a lot of Middle Eastern money in
this bid, and there had been Chinese money, which makes
it even more interesting that, you know, Paramount's one of
Paramount's arguments is that they will have an easier time
getting this deal approved. But Warner Brothers Discoveries perspective was, well,
(05:08):
it's actually making our life more complicated if you have
all of this foreign money, because then Siphius might have
to look at it and approve it.
Speaker 2 (05:15):
Bloombo's Lucas Shaw, who's led the team on this story
every step of the way, thank you so much. Let's
continue the conversation with Brandon Katz, Greenlight Analytics Director of
Insights and Content Strategy. Lucas did a really good job
in explaining the differences in structure of the deals and
also the different perspectives of each party. But I wondered
if you'd help our audience understand what the differences between
(05:39):
a Netflix joined with Warner Brothers Discoveries, streaming and studio
business versus a paramount s guidance taking the entire thing?
Speaker 4 (05:47):
What does that look like?
Speaker 7 (05:49):
You and Lucas have already done a great job, so
I'll try to pitch in here. Really WBD in paramount
more redundancies, more overlap. They are both traditional TV and
film companies with streaming services tacked on, whereas Netflix, obviously,
as we know famously or infamously depending on your perspective,
they are a streaming first, at all costs company, so
(06:10):
there's less overlap and far more new integration of potentially
complementary or potentially conflicting businesses. Now, we have seen mega
mergers of this nature in the past, but they have
almost always been a like versus like company absorbing each other.
We have not really seen a major major streaming service
(06:31):
take a company at the size of Warner Brothers Discovery just.
Speaker 2 (06:35):
Yet, Brendan, We're going later in the programs go deep
on the anti trust considerations. There are anti trust considerations here.
But let's say in either event Netflix comes out on
top or Paramount Skuidance comes out on top. How does
that change the landscape of entertainment? What does it look
like to have an entity of that size.
Speaker 7 (06:55):
Roughly two thirds of US adults who subscribe to HBO
Max also subscribe to Netflix, whereas about forty percent of
HBO Mac subscribers also use Paramount Plus, according to Greenlight
Analytics data. So as of right now, the clear raw
subscription streaming upside obviously favors Paramount Plus, which has about
eighty million subscribers globally.
Speaker 8 (07:16):
So they are a solid growing.
Speaker 7 (07:19):
Streamer that's been on original content hot Streak since late
twenty twenty three, but clearly isn't remotely the same size
as Netflix, Amazon or Disney Plus. So if Netflix were
to get WBD, they would suddenly be investing in a
lot of new businesses, and we don't know how they
would play up theatrical they know, we don't know how
they would handle wbdtv's massive external TV licensing business. We
(07:44):
do know that Paramount and WB there's more of again
overlap and redundancies, so we can safely say that that
would probably be more predictable as to what the future
would look like, and it would certainly position Paramount to
make that entrance into the top three content of media companies.
Speaker 3 (08:01):
Certainly, David Ellis has been talking about getting in the
position to produce more more content, in particular for the
consumer brand and just listen to what he told our
own Lucas Shore a little bit earlier in October at
our stream time event.
Speaker 9 (08:14):
We have a good relationship with the administration. And look,
I think if you look to that, I do believe
other things that have been rumored about right are very
large scale players that would affect that could potentially create
monopolies obviously in the ecosystem. And again I think when
you look at the lens of consolidation for us, I'll
keep going back to it, it's always how do you
(08:36):
create long term value creation, how do you put yourself
in the position to produce more content, not less, and
how do you ultimately build something that is better for
the consumer?
Speaker 4 (08:44):
Brandon, What serves the consumer best.
Speaker 7 (08:47):
What serves the consumer best overall is usually competition. So
I think there is a large sect of industry analysts
and professionals that would probably prefer Warner Brothers Discovery to
remain as an independent company because it means more competition,
it means more buyers on the market, It probably means
less layoffs of the labor force. Having said that, that's
(09:08):
unfortunately not the reality that we live in. So somebody
is going to get Warner Brothers. So it is really
deciding which ultimate partner is probably best for the industry.
And now, if you combine Netflix and HBO Max, and
if you can't combine Paramount Plus and HBO Max, they
are still significantly smaller than YouTube, which is currently about
(09:28):
a third bigger than Netflix in the US. So either way,
there are still a lot of competition out there, depending
on which industry you're putting against one another.
Speaker 4 (09:37):
Let's talk about good old cable television, because that.
Speaker 3 (09:41):
Is where many would say there is perhaps value, and it.
Speaker 4 (09:45):
Depends on which side of the equation you think.
Speaker 3 (09:47):
At the moment, it feels as though Warner Brothers Discovery
and thought there was more value in spinning off that
part of the business than the thirty dollars coming from
paramounts guidance.
Speaker 4 (09:55):
How do you look at those valuations.
Speaker 7 (09:57):
Well, let's stick with a famous Warner Brothers property friends.
Ross was a famous paleontologist in the shell, which means
he loved fossils, which means he would love the cable
network assets. They are rapidly declining. They are shrinking every day,
and while they still spin out a decent amount of
free cash flow, Wall Street sees them as an albatross
an anchor. So they all these companies want to position
(10:19):
themselves for long leashes from shareholders and Wall Street and
the cable nets just aren't part of that strategy.
Speaker 2 (10:27):
Niche analogy, but we're here for it. The most important question, seriously,
was posed by Bloomberg Tech producer PILESIVERI just take this
at face value.
Speaker 6 (10:37):
Seriously.
Speaker 2 (10:39):
Let's say iver deal goes through and we don't know
if it will there's antitrust. Does that mean that we
stop paying for multiple subscriptions and we can just pay
for one subscription where all of our platforms are in one.
Because that's the other side of it. Everyone has a
dozen or more different subscriptions. And what's so funny is
like the parties here. They're all contributors that ecosystem.
Speaker 7 (11:03):
Yeah, this seems to be let's say Netflix gets it.
I'm betting HBO will be available as a premium add
on and upsell you have to pay more for it.
But what's interesting about that is it puts Netflix in
closer competition to Amazon Channels, which is an aggregator, a
platform from which you can subscribe to other streaming services.
That's the really big strategic question because if Netflix pulls
(11:25):
this off, who's to say there won't start offering this
to other niche or subscale streaming services that need the
broad reach and distribution of Netflix. Because we've seen both
YouTube and Amazon primetime channels are massively beneficial for subscale streamers,
and then those host companies get a huge cut of
ad revenue, subscription revenue, and it becomes an entirely new,
(11:46):
self fulfilling business model all on its own.
Speaker 4 (11:49):
You are all about entertainment data.
Speaker 3 (11:52):
The moment our data is to look at share prices
and paramount goes higher today on the back of this
news and Netflix sinks yet more. Do you think there
is more value to be had longer term for the
entire industry with one or the other, Brandon.
Speaker 7 (12:08):
I think if Netflix said, you know what, we're going
to be complacent, We're not going to touch our bid
and they didn't get it, they would still be the
number one streaming subscription video service in the world and
for the foreseeable future. And we've already seen through the
last month that shareholders aren't totally convinced that ingesting let's say,
non traditional business assets compared to their business model is
(12:30):
the right way to go, whereas Paramount is a little
bit more comfortable and familiar with these businesses that it
would be ingesting. So I think also because Paramount is
trying to be a top three contender and a last
man standing in the streaming wars, they probably have the
most to gain by getting w.
Speaker 3 (12:47):
BA Brandon Katz or the energy of Green Night Analytics,
we appreciate it.
Speaker 4 (12:52):
Coming up, President Trump, he's aiming to cub state AI rules.
Speaker 3 (12:56):
We'll discuss what that means for the future of the
USAI industry.
Speaker 10 (13:00):
ED.
Speaker 4 (13:00):
What are you looking at M and a Monday.
Speaker 2 (13:02):
IBM is buying Confluent for nine point three billion dollars
enterprise value of the deal eleven billion dollars including debt.
I think if Confluent as like the plumbing for data,
particularly in a world where these very large frontier models
aren't relevant to lots of companies. IBM basically wants you
to pipe your data into its Watson platform real time,
and that's what this deal represents. IBM a little higher
(13:23):
but confluent up twenty eight percent.
Speaker 6 (13:25):
This is Bloomberg Tech.
Speaker 3 (13:38):
President Trump saying he plans to approve an executive order
this week establishing quote one rule on AI to limit
state level policies regulating the technology.
Speaker 4 (13:48):
Bloomag Senior Tech editor Mike Shepard has been.
Speaker 3 (13:50):
Across what we knew has been being talked about more
and more, and anxiety that there will be fifty rules
for AI companies instead of just one federal rule.
Speaker 4 (13:59):
What sort of form could fate take, Mike.
Speaker 6 (14:03):
Well, it's really unclear.
Speaker 10 (14:04):
We have seen circulating in recent weeks a draft version
of a measure that the President might sign that would
call for two things. It would allow the Justice Department
to sue states over regulations at the state level that
the federal government finds unconstitutional.
Speaker 6 (14:20):
It would also call for cutting.
Speaker 10 (14:22):
Funding to states that have regulations in place that the
administration finds objectionable.
Speaker 6 (14:28):
It's unclear what those.
Speaker 8 (14:29):
Criteria exactly are.
Speaker 10 (14:31):
We did see an AI action plan, a call for
reigning in rules that might impede innovation, but those are
all the specifics we have in hand at this moment,
so we'll be waiting to see what emerges on the
President's desk. We do know this as a priority for
the administration, for the President and for his top AI advisor,
David Sachs, as well as the tech industry. We've heard
(14:52):
from Jensen Wog, we have heard from Mark and Dreeson.
We've heard from Open AI and Google that they really
would like to rein in what they call a hatchwork
of state level rules. There are thirty eight states enacting
almost one hundred measures so far this year, and it's
becoming a bit much in their view.
