Them spending a hundred million dollars to try and say we're likable and we're cool again is like your uncle showing up with a Ferrari to convince everyone he doesn't miss his ex.
Hi everyone, this is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.
We've got a lot to get to today. Paramount Skydance is pausing a Warner Brothers Discovery merger until legal challenges are resolved or until June 1st, 2027. That's like a long time from now, folks. Whichever happens first. The decision comes after a federal court granted a temporary restraining order preventing the merger from closing for at least 28 days. Paramount is calling the pause a significant win, which is not, saying it provides a direct path to a trial based on evidence, but investors do not agree. Neither does Kara Swisher. Paramount shares hit a 52-week low on the news. The delay could get costly. A $650 million per quarter ticking fee begins in October. And if the deal falls apart entirely, Paramount would owe a $7 billion breakup fee. By the way, Paramount just brought on Beth Wilkinson, someone I know pretty well as its lead attorney, very good attorney. She successfully defended Microsoft's Activision acquisition. She's also representing Nexstar in its antitrust case. Beth, the company you keep. Anyway, she'll win. Well, we'll see. We'll see. We'll see. What's winning at this point? At this point. So talk a little bit about what you think. I have thoughts on it, but I'd love to hear yours first.
Well, I don't think they have a legal leg to stand on. What they have is delay. And delay costs shareholders, employees. It's effective and they'll probably extract a pound of flesh because in order to win the deal, one of the things that Paramount Skydance offered in the purchase agreement was a ticking fee of $650 million per quarter while the deal sits in limbo. That's roughly $7 million per week. So these Democratic AGs who are probably sick of a Republican weaponized DOJ have said, fine, what's good for the goose is good for the gander. And they'll probably be able to extract something, whether it's guarantees of certain shooting within their state or spinning a certain thing. They're going to, and you know, no one, all of a sudden less than no one is going to know who the California AG is going to be, right? They'll start getting a lot of time on MSNBC. So, this is political. They'll get some awareness. They might get a pound of flesh, but I don't, I think ultimately Beth will bring up a bunch of expert witnesses in the form of economists who will say a merged Warner Brothers Skydance is 8% or 6% of all viewing time versus Netflix at 9% and YouTube at 13%. The market has already voted. Paramount, as you referenced, hit a 52-week low after celebrating what management called a legal win. This was such a Trump thing, trying to pretend this is anything but bad news. And investors understand something executives often don't, and that is winning in court can still mean losing economically. So again, the real competitor here isn't Skydance or Warner Brothers. It's YouTube, Netflix, TikTok, and increasingly probably AI-generated entertainment. And as usual, legacy media is fighting yesterday's war while tomorrow's competitors are scaling. But this again seeds economic value and advantage from the legacy players to the new guys who aren't caught up in court right now, and YouTube can just scale.
Yeah, that's absolutely true. I don't think she's going to win at all, actually. I think they, yes, I don't. And I, right. Look at right now the price of Warner shares, $25. The delta between the 31 and 25, as Bill Cohan actually pointed out, is quite high. Supposed to be about 4%. It's a lot. That's a lot. Investors have decided this deal isn't happening. That's what I think is exactly.
They want a premium. So, so what you're referring to is merger arbitrage. There's a whole class of investors who, when a deal is announced at, say, I think this announced at 31 bucks a share, whatever it is, if it's trading at 25, what is that? That's about a 22 or 23%.
They don't think the deal is happening.
That's right. But what merger ARB guys do is they say, okay, I think it's going to close. I buy the stock now. When it closes, I got my 31. And it's hard to find a 20 or 22 or 23% return. But what you're saying is, to your point, the market is saying there's now approximately, if I'm doing my math correctly, a one-in-four chance this deal doesn't happen.
And what would be interesting is what happens to the stock if it doesn't close.
