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MEDIA M&A MANIA · The Media Odyssey

• Evan Shapiro: [00:00:00] Welcome back to the Media Odyssey podcast, and Full Disclosure, in a very special crossover episode. That is Marion Ranchet. Marion Ranchet: And that is Evan Shapiro. Roben Farzad: And that is Roben Farzad. Evan Shapiro: And this- That is Roben Farzad. You jumped on. Roben Farzad: I'm Roben Farzad. I'm new here. Evan Shapiro: Oh, see, it's when we rehearse that we fuck it up. Roben Farzad, who is the host of Full Disclosure, on NPR and across the internets. Thank you for joining us today. We've got a special episode, crossover episode of our two podcasts. This is airing on both feeds, quote, unquote, airing on both feeds, and we're gonna discuss a whole bunch of stuff. Welcome. Roben Farzad: Thank you for having me. I'm a longtime listener. In fact, several months ago we had an ice storm here, and I was stuck in my car eating [00:01:00] pizza like a squirrel and listening to your voice and Marion's voice talk about Warner and Paramount and the quid pro quo, and it was just, it was horrifying and comforting at the same time. So that's a memory, core memory unlocked. Marion Ranchet: I love that story. Evan Shapiro: Yeah, it's a great story. And that's actually where we started, kinda like as a lot of our guests get into our, each other's DMs. But for our listeners who may not know your show, can you please, describe what the show's about? Roben Farzad: Yeah. Full Disclosure is broadly about the business of culture. I don't know. Everybody has a pod now. My mother, I'm sure, has a pod. My mother listening to me- Evan Shapiro: I like that actually, I'm a regular listener. Roben Farzad: And my mother-in-law listening to me. But, I was a Wall Street reporter for Business Week. I was at The New York Times before that, and I came from a Wall Street background, and I loved writing about these things. And, as the financial crisis happened, NPR was you know, calling me to do explainers on All Things Considered, on Morning Edition, and by the time I left Bloomberg, which bought our magazine, they were whispering in my ear to go off and build something on my own. So it started off almost as as a prototype, was like a fresh air for business, but [00:02:00] it's, morphed into a much more omnivorous show. So whether, you have academics, hedge fund people, creatives, lapsed cocaine kingpins, anything you throw at me. Evan Shapiro: As a lapsed cocaine kingpin, I, I thank you for reporting on our community so avidly. Roben Farzad: Thank you. Evan Shapiro: It's actually a big part of your background. And then for your listeners on Full Disclosure, the Media Odyssey podcast, Marion, why don't you describe? I'm interested, Marion, how would you describe the Media Odyssey podcast? Marion Ranchet: So the way I pitch it, it's a trans-Atlantic friendship, and I think we need that, right? So both you and I, we're coming from the US and Europe, and we're bringing our own perspectives, and we, we take a topic, any topic, and we just share our views on this, and I think that's what makes it, cool and interesting. Plus, I have a cute accent. Evan Shapiro: You do have a cute accent, I do not have a cute accent. Roben Farzad: And let me tell you guys, 'cause we- Evan Shapiro: We do focus on, we do focus on media, I should say, for your listeners. Roben Farzad: From a [00:03:00] customer acquisition perspective, from a customer acquisition perspective, Evan, with all that junk on LinkedIn and all the self-congratulatory just razzle dazzle, what so stood out and cut through all of it, because you've been on the show, I thought several years ago- was your galactic snapshots of this changing universe. It was so shareable, so great. You understood visual journalism, and then the explainers behind it. The cut through the BS, I'm a veteran of that linear TV world, and these are what these guys did and didn't do, and you did LinkedIn and you acquired this, customer at the very least. Props to you. I think that's how we first met. Evan Shapiro: It is. I appreciate it, and you slipped in- we slipped into each other's DMs, but that's also how I met Marion and so I think, the community we've built, this is a great example of it, and this crossover, as you said, Wonder Twins or super, triplets, powers- yeah. So this is a crossover episode that we hatched, and we wanted to discuss, the things where our two podcasts, intersect. So the, world of business and [00:04:00] the world of business media, and the cross-Atlantic nature of it, and we've got a major topic in the merger of Disco Bros and Paramount, slash Nepo Land, that we wanna get to. But before we get there, I do wanna talk about your background a little bit deeper than just the Wall Street, and Business Week end of it, because specifically, a lot of your life is intersecting with the main gravitational forces in culture and the world today. So you were born in Iran. You are also an Iranian Jew, which is a particular experience, and