Speaker 2 (15:11):
Chet My sense from what I'm hearing out of DC
is that THISEO will focus more on the why those
state laws are bad, rather than a proactive here's one
great rule for everyone. But politically, it's really interesting because
it's not as if Republicans broadly are supporting the president
in diluting or detracting from state powers. I think of Rondacentis,
(15:33):
for example, his position and this has been quite clear.
So private industry of course would support that, but politically
the president has to do some management here well.
Speaker 10 (15:43):
Absolutely ed and really regulating AI has been a politically
tricky issue from the get go, and the reason is
there are so many different points of view on artificial intelligence.
There are a handful of members in Congress who are accelerations,
who really want to speed the adoption of technology, setting
aside whatever needs there might be for regulation, and then
(16:06):
there are others who really want to slow it down.
There in the middle, you do have a large number
of other lawmakers who are seeking to rein in specific areas.
Some are worried more about the DUMA issue, others worried
about privacy, others still are worried about copyright. And so
far we do not have anything comprehensive at the federal level,
(16:27):
and in the spirit that space a whors a vacuum.
This is why we are seeing at the state level,
both in Republican states and democratic states, legislators and governors
moving in to try to impose some order in a
system that they see as both economically significant but also
potentially perilous to voters and consumers. And we are hearing
(16:47):
from Ron DeSantis of Florida, Sarah Huckabee Sanders in Arkansas,
and then even here in Washington, Marjorie Taylor Green, a
one time ally but now really at President Donald Trump
favoring state autonomy when it comes to regulating this new technology.
So it'll be interesting to see how this plays out
(17:08):
and whether they do more to articulate a vision for
regulating artificial intelligence at the federal level as opposed to
just saying why the state level rules on a patchwork
basis are bad.
Speaker 3 (17:20):
Right now, Mike Sheperd breaking it down, We thank you.
Speaker 4 (17:23):
Let's continue the conversation.
Speaker 3 (17:24):
We can head out to Sarah Olam VP and senior
fellow the Technology Policy Institute. From your perspective, is it
better to have technology policy from a state level on
AI or federal.
Speaker 11 (17:36):
Well, if you look at all the introduced state laws,
they're over one thousand apparently that are out there floating
in addition to the ones that have been enacted. They're
just so diverse. There are like six or seven buckets
of the type of state law, including disclosure mandates, algorithmic
discrimination notice, and bias requirements. So you have this matrix
(17:57):
of fifty states times six or seven bus, and that's
a patchwork. What you see also is race to the bottom.
So the most conservative rule might rule them all. And
so really it is a matter of time and effort
for small and large companies to know what these policies are.
(18:20):
The discussion mimics a lot of the privacy debates that
we had ten years ago and still do. But really
it's difficult to see innovation move forward when you have
all these seat laws.
Speaker 2 (18:34):
Sarah, the mechanism of an EO is not that surprising
if you look at the prior initiatives of this White House.
In November, a big push by the White House on
Congress to include a federal moratorium on state AI laws
in a particular piece of legislation.
Speaker 6 (18:52):
That effort not successful.
Speaker 2 (18:53):
Explain why that was important, please sure.
Speaker 11 (18:57):
So you're seeing this post today because four days ago,
apparently the state law moratorium was dropped from the NDAA
Defense Spending Bill. I think Representative Scalise mentioned that it
wouldn't be included. There was a push in November to
include it in the NDAA, and that was after in
(19:17):
July there was a push to include it in the
the spending bill, the bb B Big Beautiful Bill, and
so there has been discussion, a lot of buzz on
the hill how how to include this moratorium in legislation,
but you know, Congress thought it's not the right vehicle
to include a moratorium. And so then you see this EO.
(19:39):
The draft proposal was floated three weeks ago. It's called
Eliminating State Law Obstruction of National AI Policy. You can
read it. It includes a litigation task force, evaluation of
state laws, restriction of funding, and also involves Commerce Department,
the FCC, FTC, DOJ. Yeah, and so that was the draft.
(20:03):
We don't know if all that was in is in
the actual but they floated it for review.
Speaker 3 (20:10):
Sarah, I want to push it forward a little bit
of what actually is necessary, because it's all very well
and good saying we don't want it from a state level,
but many would harp back to what happened with social media,
where ultimately the big companies were left to regulate themselves
because no federal policy was ever enacted.
Speaker 4 (20:25):
Do you have optimism that there will.
Speaker 3 (20:27):
Be some rules of the road, some guardrails from a
federal perspective, or will it just be pushed back on
a state level.
Speaker 11 (20:33):
You know, it's hard to say. About the harms of technology,
because yes, there are harms, but who can really know
what will be the really emergent or difficult harms out
of thousands of possibilities. You know, you don't want to
stop all of them in all innovation, and so you know,
is government the right venue to discover that? Really? You
(20:58):
see it through litigation. And in Europe they've taken the approach, well,
let's do blanket regulation, and you know that hasn't turned
out very well. As you can see, people are pushing
back against EU regulations right now. So it really is
a matter of perspective. The biden Ai Executive Order was
(21:19):
rolled back and that is a perspective that's more precautionary.
And so the Trump EO is taking the other approach,
saying we need light touch regulation. So I think and
compare that with China. I don't think we hear about
regulation from for AI there, right, And so that's the
(21:42):
that's the comparison.
Speaker 2 (21:46):
Sarah Olamb, the Tech Policy Institute.
Speaker 3 (21:50):
Time now for talking tech First Up IBM is buying
the data streaming platform Confluent fro about nine point three
billion dollars, marking one of.
Speaker 4 (21:58):
Its largest takeovers.
Speaker 3 (22:00):
It's a major bet on the kind of enterprise software
that AI tools need to perform tasks in real time,
which as both companies you see you've been rising on
the news. US Open Ai says that it stols a
saving work as an average of forty to sixty.
Speaker 4 (22:12):
Minutes a day on professional tasks. It's according to a.
Speaker 3 (22:14):
Survey from the Chatchep team maker data science, engineering communications
roles among those saving the most time. Of course, it
all comes amid skepticism that there is a lack maybe
of economic benefits of AI.
Speaker 9 (22:32):
You know, ironically, it was David Zaslov last year that said,
you know, consolidation the media business is important, and the
way we approach everything is first and foremost what's good
for the talent community, what's good for our shareholders in
value creation, and what's good for basically storytelling at large.
Speaker 2 (22:53):
That was Paramount Skuyde at CEO David Ellison there at
Bloomboat's screen Time event in October full shadow consolidation.
Speaker 6 (23:01):
In the industry.
Speaker 2 (23:02):
Fast forward to Monday, December eighth, Paramount Skuidence comes in
with a hostile bid thirty dollars per share for Warner
Brothers Discovery after Netflix entered into talks with Warner Brothers
Discovery at the end of last week in a different
kind of deal. That's what the shares are doing right
now for the arms out there, Warner Brothers Discovery trading
at twenty seven thirty five cents to share thirty six
(23:25):
center shared below. Both the offer prices at this moment
in time.
Speaker 3 (23:28):
Carac arms arbitrage for those who don't parlay in that
sort of lexicon every single day. But meanwhile, President Trump,
he did way in on the Warner Brothers Discovery and
Netflix deal. Here's what he had to say about Netflix
CEO ted surround us and he's.
Speaker 8 (23:42):
Done one of the greatest jobs in the history of movies.
Speaker 6 (23:45):
And other things.
Speaker 12 (23:47):
And he's got a lot of interesting things happening aside
from what you're talking about.
Speaker 8 (23:52):
But it is a big market share, there's no question,
though there.
Speaker 3 (23:55):
Could be a problem discovering the co CEO discussing well
the country that Netflix might ultimately have. Let's talk about
that with Jennifer Ree from the anti trust team at
Briomberg Intelligence. So there we heard perhaps an admission from
the White House that he's looking at how competition is
going to play out with whoever owns Warner Brothers Discovery
at least the streaming and the studio side of it.
Speaker 13 (24:16):
Right exactly, you know. And at the end of the day,
it depends on the Department of Justice and the analysis
that they do this year long investigation that's very likely
to take place no matter who ends up being the buyer,
and what their economists find out when they look at
the market, what the documents from the companies look like
when they're talking about who they think they compete with.
And I think with the Netflix situation, it very much
(24:36):
comes down to how the market is defined. But if
the market is defined narrowly in the way I think
it ultimately will and the Department of Justice does tend
to define markets narrowly. In general, Netflix has a problem.
The President is correct, it's a big market share.
Speaker 2 (24:52):
Jen I think it would really help them in the
tech audience understand the process a little bit.
Speaker 8 (24:57):
Is it rules based?
Speaker 2 (24:58):
So if there's an antitrust review on this, do they
look at past precedents? Do they look at a codified
set of rules and say, Okay, this either is or
is not abuse of market position?
Speaker 4 (25:09):
It is absolutely rules based.
Speaker 13 (25:10):
There's a set of guidelines called the horizontal merger guidelines
that the Department of Justice will look to that actually
gives it basic mathematics to understand, at least facially whether
it deals anti competitive. And they start by defining a
market and then summing the shares in that market. Now,
oftentimes this market definition situation can be dispositive because the
(25:30):
broader the market, it filters down the shares. The combined
share isn't as large as it is in a narrower market,
at least in this situation. And they go through a
pretty intensive analysis to make these determinations. So it is
and they do look at precedent as you suggested, and
it is rules base. But here's where I go with this.
When the agencies are looking at deals, they are trying
(25:53):
to predict the future, right, and this is a gray area.
Speaker 4 (25:56):
There is no black and white.
Speaker 13 (25:57):
Reasonable minds, intelligent minds can differ on what the impact
of a deal may be. So they're doing their best
to model out that impact. And what it means is
that there's flexibility there, there's leeway, and they might believe
there's a problem here, but they have to go to
court and then they have to convince a judge that
there's a problem here and maybe a judge would.
