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If you are Larry Ellison and you are in the business of AI infrastructure, why would you trade one share of Oracle stock for Warner Brothers Discovery, which might be dead because of AI?
These are such assets. I think I can say that right. These are such assets. Nobody else on planet Earth wanted to buy these assets. So Ellison thought he was advantaging himself by buying assets that nobody else wanted. Tom Cruise makes Mission Impossible movies, makes Top Gun movies. He's not allowed to shoot anyone who appears to be Chinese in those movies because that's a big market for those movies. These investors are going to be Middle Eastern. Who's Tom Cruise going to shoot in these movies?
Hello and welcome to Decoder. I'm Nilay Patel, editor-in-chief of The Verge, and Decoder is my show about big ideas and other problems. Today, let's talk about the big Paramount Warner Brothers Discovery merger. This deal could reshape all of media and entertainment if and when it closes. That's still an if, which we're going to come back to. Right now, Paramount head David Ellison is very much acting like he's over the finish line after outbidding Netflix, which walked away after what seemed like a done deal. There's a lot going on here, including the biggest question I've had throughout this entire saga: why would anyone want to buy Warner, which has basically killed every acquirer it's had for the last quarter century? I'm serious. First AOL, then AT&T, then Discovery. A lot of people have tried to change their fortunes by acquiring Warner Brothers. Yet, while the individuals may have walked away richer, their companies usually ended up saddled with a brutal combination of debt and regret. So, why? Why do this? And why now? Back in January, I asked Puck's Julia Alexander to walk me through Netflix's reasoning. And today, I'm digging into Paramount's with Rich Greenfield, a media and entertainment analyst and co-founder of research firm LightShed Partners. You'll hear me ask Rich a lot about the structure of this deal and the strategy that's supposed to help David Ellison pay for it. But there's no getting around the numbers. Paramount is roughly 40 times smaller than Netflix by market cap. Yet, it offered to pay 30% more for Warner Brothers. You don't need a fancy finance background to see the bigger picture here. At its core, this deal is about debt. A lot of debt. Paramount is borrowing tens of billions of dollars to make this deal happen. It has nowhere close to the amount of money needed to buy Warner for the price it had to offer to scare away Netflix. A vast majority of that money is coming from David Ellison's billionaire dad, Larry Ellison, the founder of Oracle. His personal fortune depends almost entirely on his Oracle stock, the same stock that's tied up for better or worse with AI hype. So why is Larry Ellison willing to trade his lucrative Oracle shares for shares in a media company? And what exactly is David Ellison's plan here besides slashing huge amounts of jobs when that debt bill comes due? Certainly the Ellisons think they can succeed where many, many others have failed with Warner Brothers. And surely they think AI has something to do with their plans. But Paramount won't be the first company killed by a Warner deal and it really might not be the last. Okay. Rich Greenfield of LightShed Partners on Paramount's deal to buy Warner Brothers. Here we go. Rich Greenfield, you are co-founder and analyst at LightShed Partners. Welcome to Decoder.
I'm excited to talk to you. We have not podcasted together. We have spent a lot of time... long-time listener.
I appreciate that. I feel like you and I have spent a lot of time writing and posting around each other.
So it's really exciting to talk to you, especially about Warner Brothers Paramount, where I think you have a depth of knowledge and expertise. Here's my first question for you. My thesis, it might be the core thesis I have for the entire media industry, maybe the entire telecom industry, is that if you buy Warner, you kill yourself. And yet everyone always wants to buy Warner. Why doesn't the industry understand that buying Warner is what leads to a quick and speedy demise? I mean, because you're going back to AOL, which you know, I worked at AOL when they were spinning off Time Warner. I remember this very clearly.
I mean, to be fair, AOL was the thing that died, not Time Warner. But, but, but...
No, Time Warner persists like a zombie that will kill again. It will, it will do it again even after this. I'm sure.
It is crazy how many times this asset has been traded around and sort of, I do think it is fair that sort of merging with this company has been historically the kiss of death. Obviously, the Ellison family is out to prove that isn't true. And you know, look, I think the reality is this industry is undergoing massive transformation. And you know, the pace of change in media is moving at a pretty incredible rate for a business that, you know, if you went back to the mid-90s, like cable networks were a good solid business, the movie studio business was growing and international was exploding. For, you know, think about where we are now, like linear TV is dying. Like yes, sports, news, you know, still doing very, very well. The NFL is an incredible property. Sports and news are fine, but like traditional linear television, the people that are listening to us on this podcast are not going home and watching, you know, their favorite show on NBC Thursday nights the way you and I did when we were growing up. They wouldn't even come across that, you wouldn't even think of doing that, right? Like there is so much in terms of streaming, let alone this, you know, small little company called YouTube, right? That dominates TV time spent. You think about going to the movies. I mean, think about the movie business. Attendance is down 27% from pre-pandemic levels and that's box office. Ticket prices are up over 25%. So literally butts in seats are over 50% lower than just six years ago. That's mind-bogglingly, like you think about how much this business is under distress right now.