then you escaped to the US during the initial Iranian revolution. And so you're-- And then you, went to Wall Street. You also became a journalist. What is your take right now on the state of journalism in the US through that prism with regards to the current conflict that's going on? Roben Farzad: You would think we'd be [00:05:00] all over it. In fact, when it was first breaking, when the Ayatollah was killed, when these various other operations happened. But it's been so famished across cable TV, across print, that it's so frustrating. I was even frustrated with NPR on covering this. Like, why don't we have more people out there? I see some people, it's Jane Ferguson, for example, with Newsphere and others, that has embedded reporters. I'm so hungry for that shoe leather reporting, especially with the smartphone being, even in the developed world, being so omnipresent. Why can't we flip that on the way we used to, I remember watching Tiananmen Square, and they kicked CNN out. That was the only way to watch that. Evan Shapiro: Yeah. Roben Farzad: And now, what's invigorating is being able to see a lot of this on Instagram happen live. But, as the curation and the verification, they're very difficult, and you don't know what to make from all of that. So I had this hunger to see what was happening in Iran that was so, that's absolutely shifting the balance of power in the Middle East like [00:06:00] World War I-like rebalancing. But such a paucity of thorough coverage. I can watch NewsHour in the evenings. I could try to go to BBC News, but here in the United States, I have to say it's been a letdown. Even what's happened at The Washington Post, which you've talked about in your coverage. Evan Shapiro: It's a bit, it's a bit of a desert to a certain extent with regards to internal coverage. Typically, you're right, during previous events like this, the uprisings, we've gotten a tremendous amount of, citizen reporting coming from the country. But now it feels like, and there, and it feels like a chill over the US media establishment. It just doesn't feel like thorough reporting to my taking. Is that correct? Roben Farzad: And, we're going into treacherous territory. As you've reported, there's Gulf money funding the, Warner Mount deal, right? Warner Paramount. And to what extent can you report on the Gulf kingdoms, on Saudi and the others freely? Because there's clearly a schism with Sunni and Shiite Persian Gulf once that money is accepted and once that's funded. Even, it doesn't even have to be [00:07:00] explicit. It just has to have a chilling effect, as if the owner is, if the owner says these things or feels these things, it's like working for Rupert Murdoch. You know not to go there. And as it's happening right now with Bari Weis and CBS News. Evan Shapiro: And The Washington Post and its owner- and the LA Times and its owner, et cetera, et cetera, et cetera, et cetera. But explain really quickly with regards to the influence of Saudi money, behind, the Warner-Mount deal, as you said. It's about 50% of the overall acquisition is being funded by foreign interests, including a number of Middle Eastern funds. And to your point, we're watching a realignment in this region along the scale of post-World War I. The power shift amongst the ruling class in this region is dramatic, and those interests are currently getting involved in the acquisition of CNN by CBS and, Paramount and CBS News. Roben Farzad: Yeah. While CNN, [00:08:00] as we know, is a still an economic asset, it's a declining asset, it throws off a tremendous amount of cash. It as a chess piece, as a bauble, is so valuable, for another country to come in and say that we own, it's just like Al Jazeera and the others. We own, we, effectively are the controlling money. Even if we're silent money behind that, are you gonna be able to freely go and report, say, the Saudis and the Houthis have another attack or some crimes against humanity happened? You're gonna be less prone to do that. You're gonna be less prone at 60 minutes to report on these things because that is your money that is funding you. Whereas no one thinks it's an ideal world, this kind of Warner Brothers Discovery apparatus, it's been very feckless, at least in the past. Even under Sumner Redstone in Paramount, they would largely leave this stuff alone. There has been- what was the movie The Insider, about tobacco and, Oh, Evan Shapiro: Ben Affleck. Marion Ranchet: It's a mob movie, no? Roben Farzad: I think it was. There were interventions in the past and there was corporate ownership. Let's not kid ourselves and think that these were puritanical [00:09:00] news gathering Edward R. Murrow things. But now it's blatant. 