Speaker 4 (26:15):
See it differently.
Speaker 2 (26:17):
Jennifery of Bloomberg Intelligence, I suspect you will be back
on Bloomberg Tech to talk about this very deal. Thank
you very much. Let's continue a conversation with Rich Greenfield,
partner at Lightshed Partners, General partner at lightshad Ventures. Jen
had a lot of decent mathematics there, a mathematics and
rules based approach to what happens next? Simple question for
(26:38):
you to start, Rich, what happens next?
Speaker 8 (26:42):
You know, it is really anyone's guess.
Speaker 14 (26:45):
You know, you've now got this hostile offer tender offer
from the Ellison's and from Paramount.
Speaker 8 (26:52):
Obviously sheralders are going to have to, you know, really
look at this.
Speaker 14 (26:55):
I mean you've got you know, the offers are very different,
right because one is for just the streaming and studios,
and you're going to end up with a resulting stub
equity that is the cable network piece. And you know,
depending on how that's valued, it could be anywhere from
you know, a buck and a half to four or
five dollars like a share, and so it all depends
on sort of how that trades ultimately, and do investors
(27:19):
want to sort of bet on the value of that
entity own some Netflix equity as well as get twenty
you know, plus dollars twenty three dollars of cash.
Speaker 8 (27:28):
Is so this is not a simple equation.
Speaker 14 (27:31):
Obviously, we know from Warner Brothers that they believe that
the Netflix offer was superior. They think it was thirty
one or three or thirty two dollars a share in
effective value. Will some investors want to take thirty in cash?
There may be, and I think that's going to be
the question. But can they get enough of the shares
to actually block the transaction? I think that's what essentially
(27:52):
Paramount would now be hoping for, is that enough people
tender their shares that they can stop Netflix and force
them to abandon the offer.
Speaker 2 (28:00):
If I made to recap the Netflix offers twenty seven
dollars seventy five cents, but only for the streaming and
studios bit right, the Paramount skuideance thirty dollars bid was
for the entirety of it. If we put the deal
making and the arbitrage to one side, which makes most
sense based on the current state of the media and
entertainment landscape.
Speaker 14 (28:22):
Look, we're in a point now in the entertainment landscape
where the industry is going through seismic change. You know,
movie theater attendance is down fifty percent from before COVID.
You know, forget about box office, but actually, you know,
sort of people attending movies in the US, you're down
nearly fifty percent. You know, you're seeing most of the
(28:45):
major streaming companies out there really scale back their ambitions.
And that's Warner Brothers, that's you know, if you look
at what's happened with Peacock, none of them are as aggressive.
Disney and Hulu have certainly reduced their overall aggressiveness in
how much content they're making. Like everyone is realizing how
streaming is so hard, and so the reality is consolidation
(29:08):
is certainly necessary. And I don't think this is the
last transaction we're going to see. I think you're going
to actually see this set off. You know, there's gonna
be a knock on effects from whoever ends up buying this.
You're going to see other things happen. You know, is
there a story to tell for both companies?
Speaker 8 (29:24):
Absolutely?
Speaker 14 (29:25):
I mean there's no doubt in my mind that if
you you know, put Warner brothers into Netflix, the ability
to do far more with that library than has ever
been done before. Looking at that global platform, and how
they've able to sort of surface content.
Speaker 8 (29:40):
I mean, all of this content's been sitting on HBO
Max and no one really watches it.
Speaker 14 (29:45):
That's what Netflix does really well, is they get people
to watch things throughout the library in the way that
others cannot. Right, that algorithm is so powerful Paramount buying it.
Speaker 8 (29:56):
Look, Paramount needs more scale.
Speaker 14 (29:58):
If Paramount doesn't buy this, guess is they're going to
go after something else in the space, whether that's NBC Universal,
whether that's Sony. Like, I don't think Paramount is going
to sit still. They want to get bigger. Look, they
may just spend a lot of money. I mean, Ellison
family has a tremendous amount of capital. Will they just
use that to fund far greater investment than they were
(30:19):
previously in Paramount?
Speaker 8 (30:21):
That might be another angle here.
Speaker 14 (30:22):
I Mean we've always said Paramount doesn't have to have
that because they have one of the wealthiest families in
the world backing them.
Speaker 3 (30:29):
They've got more than the wealthiest family in the world.
They've got Middle Eastern money helping them with this. That
would transpired. Does that change the storytelling?
Speaker 8 (30:37):
Rich Well, I.
Speaker 14 (30:38):
Think what's interesting is there is this perception on Wall
Street that this was just Larry Ellison, you know, writing
a check to buy all of this, And what it
actually turns out is that Larry's only writing a twelve
billion dollar check. He's backstopping a larger portion, but the
actual check he's writing his twelve billion, and three Middle
East entities are actually investing twenty four billion.
Speaker 8 (31:01):
I don't know if that played into him.
Speaker 14 (31:02):
And they say there's no scifius concerns, but you do
wonder whether the largest sort of you know, as a group,
the Middle East being the single largest sort of equity
contributor to this deal. I wonder if that played a
role in concern around this transaction.
Speaker 8 (31:19):
You know, we'll see.
Speaker 14 (31:20):
It's funny how there's been so much sort of industry
uproar around.
Speaker 8 (31:27):
Around Netflix buying Warner Brothers.
Speaker 14 (31:30):
I wonder as people start to understand more of what's
inside the paramount bid is you just said, Carolyn, will
we see more pushback on the Paramount But I don't know.
I mean, I think you know, all of these bids
have there certainly are issues and look from a you know,
if you think about sort of from an anti trust standpoint,
Disney bought Fox. That seemed you know, Disney was at
(31:51):
the pinnacle height of the industry when they bought Fox,
and that was approved during Trump one. You know, it's
hard to believe that this transaction ultimate gets blocked, either
one of them gets blocked. I think obviously the Netflix
will probably take longer than the paramount one, but I
don't think there's any quick approval. A lot of states
are going to be frustrated by you know, both of
these bids.
Speaker 8 (32:11):
Foreign countries are going to be frustrated.
Speaker 14 (32:13):
So I think there's a long regulatory review process, meaning
over twelve months, maybe even eighteen months for both of
these companies.
Speaker 3 (32:19):
And YouTube gets brought into that rich more, will we
understand what a competitive threat that is.
Speaker 14 (32:26):
Look, there's three layers of this. Is streaming A distinct
market is streaming in linear TV. Like there are people
watching us right now, Carolyn, who you know are watching
linear TV and have Bloomberg TV and have CNBC and
all of these channels, Like you know, it's hard to
sort of believe that you know, FX and and you know,
(32:46):
ABC and CBS don't really compete with Netflix. And then
you've obviously got the larger thread of like, well, you
know YouTube has Sunday Ticket, Like where do you watch
Sunday Ticket?
Speaker 2 (32:56):
Now?
Speaker 8 (32:56):
You watch it on YouTube? Is it?
Speaker 14 (32:58):
Can you really say that YouTube is not a competitor
to Netflix? And so it gets very challenging to define
what the market is. And I think you're going to
see a real difficulty in the government, you know, trying
to not just say.
Speaker 8 (33:12):
What the market is, but actually back that up in court.
Speaker 14 (33:15):
I look forward to seeing how they actually try to
prevent either of these two transactions.
Speaker 3 (33:20):
Rich Greenfield is always so good to check in with
you of like Shared partners Light Shared Ventures.
Speaker 4 (33:24):
You appreciate it.
Speaker 3 (33:26):
Coming up, we're going to be speaking about defense a
little bit more.
Speaker 4 (33:29):
Roger Zikeen is going to be joining US.
Speaker 3 (33:30):
Ronald Reagan Institute about securing industries key to the US economy.
Speaker 4 (33:35):
That's next, This is blue Bag Tech.
Speaker 6 (33:49):
JP.
Speaker 2 (33:50):
Morgan plans to invest ten billion dollars of its own
capital in the defense, aerospace, healthcare, and energy sectors. The
new strategic investment group will be led by both Halfway
Todd Coombs and the group's strategic advisors. As you can
see reads like a who's who of industries. The announcement
comes to stays up to JP Morgan's CEO, Jamie Diamond,
(34:10):
spoke about strategic and defense issues at the Reagan National
Defense Forum and said Europe was facing quote, a real problem.
Speaker 6 (34:18):
Listen to this.
Speaker 12 (34:19):
Europe has a problem. I think they accomplished an unbelievable thing,
but it got bogged down. It takes twenty seven nations,
you know, to make a decision. They have some wonderful things,
but they've gone from ninety percent of the GDP of
America to sixty five. That's not because America did anything
bad to them. It's their own bureaucracy, their own costs.
I think the leadership Merz, McCrone, Maloney, Stormer, I think
(34:40):
they know. I just think politics is really, really hard.
Speaker 4 (34:44):
Sat next to him asking the question.
Speaker 3 (34:47):
Was luckily enough me who got to fly out to
Simi Valley over the course of the weekend, and it
was all regarding the security and resiliency initiative that JP
Morgan has and why they're so focused on defense. Someone
who's also over in Simi Valley at the Reagan National
Defense Forum was Roger Zachheim.
Speaker 4 (35:02):
Here's the director of the Reagan Institute.
Speaker 3 (35:05):
You have so much rich data as perhaps some of
the nuances when it comes to Europe versus US. Why
Jamie Diamond cares about defense right now is because it's
geopolitically important, is economically important, and he's putting one point
five trillion dollars initiative for the next ten years. Roger,
what was it that you took away from the event
in terms of money coming towards defense defense tech in particular.
Speaker 15 (35:27):
Well, really, we're seeing this for new dynamism in the
national defense community. I mean, we started the Reagan National
Defense Forum over a decade ago, and you saw over
eighty plus corporate partners participating the event.
Speaker 6 (35:40):
I would say probably two thirds of.
