The Six Toughest Decisions David Ellison Faces With WarnerMount

It is Monday, September 28th. The settlement of the Paramount Warner Brothers anti-trust litigation isn't quite approved yet. The judge overseeing the state's case against the merger has yet to sign off on the consent decree. As of this taping, she's demanding that the parties reply to a letter from a very skeptical Senator Cory Booker on the issue. But it's heading that direction and I think both sides would agree at this point that this merger is almost certainly happening. So now the question is, what now? David Ellison and his team, they have an integration plan, they've got those $6 billion in promised synergies, about $80 billion in debt they will need to contend with, and it raises many, many questions about how these companies will be merged. What will the streaming product look like? After all, the combined company would have had about 13% of overall TV viewership in the first half of this year, tied with YouTube for the lead. In streaming though, they'll be seventh. So a lot of work to do there, they've got a third of U.S. linear TV viewership, thanks part to all those cable networks and CBS, but how much does that actually matter now? And most importantly to people around town who will run these media assets, everything from HBO to CNN to the Warner Brothers and Paramount Studios and much, much more. Many, many questions. So we've got Lucas Shaw here from Bloomberg to discuss today is the one amount merger. What will the biggest player in Hollywood look like? Who's going to be in charge? And now the hard reality sets in. From the ringer and puck, I'm Matt Bellany and this is the town. Okay, we are here with Lucas Shaw from Bloomberg. Back again, Lucas, I'm very excited for your big screen time event. We are doing a live episode of the town and you, we're doing, that's Thursday, correct? Yeah, Thursday. Thursday, lunch time. Is that a prime slot? Are you giving us the, everyone's halfway out the door slot? I don't think so. Or you're speaking before Dairy Cardinals, before Donna Langley, people stay the whole day. That's the program throughout the day. All right, so we're not talking about that. We're talking about where we are in the Warner Mout merger and I want to stress here, this deal has not been approved yet. The judge still must sign off on this settlement, the consent decree and she seems to be giving it a pretty hard look, mostly I think because she's going to have to oversee this as the, you know, the judge in the case, I have to ask you a question before we get started, only because I was not allowed to do this previously, but now that you've started to disclose, do we need to have a disclosure on every podcast that you are, Jerry Cardinali, Stuge or what is the, I'm on the payroll, no, for those who did not see Puck where I work my day job, we have a majority of the investor now in Redbird Capital, which was a previous investor. Now is our majority investor. So in all my newsletters about Paramount or one of the 50 I've now learned companies that Redbird invests in, we'll have to have a little disclosure. We've had disclosures in the past. I think you should disclose it every time, but it doesn't have to be a major thing. Yes. If you are talking, drop it in and I don't think it, and you necessarily have to do it if you're talking, obviously if you're just talking about the movie business writ large. But if, as we are going to do today, spend most of it talking about Paramount and Warner Brothers, the fact that one of Paramount's biggest shareholders is also your owner is relevant. Yes. I know. Not that it's going to get in. It's annoying. But you've got it. It is annoying. David Zazlow can tell you all about how much he got favorable coverage when he was an investor in Puck, but all right. So that out of the way, let's talk about the status here because the judge has not signed off on this deal, we anticipate that she likely will. She's got to, you know, they've got to address the Cory Booker stuff that he raised. They've got to put up, you know, some explanation here about how this is all going to work to her satisfaction. But so we're taping this before this has happened. We are going to assume that they will deal with this in some way and that this transaction will close. And there are many, many things on the table that we'll call like the first decisions or the first moves that will need to be made once this merger closes. So I want to get into those and get your take on where you think we are going to be headed here. So let's start right away with the thing that everybody in town is talking about. But I know, is do you think this is decision number one who's going to run streaming? No, I mean, it's the thing that people care about, okay. But it's not the thing that, like, I mean, decision number one is going to be like the overall org chart and mashing these two entities together and who's going to do what? Thing number one is raising the debt, right? They got to get people to buy into the debt of this company, which, you know, given the tightrope that they are walking here with the Middle East money and Larry Ellison putting up $40 billion to backstop this, all the major