60 Minutes absolutely do this interview with a disgraced doctor who was in the Epstein files, like a puff piece, make it look great. Or, throwing sand into reporting on, the Salvadorian prisons and the situation there. And naturally, if you're kicking up tens of billions of dollars- Evan Shapiro: Throwing sand? Throwing sand, they cut the piece. Roben Farzad: Just throttling it. Yeah. Evan Shapiro: They killed the piece. Yeah. Roben Farzad: Yeah, but imagine if you're, writing a check, if you're the kingdom doing that, have you ever just say, "Oh, no, just go ahead. Have fun with it. It's, gonna be at arm's length." I'm really skeptical about that. Evan Shapiro: As someone who grew up and escaped the Iran. So Iran before the revolution was a relatively I, wanna put this in context, progressive state. It was a Western-themed, culture. relatively free, not really oppressive culture that it's become, since the Ayatollah first took [00:10:00] over. And then there was this sweeping shift. What do you see here as someone, I don't know how old you were when you came over, but when you look at the United States and this kind of chilling acquiescence to an authoritarian figure, regardless of facts and evidence, do you see parallels, or am I just being paranoid? Am I being a New York bubble liberal worrying about fascism behind every corner? Roben Farzad: I go out to dinner on this fact that Harvard Business School had a satellite campus in Tehran as recently as 1978. It was that coveted an emerging market. US and Iran were allies. The Shah was flawed. He had a secret police. He was not exactly a torchbearer for human rights, and that vexed Jimmy Carter in his final two years in office with everything that happened in the hostage crisis. But it's not what you have now, and the CIA completely missed, the Islamic Revolution, the nefarious, influence in the Gulf, obviously what's happened in Lebanon and the Marine barracks bombing in [00:11:00] 1983. And that-- we've, been enemies now for the better part of 50 years. And, what worries, I think, a lot of people in the diaspora community is Trump showed up and he talked big that this will be free. It will be yours to take. And there was this massacre in January. Tiananmen-like massacre by all measures- that we're seeing in Iran. And now this idea emanating out of DC that we might be okay with a kind of a transactionalist solution a la Venezuela, where we get a strong man, an SOB. He might not be as religious, he might not be as theocratic as the others, but, he will be transactional enough, and we can do business with this guy. Evan Shapiro: Is that even realistic, though? Roben Farzad: I don't know if that's realistic. They're cr-- Look, is anything realistic? Yesterday, we're talking on Monday, but they say that we're thinking that maybe we can get Saudi and others to sign the Abraham Accords and normalize with Israel, and Iran, you're welcome, too. It's what kind of Jedi mind trick parallel universe is this? It's wishful thinking. In the meantime, [00:12:00] f- people are suffering in Iran. you know- Evan Shapiro: Way worse. Roben Farzad: People have suffered in Venezuela in these sanctions. People are terrified. They don't have internet, and this has largely been a population that has Western aspirations. So I don't know how to play it. And, if you're like, "If you don't sign the peace deal, we're gonna bomb you," it's so, it's not even Orwellian, it's Kubrickian. It's, Dr. Strangelove. Evan Shapiro: And, just really quickly on the other hand, you said there was this realignment kind of World War I-esque, I-- And I, and I-- We'll move on to more media-focused stuff in a second, but my assessment is what this has done, especially if peace is brokered around the shape that it is now What we've done in this conflict is handed Iran control of the Strait of Hormuz. They have proven that they can hold onto it against tremendous pressure from around the entire globe. and on the other side of it, if this stranglehold isn't broken, they're gonna use that as [00:13:00] a tool whenever they want. Am I mistaken in the kind of miscalculation? Roben Farzad: And I, don't know. Evan, I don't even know if all this is a ruse to just punt it till after November and the election and gas prices- and bomb them again maybe into submission. But it seems rich for me to come out and they're proposing tolls for the Strait of Hormuz- tribute, and then- yeah, and unfreeze our assets, and then we'll talk. So how is that vis-a-vis the position they were in three months ago? It all really beggars belief and I'm, frustrated in that, that the coverage, The Times has done a great job, The Wall Street Journal has done an amazing job, but, there's so much more we could do with citizen journalism, even with the internet shutdown. There's stuff that's emanating out of Turkey, people that have, people who have fled, and it's, it's frustrating to me because there's so much hearsay and razzle-dazzle on Instagram and TikTok and other places, and I wish there were more people who could sort it for me. I wish there were more adults in the room. Evan Shapiro: A good deal of the lack of coverage around this story, or the lack of thoroughness around the [00:14:00] story is a sycophancy amongst the media elite, in the US towards, any administration, to be honest with you. But in this