Speaker 15 (35:43):
Those companies participating didn't exist five six years ago. So
we're seeing because of all the innovations you guys cover
in the commercial sector, it's also penetrating into our national
defense community. And of course those technological innovations don't just
impact the United States, it's impacting geopolos around the world. China,
of course, is leveraging that and that's a big driver
(36:05):
of the competition between the People's Republic of China and
the United States. And it's natural then that Jamie Diamond,
the leading CEO in the United States Iconic Bank in
the United States, has something to say on the matter
and is involving himself in the matter. And that's what,
of course you covered at the Defense Form Roger.
Speaker 3 (36:23):
What's really interesting is we hear yet more and more
focus of the administration on policy making. They're basically inspires
innovation in artificial intelligence, but perhaps at the fas sake
of guardrails. And we're talking here about perhaps an EO
that might come this week that's going to look for
states not to enact individual AI rules and leave it
to federal rule making. Is that something you've seen born
(36:45):
out in the data that the defense tech community, but
investors and policy makers think that's a good thing.
Speaker 15 (36:51):
Well, they want to use AI, and we need to
use AI in our defense platforms. As a big conversation
at the Defense Forum and our national which is released
just ahead of the survey a form excuse me earlier
last week, really captured how Americans are someone ambivalent about this,
They don't know, they're concerned should we have AI in
our defense platforms? And there's almost a majority of Americas
(37:15):
just saying they're unsure. Our leaders, of course, know that
it's entirely necessary. Of course, you have to have a
person in the loop, a human the loop involved, and
we're not going to get there in a fashion we're
comfortable with if we're regulating our.
Speaker 8 (37:27):
Way out of it.
Speaker 15 (37:28):
And I think that was the spirit of what you
heard from our defense leaders, both on industry and from
the Pentagon, and I think you're going to see that
also out of the White House with this executive order.
Speaker 2 (37:38):
Roger China is worth discussion. On October tenth, Caroline and
I did the show live from Anderill's headquarters, and literally
the moment the show started, the President posted on truth
Social about at that time a deterioration in his relationship
with Jijingpin. And the point that Anderil is an example,
would make is we've been talking about China as a
(37:59):
threat for some time. We're still bracing for China as
a threat in the year twenty twenty seven. And in
your survey, respondents engaged on that point give us the data.
Speaker 15 (38:10):
Well, seventy nine percent view China as the adversary of
the United States. You know, rushes in there too, of course, Iran,
but the country that the most Americans, as expressed by
the respondents and our survey, are concerned about that they
view as an enemy as an adversary is the People's
Republic of China. And they're right, and the Trump administration
(38:30):
is first term named the PRC as the leading challenge
to our national security.
Speaker 6 (38:36):
Now.
Speaker 15 (38:37):
President Trump, of course is engaging in dollar diplomacy. The
National Security strategy that came out last week emphasize how
he believes economic cooperation with China will be one of
the ingredients. Tours take the United States a forty trillion
dollar economy. But from a national defense standpoint, we're only
going to get what sector Hesech talked about. We want
(38:58):
to have strength as a driver towards engagement with China,
but without confrontation. We're only going to get there if
we are strong, if we're making these investments, if companies
like Androil are going to make the progress they promise
with respect to autonomy and other new companies getting online
leveraging this new technology. Of course, in part AI driven.
Speaker 2 (39:19):
Roger, I want to go back to Caroline's conversation with
Jamie Diamond. If we could end there, please, there is
support for this government taking stakes and strategic industries. But
clearly the private sector and from a financing perspective, the
banks think they have a role to play here. Is
the situation just better now for private industry to do
(39:39):
business with the government directly or co invest with them.
Do you get that sense?
Speaker 15 (39:44):
Well, listen, certainly from the Reagan Institute perspective, it is
better when our free market is driven by the private
sector and not government. I think if you talk about
companies from Anderalds or new entrants or newer entrant all
the way to the Boeings and north through Grummans of
the world reading on the public markets right certainly in
the in the primes and so government needs to leverage
(40:05):
that technology. They need to go ahead and develop and
drive budgets that have growth so those companies can continue
to scale up. That is what's required to scale here.
And we talk about Jamie Diamond, right and the banking sector.
It can't just be vcs anymore. It can't just be
the pe community. We need major banking institutions to get involved.
(40:26):
And that's why Jamie Diamond's leadership was so essential and
was great to have him on stage with you.
Speaker 2 (40:30):
Carolina Roger's that Kim, director of the Reagan Institute. It's
great to have you on Bloomberg Tech. We appreciate it.
Now coming up, let's get back to Paramount's hostile bid
for Warner Brothers Discovery. There's a lot to talk about.
What happened next, the why, and the deal as a whole.
That's what the trading looks like for the names involved.
This is Bloomberg Tech. Back to today's big story, Paramount
(40:57):
making a hostile bid for Warner Brothers to Discovery thirty
dollars per share just stays off. The company agreed a
deal with Netflix. I want to get to Bloomberg Intelligence
media analyst Keith rang and Ethan because when we spoke
on Friday, you called it the next thing will happen
is a hostile bid from Paramount. Were there any surprises
within the structure of Paramount's offer for you, Not.
Speaker 16 (41:21):
Really, but you know, when you compare it, obviously, on
the face of it, the Paramount offer definitely looks superior
because it is a thirty dollars bid, it is an
all cash bid. But the two offers are actually so
very different.
Speaker 3 (41:34):
You know.
Speaker 16 (41:34):
Paramount, of course promising regulatory certainty a much speedier path
to approval. But again, a lot of this is still
TBD ed. We have to kind of wait and watch
and see Paramount kind of removing a lot of what
they thought would potentially spark regulatory problems, you know, removing
the or with the Saudi money, kind of getting rid
(41:55):
of the governance issues so as to not trigger a
sifious jurisdiction. But again I don't know whether shareholders necessarily
view this as a superior deal.
Speaker 2 (42:05):
Well, when a big piece of news and a big
piece of MNA happens like this, our Bloomberg terminal clients
will know. You publish a REACT and the headline of
your react is Paramount hostile. Warner bid ups and te
may not be enough. Why do you feel it may
not be enough?
Speaker 16 (42:20):
Keeper, Because on the face of it, the Netflix bid
actually offers superior value for all of Warner Brothers Discovery.
So you have the studio and streaming unit valued at
about twenty eight dollars a share according to the Netflix bid.
And then if you just kind of look at where
other cable networks are trading, because you will be left
(42:41):
with a cable network stub business, which is called Discovery Global.
We think and I think the street also thinks that
that should be worth about three and a half to
four dollars a share. Now, Paramount in their presentation has
valued that unit at about one dollar per share, and
I think that is where majority of the delta is
coming in, and so I think they will kind of
ultimately need to up their bid.
Speaker 2 (43:04):
What we're hearing in the markets is right now, the
state of play is that Paramount's not even heard back
from Warner on their bid. Keith Rang and Na from
the Bloomberg Intelligence, thank you so much. That does it
for this edition of Bloomberg Tech. Let's recap where we're at.
Speaker 6 (43:19):
We have a.
Speaker 2 (43:19):
Netflix bid for the streaming and studio business, and Warner
Brothers Discovery. We have a Paramount Skuidance bid for all
of Warner Brothers Discovery. You can listen to all those
conversations in today's podcast. Find it online on Apple, Spotify, iHeart,
and of course on all the Bloomberg platforms. Big Wig ahead,
This is Bloomberg Tech.
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Vla low in sentrances.
Speaker 2 (00:19):
Go, this is Bloomberg Tech coming up. Paramount making a
hostile bid for Warner Brothers Discovery, just days after the
company agreed to a deal with Netflix.
Speaker 3 (00:31):
Plus, President Trump wants to limit state level AI regulation.
He plans to approve an executive order this week aiming
for one rule on artificial intelligence.
Speaker 2 (00:40):
And IBM is buying the data streaming platform Confluent for
about nine point three billion dollars, one of its largest takeovers.
Speaker 3 (00:47):
Yeah, look at that share market reaction for Confluence.
Speaker 4 (00:50):
Let's check in on the broader market.
Speaker 3 (00:52):
So anticipation, anticipation of the macro perspective that is the
Federal Reserve policy making later this week. We're down by
about a quarter of a percent, But so much is
happening underneath the hood at the moment, ed and you're
going to dig into our story of the day of
the week, maybe the year.
Speaker 2 (01:06):
Yep, Warner Brothers Discovery. This is the state of play
this morning. Paramount Skuydowance comes in with a hostile bid
at thirty dollars per share for the entirety of Warner
Brothers Discovery. At the end of last week. Netflix had
come in with an offer of twenty seven dollars seventy
five cents a share, but that was largely for the
streaming and studio businesses, with the plan that Warner Brothers Discovery,
(01:30):
who entered into those talks with Netflix, would divest and
spin off some of the remaining legacy cable units. There
is so much to discuss in this, the financing in
both senses, where's it coming from, and what does the
President of the United States have to say about it?
Speaker 3 (01:43):
Character There are so many angles to get into. Let's
go to our key reporter on all of this, Bluebogs
Entertainment reporter Lucas. Sure, you head the entertainment coverage for
this network.
Speaker 4 (01:53):
And I'm interested. What's the standout for you?
Speaker 3 (01:55):
Because we are unfolding who's behind the money, what's behind
the attitude to go so hostile?
Speaker 5 (02:00):
Take us there first, I guess the part that stands
out to me is that David Ellison is coming back
and going hostile with the same bid that was just
rejected by the board.
Speaker 6 (02:11):
Rather than sweetening the offer.
Speaker 5 (02:13):
You know, paramounts Guidance has now made six different attempts
at buying Warner Brothers Discovery. They've been rejected every single time.
But they are adamant and have been for days now,
that their offer is better than Netflix's, that the board
is not factoring in certain things that are confused by
the valuation on the cable networks, for example, which would
(02:34):
be spun off in the Netflix scenario.
