More like Paramounting problems, amirite?
As the dust settles over the latest corporate game of thrones, there’s been much wailing and gnashing of teeth as the seemingly unstoppable force of the Ellison family swallowed up another beloved, well, fondly remembered pillar of Hollywood History. The ink is still fresh on the deal that – if it receives all the necessary regulatory and legal approvals (still a big if, although not as big an if had Enemy of TrumpTM Netflix succeeded) – will make David Ellison the most powerful man in media you never wanted to have heard of. In a move that surprised absolutely no one, David leveraged his chief, and perhaps only, real talent – persuading his father Larry Ellison to open his wallet – to add Warner Bros. Discovery to his already precarious Paramount Skydance chimera. So, let’s take this opportunity to congratulate Ellison, both senior and junior, on their ownership of an $111 billion white elephant that comes with its own cursed legacy that has brought down mightier empires with sturdier foundations.
For those of us watching this consolidation corporate body horror from the cheap seats, the downsides are drastic and obvious. The creative industry is already feeling the chill, not just from the inevitable “synergy” layoffs (read: thousands of people losing their jobs to pay for a billionaire’s belated parental overcompensation), having still not quite recovered from the disruptions caused from Disney’s Fox buy-out. Add to that Ellison Snr’s obvious and self-serving support for putting AI at the heart of his son’s entertainment endeavours, and, of course, the rich, thick stench of corruption and cronyism from the Ellisons’ well-documented ties to the Trump Syndicate that’s seized control of the US Government and the future looks very grim indeed. Having already turned CBS News into looney tunes, you have to wonder what he’ll make of the once-august CNN.
But while these fears for the soul of entertainment, there is cause for hope. It won’t be pretty, and there will be collateral damage along the way but it might just be very, very funny if irony is your thing.
Money money money, must be funny in a rich man’s world.
First, let’s talk about the math, because given the figures and assumptions involved, it seems likely that the accountancy was handled by one of their beloved LLMs. The sheer scale of the leverage here is, frankly, enough to make any shareholder who’s paying attention see red. David Ellison isn’t just buying WBD; he’s inheriting $29 billion in existing WBD debt, on top of the tens of billions in fresh loans needed to pay out the shareholders who are laughing all the way to their banks. And who’s backstopping this titanic pile of IOUs? Larry “The $45.7 Billion Guarantee” Ellison who’s not just opened his wallet to let the nepo baby have his bottle; he’s collateralized 41% of Oracle to satiate the avarice of the WBD board. The entire Paramount-Skydance-Warner Bros-Discovery media empire built on the assumption that Oracle stock, currently riding on a massive $100 billion AI-spending spree, never corrects. If (When) the AI bubble pops, and/ or if Oracle’s $50B data centre capex bet proves to be a gigantic bust, there’s a danger entire house of cards is going to go down in a forced IP fire sale. Bluntly, if the chips are down, they’re fucked.
And even if that extreme probability doesn’t come to pass in the scale or severity it could, there’s still enormous risk from the penalties and promises David gleefully signed up in order to sweeten and seal the deal. David’s “Superior Proposal” gives $2.8 billion to Netflix for being gazumped and, presumably, not attempting to cause any further trouble: nice work if you can get it. And while the Ellisons can be confident of having the United States’ Federal Authorities in their deep (for now) pockets, State Attorney Generals and international regulators are already making ugly noises about the proposed deal and so there’s the spectre of a further $7 billion payout to Warner Bros if it all falls through. If it all falls through, David will have spent nigh on $10 billion of daddy’s money with nothing to show for it.
That’s [not] all, Folks!
Of course, this isn’t exactly a “steady as she goes” project; or even your classic “fixer upper”. This is a “both houses are currently on fire” situation and the only way this price makes sense, and the only way to service that obscene debt, is if both Paramount-Skydance and Warner Bros. Discovery stop bleeding cash immediately and operate at maximum profitability. A pity then that at the head of this corporate conflagration is a man who seems entirely unsuited to the task at hand.