So why buy it? I mean, this is my core question. Like there's the history of it, which is buying Warner will kill you and you better have a good thesis about why it won't. But historically, everyone's idea is we're going to take Warner's assets and come up with some new distribution and Warner's assets will make our distribution powerful. That was AOL's thesis. That was AT&T's thesis down the line. That was even to some extent Discovery's thesis, right? That we're going to build a new streaming platform and that distribution powered by Warner's assets will be successful. That never works. That might still be the Ellison thesis. It's unclear. I want to come to that. So there's the history there of these assets aren't good enough to overcome the distribution challenges and then there's what you're talking about and then there's AI in the corner and why, why take this gamble?
You know, Netflix launched streaming in 2007. I, you know, I'm sure you remember the early days of Netflix streaming. I can't even tell you how many people would come up to us and say Netflix has to buy a studio. There's no way they can do this. Like this is crazy. Like if they want to be real in this business, they've got to go buy, you know, like... And I remember even Amazon, people were like, 'Oh, Amazon.' And look, they ended up, they did buy MGM to be fair. Um, you know, but there was this long-held view that there was no way that you could build a robust studio all on your own. And Netflix did it. Like they proved, like overpaying for talent, you know, really like outbidding. I mean, they remember they outbid famously HBO for House of Cards and the rest is history, right, in terms of building it. There's no doubt in my mind David Ellison went out at Skydance and bought Paramount. That's sort of his stake in the ground. Had a big Hollywood studio. Um, had a streaming service. There was certainly the ability to just build, right? Like they did not need to buy another studio and a whole bunch of other linear TV assets for over a hundred billion. I think in their minds, building it was going to take time, like replicating that Netflix model of ramping the technology, ramping the content, raising the price, having more money from the subscription to invest in more content, like that whole flywheel that is why Netflix is the size company that it is today. The Ellison family was not willing to be patient. They didn't want to wait and build it slowly. They wanted to do it quickly and the quickest way to do it was to leverage their family fortune to go out and buy Warner Brothers. They believe this is an accelerant to their plan of having versus just going out and building it brick by brick and we'll see whether that ends up being successful. There is incredible IP sitting inside of Warner Brothers. Now the flip side is you paid a lot for it. You levered up to seven times, you know, seven times, you know, debt to EBITDA leverage. That's a lot of debt that you've got to work off over the course of the next, you know, five years. Plus, you got a lot of linear TV. And we were just talking about earlier on the podcast, nobody's watching linear TV. And so, you spent a lot of money to get assets that are in secular decline. And so, look, I'm not David Ellison. I would not have done this transaction. I would have just invested and built. They did not want to. They did not agree with our view and they went out and did this transaction. They ended up paying a lot more than they hoped to pay. Not as much as I actually thought it was going to go even higher, but Netflix obviously bailed out and they got it for $31 a share. Still a sort of a crazy price, but you know what? They believe they can make the math work on this. And look, time will tell.
Let's talk about the math for a second, and then I want to come back to the strategy of it. It's not all Ellison money, right? There's some amount of syndication going on.
They could syndicate all of it. Like it could literally be zero Ellison money and it could be all syndicated. Now we have no idea. We presume that Middle East money will still be part of this in a substantial way. They've, you know, talked about several different sovereign wealth funds being involved. Whether that ultimately happens or not, or whether they syndicate this to US investors. Again, you know, I think the challenge of syndicating this right now is, you know, with the stock trading, you know, I know this is coming out in a few days after we record, but significantly below the $16 price of where the Ellisons or their syndicated investors are investing. It's obviously trading at a meaningful discount to that. And so, you know, most people could go into the public markets and build a position at a far lower price than where this transaction is occurring at. I think that's sort of the challenge on the syndication side, but we'll see. I'm actually really interested to see what the ultimate investor base looks like.
The key part of the puzzle, for at least in the Ellison deal as it got bigger and more lucrative, was the guarantee from Larry Ellison.