Speaker 6 (02:37):
And so they're you know, they're not going.
Speaker 5 (02:38):
Down without a fight, but I still think that they
will end up probably having to raise the offer.
Speaker 6 (02:44):
Lucas.
Speaker 2 (02:44):
Over the weekend you reported in detail a meeting that
took place between Netflix co CEO Ted Sarandos and the
President of the United States. Then the President Sunday Night said,
and this is before the Paramount Skuydance bid came in,
that from an antitrust or market share perspective, this has
got to be looked at. Would the same not apply
(03:06):
to Paramount Skydance.
Speaker 6 (03:09):
It would. It just is a different type of market
I guess right.
Speaker 5 (03:12):
So the President's comments I thought were notable because he
had not spoken out against the Netflix bid at all,
despite the fact that the Paramount people were convinced that
Trump was going to try to block it and was
against it, And I would say his comments were sort
of balanced. On the one hand, he praised Netflix and
praised Ted Sarandos, but he did say that it would
need to be reviewed. You know, Netflix is the biggest
(03:34):
player in Hollywood in streaming, and so if we're to
add on HBO and Warner Brothers, who would make it
even stronger there. In Paramount's case, they'd be combining two
movie studios. They'd be combining huge amounts of television networks.
Speaker 6 (03:47):
The respective share of either.
Speaker 5 (03:49):
Combined company in terms of TV viewing would be quite large,
would be somewhat similar, and yet both I think would
still be smaller than YouTube.
Speaker 6 (03:57):
So a lot of this, if.
Speaker 5 (03:58):
We get to you know, I trust case is going
to depend on what market you are defining.
Speaker 3 (04:04):
Let's just think about the storyline that's capturing a lot
of attention today is the money.
Speaker 4 (04:09):
And we're all about the money for these things.
Speaker 3 (04:11):
Lucas was involved previously. It looks as though Chinese money
is now being put to one side, but Middle Eastern
money coming to the fall, and Jared Kushner's money private
equity at least which is also about by Middle Eastern
money coming to the fall.
Speaker 5 (04:25):
Yes, the Middle Eastern money is probably the most interesting
part of it because there had been a report, you know,
at this point, maybe a month ago in variety of
the Holly Trade publication saying that there were three prominent
Middle Eastern sovereign wealth funds involved in the Paramount bid.
Paramount initially didn't really engage, then later that day said
that the report was inaccurate, And then it turns out
(04:46):
the report looks like it was pretty accurate, because yes,
I had heard and that they have since disclosed that
you do have a lot of Middle Eastern money in
this bid, and there had been Chinese money, which makes
it even more interesting that, you know, Paramount's one of
Paramount's arguments is that they will have an easier time
getting this deal approved. But Warner Brothers Discoveries perspective was, well,
(05:08):
it's actually making our life more complicated if you have
all of this foreign money, because then Siphius might have
to look at it and approve it.
Speaker 2 (05:15):
Bloombo's Lucas Shaw, who's led the team on this story
every step of the way, thank you so much. Let's
continue the conversation with Brandon Katz, Greenlight Analytics Director of
Insights and Content Strategy. Lucas did a really good job
in explaining the differences in structure of the deals and
also the different perspectives of each party. But I wondered
if you'd help our audience understand what the differences between
(05:39):
a Netflix joined with Warner Brothers Discoveries, streaming and studio
business versus a paramount s guidance taking the entire thing?
Speaker 4 (05:47):
What does that look like?
Speaker 7 (05:49):
You and Lucas have already done a great job, so
I'll try to pitch in here. Really WBD in paramount
more redundancies, more overlap. They are both traditional TV and
film companies with streaming services tacked on, whereas Netflix, obviously,
as we know famously or infamously depending on your perspective,
they are a streaming first, at all costs company, so
(06:10):
there's less overlap and far more new integration of potentially
complementary or potentially conflicting businesses. Now, we have seen mega
mergers of this nature in the past, but they have
almost always been a like versus like company absorbing each other.
We have not really seen a major major streaming service
(06:31):
take a company at the size of Warner Brothers Discovery just.
Speaker 2 (06:35):
Yet, Brendan, We're going later in the programs go deep
on the anti trust considerations. There are anti trust considerations here.
But let's say in either event Netflix comes out on
top or Paramount Skuidance comes out on top. How does
that change the landscape of entertainment? What does it look
like to have an entity of that size.
Speaker 7 (06:55):
Roughly two thirds of US adults who subscribe to HBO
Max also subscribe to Netflix, whereas about forty percent of
HBO Mac subscribers also use Paramount Plus, according to Greenlight
Analytics data. So as of right now, the clear raw
subscription streaming upside obviously favors Paramount Plus, which has about
eighty million subscribers globally.
Speaker 8 (07:16):
So they are a solid growing.
Speaker 7 (07:19):
Streamer that's been on original content hot Streak since late
twenty twenty three, but clearly isn't remotely the same size
as Netflix, Amazon or Disney Plus. So if Netflix were
to get WBD, they would suddenly be investing in a
lot of new businesses, and we don't know how they
would play up theatrical they know, we don't know how
they would handle wbdtv's massive external TV licensing business. We
(07:44):
do know that Paramount and WB there's more of again
overlap and redundancies, so we can safely say that that
would probably be more predictable as to what the future
would look like, and it would certainly position Paramount to
make that entrance into the top three content of media companies.
Speaker 3 (08:01):
Certainly, David Ellis has been talking about getting in the
position to produce more more content, in particular for the
consumer brand and just listen to what he told our
own Lucas Shore a little bit earlier in October at
our stream time event.
Speaker 9 (08:14):
We have a good relationship with the administration. And look,
I think if you look to that, I do believe
other things that have been rumored about right are very
large scale players that would affect that could potentially create
monopolies obviously in the ecosystem. And again I think when
you look at the lens of consolidation for us, I'll
keep going back to it, it's always how do you
(08:36):
create long term value creation, how do you put yourself
in the position to produce more content, not less, and
how do you ultimately build something that is better for
the consumer?
Speaker 4 (08:44):
Brandon, What serves the consumer best.
Speaker 7 (08:47):
What serves the consumer best overall is usually competition. So
I think there is a large sect of industry analysts
and professionals that would probably prefer Warner Brothers Discovery to
remain as an independent company because it means more competition,
it means more buyers on the market, It probably means
less layoffs of the labor force. Having said that, that's
(09:08):
unfortunately not the reality that we live in. So somebody
is going to get Warner Brothers. So it is really
deciding which ultimate partner is probably best for the industry.
And now, if you combine Netflix and HBO Max, and
if you can't combine Paramount Plus and HBO Max, they
are still significantly smaller than YouTube, which is currently about
(09:28):
a third bigger than Netflix in the US. So either way,
there are still a lot of competition out there, depending
on which industry you're putting against one another.
Speaker 4 (09:37):
Let's talk about good old cable television, because that.
Speaker 3 (09:41):
Is where many would say there is perhaps value, and it.
Speaker 4 (09:45):
Depends on which side of the equation you think.
Speaker 3 (09:47):
At the moment, it feels as though Warner Brothers Discovery
and thought there was more value in spinning off that
part of the business than the thirty dollars coming from
paramounts guidance.
Speaker 4 (09:55):
How do you look at those valuations.
Speaker 7 (09:57):
Well, let's stick with a famous Warner Brothers property friends.
Ross was a famous paleontologist in the shell, which means
he loved fossils, which means he would love the cable
network assets. They are rapidly declining. They are shrinking every day,
and while they still spin out a decent amount of
free cash flow, Wall Street sees them as an albatross
an anchor. So they all these companies want to position
(10:19):
themselves for long leashes from shareholders and Wall Street and
the cable nets just aren't part of that strategy.
Speaker 2 (10:27):
Niche analogy, but we're here for it. The most important question, seriously,
was posed by Bloomberg Tech producer PILESIVERI just take this
at face value.
Speaker 6 (10:37):
Seriously.
Speaker 2 (10:39):
Let's say iver deal goes through and we don't know
if it will there's antitrust. Does that mean that we
stop paying for multiple subscriptions and we can just pay
for one subscription where all of our platforms are in one.
Because that's the other side of it. Everyone has a
dozen or more different subscriptions. And what's so funny is
like the parties here. They're all contributors that ecosystem.
Speaker 7 (11:03):
Yeah, this seems to be let's say Netflix gets it.
I'm betting HBO will be available as a premium add
on and upsell you have to pay more for it.
But what's interesting about that is it puts Netflix in
closer competition to Amazon Channels, which is an aggregator, a
platform from which you can subscribe to other streaming services.
That's the really big strategic question because if Netflix pulls
(11:25):
this off, who's to say there won't start offering this
to other niche or subscale streaming services that need the
broad reach and distribution of Netflix. Because we've seen both
YouTube and Amazon primetime channels are massively beneficial for subscale streamers,
and then those host companies get a huge cut of
ad revenue, subscription revenue, and it becomes an entirely new,
(11:46):
self fulfilling business model all on its own.
Speaker 4 (11:49):
You are all about entertainment data.
Speaker 3 (11:52):
The moment our data is to look at share prices
and paramount goes higher today on the back of this
news and Netflix sinks yet more. Do you think there
is more value to be had longer term for the
entire industry with one or the other, Brandon.
Speaker 7 (12:08):
I think if Netflix said, you know what, we're going
to be complacent, We're not going to touch our bid
and they didn't get it, they would still be the
number one streaming subscription video service in the world and
for the foreseeable future. And we've already seen through the
last month that shareholders aren't totally convinced that ingesting let's say,
non traditional business assets compared to their business model is
(12:30):
the right way to go, whereas Paramount is a little
bit more comfortable and familiar with these businesses that it
would be ingesting. So I think also because Paramount is
trying to be a top three contender and a last
man standing in the streaming wars, they probably have the
most to gain by getting w.
