Watching the real life Games of Thrones battle between streaming heavyweight Netflix and media giant Paramount Skydance is fittingly epic, given the winner’s prize is ownership of Warner Bros Discovery.
The outcome will decide the reordering of the US media industry’s borders, giving the winner the keys to some of the world’s biggest movie and content franchises including Batman, Harry Potter, Looney Tunes and of course Game of Thrones.
But US President Donald Trump has made it pretty clear that he rules Hollywood’s Westeros.
If this was an ordinary takeover – all other things being equal – money acts as the adjudicator and the suitor offering the largest cheque wins.
But Trump – the world’s noisiest showman and former host and producer of the Apprentice – will want the last word on deciding which of the bidders gets “fired” and which gets the prize.
It might seem unconventional for a US president to intervene in a commercial takeover deal.
But over the past year, Trump has upended the international rules-based order. His threat to take over Greenland and further alienate the US’ European allies by imposing additional tariffs, leading to an international stock and bond market meltdown, is just the most recent example.
So the prospect of Trump hijacking the outcome of a Hollywood merger would barely raise an eyebrow. “I’ll be involved in that decision,” he told reporters last year.
If there are regulatory issues that come into play – and a combination of Netflix and Warner Bros certainly sets off antitrust alarms – then agencies such as the Department of Justice, Federal Communications Commission and Federal Trade Commission step into the ring.
Netflix is the monster of the streaming industry around the world and has an 18 per cent share of the market in the US. That said, Paramount is also a large enough player that its Warner Bros tie-up would also attract the attention of competition regulators.
Absent Trump, Netflix is sitting in pole position, having just sweetened its offer on Wednesday (AEDT) to one that is now $US72 billion ($107 billion) in cash and has the tick of approval from the Warner Bros board.
But it’s too early to dismiss the Paramount offer from its chief executive David Ellison, which has the financial backing of his father Larry. As the founder of software company Oracle and possessor of a fortune that typically sits around $US240 billion ($356 billion) according to Forbes, Ellison is a heavyweight in the business world. Just as importantly, he’s a close confidante of Trump.
The president is legendary for playing favourites. Netflix’s co-chief executive Ted Sarandos has personally courted Trump, meeting him at the White House late last year and has previously visited him at the Mar-a-Lago Club in Florida. He starts with a disadvantage though, because Netflix co-founder Reed Hastings, who remains the company’s chairman, is one of the largest Democratic donors in the US.
On the other hand, Trump’s relationship with Larry Ellison (who some call “the shadow president”) is next level.
And according to media reports last month, senior White House officials discussed internally their preference for Paramount Skydance to acquire Warner Bros Discovery, and one official discussed potential programming changes at Warner Bros-owned CNN with Larry Ellison.
Paramount is certainly the interloper in this deal and has pulled out just about every tactic in its arsenal to rescue its failing bid.
Making zero headway with the Warner board, David Ellison revealed a week ago that his company is gearing up for a proxy fight, taking its pitch directly to shareholders.
Paramount plans to nominate new directors willing to pull the plug on the Netflix deal.
Paramount also attempted unsuccessfully to sue Warner board members, including chief executive David Zaslav, in a Delaware court, accusing the group of misleading shareholders and failing to disclose the financial analysis underpinning its Netflix preference.
So as Paramount throws its wild punches, on the face of it and absent interference from Washington, Netflix appears to be winning the battle for Warner Bros.
But the Trump wild card hasn’t yet been played.
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