100%. The only reason this transaction went to Paramount is that Larry stepped up and said two things. One, I am personally on the hook for all of the equity of this transaction. And then two, if for any reason the leverage is too high and the banks that are committing to the debt don't want to fund the debt, I will put more cash in to fix the leverage issue myself. So Larry effectively made this transaction switch from Netflix to Paramount.
Okay, here's my question about that. And this is the first brush at AI that I think is going to come up several times in this conversation. If you're Larry Ellison, your wealth is Oracle and Oracle has been an unsexy but lucrative company for a long time. And suddenly it's sexy again because you run a bunch of data centers and maybe a little less sexy than six months ago, but go ahead.
Sure. But they just had earnings like this week. They did okay. I think a lot of people thought the catastrophe was coming and they overperformed estimates, right? So Oracle is doing fine. The AI multiple is real for Oracle on some timeline. Why on earth would you trade out of the AI multiple of your Oracle stock, which is your legacy and your wealth, for a media multiple with this much debt? Because that, unless you just love your son that much, I cannot think of another reason to make that trade. Look, I think it really depends on how is AI going to transform these industries. You know, I don't think AI is going to mean a whole lot to the linear television business, so let's just leave that to the side. But, you know, there's a big open question. Does AI make studio IP, the content, you know, does it make it far more valuable? Like, I don't... The funny thing is, is like I love White Lotus. I think, you know, that show is such an original idea and the storylines are so crazy. It's hard to imagine AI coming up with that Walton Goggins scene, you know, in the restaurant. Like, I don't think AI is going to come up with an original idea like that. Can it replicate things that it sees? For sure. The question becomes is like, will AI lead to the creation of great content on its own? Like, do you need to go out and buy this much in the way of studio assets? Does it just make studio production cheaper? Like, you know, if the average big movie costs a couple hundred million, can you take 30, 40, 50, 60% of the cost out of the production because so much of it can be, you know, achieved through AI? I think we don't know those answers yet. What worries me, I'll tell you, is I do believe that the world of user-generated content... You know, we spend a lot of time thinking about YouTube. YouTube content is going to get dramatically better with AI there. I mean, there is no doubt about it. Everyone on planet Earth is going to be able to make far better content than they can today. Play around with any of the models today. You're getting an early look. And sure, it's only a few seconds of video, but like within three years, right, everyone's going to be able to make something truly meaningful. What does that do? What is that competitive dynamic? How does that change? Like, will we have somebody sitting in their basement that can literally make a movie without the cost of using a movie studio? I mean, those are things that are sort of hard to comprehend, but don't seem unreasonable as you think about the pace of change. And so the real question to me is, sure, AI can make everything that sits inside of Paramount and Warner Brothers combined cheaper to create. They can make a lot more with AI. But the flip side of this that no one's talking about is how does the competitive landscape change over the next three to four years? And are all of these companies, I'm not even just saying Paramount, but is everybody under the threat of a sea of content that you can't even comprehend? Like, we think there's a lot of content on YouTube, but if that content is multiple times better in quality and there's even more of it being created because it's so much easier and faster, what does that do to the value of any of this existing content? That's the real worry, the thing that keeps me up at night.
All right, I was going to ask you a question again because I think you've actually raised the stakes on this question. If you are Larry Ellison and you are in the business of AI infrastructure and that is your wealth and your legacy at Oracle, why would you trade one share of Oracle stock for Warner Brothers Discovery, which might be dead because of AI?
Dead is a strong word. I don't like using dead from the standpoint of any of these companies. Maybe they'll be smaller companies. Certainly there's more competition would point to that. But I think the answer honestly is we've seen a list, we don't have enough time on this podcast, of people that want to be in the media business, that want to be in the entertainment business, want to be in the sports business. Like, you know, do you own sports teams because they're incredible businesses or do you own sports teams because they're trophy assets? There is without a doubt there is a trophy asset aspect to this. But then, you know, and again I don't know, I can't prove to you that this is Larry Ellison's thinking, but I do think that there is sort of a bet on David, right? He's 43 years old and there's a bet that someone can do Hollywood different. You know, time will tell whether this is, you know, successful or not, but there's a belief that through the use of technology they can achieve what nobody else has done. That's a, you know, that's a very, very aggressive, you know, view, but that's where they're sitting. They think their technology will be better than Netflix, better than YouTube's. Like they're going to move off of Google. They're dumping Google Cloud. They're dumping AWS. They're moving everything to Oracle Cloud. So maybe that's also part of the answer here. Is there an element of training and sort of leveraging what Oracle can do by having all of this content and user information?
