For a moment, Larry Ellison was the world’s richest man this week. His share of Oracle stock surged close to $90 billion in one day after the company announced major cloud computing contracts with Nvidia and OpenAI, bringing total “performance obligations” to over $455 billion. Incidentally, Oracle revenues were actually under target, but the money you make now appears to matter less than the money you might make later. Oracle is also the technology backbone of the much-hyped but never-delivered Stargate Project of data center clusters; OpenAI is also a partner there. In other words, just sprinkle the words “AI” and “data centers” around and you too can add almost nine figures to your fortune in a day.
Ellison is one of the more reclusive oligarchs, content to own entire islands in Hawaii rather than be outspoken about politics. But he’s a major Republican donor, close to Donald Trump and on board with MAGA. He’s just quieter about it than some of his Silicon Valley conservative cohorts.
Only a small piece of the Ellison fortune, currently estimated at around $383 billion, was used to fund Larry’s son David’s pretensions to Hollywood grandeur. David, the head of Skydance, bought Paramount after a protracted courtship—and after Trump administration pressure in the merger approval process, cut off a piece of the action for the president in settling a frivolous lawsuit against 60 Minutes—and is in the midst of showing Stephen Colbert the door and transforming the venerable CBS News into yet another conservative bastion. Ellison now may expand that empire; he’s preparing a mostly cash bid for Warner Bros. Discovery, the studio up the road from Paramount in Burbank.
Warner Bros. Discovery is currently the parent company of CNN; that network would fall into a sphere of influence at Paramount, where right-wing blog owner Bari Weiss is about to be handed a leadership role in the news department and the head of the conservative Hudson Institute is the new ombudsman. After decades of keeping its right-wing politics behind the scenes, the Ellison family apparently wants to emulate Rupert Murdoch, only with more resources and, if the Warner Bros. deal goes through, a potentially bigger megaphone.
But there’s more to this merger than conservative media politics; after all, Paramount is also home to the newly Trump-hating South Park, and there’s a possibility the combination results in no CNN rather than a right-wing version of it. The economic realities of a Paramount/WB tie-up would be catastrophic for entertainment producers, who will lose one more outlet for their scripts and shows, and maybe have their outlets given over to the AI revolution that’s making the Ellison family incomparably rich.
The merger would reduce the number of Hollywood studios from five to four; put under one roof dozens of media channels and the rights to parts of every major sports league except the NBA; and reduce the number of decision-makers in the fraught transition from linear TV to streaming, while eliminating one streaming channel in the process.
The merger would combine the number five and number four streaming companies, the beginning of a domino effect that will consolidate the next generation of television.
Warner Bros. Discovery was in the process of un-merging itself, after enduring the disastrous economics of an entertainment conglomerate on two occasions. The AT&T-Time Warner merger was the first to be reversed, and the merger with Discovery was next on the block. The company announced that it would hive off its cable channels from the studio and prestige HBO and streaming business, much like Comcast did earlier this year with its cable networks, which are now part of a spin-off called Versant.
But Ellison is preempting that split, as his bid is for the whole company—cable networks, studio, and streamer. Paramount has pitched a “revival” of its cable stalwarts like MTV, something that seems completely ahistorical and ill-fated. Cable is if not a dead medium then a dying one; about a third of American households have dropped their cable hookup since 2010, and the vast majority of rotting cable channels just flip through reruns and old movies with no differentiation.
If David Ellison thinks that MTV can become a cultural phenomenon again by, as The Wall Street Journal reports, “taking advantage of its archive of interviews and music documentaries with bands from the ’80s and ’90s,” I think he’ll find that selling nostalgia on a distribution system many people don’t have anymore is a lost cause. The Journal notes that the median age of MTV viewers is 56.
Paramount is far more invested in cable than its fellow studios, and the bid’s inclusion of Warner Bros. Discovery’s cable channels as well reflects this commitment. But Ellison also wants to cut $2 billion from total operations at Paramount at the same time. The stated idea is to “revive the networks without increasing spending on them.” Good luck with that!
I think a very possible outcome is that this bet on cable fails miserably as the transition away from television as we know it hurtles toward its end. That closes off what was a major production and particularly residual cash cow for actors and other frontline talent. This was inevitable, but diverting effort into a doomed task of rebuilding cable will burn cash.
The merger would also combine the number five and number four streaming companies, the beginning of a domino effect that will consolidate the next generation of television. And it would combine Paramount and Warner Bros. movie studios. For anyone trying to sell an idea, there’s now one less bidder, and likely lower prices in the offing.
Perhaps the worst part of this deal is what will happen when it makes contact with Washington. There’s a strong argument that this deal is illegal under the antitrust laws. But from the original AT&T-Time Warner combination to the Paramount-Skydance tie-up, Trump has shown his most willingness to politicize mergers in the media space, the law be damned. And this one gives him a chance to mess with and potentially destroy CNN as a condition of the deal. David Ellison has shown himself all too willing to take dictation from the White House in its decisions.
This of course creates one more big company in a company town that has seen substantial labor activity in the past few years, as the Hollywood rank and file resists AI as part of the evolution of its business. Here you have someone whose fortune is dependent on AI building a media empire. That spells danger when new labor contracts come up.
The consolidation of Hollywood has been promised for years, and the newly permissive environment in Washington made this a strong expectation. But Comcast and Warner Bros.’ experience shows that media conglomerates are bad companies, too sprawling for the current age. Paramount wants to leverage the deep pockets of Oracle to build a vanity project that’s eager to move in whatever direction Trump wants.
That’s not a guarantee of business success unless Papa Ellison wants to keep throwing money into a sinkhole. And a misguided owner of one of a dwindling set of media giants is bad for anyone who wants to make entertainment, still America’s biggest manufacturing export.