administration, in particular, because of the transactional nature of that, this administration's relationship with business. And it, that gets us to a lot of the other big stories, around mergers and acquisitions, in media. You've been reporting recently about GameStop's acquisition of eBay. Marion, I don't know if you heard about this story, but this is a really crazy, transactional, bizarre tale. Talk about how GameStop came to the idea of buying eBay and why they think that they can buy a company that's worth 5X what they're worth. Roben Farzad: As as your listeners might know, something peculiar happened in the pandemic when we were in lockdown and you had this renaissance, if you will, a rediscovery of individual investor [00:15:00] power. There was GameStop, there was AMC, the near-defunct movie chain, a handful of other nostalgic names that over Reddit and other places, everybody said, they came up with these, slogans like, "Diamond hands, I'm gonna hold till I die," and everything. Just go in there, buy, And certainly hedge fund managers are like, "These idiot small investors are out there. Let's short these. Let's go," and you're like an orca swimming into a pod of seals, right? And it turns out that they were able to exact a lot of pain on these hedge fund managers. And it gave, that community that was in, in lockdown and had nothing to do and had extra money, had stimulus money, had money sitting on the side, zero interest rate policy and everything like, "Yeah, we beat them." And then the AMC CEO's "Yeah, our stock's up. Let's sell a ton of stock and let's capitalize this otherwise, paper meaningless buzz." And what's amazing to me is that five years after that, GameStop, which was similarly left for that, has an enterprising, flamboyant CEO who's out there who [00:16:00] can effectively go straight to social media and is like, "Yeah, I'm gonna make a bid, I'm gonna make a bid for, eBay." And it doesn't even have to be legit. He can half-heartedly, half-assedly go on CNBC and say it, and he gets buzz, and the stock moves up, and the battalion of GameStop's mom-and-pop investors get all excited about it. And it forces eBay to have to come and do something, and it's just smack talking for smack talking's sake. We've talked about certain congresspeople, MTG and others, who could go straight to social media and they didn't have to worry about the institutional guardrails. And you're seeing that with the CEO, worth quite a lot of money. He's a collector, no love lost for eBay and eBay policy, and he's out there hogging some headlines, making news, making headway. And opportunistically, if the stock keeps going up, I was singing Air Supply on NPR. That's how you make love out of nothing at all. Out of nothing at all. You create buzz and then you sell the stock, and that, that's still a vestige of [00:17:00] 0% interest rate in the time of NFTs and others, and there's still some of that out there, like I... And I tell you, I love RC Cola. I'm like the last person who drinks it. Am, I gonna agitate like a whole movement out there to get everybody to unlock RC Cola from Cadbury Schweppes and run its market value up and take out PepsiCo? It's great fodder for a book proposal or screenplay, but it's not- Evan Shapiro: You can use social media right now to do that Roben Farzad: And it's, this is that was that precedent with Elon Musk, you guys might forget years ago, where he said, "I have, Tesla, I can take it private What is it, $420? And then he talked so much smack and so much smack and the Twitter thing. Was he talking smack when he wanted to, and he, it turns out he, he could do it. And the numbers are so enormous now, whether you talk about Musk or the Ellisons and net worth in the hundreds and hundreds of billions of dollars, that some of this, some of this alchemy is indeed notionally possible, which that's scary stuff. This used to be [00:18:00] very deeply regulated SEC, NASD territory, and now people can come out and get time, a hearing on CNBC and actually move companies by billions of dollars. Marion Ranchet: And what type of trends are you seeing, right? You, we were chatting and you said, big value, fewer deals. We've had some numbers thrown at us. Volume of deals decreased by 30%, but the value went up 10%. What does that tell you about what's going on within the media and entertainment ecosystem? Roben Farzad: Broadly, I think as a transcontinental thing, there's been a, the, in terms of the markets, the developed markets, Europe, Canada, and the others, Japan especially, I don't know if you've watched the Korean stock market. It's been out of control with Samsung and SK. It's been the best performing stock market by far. Evan Shapiro: Samsung is up almost by 40%, year on year in valuation. It's crazy. It's a trillion dollar company now. Roben Farzad: And then look at SK, look at the cost fee itself, I think is up 400 per- it's crazy. The, and [00:19:00] these were dormant markets. In my world, international has not really done anything versus