Skydance has never been a profit powerhouse, and its chief operating model has been to turn up with a cheque book and buy a slice of whatever looks like a sure thing, hitching its logo onto sure fire hits like Top Gun Maverick and Mission: Impossible Fallout as well as a whole raft of mediocre franchise sequels and reboots. It was a parasite that hooked itself into Hollywood and, like The Last Of Us’ cordyceps has now assumed control and is piloting the corpse of Paramount around like a mech-suit made of ailing IP. Having abandoned his acting career in 2010, bitterly one must imagine, Ellison jr clearly set his sights on living vicariously – if not particularly selectively. Perhaps its that lingering resentment of an industry which valued nothing but his access to his father’s money that drives his notorious talent problem? He’s already alienated two of his golden gooses, provoking Tom Cruise to refuse to even be in the same room as him after suggestions to use AI and CGI for stunt work angered the famously hands-on actor (although it may also be the not-unreasonable but uncharacteristically frugal suggestion from David Ellison that Cruise find his own financing for those Mission: Impossible Dead Reckoning/ The Final Reckoning overruns). Likewise, Taylor Sheridan, the jewel in the somewhat ramshackle Paramount+ crown who basically took his $20M-per-episode universe and signed an exclusive deal with NBCUniversal because he couldn’t stand David’s micro-management. It doesn’t bode well for plans to make thirty theatrical films a year when the few remaining stars who can guarantee a box office won’t take your calls. This may explain his strategic masterstroke of reopening closed doors to disgraced or ostracized media figures like Max Landis and Brett Ratner to shepherd his new cinematic oeuvre. Harvey Weinstein is probably waiting by the phone right now.
It’ll be alt-right on the night.
Of course, replatforming those who have been credibly accused of sexual abuse sits quite comfortably within your brand if your intention is to MAGAfy your movie business, but that is the funniest thing about this whole shebang. The Ellisons seem ideologically locked into the belief that what global audiences want is culture war crusades across their screens while all evidence is to the contrary. The audience just isn’t there and it never will be (MAGA don’t, by and large, go to the movies and their boos mean nothing because we’ve seen what makes them cheer). The Fox Newsification of CBS News is already failing as it haemorrhages viewers and, as the Snyderverse shows, a vaguely alt-right take on superheroes just doesn’t fill multiplexes. Much of Skydance’s output has been bang average and forgettable and while the big blockbuster hits grabbed the headline, they are the exception to the rule. Ellison has shown zero nous when it comes to spotting entertainment trends or titles that resonate and if he harbours a belief that if they just make it all a little more focussed on a specific segment of the political spectrum, the audience will show up it speaks to a lack of vision that’s tantamount to financial suicide when you need every wing of your bloated empire to succeed just to keep your corporate head above water.
Especially when you’ve just gleefully ripped a poison chalice from the lips of your streaming rivals and taking a big, shit-eating gulp. Warner Bros are now entering into their fourth messy marriage in in 25 years and by this point it seems like the studio has a built-in immunity to corporate stability. First it was AOL (disaster), then AT&T (catastrophe), then Discovery (brutal), and now, just as the bruising and swelling from the Discovery debacle was starting to subside, the Ellisons. There’s a reason investors and industry insiders coined the notion of the “Warner Bros. Curse” because the massive debt from these consecutive mergers always triggers a brain drain and eventually, another desperate sale.
Still, I’m sure that nothing at all like that will happen to the Ellisons’ multi-laterally leveraged interconnected and interdependent vanity projects even though David, and by David I mean Larry, Ellison has bought himself a gold-plated Titanic: shiny, expensive, cross-collateralized with the world’s riskiest tech stock, and set full steam ahead across the choppy waters of the 21st century entertainment industry. Here’s hoping they hit every fucking iceberg on the way down.