Speaker 3 (12:47):
BA Brandon Katz or the energy of Green Night Analytics,
we appreciate it.
Speaker 4 (12:52):
Coming up, President Trump, he's aiming to cub state AI rules.
Speaker 3 (12:56):
We'll discuss what that means for the future of the
USAI industry.
Speaker 10 (13:00):
ED.
Speaker 4 (13:00):
What are you looking at M and a Monday.
Speaker 2 (13:02):
IBM is buying Confluent for nine point three billion dollars
enterprise value of the deal eleven billion dollars including debt.
I think if Confluent as like the plumbing for data,
particularly in a world where these very large frontier models
aren't relevant to lots of companies. IBM basically wants you
to pipe your data into its Watson platform real time,
and that's what this deal represents. IBM a little higher
(13:23):
but confluent up twenty eight percent.
Speaker 6 (13:25):
This is Bloomberg Tech.
Speaker 3 (13:38):
President Trump saying he plans to approve an executive order
this week establishing quote one rule on AI to limit
state level policies regulating the technology.
Speaker 4 (13:48):
Bloomag Senior Tech editor Mike Shepard has been.
Speaker 3 (13:50):
Across what we knew has been being talked about more
and more, and anxiety that there will be fifty rules
for AI companies instead of just one federal rule.
Speaker 4 (13:59):
What sort of form could fate take, Mike.
Speaker 6 (14:03):
Well, it's really unclear.
Speaker 10 (14:04):
We have seen circulating in recent weeks a draft version
of a measure that the President might sign that would
call for two things. It would allow the Justice Department
to sue states over regulations at the state level that
the federal government finds unconstitutional.
Speaker 6 (14:20):
It would also call for cutting.
Speaker 10 (14:22):
Funding to states that have regulations in place that the
administration finds objectionable.
Speaker 6 (14:28):
It's unclear what those.
Speaker 8 (14:29):
Criteria exactly are.
Speaker 10 (14:31):
We did see an AI action plan, a call for
reigning in rules that might impede innovation, but those are
all the specifics we have in hand at this moment,
so we'll be waiting to see what emerges on the
President's desk. We do know this as a priority for
the administration, for the President and for his top AI advisor,
David Sachs, as well as the tech industry. We've heard
(14:52):
from Jensen Wog, we have heard from Mark and Dreeson.
We've heard from Open AI and Google that they really
would like to rein in what they call a hatchwork
of state level rules. There are thirty eight states enacting
almost one hundred measures so far this year, and it's
becoming a bit much in their view.
Speaker 2 (15:11):
Chet My sense from what I'm hearing out of DC
is that THISEO will focus more on the why those
state laws are bad, rather than a proactive here's one
great rule for everyone. But politically, it's really interesting because
it's not as if Republicans broadly are supporting the president
in diluting or detracting from state powers. I think of Rondacentis,
(15:33):
for example, his position and this has been quite clear.
So private industry of course would support that, but politically
the president has to do some management here well.
Speaker 10 (15:43):
Absolutely ed and really regulating AI has been a politically
tricky issue from the get go, and the reason is
there are so many different points of view on artificial intelligence.
There are a handful of members in Congress who are accelerations,
who really want to speed the adoption of technology, setting
aside whatever needs there might be for regulation, and then
(16:06):
there are others who really want to slow it down.
There in the middle, you do have a large number
of other lawmakers who are seeking to rein in specific areas.
Some are worried more about the DUMA issue, others worried
about privacy, others still are worried about copyright. And so
far we do not have anything comprehensive at the federal level,
(16:27):
and in the spirit that space a whors a vacuum.
This is why we are seeing at the state level,
both in Republican states and democratic states, legislators and governors
moving in to try to impose some order in a
system that they see as both economically significant but also
potentially perilous to voters and consumers. And we are hearing
(16:47):
from Ron DeSantis of Florida, Sarah Huckabee Sanders in Arkansas,
and then even here in Washington, Marjorie Taylor Green, a
one time ally but now really at President Donald Trump
favoring state autonomy when it comes to regulating this new technology.
So it'll be interesting to see how this plays out
(17:08):
and whether they do more to articulate a vision for
regulating artificial intelligence at the federal level as opposed to
just saying why the state level rules on a patchwork
basis are bad.
Speaker 3 (17:20):
Right now, Mike Sheperd breaking it down, We thank you.
Speaker 4 (17:23):
Let's continue the conversation.
Speaker 3 (17:24):
We can head out to Sarah Olam VP and senior
fellow the Technology Policy Institute. From your perspective, is it
better to have technology policy from a state level on
AI or federal.
Speaker 11 (17:36):
Well, if you look at all the introduced state laws,
they're over one thousand apparently that are out there floating
in addition to the ones that have been enacted. They're
just so diverse. There are like six or seven buckets
of the type of state law, including disclosure mandates, algorithmic
discrimination notice, and bias requirements. So you have this matrix
(17:57):
of fifty states times six or seven bus, and that's
a patchwork. What you see also is race to the bottom.
So the most conservative rule might rule them all. And
so really it is a matter of time and effort
for small and large companies to know what these policies are.
(18:20):
The discussion mimics a lot of the privacy debates that
we had ten years ago and still do. But really
it's difficult to see innovation move forward when you have
all these seat laws.
Speaker 2 (18:34):
Sarah, the mechanism of an EO is not that surprising
if you look at the prior initiatives of this White House.
In November, a big push by the White House on
Congress to include a federal moratorium on state AI laws
in a particular piece of legislation.
Speaker 6 (18:52):
That effort not successful.
Speaker 2 (18:53):
Explain why that was important, please sure.
Speaker 11 (18:57):
So you're seeing this post today because four days ago,
apparently the state law moratorium was dropped from the NDAA
Defense Spending Bill. I think Representative Scalise mentioned that it
wouldn't be included. There was a push in November to
include it in the NDAA, and that was after in
(19:17):
July there was a push to include it in the
the spending bill, the bb B Big Beautiful Bill, and
so there has been discussion, a lot of buzz on
the hill how how to include this moratorium in legislation,
but you know, Congress thought it's not the right vehicle
to include a moratorium. And so then you see this EO.
(19:39):
The draft proposal was floated three weeks ago. It's called
Eliminating State Law Obstruction of National AI Policy. You can
read it. It includes a litigation task force, evaluation of
state laws, restriction of funding, and also involves Commerce Department,
the FCC, FTC, DOJ. Yeah, and so that was the draft.
(20:03):
We don't know if all that was in is in
the actual but they floated it for review.
Speaker 3 (20:10):
Sarah, I want to push it forward a little bit
of what actually is necessary, because it's all very well
and good saying we don't want it from a state level,
but many would harp back to what happened with social media,
where ultimately the big companies were left to regulate themselves
because no federal policy was ever enacted.
Speaker 4 (20:25):
Do you have optimism that there will.
Speaker 3 (20:27):
Be some rules of the road, some guardrails from a
federal perspective, or will it just be pushed back on
a state level.
Speaker 11 (20:33):
You know, it's hard to say. About the harms of technology,
because yes, there are harms, but who can really know
what will be the really emergent or difficult harms out
of thousands of possibilities. You know, you don't want to
stop all of them in all innovation, and so you know,
is government the right venue to discover that? Really? You
(20:58):
see it through litigation. And in Europe they've taken the approach, well,
let's do blanket regulation, and you know that hasn't turned
out very well. As you can see, people are pushing
back against EU regulations right now. So it really is
a matter of perspective. The biden Ai Executive Order was
(21:19):
rolled back and that is a perspective that's more precautionary.
And so the Trump EO is taking the other approach,
saying we need light touch regulation. So I think and
compare that with China. I don't think we hear about
regulation from for AI there, right, And so that's the
(21:42):
that's the comparison.
Speaker 2 (21:46):
Sarah Olamb, the Tech Policy Institute.
Speaker 3 (21:50):
Time now for talking tech First Up IBM is buying
the data streaming platform Confluent fro about nine point three
billion dollars, marking one of.
Speaker 4 (21:58):
Its largest takeovers.
Speaker 3 (22:00):
It's a major bet on the kind of enterprise software
that AI tools need to perform tasks in real time,
which as both companies you see you've been rising on
the news. US Open Ai says that it stols a
saving work as an average of forty to sixty.
Speaker 4 (22:12):
Minutes a day on professional tasks. It's according to a.
Speaker 3 (22:14):
Survey from the Chatchep team maker data science, engineering communications
roles among those saving the most time. Of course, it
all comes amid skepticism that there is a lack maybe
of economic benefits of AI.
Speaker 9 (22:32):
You know, ironically, it was David Zaslov last year that said,
you know, consolidation the media business is important, and the
way we approach everything is first and foremost what's good
for the talent community, what's good for our shareholders in
value creation, and what's good for basically storytelling at large.
Speaker 2 (22:53):
That was Paramount Skuyde at CEO David Ellison there at
Bloomboat's screen Time event in October full shadow consolidation.
Speaker 6 (23:01):
In the industry.
Speaker 2 (23:02):
Fast forward to Monday, December eighth, Paramount Skuidence comes in
with a hostile bid thirty dollars per share for Warner
Brothers Discovery after Netflix entered into talks with Warner Brothers
Discovery at the end of last week in a different
kind of deal. That's what the shares are doing right
now for the arms out there, Warner Brothers Discovery trading
at twenty seven thirty five cents to share thirty six
(23:25):
center shared below. Both the offer prices at this moment
in time.
Speaker 3 (23:28):
Carac arms arbitrage for those who don't parlay in that
sort of lexicon every single day. But meanwhile, President Trump,
he did way in on the Warner Brothers Discovery and
Netflix deal. Here's what he had to say about Netflix
CEO ted surround us and he's.
Speaker 8 (23:42):
Done one of the greatest jobs in the history of movies.
Speaker 6 (23:45):
And other things.