debt questions they need to resolve. Sure. But let's say they do that. Let's talk about the operation of the company. The first one, I think, is the executive structure. How is this going to work? Are they going to have one person over all of streaming? And who is that person going to be? Are they going to bring over the leadership team at Warner Brothers? Mike and Pam, Mike DeLukard and Pam Abdy at Warner Brothers, are they going to keep or set aside the top executives at Warner Discovery all of this? So give me your back rotate. Well, there's, yeah, I mean, we didn't even touch the TV studios because they have three different ones. There's what happens with all the network groups. You have a lot of high profile executives that are now going to be at one company and they cannot all be there. And they know, they know, Alison knows they have a plan. They have not shared this widely within the company for obvious reasons, but they know how they're going to match these companies together. Yes, they've had months to prepare. Exactly. I think it's going to be similar to what happened with Paramount. It's not going to be all at once. It's going to be not a slow role, but a role over the next couple months where they'll have some immediate changes. This is what we're doing. It's a strategy. And then after a couple months, oh, yeah, by the way, these entire teams are going away and oh, by the way, we're shutting this down and we're selling this. And by the end of this year, let's say this closes in two weeks, we will have a good sense, I think, of what the new Warner Mount organization is going to be. Sure. So between, if you kind of break it down by category streaming, do you think that both Casey and Cindy will be at the company January 1st, 2027? Casey Boyz, who runs HBO, Cindy Holland, who runs Paramount Plus. I do not. Not that they won't offer Cindy something. I think that Casey has made it clear that he does not want a repeat of what happened at HBO Max when that service was launched, because if you remember, he was put in charge of it with Kevin Riley. And they were both sort of dual operators of this service. And from people that I've talked to at HBO Max, it just didn't work. There needs to be one decider at these companies, one person in terms of pro-Gramming. In terms of pro-Gramming. On programming. Exactly. Because at Warner Brothers Discovery, he's had this sort of JB Perette has run the business side of streaming and also runs video games. And there's a version of this where they offer that job to Cindy, even if that has not been her historical role. I think they will offer that to her, or offer her some kind of elevated and separate job. And don't get me wrong. I think they are happy with Cindy and they like her. But when you have the opportunity to bring in the head of HBO, which not only has had the prestige over the last 10 years, but they've pretty successfully managed to broaden out the content offering to become more populist, more IP driven, and broader tent shows along with still being a dominant player at the Emmys. So I think you do that if you have the chance. And not only that, Casey's deal is up and he can leave after the transaction. So the last thing you want is him going to Netflix or somewhere else. Yeah, there is a conventional wisdom in Hollywood that Casey is the most important to keep. I think that that is supported by the fact that he's viewed as the kind of the best HBO is despite Apple's recent success, viewed as the best place to work in town. The only wrinkle in all of this is all the people who feel this way are not David Ellison. Yeah. And he values loyalty and he values his team. And Cindy's been there from, you know, the, the first transaction and he made a promise to all these people help me get Warner Brothers and we're going to run this town together. And I'll take care of you. Yeah, exactly. But I imagine he can also be pretty ruthless. Okay. So your, your prediction will be that, yeah, that's what the money's for. Cindy, that Casey will be put in charge of streaming. Cindy will be offered something, but not I want to stress, I have no inside information on this. This is pure speculation, no reportable, no reportable facts. Yes, this has not been revealed to me, I'm not floating it here because I'm going to report it two days later. I'm not, this is based on my impression of what's going on. Okay. And you don't disagree. I don't disagree. I think that there's a world in which it shapes out differently, but if I had to put money on it, what you are outlining would also be my prediction. And I think that, and I do think people tend to discount some of Cindy's skill sets, but that like, there's just sort of this rush to crown Casey, which I understand. Let's go to the movie studio, because this one's more interesting. You've got Mike Deluca and Pam Abdy, who run Warner Brothers, they're on sort of a kind of not great run this year. They had their 2025 that they were dining out on until well into 2026. And probably not the best time for Digger to come out either. We haven't seen the reviews yet, but probably not going to perform what you would think a $150 million plus Tom Cruise movie will perform at. But they have talent