Collapse. Collapse. Here's what I think. This is what I think. All right, let me go. This is, someone sent me a very interesting legal document which I thought was great. They chose financial hemorrhage over legal precedent. This tells you everything about how they assessed their chances on August 3rd. They were going to lose on the preliminary injunction. They were absolutely going to lose on that, and that would have devastated the stock. Devastated the stock, and you couldn't overturn it on appeal. This is called something called abuse of discretion standard, and the merger would have been over if they lost on August 3rd. So they're pushing this, this lawyer, they had a guy named Kessler, and hiring Beth, it's a great hire. She's great. She's terrific. I don't really care how terrific she is. This is, they have, I think they have decided, this is, let me read you this, Paramount blank. They looked at August 3rd hearing, two PI motions, two markets, A-list writer declarations, a judge who already tipped her hand and decided that no ruling was better than another bad ruling. That's a rational litigation decision and a catastrophic business signal. Paramount isn't just scared. They've entered a survival mode and they're trying to control the bleeding. The question is whether the patient can survive long enough to reach the operating room. And as you said, other competitors are scaling, including all these tech competitors and also Disney and others. They have all kinds of freedom to do things. They have this ticking fee that's very expensive, and at some point the savings that they were going to recognize in this deal are going to disappear, right? That they were going to do through the coordination. And so.
Oracle stock is way off. This is what's paying for part of this. Yeah.
This is delay. You don't have to win at litigation here. You have to delay the litigation. And Beth can push for, and she's going to try to do this in court, a shorter time span in between, in between the, you know, what's happening here. But she's frozen. It's really pretty much frozen. So she can say, let's try a scheduling. It's on July 31st. They want to get it this fall. It's not going to happen this fall. And the judge is going to set this schedule, and this judge doesn't seem in any rush. Now they've also filed the appeal into the Ninth Circuit. That's going to take until the trial is over. So, you know, the California and the group is going to appeal if they lose. It just keeps dragging and dragging on. And so I don't see how, I don't see how they get this out the door, unless they have a settlement. And so another document I got which was really interesting, and they said these are the most likely ones. One, states win at trial, permanent injunction, merger blocked, Skydance walks, Paramount restructures or finds a new buyer. Settlement possible. Paramount offers structural remedies, divest a studio, sell cable networks. States accept or reject. Deal collapses economically. Also possible. Ticking fees exceed value of Warner Brothers or Skydance, invokes termination cross clause. Merger dies without a verdict. And then if Paramount wins at trial, merger closes after more than $1 billion in ticking fees and severe reputational damage, near certain appeal by states. I just don't, I got to say I don't know. She's a talented lady, but time is not on the side of Paramount here in that regard. So again, as I often do here, I'm just sort of flying on instruments and thinking out loud, but I wonder if the fulcrum here. So economically, if this goes on long enough, it will close because.
If it goes on long enough. But, and there's a big but here. The data, the only way this legally doesn't close when they chase it all down and they've had a chance to actually evaluate it is to prove it's a monopoly. And I don't, I think they're going to have a very difficult time, the AGs, proving that because essentially a combined Warner Brothers and Paramount would represent about 12% of total US TV watch time, and YouTube currently stands at 13%. And in terms of box office sales, a combined Paramount and Warner Brothers represent roughly 25% of the domestic box office. Now having said that, if the fees, if this becomes economically untenable because of delay and ticking fees, they might just throw up their arms and blame Democrats. And by the way, this is political. All 12 AGs filing cases are Democrats here. The judge that decided this was a Biden appointee.
But the Trump administration waved it through when lawyers at the Justice Department didn't want to.
What's good for the goose is good for the gander. This is, if you're going to weaponize the DOJ against us, whether it's cutting off fees to our greatest research universities with no legal precedent, if it's, if it's ram, if it's carving up TikTok like a political giveback to your Republican donors, fine. You want, you want to go that way.
Or waving this deal through when lawyers at the Justice Department did not want it to go through. See, I mean, there's a ton of examples. The FTC going after The View. I mean, it's just, if you're going to be ridiculous, folks, I actually like Democrats punching back at some point. I do think the merits of this case or the lack thereof will result in a judge saying, okay, this is going to close. The fulcrum, I want to get your view on this. I think the thing, if this dies, I think the reason it will die is if OpenAI continues to have negative momentum. Why is that? Oracle stock for a while, about, I think it was nine or 12 months ago, Larry Ellison became the wealthiest man in the world because they announced a deal for something like a trillion dollars in capex commitment from OpenAI to build out, help build out their infrastructure around compute and inference. Oracle stock is dramatically off.
Dramatically. Yeah. And if the cracks continue to widen at OpenAI, Oracle has now become a public tracking stock for OpenAI. And I got to think that dad's piggy bank, which is Oracle shares, are quite frankly, that's where this check gets cashed. And if Oracle shares come under enough pressure and dad goes, you know what? All of a sudden this went from five or 10% of my net worth to 20 or 30%, and it's going to, quite frankly, you know, I'm going to wake up in a suit that's uncomfortable for me at this age in terms of finance and debt. He might decide, sorry, son, I can't refill your green light credit card as I do because the Deliveroo and the Uber has become too expensive. I'm now using the metaphor for what I do.
