Will Warner Bros. kill Skydance — or will David Ellison kill Warner Bros?

AI Summary

Skydance has completed its acquisition of Warner Bros. Discovery, combining it with Paramount under a new corporate name. The discussion considers whether the merged company can succeed where previous owners struggled, including possible consolidation of Paramount and HBO streaming services.

Today, I’m talking with Peter Kafka, chief correspondent at Business Insider and host of the Channels podcast, about the gigantic Warner Bros.-Paramount merger and the future of the company now simply called Skydance. Skydance is owned by David Ellison, son of Oracle CEO Larry Ellison, and its deal to acquire Warner Bros. Discovery officially closed the day Peter and I spoke. There are some grand ambitions here, but the reality is that acquiring Warner never goes well for anyone. AOL failed, AT&T failed, and Discovery failed — although it did succeed in flipping these assets to Skydance. So I wanted to ask Peter if he thinks the Ellisons and Skydance have a real shot at succeeding where so many companies before them have hit the rocks. Okay: Peter Kafka on Warner Bros. and Skydance. Here we go. This interview has been lightly edited for length and clarity. Peter Kafka, you’re the chief correspondent at Business Insider, and you’re the host of the Channels podcast, our sister podcast here on the Vox Media Podcast Network. Welcome back to Decoder. Thanks for having me. It’s big media day again! A big media day. It’s an auspicious day, as my parents would say. It is the day that the Warner-Paramount merger closes. We’ve all been calling it Warner Mount, but I’m told this company will instead just be called Skydance.   Skydance! Every time I see the word Skydance, I assume it is foreign-owned, which is maybe true in some way. Another way to think of it is that there are iconic names in Hollywood. Paramount is such an iconic name that Viacom turned itself into Paramount years ago. Warner Bros. is a legendary studio. Let’s get rid of those names. Let’s add Skydance, which no one’s ever heard of. Let’s just start at the start. There was Paramount. There’s Warner Bros. The deal closes today. That is all going to be a new company called Skydance. Is Skydance just a holding company? Are we as consumers meant to know that this thing exists? I think for the near term, you’re still gonna think of companies like Paramount, Warner Bros., and HBO as brands you know, but this is going to be one company. They’re going to merge everything. They’re likely going to merge the streaming services, Paramount and HBO, into a thing, not right away, but eventually. So I do think Skydance will be a name that consumers will probably know at some point. Verge subscribers, don’t forget you get exclusive access to ad-free Decoder wherever you get your podcasts. Head here. Not a subscriber? You can sign up here. I just have to ask, what are the chances that HBO Max will be rebranded yet again into Skydance? There’s probably gonna be some branding stuff. Not again. In the near term, because this is still a cable TV company, there are actually some limits on what these guys can do with their brands and their services. And they won’t come out and say, “We’re gonna mush this stuff together.” But there’s likely to be one mega streaming service, and maybe you can get HBO separately, or maybe you can only get HBO or only Paramount. Still, it’s gonna be one thing, and one movie studio. It’s all gonna get mushed together, and it’s all gonna be run by David Ellison. David Ellison is just the latest to believe that he can buy Warner Bros. and make something good happen. I have joked many times on this show that maybe the only antitrust policy this country needs is to make it illegal to buy Warner Bros., and that would just solve a lot of problems. Why does he think he will be successful? Well, his dad’s the eighth richest man in the world, so that’s not nothing. That Oracle stock is tied up in a bunch of AI stuff. It’s moving up and down. We can talk about that. But one, that means that he literally has the money to buy this, and two, that this is a public company kind of in name only. David Ellison and Larry Ellison, his father, control this company effectively. They don’t really need to worry that much about equity shareholders. Debt’s a different issue.  And he’s 43. He’s got a long run backed by tens of billions of dollars of his father’s money to take a stab at this. And as you said, he will not be the first person to do this. There’s a long list of failures. I think maybe that’s appealing to guys like him. It’s like, “Everyone else is dumb. I’m the smart guy who’s gonna figure it out.” “Everyone else is dumb, and I’m smarter than everyone else is,” is very appealing. But that long list of failures, if you just look at it — they’re all shaped like this idea. We’re gonna take iconic Warner Bros. content, we’re gonna marry it to new distribution, we’re gonna reduce the overhead and costs and decadence of Hollywood. Where does new revenue come from? There’s no plan for new revenue. There’s no announced plan for new revenue. Right now it’s shrinking; it’s cutting costs. It’s when we merge these two companies together, we’re gonna save $6 billion over the next three years. We promise that most of that’s not gonna come from layoffs, but a lot of