relationships. They have the backing of CAA. They have all of these things going for them. And they are in the a list filmmaker business, whereas Paramount for the most part is not. And you have the Skydance people, Josh Greenstein and Dana Goldberg, who are running the film studio and arguably the television studio as well. And they are fine, but they don't have those kinds of top level relationships, or at least not as much. Well, but they have relationships with the person who matters, which is David Ellison. Exactly. It's this tension again. And they were told come to Paramount, and we're going to run the town. And now you've got a decision. Is there a world where Mike and Pam coexist and run Warner Brothers? They're supposed to operate these things separately now, or at least release movies separately. So do Mike and Pam report to Josh and Dana? Do they coexist and all report to Ellison, or some kind of chief content officer that is yet to be named? How do they, how do you manage this? Well, do you think two questions before we get into that related one? Do you think that they will name one person to serve as the Donald Langley, Dana Walden, Belabajaria, person in charge of all programming at the company? I think you've got to. The only difference here is that I think David Ellison considers himself to be that person. Yes. And someone needs to sit him down and say, like, dude, you are going to be running a third of the output of Hollywood. You cannot be this person. You need somebody to be this person. You're now a CEO, you are not running a production company. You need to delegate this part of the job. You can still go to lunch with Tom Cruise. You can still go flying on the weekends. Everyone knows you're the boss. Yes. But we need somebody to come in here and do this. I don't know who that person would be. Maybe they go after Donald Langley. Maybe they elevate somebody from another job elsewhere. Well, maybe that would be the argument for some of the people internally. Or a Casey Boyz. Not that he's a movie guy. Well, that's who I was referring to. Yes. What you can say, okay, Casey, you don't want to, like, you take the really big job and then Cindy stays in charge of streaming. Now Cindy might not want that. So that's one question. The other question I had is, and I think it is sort of relevant to the, what they're doing with the studio. Like, what is the, what is the strategy for their movie studio? Because I feel like, you know, Skydance was all about just big, tentpole, IP movies. They haven't really been really, Skydance has made a lot of streaming only movies for Apple. They were genre. They were big scale. They were movies that aspired to be a theatrical wide release, even if they didn't get there in a lot of the cases. My question is, what is, you're now going to be releasing 20 wide releases a year, 30 total movies. Most of these companies have a clear strategy, right? Like we know what Disney's movie strategy is. It's the IP with a few bets. Donna's at Universal is more of sort of a portfolio. They go from small to really big. Paramount has frankly been confused for a little while. And I feel like Warner Brothers under Mike and Pam has been a little more, like high class filmmakers. Are they trying to do a little bit of everything? Are they going to be mimicking Donna's strategy as a Donna plus Disney? I think what they're going to do is lean into Warner Brothers as the IP and tentpole focused studio. I think that Paramount, they realize that they have a lot of singles and doubles. They have very few movies that even have the opportunity to deliver a home run. And they want home runs. So what you do is you lean into the Warner Brothers IP, you get as many DC, Harry Potter, Lord of the Rings, those types of movies in development, even more so than they already have. And then you sort of supplement that with the Paramount movies. Because I don't think as much as they have tried, Paramount is somewhat limited in the IP. Unless they go out and buy a bunch of stuff and they're trying with Call of Duty and they're trying with some other things. But the Warner's library and the Warner's franchise cupboard just is a lot more stocked. So that's where you lean in. Which then begs the question, do you believe that Mike and Pam are the people to best exploit that cupboard? And do you believe that their filmmaker first in trying to eventize certain filmmakers and star combinations that that is the right strategy for you? We're also assuming there's someone out there that he has his eye on, which we don't even know. I mean, who else is qualified these days? Well, no, I think I don't, I actually do think that he plans to put Josh at a minimum keep Josh and Dan in charge of Paramount, if not expand their purview. He clearly likes them. Even though the movie studio hasn't had a, you know, they haven't had a big hit this year. They've had it to your point. A lot of like nice singles, maybe a double, but that's been Paramount for the past decade. We all talk about Mission Impossible and Top Gun Maverick. Yeah, they have one of those movies every two or three years. That's like three movies in the past decade. They have one huge movie every two or three years. And otherwise