We need to take a quick break. We'll be right back.
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We're back with Rich Greenfield, co-founder and analyst at LightShed Partners. Before the break, we were discussing the structure of the Paramount deal to acquire Warner Brothers and how so much of it depends on some really risky financing and some major gambles on unproven technology like using generative AI to produce large volumes of cheaper film and TV. Now, I want to really dig deeper into the strategy here because it involves a lot more than just David Ellison placing all of his hopes and dreams on AI. I would say there's a conventional wisdom thesis, right? That all of this technology will be used together in a way that maybe Hollywood was not smart enough to do or smart enough to invest in, and that's why Netflix cleaned their clock and that's why YouTube is starting to eat them alive, right? And I know you've made that point many times. I've talked to people who have built the streamers, I know you have too, and they're kind of like, this problem is more solved than you think. Like there's not more to get out of the core technology of video streaming. There might be more to get out of recommendations, sure, but you need all the people opening the app and then taking the recommendations and spending more time in the app for that to actually work. And we haven't solved the problem of getting more people to open the app. And I don't know, I haven't heard that from any of the Ellison pitches around Warner.
I wish I could bottle what you just said because it is singularly the most important thing that everyone in this business needs to understand. This is all about time spent, right? Like daily use activities. You open up Instagram every day. You open up TikTok multiple times every day. You open like the... the goal is, can you, you know, the reason Netflix is as successful, the reason YouTube is as successful is that when you come home from work, you're not even going to find an existing show, you're turning it on because you know you're going to be entertained. You open up Paramount Plus because there's an episode of Yellowstone you want to watch, or you open up HBO Max because the new episode of The Pit hit last night at 9:00 and you want to watch that new episode and then you turn it off until next week when that next episode comes out. They are not places where you just go to be entertained. The question is, and here is like the multi-billion dollar like success or failure of this transaction, is even if you throw far more content, far better technology, and a ton of marketing, which is what the plan of Paramount is, right? Like that is the plan is to do all three of those things over the course of the next two years as they integrate Paramount with Warner Brothers. Even if you do that, can you meaningfully move the needle on daily engagement? Because the internet is historically winner-take-most. Pick your category. You know it better than I do. The question is honestly, even if you do all of those things, have we already... has the world already picked their winners? Like Disney tried, right? Like Disney really went at this. They ramped up content to an incredible level. There was like a new series on Disney Plus every few weeks. Like there was lots of content and it didn't really move the needle enough. And so the question is, can Paramount do what Disney couldn't? Can they actually break into a daily use application? I mean, Prime Video, even with all the sports that they've spent on, hasn't really achieved that. I'll be honest with you, Nilay, I'm not sure it's possible. Like, because people have chosen their... they have sort of their behavior is they open up Netflix or they open up YouTube. Can you get them to open up Paramount every single day? Can you do that? I don't know.
So this is... you mentioned the three phases, right? They're going to invest in production. Maybe they'll have more content because production will cost less because of AI. Then there's technology which you talked about. They're going to invest a lot in technology. And then you talked about marketing. I do want to come to marketing because the marketing piece seems really important to me. The technology piece, you know, this is my universe. I'm looking at David Ellison talking about migrating everything to one platform and then building on that platform and I think, well, Warner tied itself in knots trying to do this. And it accomplished effectively nothing. Have you heard a good argument for why you would immediately incur this cost other than all of the content will be on one app?
Look, if you look at Disney Plus as just a starting place, you know, they brought on Adam Smith who came from Google. Adam, you know, he's CTO and CPO, chief product officer. The new Disney Plus does look far better. Like there's actually a recommendation algorithm now. It actually has trending. It's personalized to you. It's still early days, but I do think it's helping with engagement. Again, I don't think it's helping enough because I think they need a lot more content. Like it's not just tech in and of itself is not the answer. You need the content to be with it. But I do think that if you have any hopes of driving engagement, you need a great platform and the Paramount and Warner Brothers platforms are both not good. Like they are not competitive with where Netflix was three or four years ago. The dirty little secret that no one's talking about is if you look at Netflix's, you know, platform now, it's completely dynamic. There isn't a set platform. It completely changes based on time of day and how you're using it. Like it is a constantly morphing platform. All of these companies, including Paramount, are trying to build what Netflix was like three or four, five years ago. Yeah. I mean, open up any of these apps, they can't even make the cover art play video. It is so outdated in terms of like what the technology stacks of these companies are. And so like I think that the recognition at Paramount is we need to first unify this all. They believe, and again I think one of the big tells on this whole transaction, right, is can the Oracle Cloud actually handle this? Because I don't believe, and you check me if I'm wrong on this, I don't believe there's anybody in the streaming media space that uses the Oracle Cloud. Like TikTok does, but that's short-form vertical video and it doesn't matter.