Speaker 12 (23:47):
And he's got a lot of interesting things happening aside
from what you're talking about.
Speaker 8 (23:52):
But it is a big market share, there's no question,
though there.
Speaker 3 (23:55):
Could be a problem discovering the co CEO discussing well
the country that Netflix might ultimately have. Let's talk about
that with Jennifer Ree from the anti trust team at
Briomberg Intelligence. So there we heard perhaps an admission from
the White House that he's looking at how competition is
going to play out with whoever owns Warner Brothers Discovery
at least the streaming and the studio side of it.
Speaker 13 (24:16):
Right exactly, you know. And at the end of the day,
it depends on the Department of Justice and the analysis
that they do this year long investigation that's very likely
to take place no matter who ends up being the buyer,
and what their economists find out when they look at
the market, what the documents from the companies look like
when they're talking about who they think they compete with.
And I think with the Netflix situation, it very much
(24:36):
comes down to how the market is defined. But if
the market is defined narrowly in the way I think
it ultimately will and the Department of Justice does tend
to define markets narrowly. In general, Netflix has a problem.
The President is correct, it's a big market share.
Speaker 2 (24:52):
Jen I think it would really help them in the
tech audience understand the process a little bit.
Speaker 8 (24:57):
Is it rules based?
Speaker 2 (24:58):
So if there's an antitrust review on this, do they
look at past precedents? Do they look at a codified
set of rules and say, Okay, this either is or
is not abuse of market position?
Speaker 4 (25:09):
It is absolutely rules based.
Speaker 13 (25:10):
There's a set of guidelines called the horizontal merger guidelines
that the Department of Justice will look to that actually
gives it basic mathematics to understand, at least facially whether
it deals anti competitive. And they start by defining a
market and then summing the shares in that market. Now,
oftentimes this market definition situation can be dispositive because the
(25:30):
broader the market, it filters down the shares. The combined
share isn't as large as it is in a narrower market,
at least in this situation. And they go through a
pretty intensive analysis to make these determinations. So it is
and they do look at precedent as you suggested, and
it is rules base. But here's where I go with this.
When the agencies are looking at deals, they are trying
(25:53):
to predict the future, right, and this is a gray area.
Speaker 4 (25:56):
There is no black and white.
Speaker 13 (25:57):
Reasonable minds, intelligent minds can differ on what the impact
of a deal may be. So they're doing their best
to model out that impact. And what it means is
that there's flexibility there, there's leeway, and they might believe
there's a problem here, but they have to go to
court and then they have to convince a judge that
there's a problem here and maybe a judge would.
Speaker 4 (26:15):
See it differently.
Speaker 2 (26:17):
Jennifery of Bloomberg Intelligence, I suspect you will be back
on Bloomberg Tech to talk about this very deal. Thank
you very much. Let's continue a conversation with Rich Greenfield,
partner at Lightshed Partners, General partner at lightshad Ventures. Jen
had a lot of decent mathematics there, a mathematics and
rules based approach to what happens next? Simple question for
(26:38):
you to start, Rich, what happens next?
Speaker 8 (26:42):
You know, it is really anyone's guess.
Speaker 14 (26:45):
You know, you've now got this hostile offer tender offer
from the Ellison's and from Paramount.
Speaker 8 (26:52):
Obviously sheralders are going to have to, you know, really
look at this.
Speaker 14 (26:55):
I mean you've got you know, the offers are very different,
right because one is for just the streaming and studios,
and you're going to end up with a resulting stub
equity that is the cable network piece. And you know,
depending on how that's valued, it could be anywhere from
you know, a buck and a half to four or
five dollars like a share, and so it all depends
on sort of how that trades ultimately, and do investors
(27:19):
want to sort of bet on the value of that
entity own some Netflix equity as well as get twenty
you know, plus dollars twenty three dollars of cash.
Speaker 8 (27:28):
Is so this is not a simple equation.
Speaker 14 (27:31):
Obviously, we know from Warner Brothers that they believe that
the Netflix offer was superior. They think it was thirty
one or three or thirty two dollars a share in
effective value. Will some investors want to take thirty in cash?
There may be, and I think that's going to be
the question. But can they get enough of the shares
to actually block the transaction? I think that's what essentially
(27:52):
Paramount would now be hoping for, is that enough people
tender their shares that they can stop Netflix and force
them to abandon the offer.
Speaker 2 (28:00):
If I made to recap the Netflix offers twenty seven
dollars seventy five cents, but only for the streaming and
studios bit right, the Paramount skuideance thirty dollars bid was
for the entirety of it. If we put the deal
making and the arbitrage to one side, which makes most
sense based on the current state of the media and
entertainment landscape.
Speaker 14 (28:22):
Look, we're in a point now in the entertainment landscape
where the industry is going through seismic change. You know,
movie theater attendance is down fifty percent from before COVID.
You know, forget about box office, but actually, you know,
sort of people attending movies in the US, you're down
nearly fifty percent. You know, you're seeing most of the
(28:45):
major streaming companies out there really scale back their ambitions.
And that's Warner Brothers, that's you know, if you look
at what's happened with Peacock, none of them are as aggressive.
Disney and Hulu have certainly reduced their overall aggressiveness in
how much content they're making. Like everyone is realizing how
streaming is so hard, and so the reality is consolidation
(29:08):
is certainly necessary. And I don't think this is the
last transaction we're going to see. I think you're going
to actually see this set off. You know, there's gonna
be a knock on effects from whoever ends up buying this.
You're going to see other things happen. You know, is
there a story to tell for both companies?
Speaker 8 (29:24):
Absolutely?
Speaker 14 (29:25):
I mean there's no doubt in my mind that if
you you know, put Warner brothers into Netflix, the ability
to do far more with that library than has ever
been done before. Looking at that global platform, and how
they've able to sort of surface content.
Speaker 8 (29:40):
I mean, all of this content's been sitting on HBO
Max and no one really watches it.
Speaker 14 (29:45):
That's what Netflix does really well, is they get people
to watch things throughout the library in the way that
others cannot. Right, that algorithm is so powerful Paramount buying it.
Speaker 8 (29:56):
Look, Paramount needs more scale.
Speaker 14 (29:58):
If Paramount doesn't buy this, guess is they're going to
go after something else in the space, whether that's NBC Universal,
whether that's Sony. Like, I don't think Paramount is going
to sit still. They want to get bigger. Look, they
may just spend a lot of money. I mean, Ellison
family has a tremendous amount of capital. Will they just
use that to fund far greater investment than they were
(30:19):
previously in Paramount?
Speaker 8 (30:21):
That might be another angle here.
Speaker 14 (30:22):
I Mean we've always said Paramount doesn't have to have
that because they have one of the wealthiest families in
the world backing them.
Speaker 3 (30:29):
They've got more than the wealthiest family in the world.
They've got Middle Eastern money helping them with this. That
would transpired. Does that change the storytelling?
Speaker 8 (30:37):
Rich Well, I.
Speaker 14 (30:38):
Think what's interesting is there is this perception on Wall
Street that this was just Larry Ellison, you know, writing
a check to buy all of this, And what it
actually turns out is that Larry's only writing a twelve
billion dollar check. He's backstopping a larger portion, but the
actual check he's writing his twelve billion, and three Middle
East entities are actually investing twenty four billion.
Speaker 8 (31:01):
I don't know if that played into him.
Speaker 14 (31:02):
And they say there's no scifius concerns, but you do
wonder whether the largest sort of you know, as a group,
the Middle East being the single largest sort of equity
contributor to this deal. I wonder if that played a
role in concern around this transaction.
Speaker 8 (31:19):
You know, we'll see.
Speaker 14 (31:20):
It's funny how there's been so much sort of industry
uproar around.
Speaker 8 (31:27):
Around Netflix buying Warner Brothers.
Speaker 14 (31:30):
I wonder as people start to understand more of what's
inside the paramount bid is you just said, Carolyn, will
we see more pushback on the Paramount But I don't know.
I mean, I think you know, all of these bids
have there certainly are issues and look from a you know,
if you think about sort of from an anti trust standpoint,
Disney bought Fox. That seemed you know, Disney was at
(31:51):
the pinnacle height of the industry when they bought Fox,
and that was approved during Trump one. You know, it's
hard to believe that this transaction ultimate gets blocked, either
one of them gets blocked. I think obviously the Netflix
will probably take longer than the paramount one, but I
don't think there's any quick approval. A lot of states
are going to be frustrated by you know, both of
these bids.
Speaker 8 (32:11):
Foreign countries are going to be frustrated.
Speaker 14 (32:13):
So I think there's a long regulatory review process, meaning
over twelve months, maybe even eighteen months for both of
these companies.
Speaker 3 (32:19):
And YouTube gets brought into that rich more, will we
understand what a competitive threat that is.
Speaker 14 (32:26):
Look, there's three layers of this. Is streaming A distinct
market is streaming in linear TV. Like there are people
watching us right now, Carolyn, who you know are watching
linear TV and have Bloomberg TV and have CNBC and
all of these channels, Like you know, it's hard to
sort of believe that you know, FX and and you know,
(32:46):
ABC and CBS don't really compete with Netflix. And then
you've obviously got the larger thread of like, well, you
know YouTube has Sunday Ticket, Like where do you watch
Sunday Ticket?
Speaker 2 (32:56):
Now?
Speaker 8 (32:56):
You watch it on YouTube? Is it?
Speaker 14 (32:58):
Can you really say that YouTube is not a competitor
to Netflix? And so it gets very challenging to define
what the market is. And I think you're going to
see a real difficulty in the government, you know, trying
to not just say.
Speaker 8 (33:12):
What the market is, but actually back that up in court.
Speaker 14 (33:15):
I look forward to seeing how they actually try to
prevent either of these two transactions.
Speaker 3 (33:20):
Rich Greenfield is always so good to check in with
you of like Shared partners Light Shared Ventures.