they release a bunch of small stuff. You need two or three of those a year. Well, but that's like to your point, what I think they're expecting Warner Brothers to provide. Yeah, exactly. But that's the question is, do the Skydance people do they run Warner Brothers and find someone who will report to them and run Warner Brothers as they want it to be run? The tricky part with that is, okay, so let's say you put them over both movie studios, which I might violate. I'd have to look again at the consent decree and see how that would work. So then are you going to have different people in charge of both Paramount? If that just creates, creates even more high-pay jobs. I find it hard to believe that they're going to have four different movie studio chiefs. And especially if there's also going to be a content chief over everybody. Yeah. Yeah. Yeah. This episode is brought to you by the new movie, The Social Reckoning. This electrifying thriller from Aaron Sorkin is based on the true story of the Facebook insider who uncovered what the company knew about the harm its platforms were causing and the Wall Street Journal reporter determined to expose it. Mikey Madison, Jeremy Allen White and Jeremy Strong star and this timely David versus Goliath story that sparked a reckoning against one of the world's most powerful companies. The social reckoning is in theaters October 9th. Together last year or together this year Paramount and Warner Brothers have generated ten percent of US box office. Ten percent together. It's anemic. Unbelievable. Usually, this is an anomaly, usually at this point in the year they would be in the mid-twenties right together. But this year they've just had not a lot of luck. It's universal. It's Disney and then it's like hits everyone has a hit eight twenty four has maybe eight twenty four has a couple Amazon has a hit. All right. So let's next one layoffs one sweat one fell swoop or waves and waves and waves waves and waves. I agree. Nobody wants the headline saying we just David Ellison who just did all these things and pissed everyone off then fires twenty five percent of the staff. Yeah. Although to be honest to make the math work on the deal they've got to get rid of people pretty quickly. So I think they it won't be insignificant the the waves it will be just in this era and entertainment of the layoffs never stopped. The layoffs are Warner Brothers discovery never stopped. It was like every three months there was some new slight restructuring. Yeah. Disney as well. It lasts this week and it's just a drip drip drip. So yeah, but I agree it will not be the headlines will not be paramount eliminates thirty percent of workforce. It'll be paramount eliminates five percent five times or whatever. Yeah. Yeah. Even though I bet Larry Ellison would probably love the thirty percent and to be honest I bet the stock price would probably jump if they announced that it would be the Elon approach. Yes. Speak of Elon. So I believe this report that Elon may invest in the combined company. I'm sure there's been a conversation because of the friendship between Larry and Elon. I know. That's why I hate these have discussed stories literally everything has been discussed. I hear you. But I think you and I both know that if we got Nicole saying they'd talked about it we would report it. Oh, sure. No. You do the story. But I'm asking you whether you think it's real. And I don't I think even these guys know that this would be so poorly received and create such a microscope on the company that it would not be worth it. Well, let's say abs. - Absolutely need the money. - I have a related question to that. Do you think that David Ellison feels or worries that they are now viewed as too Trump-y? - Yes. - Okay, so what do you do about that? - Because not that he particularly cares. He cares about how the company, if the Democrats win in the midterms, and they spend the next two years calling him to DC, hearings, all that stuff. - Exactly, which is likely gonna happen. - And if Elon Musk is an equity owner of the company, it's gonna be even worse. So that's why I think we can move directly on to the next one, which is the combination of CBS News and CNN. Because I think that they are going to combine forces, and they're gonna have a very robust series of layoffs, and have news gathering combined among them. But I do not think that Barry Weiss is going to run everything. Oh no, I don't either. It just does, I mean, why? Like, you made your point. She's doing what she's doing as CBS, and you don't need that. I think it's more likely that in, I don't know, three years or whatever that Barry Weiss has gone, then she ends up running all of CNN. I could be wrong, but why? Because she doesn't like it, or I don't know. I mean, depending on which media reporter you read, 60 minutes is either doing fine, or a total disaster this season. Well, I think you can say that about just about every day. Yeah, I know. But my point is other than the bad press, it's not like CBS News is like a total calamity. Like, it's chugging along. No, it's just a massive fucking headache that he doesn't really need. It's a huge headache, and it generates outsized media coverage that I don't think Ellison