the S&P and Mag 7 for the better part of 15 years. And now, Marion, especially with the bluster over NATO and NATO paying its own way, there's suddenly, in shipbuilding and defense companies and others, there's money that's flowing into it that, that, purse strings are being unlocked. The broader question is can France and Germany kind of, cut a lot of the red tape that would allow for, mergers, like Mittelstand companies in Germany to do this stuff? This has been a time immemorial question. In Wall Street every year they're like, "This is finally the year they get that religion." In Japan, they called it the Big Bang. Can you cast off the 30 years of doing nothing by finally letting these companies merge and letting zombie companies go away? That remains to be seen, but there is interest, I can tell you, in data centers right now. That's the trend that's eating everything. Yeah. That's extended to power. You look at Caterpillar, right? [00:20:00] You look at, ancillary companies, SanDisk and the others that are enabling this enormous revolution. Evan Shapiro: Infrastructure build. Roben Farzad: Trillions of dollars- Yeah, infrastructure stuff. We have a mega merger in my state. Evan Shapiro: Some of that is based on loose accounting though. There is this kind of circular loop that's financing all of that we talked about. But Marion loves to focus on a lot of the M&E or M&A around M&E, in Europe specifically. You're seeing, MFE assemble a cross-regional, coalition or actually, holdco of media in Europe. And then you're watching here in the US the same thing by a different Nepo family. So you've got the Berlusconis, the OG Nepo- The original media, oligarchy, and then inspiring what's happening here in the US. Marion and Roben, I'm interested to hear the two of you, what is, what are those two things, the Nepo Ellisons and the Nepo Berlusconis mean to you about the state [00:21:00] of, I don't know, consumer choice and, competition, in media across, the Atlantic? Marion, let's start with you. Marion Ranchet: I think we're coming from two different places. Roben said, historically, Europe was the, it's heavily regulated, right? So you could just not do whatever you wanted to do. And a few years ago on the French market, TF1 and M6, wanted to merge, and at the time it was rejected, right? The competition authorities rejected it because they were saying that two big commercial broadcasters going together would be impairing the competition within TV advertising. But it, it is true at the time, if you were just looking at TV advertising, they were. What Europe is doing now, right now, exactly what Roben is saying, is that they're trying to open up their mind a little and the definition of what is, who is a competitor, is way different. And [00:22:00] so some of those deals that were rejected a few years ago are now being approved. And so one example, is in Germany with RTL Plus going after Sky Germany, so offloading Sky Germany from the Comcast, NBC group, and this was approved within a year. So they're both, I think, a bit more lenient, and a bit faster, but I think because they realize it's a question of how media companies in the region can actually survive and thrive in front of big tech. Evan Shapiro: But you see this as a net, positive, don't you, Marion? This is something, this cross regional consolidation and operational efficiency is something that you think is necessary for these regional players to compete against the big death, big tech death stars, as I call them. Marion Ranchet: Absolutely. And now depending on what merger we're talking about, I'm less worried when I see RTL and Sky or maybe a Sky ITV in the UK than I am [00:23:00] looking at MFE. Because to your point, MFE, I like it on paper, right? That they wanna build a Pan European commercial broadcaster. It does make sense provided that they transform, they innovate, and they don't stay this big, let's say fat TV advertiser and not do anything else to transform their business. But then within MFE, I'm worried of course, as anyone should be, about the impact in each of those European markets, given, Nepo Berlusconi, in the back. But Roben, how about you? In the US, how do you look at those, would you wanna see no mergers? Or are you happy with some mergers, maybe not others? Roben Farzad: I don't understand the impetus. I said it with Evan offline, it's, it is a very late stage capitalism thing. What did all of the friction and heat of Warner Brothers Discovery accomplish, right? If the inception was, what, 2022, when it became public. And David Zaslav [00:24:00] in here. David Zaslav, who by the way, has earned unbelievable amounts. He's been paid over the last couple of years. Evan Shapiro: Near- nearly $1 billion, yes. Roben Farzad: So you, give yourselves a huge pat on the back for taking this off of AT&T's hands. AT&T saddles you with debt, and you convince the board to let you just pay me on de-leveraging and free cash flow, and nothing was accomplished. There was Round Trip, there was a