TikTok, TikTok goes down a lot.
Okay. Nobody in the streaming, the per-, you know, streaming sports, streaming, you know, live events, news, live TV. Nobody is using Oracle's Cloud. This is going to be the first company ever to use Oracle's Cloud for this purpose and they're doing it this summer for Paramount and then obviously I would assume next summer for Warner Brothers. They say it's going to be 50% faster at half the cost than Google and Amazon's cloud. I'm... everyone should have... all eyes are going to be on Oracle and can they actually... I mean, you know, I'm sure you could have guests on, can Oracle actually do this? Is going to be a great question and a great thing to watch. Yeah.
Again, I think the experience we are seeing as Oracle tries to become a big hyperscaler player in AI and as Oracle tries to run the TikTok platform that it's trying to run, you can see the seams. It is just obvious where the seams are. It is obvious how their architecture — you mentioned Netflix is ahead — like Oracle's architecture is older than everyone's architecture in specific ways. I'm very curious, right? I think these are big questions too.
They are confident that Oracle can do it. But maybe this also speaks to why this transaction is occurring, right? Like, hey, if Oracle can do this and prove that they can actually achieve this, even if there's growing pains, can they start to attract other players onto their platform? I have no idea, but I guess that's maybe an open question, right? But the other two players at scale that would meaningfully move the needle for Oracle are Netflix, which is deeply tied with AWS and I don't think ever leaving AWS, and YouTube, which for very obvious reasons is not going to leave Google.
Like, what? Who cares? There are a lot of smaller players.
Sure. But I'm just saying like needle-moving compared to Sam Altman is right. Like you can collect every smaller streamer in the world and your AI workload is still going to be a huge part of your profit there. So again, the arguments here for Oracle, they all seem to land on well, David is Larry's son and maybe that's fine. Like you said, maybe it's just a trophy asset. But when you talk about content production will go up at higher efficiency because of AI, that's an efficiency argument, right? We're going to lower cost. When you talk about technology, it's still an efficiency argument. And then you get to marketing, and marketing just feels like pure cost because breaking through in a world where there's ever-increasing supply of content and saying, 'Watch this show and not that one,' through marketing alone seems impossible. Like, I'm not sure how you do it. The amount that you might have to spend to get people to open this new app and spend more time there to watch new IP or a new take on some existing IP seems so high that it will necessarily dwarf whatever efficiencies you get from content production and technology. I can't make that math work either.
Well, look, the single biggest way both of these companies, Warner Brothers and Paramount, they're actually not very good at marketing their own service themselves. Both of them actually rely on another company to do most of their legwork. Both of them rely on Amazon Channels heavily.
Paramount even more so than Warner, but a huge portion of their subscriber bases reside on Amazon Channels. Remember, when you're on Amazon Channels, Amazon handles the marketing. You don't use your app. I mean, you could log into your app, but most people just use the Amazon Prime Video app and watch their HBO. They're watching The Pit on Prime Channels or they're watching, you know, 1883 on Prime Channels. Like, they're never using their app. I think one of the huge, huge issues that is not getting enough attention in technology circles and media circles right now is David Ellison and team going to pull off of these channel stores, whether it's Amazon's channel store or Roku's channel store. Like, you know, even Google has YouTube Prime Channels. Like these channel stores have sort of been solving the issue that you just raised. Like it is really hard to get subscribers. It is very expensive and difficult, and they've relied on these channel stores. And Amazon's built a monstrous business. You know, I give them a lot of credit. I mean, the fact that Apple TV Plus is a Prime Channel shows you how much has changed over the last five or six years and how hard it is to grow the streaming video business. But if you're Ellison, who doesn't use channel stores? There's two companies, right, that don't use channel stores: Netflix and Disney. If you're Ellison and you want to be sort of considered in that top echelon, that top tier, do you have the guts to go it alone? I think that's going to be a huge signal to how big his ambitions are. Is he really willing to go out? As you just said, it's very expensive to go out and market, retain, and again, it's not just getting the subscribers. You have to have enough content and a good enough underlying technology to keep people coming back every single day. Otherwise, they churn, right? Like that, the enemy of this business is churn. I think one of the things that Netflix was most excited about when they were looking at HBO or at the Warner Brothers acquisition is they were stunned by how high churn was in every single market around the world for HBO, right? Because people sign up for one show and then they leave, right? Game of Thrones is over. I'm gone.