Yeah, it's down 52% in the past year. 52%. I mean, year to date, year to date 39%. Six months, 32%. One month, you know, it's just headed down. You're right. I mean, this is what I had said. Remember I had said this a couple, this Oracle stock thing that I was paying attention to. That's besides the point. I think that they just overindexed on their confidence. They were like, well, we got the Trump administration to roll over. We gave the EU some stuff they wanted. And then they were like, China said yes. I'm like, what's the difference? It doesn't really matter because these guys have a, what I thought Bond did very smartly, and I agree with you, it's a different market, but the judge is also calling that irrelevant, the streaming market irrelevant here for this particular case. So I don't think they have a great way in with this judge, and I thought they were overly confident. They did not think Bond would be quite so controlled because he could have done a get rid of CNN, thank horrible CBS. They did none of that. They did only a very specific, small, discreet lawsuit that will move, will delay this just enough. They don't have to win. They really don't have to win here. They just have to delay it. And the question is how much will the Ellisons put up with to own this. That's the thing. How much, they're rich enough to do it. It's just a question of how much, how much they want it, right? I guess on some level. And again, delays in deal making for Warner Brothers. Delays. I mean, the asset becomes less valuable. They can't make any major deals now. They can't do any major things, and the other people will benefit. It's not a good situation.
I think we're in violent agreement here. And that is whether or not this, the legal merits here are important. But I would argue the legal merits all point to eventually this would close. But they can get in the way of the closing and force the Ellisons to perhaps walk away if they make getting to closing too expensive for them. And it's not only a function of the price and the expense. It's a function of how much money the Ellisons have. And if Oracle is down another 50%, I don't think the deal closes. If it's up 20 or 30%, I think they have the staying power to weigh these guys out and hire your very talented friend who, by the way, has a very handsome trophy husband. I just want to point that out.
He's dreamy. He's dreamy.
She's going to be mad at us, you know.
I like it when baller women have like a trophy husband. I think that's.
He's a very talented journalist.
Come on. We've been doing it. We've been doing, anyways, we've been doing that forever. I'm going to get a text. Why should you be the only one with a trophy? A trophy.
She thinks we've gone too woke. I think she does think we've gone too.
Oh, well, let me word to your mother, sister. A lot of people think that. Anyways.
We're wokeish. We're woke adjacent.
We're woke adjacent, right?
We wander around. Listen, this is a devastating business problem. It's really bad. It's not good. You know, this is, look, it's just, this is to me, they were too arrogant. They were too arrogant. They didn't think this guy would come to play.
It's gonna, media's obsessed with itself. They're going to constantly report about it.
It's an, come on. It's an interesting case. It is interesting. Come on. It's all the tech people. It's media. It's tech. It's Larry Ellison. The satanic-looking Larry Ellison. It's so much good stuff here. Come on. It's a great story. It's a great. And now you brought in Beth Wilkinson, the star litigator.
I hope I'm not going to get him in trouble. I had drinks with the guy who runs Warner Brothers movies or one of the co-. And he's just like the loveliest guy, this guy Jesse, man.
And he's just so nice. And I'm like, what's going on there? It's like, I just show up and I do my work, you know? It's just like, I don't know. I'm just showing up trying to find good ideas to turn into movies that people want to see.
Yeah. I just, I don't know. I think I'm going to go on a limb and say this deal doesn't happen. This deal doesn't happen.
I'm going to, I agree with you.
I agree with you on the market, but I don't think that's what it's going to get judged on. This judge has already signaled that.
No, no, no, no. That I, there's no, I mean.
Winning isn't winning. Yeah, but we're saying the same thing. This isn't about the legal argument. It's about the prospects. It's about Oracle stock price, which is directly linked to the prospects of OpenAI at this point. So, if you want to know whether this deal is going to close or not, tell me what the narrative is and the value of OpenAI is in six months. That's it.
We'll see. We'll see if they've got the staying power. You Ellisons, boy, they weren't expecting this, I don't think. And also, let me just throw in one last thing. Guess what's happening in November? The midterms. This family does not look good during the midterms given all the crap they were doing at CBS and all the statements about what they were going to do at CNN. They are going to run into a buzzsaw of Democrats on top of this, like, by the way. So just all down and to the right. So to the right, to the right.