lot of IP that was killed. As what was it, Spider Girl initially what said? Evan Shapiro: It was, no, it was Bat Girl, Bat Girl and then, Roadrunner and Roadrunner & Coyote, which is now coming out, and a couple of other major properties as well. Roben Farzad: Like we're getting, oh, we're getting an exciting net operating loss out of this. Evan Shapiro: No, you're- but they've, crucially some things were accomplished. They destroyed an enormous amount of value. They were worth $60 billion, at merger, then they shed most, more than half of that value, close to 70% of that value at one point. And the only thing that resurrected the value was the auction that Zaslav had. In the meantime, [00:25:00] thousands of jobs cost. Thousands of jobs cost. Roben Farzard: Oh, and the deleveraging as you know. Evan Shapiro: Tremendous shareholder value lost. Roben Farzad: If this pushes through the amount of debt and deleveraging... Evan Shapiro: Correct. Roben Farzad: I don't think that the Ellisons are just gonna sit back and let it do its thing. You can imagine CNN, you're gonna imagine the studios. You saw what happened with Fox and Disney. Marion Ranchet: Yeah. Evan Shapiro: They comp is them. Roben Farzad: And I don't, Yeah, I don't think that, I don't think that European regulators would be as easy as they are on this. In this case, you have a president who's incented. They were just busy, it was going down the gullet, Paramount, that acquisition, which was contentious, taking it off of Shari Redstone, and then they immediately telegraphed that we'd like Warner Brothers, too, and the White House is like, "If you want Warner Brothers, you better take CNN." And it just beggars belief. There's so much disruption, so much destruction. You have talent people in the industry signing things, begging for regulators to block it, and every indication being that the White House wants to speed this through as early as July 20th. I don't even know if that's humanly possible.[00:26:00] But to my mind, Marion, to answer your question, it's a re- very reductionist thing. And, I don't mean to sound like a kid, "Daddy, why do mergers happen?" I understand. I'm cold-eyed. But if it only boils down to the stock price, what did this guy accomplish? He was a caretaker for HBO. You had several great seasons of Succession, which was signed on before he was there, or Evan Shapiro: Yeah, he had nothing to do with that. Roben Farzad: Or The White Lotus. And if it's just legerdemain and deleveraging and getting the stock price back up and round-tripping and you extracting the juice in the meantime, have you no shame? Remember he was yelled off the stage at that commencement speech? Was it at BU or BC- when he was there? Some people just don't get it. And so it, it's my same beef with Elon Musk and Twitter. Was the only thing that a fiduciary has to worry about the stock price, not the fact that he's-- the, site might crash under him, that he's gonna gut 70% of the staff, that he'll allow right-wing trolls to come in? Isn't there a more [00:27:00] holistic review of these things, or have we become so jaded and glazed over that nope- Evan Shapiro: there's-- there's the more moralistic, there's the kind of general and traditional and historic form of corruption which is I'm enriching myself. The Zaslavian, Machiavellian, bullshit flywheel of I'm gonna funnel direct cash into my hands and the hands of the select- Roben Farzad: No, but he's the, he's there saying, "Look at the free cash flow. Look at the free cash flow. Look what I've done."If you look at it by any metric, by any other metric, right? And a board. Evan Shapiro: Profit, revenue growth, any of those metrics, he fails. He's historically- Roben Farzad: I could have literally taken the money on the first day of Warner Brothers Discovery and put it in the S&P 500 and trounced what they did. And yet I've given it to you- Evan Shapiro: Right 'cause it rode all the way down and then all the way back up. But there's a difference between that- Roben Farzad: It went to $7. Evan Shapiro: There's a difference between that traditional I'm gonna enrich myself and be incompetent at the same time, [00:28:00] and what seems to be a different type of use of the popular sphere and, frankly, financial wealth that you're talking about with regards to Musk, and now with specifically regards to the Ellisons, which is I'm going to utilize these levers I have, all this wealth, all of these connections, all of this relationship I have with the United States government to not only enrich myself, but build a moat around a certain, frankly, a population. So you, I'm going to protect my government contracts, SpaceX, and now he's gonna become a trillionaire. So using Twitter and all the other levers that he has, he used it to consolidate contracts for himself and his company to make himself a trillionaire and solidify power with Starlink and a whole bunch of other things. Similarly, the Ellisons have, there's a meeting last summer where [00:29:00] the younger Ellison