Correct. That's the problem. They don't have enough. This keeps coming back to one core problem. Sure, the algorithm. Sure, the technology, but not enough content. Not enough content that keeps you there. You don't get immersed in the world of HBO Max. You don't get immersed in the world of Paramount Plus. These are lightly used applications. And look, their time-spent figures show that.
Let's talk about the — you mentioned in the context of cable news and sports. News and sports are also incredibly sticky. People just stick around for those things. They will literally tune in on time for those things. A big piece of the Paramount deal that Netflix didn't want, and CNN is still sticky. There's a war in Iran going on. This is when CNN proves its value to everyone, right? That they're just...
I sort of disagree, Nilay. Like, I mean, viewership-wise, no.
Well, this is when you want...
War or no war, there's nobody watching CNN. The numbers are a ghost of their former selves. I mean, the business literally — the business of CNN is literally evaporating in front of your eyes.
Let me make the argument about CNN's value. And look, I run a newsroom. I have a lot of feelings about the business of making news. If you want to distribute content to the biggest number of people, you would just go to YouTube. You just put the stuff on YouTube. We put our stuff on YouTube. YouTube pays you nothing, right? That effectively you cannot run a business on YouTube.
They pay you a few shekels. You get a few pennies off of it.
But not like — no, I don't know a single YouTube creator who's like, 'I can live and die on YouTube alone.' Like everybody...
MrBeast probably. MrBeast.
No. MrBeast loses money on YouTube alone. All of his money is market is...
Yep. He has figured it out and his rates are so high that no one else can afford to pay his brand deals. Right. So he had to move into physical products so that he could market his own products at a high enough margin because no one could afford the rates he wanted to charge. Rich, this is incredible. This is another — this is like a PhD thesis of the Decoder episode. No one can make money on YouTube alone. If you want to run a newsroom at CNN's scale, of which there are vanishingly few in the world right now and they're getting smaller, you need some other money to do it, right? You cannot just distribute everything on YouTube. And maybe if CNN did distribute everything on YouTube, they'd have way more audience. So they're stuck in a distribution puzzle that maybe no one will ever solve, right? Unless you own lucrative enough distribution, you cannot afford to run a thing the size of CNN. This is why their business is shrinking, because to go get CNN, you pretty much have to watch linear cable and no one's going to do that anymore. And that thing is under a lot of pressure. Ellison wanted this business, right? He was like, 'I'm going to buy the whole thing. I'm going to buy the linear business.' The only linear asset of any value is CNN. He made some promise that sweeping changes would come to CNN to the White House, but there is a war in Iran. His investors are going to be Middle Eastern, it seems like. That all seems like a puzzle that is such a big distraction from the problems you've already laid out in the core streaming business. Why pick that up, too?
I think you're missing the core reason for why they bought the linear TV assets. There's two reasons. One, they really believed, and I think ultimately proved correct, they were the only ones willing to buy these terrible assets. These are such shitty assets. I think I can say shitty, right? These are such shitty assets. Nobody else on planet Earth wanted to buy these assets. So, you know, when Comcast and Netflix were looking at this, because you remember you had effectively three bidders. They only wanted to buy the studio and streaming business. They had no interest in the global linear networks business. So Ellison thought he would advantage himself by buying assets that nobody else wanted. But then the other piece of this is, you know, go back to where we started much earlier on this podcast. We were talking about the leverage in this transaction, that this is effectively a very highly leveraged buyout. You're levering up seven times. Like there is a ton, ton of debt in this transaction. These linear cable networks, while not good businesses, they do throw off a lot of cash. So they're in secular decline. Ellison and team don't deny that. Like, these are secular declining assets. They need that cash flow. The math on this transaction actually wouldn't work without those assets. Like you couldn't lever up to this leverage without buying those assets. And so I think it is very much solving a math equation and knowing you had to have those assets, plus the view that, hey, you'd be in a better position to buy this company because Netflix didn't want them. And so they actually, I think in the end, I think their willingness to buy at all helped them relative to Netflix's bid.
Even though they didn't have the approval. I mean, it seems like it didn't help them because Netflix had won until the Trump administration got involved. That's the narrative that certainly I've seen people talk about.