I hope so. I hope you're right. And they shouldn't have done the CBS mess. It brought ridiculous attention to a very small part of its business. It was stupid.
I think that's accurate. They created smoke where they didn't need to, you know.
They could have just let it run quietly and then done all their nasty stuff later, but they didn't. They couldn't resist. Anyway, the rescheduled White House Correspondents' Dinner took place Friday. Jesus Christ, this thing. Speaking of media, what a story. Three months after Trump forced the original event to be cut short, Trump opened by saying the show must go on and condemning political violence. That was good, but quickly shifted to an hour of attacks on Democrats, celebrities, and journalists. Many of his jokes falling flat, and even Republicans didn't think it was good. Those attacks include personal jabs at CNN's Kaitlan Collins. How dare he? Who's accepting an award for her White House coverage? Trump also sat there as The Wall Street Journal accepted an award for its reporting on his ties to Jeffrey Epstein in that famous birthday greeting thing with the lady's vagina. I, you know how I feel about this Correspondents' Dinner. I think it's just repulsive, and I had offered to pay for the scholarships because I hated it so much. But I covered it as a young reporter. I thought it was terrible 20 years ago. This was just bad. And you know, don't come for Kaitlan Collins, my friend. I thought she acted rather well. Although I suspect nobody should have been there in the first place, but that's just me.
Well, let's bring this back to me. I need your advice. So, this is a picture. I'm holding this up for our viewers on YouTube.
This is me and Kaitlan. Notice what she's doing here.
Smiling. Smiling. She's smiling.
She's, in addition to being a very talented journalist, she's also a lovely person who smiles when appropriate.
She smiles when appropriate. That's correct.
I saw this thing. I mean, the clips are everywhere. And I just thought there, I think about our brand, right? The US brand. There are a few things that have been worse for the brand than the White House Correspondents' Dinner.
Never. Yes. The worst. The worst. Well, first off, what better marks America than an event with our, you know, technically our most iconic journalist and the president, and a mentally ill man with guns manages to interrupt the whole thing. And then we reschedule it and we have this 80-year-old man making the creep. This wasn't even about insults. It's like this dude is just so creepy. It's like your grandfather whose daughter shows up and won't stop talking about his grandson's girlfriend in a very uncomfortable way. It's like, dude, just take your limp dick and just take it somewhere else.
It's so, the air, I don't know, the clip, the air in that room was like, oh God, this is just the worst thing. And let's go macro. The White House Correspondents' Dinner is like Blockbuster holding an award show for who has the best DVD. No one gives a... It's like, come on. The institutions here, there's a theme across all of this. The through line is the institutions are ceding power to individuals and to individual journalists who go on social media. This thing needs to be buried or at a minimum don't invite the president. This thing just was so awkward.
Exactly. Just have a nice dinner with your... I'm not a big awards person. I hate awards. I don't go to them anymore because I hate them in the first place, and now I've said, you know, I actually hate them. Why am I going? I have never, I've only covered this as a young reporter. I never went, I've gone to the parties. But I've always found it to be this little like, haha, laugh, laugh with the cabinet members, whether it's Obama people or whether it's Trump people. It's gross. It's gross in a way that really makes people hate journalists. And that was always my issue with it. It's like, it's fine for those cabinet people to go. It's like, whatever. They get to influence journalists. But it just dressing up and my issue the whole thing was I knew he was going to do this. Everyone knew he was going to do this. So what's your choice? Not showing up, which I think is the best choice. The second one is what if walking out in a tuxedo, a how dare you sir look makes you look idiotic, and sitting there makes you look... There's no winning for the journalists. They shouldn't have gone.
Yeah, but yes, exactly, and that's.
They should have gone, they should have done a nice dinner or something for the winners and.
And to sit up there and have him like hand out an award to The Wall Street Journal, I'm.
The whole thing, it's like we have lost so much standing globally. Everybody has, right?
We just look like it. Oh, wait. They had to reschedule it because a mentally ill person with access to firearms interrupted it. So, they redid the thing and this president had to sit there and then make a stupid creepy comment. It's like, how could we damage the brand and just look like a more strange, weird nation than we already look?