goes to the, administration and promises to make changes at Paramount in exchange of, in exchange for the merger being approved. This is recorded. He pay-- they pay off the White House through settling a lawsuit, a spur, a spurious lawsuit- So spurious, yeah, against 60 Minutes. Ellison, David Ellison himself negotiates that deal in a kind of quid pro quo thing, and the Colbert firing, and the attack on 60 Minutes. This is all engineered. Then, the next day after that meeting, calls Colbert and fires him, cancels the show. Then a couple weeks later leaks a story that, that the show is not profitable and that's why they canceled the show. Then hires Bari Weiss, gives her, CBS News. She's immediately goes about attacking "60 Minutes" to the point where Anderson Cooper quits, and now she's gonna rejigger [00:30:00] the entire show this summer. There's a, there's an actual exchange of value between this corporation and this administration to change reporting, change free speech on the network in exchange for specific benefits, and these are not necessarily tied to Paramount. There's the whole AI infrastructure executive order that the White House signed. There's so many different quid pro quos. There's the whole ByteDance and TikTok negotiations the White House did on behalf of the Ellisons. Am I being paranoid or is this actually going on right in front of our eyes? And how dangerous do you think this is for both business in the United States and the media and the free speech and journalism in the United States? Roben Farzad: I'm looking for an, I'm looking, for an analog. I kinda wanna invoke Teapot Dome scandal or Tammany Hall or something, but this is on the orders of trillions of dollars. To say nothing of TikTok and the United States and Oracle being involved in the tech stack of [00:31:00] the, US TikTok right now. That is a tremendous amount of money and, in, really lackluster defense of the system, at least I can say that it's largely out in the open. When he sues an ABC- or when he takes that tribute, it's such BS. It's such... Like you went in, "60 Minutes," you edited this Kamala interview. No, that's routine editing. All that stuff happens. Or what he did-- take it back to the Venezuela thing. I'm gonna extract this guy. I'm not gonna hand off the democracy to the Nobel Prize winner or extol her, but we're gonna get your oil, and it's gonna be beautiful. Marion Ranchet: No. Roben Farzad: And there's something just delightful about that kind of naked, I don't even know what, transactionalism. It's very id. It's reptilian brain. And the, you know- Evan Shapiro: And yet the press is not covering what's happening Roben Farzad: Because why? How, are you gonna cover it? Who else is gonna cover it? Disney owns ABC, right? CBS is now, CBS and CNN. How are you gonna, as a CNN editor right now, how are you gonna assign people to cover this? The New York Times is gonna do it, and he's had The New York Times in his [00:32:00] crosshair. The Wall Street-- Washington Post, as owned by a person with unbelievable amounts of FU money, and he's decided, nah, actually, maybe his version of Paola was that Melania documentary. Forty million doll- forty million dollars? A hundred and fifty million dollars for the free press? it was making buzz. It was great, but... And you compare those numbers, Evan, to this thing you published over the weekend, and The Colbert Show was profitable. Evan Shapiro: Yeah. There's, it's, it is- it's just basic United States media network accounting. You have to look at all the revenue levers. It was very clearly... It, yes, the profit margins were going down year after year as were the revenues. No question that this is an aging and declining asset. But you lied. You just outright lied about it being not profitable. But then my problem is The Wall Street Journal and Puck don't even bother pushing back. There's not even remotely a modicum of [00:33:00] pushback on this just clearly- Roben Farzad: No, but you, see, some stuff, provable lies. I think you see some stuff from Dylan Byers. I think you see some stuff from Bill Cohen, and I'll tell you, Oliver Darcy's been amazing about it. Evan Shapiro: Yeah, that's true. Roben Farzad: On his thing. And this is a person who- Evan Shapiro: You're right. Roben Farzad: knew CNN on the inside and was jilted and, we've had him on the show. You talk about an Iranian American, that guy's do- down low Iranian American. he puts me to shame. Yeah. I should just go start my Persian food truck. But every week he's out there hammering and taking leaks from CBS News staffers back. Evan Shapiro: Yeah, I read that religiously, yeah. Roben Farzad: So what, who's gonna have the appetite to cover this? The, Rupert Murdoch strangely has been a better steward of The Wall Street Journal than- Evan Shapiro: The New York, and the New York Post has been covering the fuck out of this story, to be honest with you. Roben Farzad: Yeah, the New York Post loves that stuff. The New York Post loves giving CBS staffers, like it