wants to fan those flames. You put Barry Weiss in charge of CNN, it ramps it up to 11. I'd, no, I agree. I don't think she's getting put in charge of CNN. I think they'll keep Mark Thompson. Oh, you think they'll keep him? See that I was going to say, I don't know if they'll keep the current guy. I think with a lot of these people, it's a question of how long, sort of like how I wouldn't be surprised if they kept Mike and Pam in the short term, and then changed it in the long term. I wouldn't be surprised if they kept Mark Thompson, especially because he's a pretty, he's pretty well regarded. I don't think that what he's doing at CNN is really working right now, but he's well regarded, and so they keep him for the time being. But that's the thing. If you're Ellison and you want to improve the ratings at CNN, maybe you're bringing someone else in. Yeah, but I don't think meddling at CNN, to your point about the headaches, like making early dramatic changes at CNN, even if they are benign, it will be covered in a way that, it will mar the start of his tenure, and I think he wants, I just think he's more focused on the entertainment part of the business. I agree. I just wonder if he'll make some change there, and put in a David Rhodes, or an experienced news executive that will not draw that negative headlines that Barry Weiss did, but will also allow him to say that he's making changes. And Trump could still come after him. If Trump doesn't get what he wants at CNN, I'm like, there's a scenario where the first thing David Ellison does is fire Katelyn Collins, because Trump doesn't like her. It's possible, but I just, I don't think that's where he makes his first big changes. I agree, okay. So I want to get to some of these other topics. We can do it quickly. The film output, everyone's asking, are they going to get to 30, 32 a year? And I keep saying, of course they are. It's not 30. It's easy to get to 30. What do you mean it's not 30? It's 20, it's 20 wide releases. - It's 30 movies. - It's 30 movies. But that's my point. It's like they can throw a bunch of stuff into theaters. That's not the question. The question is what they are going to be making and what they're going to be buying and what the total expenditure and output is going to be. Because this like, oh, we're spending $300 million more in the US per year. They were already planning to do that. It's just that now they're going to spend it in the US, which great, they can go to whatever state has the best tax incentives. So do you think that we see a market difference in the output of these two studios? - Yeah, a little bit. I mean, it just, it depends on how you look at it. So 20 wide releases, 30 total releases would be considerably more than I believe they've released in 2026. What people have pointed out is that it is about the same or maybe even a little less than what they were planning to do in 2027. So I think it's a change in that paramount pre-David Ellison was a shadow of the studio and he does plan to keep investing. And so you're going to see at least in the short term an increase in what paramount was doing and probably not that much of a change in what Warner Brothers was doing. To me, the question isn't what happens in 2027, 28, 29, especially because as you and I know, those, most of those are pretty much set. Like when David Ellison wanted to get the number of releases for paramount up in 2026, he did it by buying smaller movies or finding little ways to inflate the number of releases without having like a meaningful impact on the box office. To me, what does it look like in 29 and 30 when you have actually integrated and you're looking at how much you can spend other than what you are now legally obligated to do? How committed are you to really putting 30, 32 movies a year in theaters? Are you looking at this as we expect you will and go, you know, it really be better if we did 22 movies a year. And that's what we're going to target. And we'll find ways to sort of inflate the numbers by doing a re-release of a bunch of stuff from our library. - And maybe we'll make some movies for Apple or Amazon Prime Video, but we're putting by any means in 2000 theaters, maybe not the best idea. - Yeah, I agree. So, all right, then the next one is the streaming platform. What does Paramount Plus and HBO Max look like in 2027, 28? - Yeah, is it one service? Is it a bundled service? - What's it called? - They haven't even figured out how to finish the Pluto Paramount Plus integration. I mean, the tricky part that people forget about with streaming is there is the integration of the backend and the technology and the stuff that we don't really see. I mean, you feel it when you open the app. But I think that all that is inevitable, right? They're going to have one tech stack for all their streaming. - Sure. - The question is for the convention. - The magic pixie dust of tiktok. - Yes. - Sprinkle fusion or whatever the hell makes sense. With the question is, do they have one place that you go or do they try to keep it separate? Because my understanding is there's not a lot of overlap between Paramount and HBO Max as customer bases. If you just think about like who they serve, they definitely are different