I agree. And then laughing with him, and then the incoming president of it, Jackie Heinrich from Fox, like laughed and joked it up with him after he did the creepy. I mean, seriously, it's like the whole thing is like, I don't, Jackie, I don't care if you're at Fox and you're conservative. That was gross. That was gross from a conservative or a liberal point of view, and not just Kaitlan. Like, and then using Dylan Mulvaney. Oh, anyway, please don't do this anymore. When I said don't do this anymore after the shooting, I got so many like press people like, Kara, that's really unfair. I was like, go fuck yourself. This is fucked. We shouldn't be doing this. It should be over. Thank you very much.
So folks, just in terms of how precious broadcast journalists think they are. Podcasts reach exponentially more people. Do we have an award show giving each other little trophies?
Oh, wait. We got awards. Never mind. I take it back.
Yeah, but we don't. It's fun. Like, there's no president there. It was like, there was the Webbies. We got one at the Webbies. That was fun as fuck. That was a really good party. There was no president. There were all these cool people there. It was fun. I don't, and that's the only one I like because I think it's an actually fun party. But no, mostly no. Right. Do we.
There's no invite the president. We're not going to shake hands with the president. That's what we're definitely not doing anyway.
Anyway, folks, Kaitlan Collins, we love you. You did a great, let me tell you, she acted with a lot of dignity. She's a young woman and she acted, I would have been like slapping him silly, but of course, you would have been arrested then. But anyway, it's just terrible to put people in that situation, and putting themselves in that situation is not the best thing either. Anyway, let's go on a quick break. When we come back, Meta pushes AI optimism.
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Scott, we're back. Meta just launched a new campaign making a case for AI optimism with an ad showing Meta products as tools for human connection. The video is set to David Bowie's Five Years, which is a song about the end of the world. Now, let me be fair. Bowie did say later that he wrote it in hopes people would be optimistic. Just so you know. Just so you know. I want to correct that. A lot of people were like, it was about the end of the world, but he was hoping to turn that around. But let's listen to a clip first.
Some people will have you believe AI will make us less connected, that it's going to leave us behind. We couldn't disagree more. Call us optimists. Call us dreamers. Just as we've always done, we're betting on people.
Jesus Christ. Make it, seriously make it stop.
Mark Zuckerberg shared the ad on Facebook, writing, as we enter the next wave of AI, we continue to believe the future is for everyone. The message comes months after Meta told staff it was cutting 10% of its workforce and scrapping 6,000 open roles to offset AI spending. I would like your marketing. Let me just tell you, I'm just telling you, this says midterms all over it. It's like, now we believe in people. Before he believed in giving Donald Trump money, but now people thoughts. Marketing professor, put your hat on and tell me what works and doesn't work here.
I know exactly what's going on here. Somebody really attractive who wears black has shown up and talked about intangible associations and emotion, and they have so much fucking money. And then Mark and the CMO there has convinced themselves this was a good idea. This goes back to the notion of, don't these people have friends? I mean, Mark, can you tell us how connecting people fits into teen girls self-harming, or you hiding evidence that one in eight British teens cite Instagram as a catalyst for their mental health? I sat next to the woman, you know, Dina Powell, and she wrote, she tweeted a thing and said, it's always been about connecting people. Call us optimists. And the only thing I could think of was, sit down. I'm an AI optimist.
Meta Marketing Professor.
Meta's new ad has this incredible soft-focus family using AI glasses to connect more meaningfully.
Yeah. Okay. Nothing says intimacy like a $300 pair of glasses beaming your kid's birthday party back to a fucking server farm so Zuck can serve the moment back to you as a Nissan ad.
It's just, this is so cynical. They are the last people to be talking about the upside of AI. They're going to invite so much criticism.
I don't know who the CMO of Meta is. You're a fucking idiot for approving this thing.
What would you do here? Because they have other ones. They have another video I saw about data centers. They're trying to turn that idea around that it does help people, it creates jobs, etc. They're now moving.
That's a good one. That ad is smart. PR and talent, just very droid. No ethnically ambiguous people pretending they're happy wearing these glasses. None of that shit. Just communications around what is trying to call balls and strikes. Their program around vocational training and investing in vocational training. That is a great program. That is great branding. It shouldn't be an ad. It should be their PR team, which are some of the most talented people in the world, getting that thing placed everywhere, but not running ads on it. This thing is so, it's going to invite so much scrutiny around. Okay, this is Jeffrey Dahmer running a Jack in the Box commercial. It's just, you just don't do this. What are you thinking approving an ad saying that you're AI optimist and you're connecting?
What the hell? They also cursed in it. I don't like when they curse in ads. I don't like that.
