The Double Whammy Of The CBS, Warner Brothers Mergers Will Be A Layoff Nightmare

You might recall that Paramount and CBS had only just started to lay off workers in the wake of the merger with David Ellison’s Skydance. Now, after Ellison (or more accurately his dad and the Saudis) dramatically overpaid for Warner Brothers ($111 billion plus numerous incentives), the overall debt load at the company is so massive, it could make past Warner Brothers chaos seem somewhat charming:

“The deal is tied up with so much debt that it virtually guarantees layoffs the likes of which Hollywood hasn’t seen before. That’s going to mean far less output from the suite of properties under Paramount and Warner’s control. And it will mean that the production apocalypse which has been brewing since the pandemic, the end of Peak TV, and the contraction of runaway green lights for streaming networks will grow still more apocalyptic.”

The real world costs of this kind of pointless consolidation is always borne by consumers and labor. Executives get disproportionate compensation, tax breaks, and a brief stock bump. Workers get shitcanned and consumers get higher prices and shittier overall product in a bid to pay doubt debt. We have seen this happen over and over and over again in U.S. media. It’s not subtle or up for debate.

Keep in mind Warner Brothers has seen nothing but this kind of operational chaos over the last two decades as it bounced between pointless mergers with AOL, AT&T, and Discovery, all of which promised vast synergies and new innovation, but instead resulted in oceans of layoffs, higher prices, and consistently shittier product.

Now comes the granddaddy deal of them all to try and cement Larry Ellison’s obvious desire to try and dominate what’s left of U.S. media. Run by his son David, whose operational judgement (if Bari Weiss’ start at CBS is any indication) is arguably worse than all the terrible, fail upward, trust-fund brunchlord types that preceded him.

All of the debt from past deals just keeps piling up and being kicked down the road in a lazy, pseudo-innovative shell game (and this doesn’t; include CBS!):

“In its initial $30-a-share bid for Warner Bros., Paramount was financing the purchase with up to $84 billion in pro forma debt. That has now risen to $31 a share, tacking on roughly another $2.5 billion, plus a “ticking fee” of 25 cents per share per quarter for every quarter the deal doesn’t close after September 30 of this year. Paramount is also paying Netflix’s breakup fee of $2.8 billion. Paramount has not released the financing details for the new deal, but it’s likely to be an even higher debt load.”

Ellison is pretty broadly also leveraged in the AI investment hype cycle, and if that bubble pops (or pops worse, as the case may be), this entire gambit could go wrong very, very quickly. Even the ongoing Saudi cash infusions may not be enough to save them. Larry Ellison’s nepobaby son will of course be fine; the employees, consumers, and broader U.S. media market, not so much.