audiences. And you either that's a good thing because you can have one app that pleases all of them or it's bad because you're trying to force two cohorts together that don't belong there. - Yeah. Remember, this was the whole strategy of Warner Brothers Discovery with the HGTV and Discovery garbage together with HBO programming and Valhalla of streaming magic didn't work. - I think if what's been happening over the years at Disney is any indication, it will remain two services for a while because it would the financial risk of combining them and losing a bunch of customers and also get, you know, the only reason to do that would be, or one of the reasons would be to offer the one service at a discount and think that it'll reduce churn and all that. I just think the potential financial impact is significant. And so they're gonna have to keep them independent for a while until they figure out exactly how to pull it off. - Yeah, I mean, Disney Plus and Hulu is a good test case because in many ways it's the same thing. You've got a broad service for families and Paramount Plus is the case for general audiences. And then you have a more niche and premium service. Maybe you start to integrate that into Paramount Plus and it's Paramount Plus with HBO Max and there's a tile and all of a sudden you get both services for reduced bundling and what Disney is doing now. They're essentially making the bundle of ESPN and Disney Plus and Hulu the same price as subscribing to each individually to push people into the bundle to reduce churn. All right, Lucas, thank you very much. - Thanks Matt. - We are back with the call sheet, Craig, first a little housekeeping. I got destroyed this weekend. Made three box office predictions and two of the three came up well short. - Hard of the beast. We took the under on 18 million. It actually got to 20. Brad Pitt still got it. - But that's not the bad one. - Forgotten Island. We took the over on 20 million. And I think it got to 12. - Not great. - And then we took the over on prime time, but and that was correct. We took the over on 12 million and that got to about 20. - Yes, so prime time totally fine. I also predicted that's going to be 824's biggest movie of the fall. Okay, but man, a DreamWorks Animation movie got to only like 12.8 or something, like not great. That's shades of Ruby Gelman teenage Kraken from a few years ago. That was their last massive bomb. I don't know what happened to this one. It seemed like it would be well positioned, not a lot of kids movies lately. Maybe it just seemed my kid saw it. He said it was okay. He didn't love it. but I don't know man, the animation did not. feel like typical studio style animation, but I don't know. I thought that would make it feel fresh. All right, so let's move on. The question has come up. What should the new WarnerMount studio company be called? There was a piece in Hollywood reporter this morning. What will David Ellison name his mega Hollywood studio? And some Asinine names. I know it's not gonna be called WarnerMount. That's my creation. Parabros is out there, not happening either. Paramount, Skydance, Warner Brothers Discovery. Can't do that either. I think they're gonna go with what they've been basically telegraphing, which is Paramount, a Skydance Corporation, and Warner Brothers, a Skydance Corporation. And the parent company will just change its name from Paramount Skydance to Skydance. - I think that's correct. I think that's the right move. Because if you wanna communicate, if you wanna signal that things aren't gonna change, keep it sounding separate. Keep Warner Brothers is a separate thing. Warner Brothers, a Skydance Corporation, Paramount, a Skydance Corporation, and Skydance, as this overarching company whose name you ideally don't talk about that much. So it sounds like Warner Brothers and Paramount are separate. It's the cleanest. - Listen, this company was called Viacom for 30 years. Like nobody in the real world knew what Viacom was. And the downside is, is that we are in a direct to consumer world these days. And people tend to know what these companies are. We see it here on the show. The number one and number two topics that we see an audience for on our show is when we talk about Disney and Netflix. And those are the two big consumer brands in the entertainment space. So maybe they lose a little, if it's not called, Paramount, Warner Brothers, or something like that. But I think Ellison has an attachment to Skydance. It can be a holding company for both of these. You can still put the brand forward at the studio level. And it'll just be a little tag when you see the Paramount logo on a movie or the Warner Brothers logo on a movie. Just like you see Universal Pictures a Comcast company or all the other studios in their ownership. I don't think it'll be Paramount, Skydance, Warner Brothers Discovery. I think Discovery will go bye-bye. And that was the remnants of the previous merger. Discovery RIP, you were not welcome and you did not add a whole lot. So all right, that's the show for today. I want to thank my guest Lucas Shaw, producer Craig Horoback, artist Steve Alman, and Stefano Sanchez. And I want to thank you. We will see you a couple more times this week.