Speaker 4 (33:24):
You appreciate it.
Speaker 3 (33:26):
Coming up, we're going to be speaking about defense a
little bit more.
Speaker 4 (33:29):
Roger Zikeen is going to be joining US.
Speaker 3 (33:30):
Ronald Reagan Institute about securing industries key to the US economy.
Speaker 4 (33:35):
That's next, This is blue Bag Tech.
Speaker 6 (33:49):
JP.
Speaker 2 (33:50):
Morgan plans to invest ten billion dollars of its own
capital in the defense, aerospace, healthcare, and energy sectors. The
new strategic investment group will be led by both Halfway
Todd Coombs and the group's strategic advisors. As you can
see reads like a who's who of industries. The announcement
comes to stays up to JP Morgan's CEO, Jamie Diamond,
(34:10):
spoke about strategic and defense issues at the Reagan National
Defense Forum and said Europe was facing quote, a real problem.
Speaker 6 (34:18):
Listen to this.
Speaker 12 (34:19):
Europe has a problem. I think they accomplished an unbelievable thing,
but it got bogged down. It takes twenty seven nations,
you know, to make a decision. They have some wonderful things,
but they've gone from ninety percent of the GDP of
America to sixty five. That's not because America did anything
bad to them. It's their own bureaucracy, their own costs.
I think the leadership Merz, McCrone, Maloney, Stormer, I think
(34:40):
they know. I just think politics is really, really hard.
Speaker 4 (34:44):
Sat next to him asking the question.
Speaker 3 (34:47):
Was luckily enough me who got to fly out to
Simi Valley over the course of the weekend, and it
was all regarding the security and resiliency initiative that JP
Morgan has and why they're so focused on defense. Someone
who's also over in Simi Valley at the Reagan National
Defense Forum was Roger Zachheim.
Speaker 4 (35:02):
Here's the director of the Reagan Institute.
Speaker 3 (35:05):
You have so much rich data as perhaps some of
the nuances when it comes to Europe versus US. Why
Jamie Diamond cares about defense right now is because it's
geopolitically important, is economically important, and he's putting one point
five trillion dollars initiative for the next ten years. Roger,
what was it that you took away from the event
in terms of money coming towards defense defense tech in particular.
Speaker 15 (35:27):
Well, really, we're seeing this for new dynamism in the
national defense community. I mean, we started the Reagan National
Defense Forum over a decade ago, and you saw over
eighty plus corporate partners participating the event.
Speaker 6 (35:40):
I would say probably two thirds of.
Speaker 15 (35:43):
Those companies participating didn't exist five six years ago. So
we're seeing because of all the innovations you guys cover
in the commercial sector, it's also penetrating into our national
defense community. And of course those technological innovations don't just
impact the United States, it's impacting geopolos around the world. China,
of course, is leveraging that and that's a big driver
(36:05):
of the competition between the People's Republic of China and
the United States. And it's natural then that Jamie Diamond,
the leading CEO in the United States Iconic Bank in
the United States, has something to say on the matter
and is involving himself in the matter. And that's what,
of course you covered at the Defense Form Roger.
Speaker 3 (36:23):
What's really interesting is we hear yet more and more
focus of the administration on policy making. They're basically inspires
innovation in artificial intelligence, but perhaps at the fas sake
of guardrails. And we're talking here about perhaps an EO
that might come this week that's going to look for
states not to enact individual AI rules and leave it
to federal rule making. Is that something you've seen born
(36:45):
out in the data that the defense tech community, but
investors and policy makers think that's a good thing.
Speaker 15 (36:51):
Well, they want to use AI, and we need to
use AI in our defense platforms. As a big conversation
at the Defense Forum and our national which is released
just ahead of the survey a form excuse me earlier
last week, really captured how Americans are someone ambivalent about this,
They don't know, they're concerned should we have AI in
our defense platforms? And there's almost a majority of Americas
(37:15):
just saying they're unsure. Our leaders, of course, know that
it's entirely necessary. Of course, you have to have a
person in the loop, a human the loop involved, and
we're not going to get there in a fashion we're
comfortable with if we're regulating our.
Speaker 8 (37:27):
Way out of it.
Speaker 15 (37:28):
And I think that was the spirit of what you
heard from our defense leaders, both on industry and from
the Pentagon, and I think you're going to see that
also out of the White House with this executive order.
Speaker 2 (37:38):
Roger China is worth discussion. On October tenth, Caroline and
I did the show live from Anderill's headquarters, and literally
the moment the show started, the President posted on truth
Social about at that time a deterioration in his relationship
with Jijingpin. And the point that Anderil is an example,
would make is we've been talking about China as a
(37:59):
threat for some time. We're still bracing for China as
a threat in the year twenty twenty seven. And in
your survey, respondents engaged on that point give us the data.
Speaker 15 (38:10):
Well, seventy nine percent view China as the adversary of
the United States. You know, rushes in there too, of course, Iran,
but the country that the most Americans, as expressed by
the respondents and our survey, are concerned about that they
view as an enemy as an adversary is the People's
Republic of China. And they're right, and the Trump administration
(38:30):
is first term named the PRC as the leading challenge
to our national security.
Speaker 6 (38:36):
Now.
Speaker 15 (38:37):
President Trump, of course is engaging in dollar diplomacy. The
National Security strategy that came out last week emphasize how
he believes economic cooperation with China will be one of
the ingredients. Tours take the United States a forty trillion
dollar economy. But from a national defense standpoint, we're only
going to get what sector Hesech talked about. We want
(38:58):
to have strength as a driver towards engagement with China,
but without confrontation. We're only going to get there if
we are strong, if we're making these investments, if companies
like Androil are going to make the progress they promise
with respect to autonomy and other new companies getting online
leveraging this new technology. Of course, in part AI driven.
Speaker 2 (39:19):
Roger, I want to go back to Caroline's conversation with
Jamie Diamond. If we could end there, please, there is
support for this government taking stakes and strategic industries. But
clearly the private sector and from a financing perspective, the
banks think they have a role to play here. Is
the situation just better now for private industry to do
(39:39):
business with the government directly or co invest with them.
Do you get that sense?
Speaker 15 (39:44):
Well, listen, certainly from the Reagan Institute perspective, it is
better when our free market is driven by the private
sector and not government. I think if you talk about
companies from Anderalds or new entrants or newer entrant all
the way to the Boeings and north through Grummans of
the world reading on the public markets right certainly in
the in the primes and so government needs to leverage
(40:05):
that technology. They need to go ahead and develop and
drive budgets that have growth so those companies can continue
to scale up. That is what's required to scale here.
And we talk about Jamie Diamond, right and the banking sector.
It can't just be vcs anymore. It can't just be
the pe community. We need major banking institutions to get involved.
(40:26):
And that's why Jamie Diamond's leadership was so essential and
was great to have him on stage with you.
Speaker 2 (40:30):
Carolina Roger's that Kim, director of the Reagan Institute. It's
great to have you on Bloomberg Tech. We appreciate it.
Now coming up, let's get back to Paramount's hostile bid
for Warner Brothers Discovery. There's a lot to talk about.
What happened next, the why, and the deal as a whole.
That's what the trading looks like for the names involved.
This is Bloomberg Tech. Back to today's big story, Paramount
(40:57):
making a hostile bid for Warner Brothers to Discovery thirty
dollars per share just stays off. The company agreed a
deal with Netflix. I want to get to Bloomberg Intelligence
media analyst Keith rang and Ethan because when we spoke
on Friday, you called it the next thing will happen
is a hostile bid from Paramount. Were there any surprises
within the structure of Paramount's offer for you, Not.
Speaker 16 (41:21):
Really, but you know, when you compare it, obviously, on
the face of it, the Paramount offer definitely looks superior
because it is a thirty dollars bid, it is an
all cash bid. But the two offers are actually so
very different.
Speaker 3 (41:34):
You know.
Speaker 16 (41:34):
Paramount, of course promising regulatory certainty a much speedier path
to approval. But again, a lot of this is still
TBD ed. We have to kind of wait and watch
and see Paramount kind of removing a lot of what
they thought would potentially spark regulatory problems, you know, removing
the or with the Saudi money, kind of getting rid
(41:55):
of the governance issues so as to not trigger a
sifious jurisdiction. But again I don't know whether shareholders necessarily
view this as a superior deal.
Speaker 2 (42:05):
Well, when a big piece of news and a big
piece of MNA happens like this, our Bloomberg terminal clients
will know. You publish a REACT and the headline of
your react is Paramount hostile. Warner bid ups and te
may not be enough. Why do you feel it may
not be enough?
Speaker 16 (42:20):
Keeper, Because on the face of it, the Netflix bid
actually offers superior value for all of Warner Brothers Discovery.
So you have the studio and streaming unit valued at
about twenty eight dollars a share according to the Netflix bid.
And then if you just kind of look at where
other cable networks are trading, because you will be left
(42:41):
with a cable network stub business, which is called Discovery Global.
We think and I think the street also thinks that
that should be worth about three and a half to
four dollars a share. Now, Paramount in their presentation has
valued that unit at about one dollar per share, and
I think that is where majority of the delta is
coming in, and so I think they will kind of
ultimately need to up their bid.
Speaker 2 (43:04):
What we're hearing in the markets is right now, the
state of play is that Paramount's not even heard back
from Warner on their bid. Keith Rang and Na from
the Bloomberg Intelligence, thank you so much. That does it
for this edition of Bloomberg Tech. Let's recap where we're at.
Speaker 6 (43:19):
We have a.
Speaker 2 (43:19):
Netflix bid for the streaming and studio business, and Warner
Brothers Discovery. We have a Paramount Skuidance bid for all
of Warner Brothers Discovery. You can listen to all those
conversations in today's podcast. Find it online on Apple, Spotify, iHeart,
and of course on all the Bloomberg platforms. Big Wig ahead,
This is Bloomberg Tech.
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