The corporate drama gripping Hollywood right now could have national security implications, says South Bay Congressman Sam Liccardo in a new joint letter to the board of Warner Bros. Discovery.
You've likely heard that David Ellison, the son of Larry Ellison, and his company Skydance, completed an $8 billion merger with Paramount in August. And reporting by the New York Times and others suggests that Ellison had planned to then go after an acquisition of Warner Bros. Discovery (WBD), creating a new behemoth in movies and streaming that could take on the likes of Netflix.
Ellison's plan was seemingly thwarted last week with the announcement by Netflix and WBD that they had agreed to a sale. And it's a deal that has many creatives in Hollywood balking at the notion that Netflix might own one of the last remaining studios producing and distributing movies to physical movie theaters — a business that Netflix has no particular interest in.
But now, Ellison and the merged Paramount Skydance have made clear that they are launching a hostile takeover bid for WBD, and they will be pitching themselves as a better acquirer to the company's shareholders, in an end-run around the board.
President Trump has also inserted himself, posting to social media over the weekend suggesting that he would be "involved" in any antitrust decision to approve or disapprove the Netflix deal. And as the Times reported this week, a Trump family member, Jared Kushner, is one of the investors backing Paramount's bid for WBD, with his private equity firm Affinity Partners, so lots of conflicts of interest there. Also investing are the sovereign wealth firms representing Saudi Arabia, Qatar, and Abu Dhabi.
It's all some shady sounding business, and now two members of Congress are calling foul, including the Bay Area's own Representative Sam Liccardo, the former mayor of San Jose.
As the Associated Press reports, Liccardo, along with Congresswoman Ayanna Pressley (D-Massachusetts), have sent a letter of concern to WBD President and CEO David Zaslav and the company's board, suggesting that the involvement of the Saudis and Qataris in the Paramount hostile takeover bid could have national security implications.
"As one of the most influential media companies in the world, Warner Brothers Discovery shapes America’s news, entertainment, and cultural content like few companies on the planet,” said Liccardo and Pressley. “Equally important, the company has private financial and personal data on tens of millions of Americans. We cannot allow powerful and brutal foreign-backed investors access to this trove of personal data, and to obtain influence over our nation’s news ecosystem, without full scrutiny mandated by law.”
"A transaction of this nature — combining a major media portfolio with foreign-backed capital — plainly warrants that scrutiny," the congressmembers add.
While hostile takeovers are mostly a thing of the past, and companies have many levers to pull to avoid them these days, the Times noted on the Daily podcast Tuesday that one of the last notable and successful hostile takeovers to take place in the US was Larry Ellison and Oracle's 2003 takeover of Peoplesoft.
So, the son may be taking cues from the father, and we'll have to see where this leads.
Previously: Netflix Strikes $83B Deal to Acquire Warner Bros. (and HBO) to Create Content Juggernaut
Top image: Photo by Hannah Wernecke