used to with Norah O'Donnell, and it's doing the same with Bari Weiss because people love to do this stuff. And the New York Post has lost money on and off. Look, I don't think anybody's buying these media assets for the news [00:34:00] cash flows. I think it's overwhelmingly for him it's this studio streaming business, the super app of Warner and Paramount, but it takes out- As you know it takes outsize attention, the CBS News division and Tony Dokoupil and 60 Minutes and Anderson Cooper and the layoffs that are gonna happen at CNN if this is indeed folded into CBS News, and there are very few players on the outside that are willing to poke holes into that. There are many Substackers, as we know, but, Evan, you know the bind. How many Substacks can you subscribe to? Evan Shapiro: At least a few. The, those represented on this podcast anyway. Marion, you were gonna ask a question. Marion Ranchet: No, but what I'm listening to you guys, two things, right? Number one, you have this thing in the US where you have to personify the companies. We've been talking about Zaslav. We've been talking about Ellison. I'm in European media, and I don't know if I can name the CEO of Sky or, RTL Group. [00:35:00]Well it so happens that I know, but these people are part of an organization. They don't represent the organization, and so the light is not on them, right? So there's that thing that you guys are doing that is, it's such about ego. You look at the Ellison, you look at Musk, it's about ego, to your point. It's about money. We're very focused, head down on trying to find mergers and acquisition that makes sense. Is it exactly what needs to happen? I don't know. We'll, know in five years from now. But to me, it makes more sense to put an RTL, and a Sky, one pay TV, one free together than it is, forget the Ellison, forget everyone. But to put two exact studios together Roben Farzad: Marion, and don't you have more protections for studio jobs or studio redu- what they call redundancies there? Where here it's- Marion Ranchet: Yeah, for sure. Roben Farzad: You guys- They'll make a faint praise about, "We'll put out- Absolutely ... 30 pictures combined," and then [00:36:00] Wall Street will, won't hold them to that over two years, and then over time- Yeah ... you'll see what happened with, Fox and Disney, and you'll see what happened with the Warners and Paramount. Marion Ranchet: Yeah. But every time, those are companies that are, so it's about the ego, "I wanna get this thing," or it's about, again, making something bigger that is exactly resembling what you have already. And so that's where I don't really believe in M&A. I don't see how it's gonna advance a Paramount and a Warner to come together. But when you see companies who are, who could be in some way complementary, I do have a bit of hope that something good can come out of it. Does that mean there's not gonna be a single layoff? Doubt it. Most companies are struggling and are gonna need to make some cuts. But that is- Evan Shapiro: Especially the traditional media. Marion Ranchet: Yeah. That is, yeah, that is, striking when you look at the US now. A few things like that are happening here, too. So this thing about, CNN and CBS, to some extent we have that. We have our [00:37:00] own, Rupert Murdoch, in France with, Bolloré, and he's exactly that. He's embodying that company. And during the Cannes Film Festival, there was a petition, against him. And what happened? Maxime Saada, CEO of Canal+, instead of trying to quiet things down, et cetera, said, "We will not be working with people who have signed that petition." That's like over 2,000 people from the movie ecosystem in France. So those things, those mini games, those deals in the back Evan Shapiro: There's a parallel here in the US. Yeah, the par- there are parallels here in the US of thousands of, members of SAG signed, and, DGA signed an open letter saying, coming out against the Paramount-Warner merger. And, so let me pivot it to, and this is a question for both of you 'cause I feel like you're both more expert in this ar- in these separate areas than I am. So you've got Ellison [00:38:00] here talking about not reducing jobs necessarily disproportionally and putting out more movies now between the two studios, that, than, are both are putting out now in order to get approval from, let's say, the caucus in California or the House or the attorney general, in California, and then they're gonna make similar weird promises, I'm sure, in Europe to get EU regulators to approve this deal 'cause they also have to approve this. And then you've got the House and Senate, the House very likely changing hands, the Senate perhaps changing hands this fall. If this, all the timing has to fall into place, but do you think from both perspectives, Marion from the EU, Roben from the US, do you think this thing gets through? Do you think the Paramount, Disco Brothers merger gets approved? Marion, let's start with you. Marion Ranchet: I, wanted to start with Roben because I, wonder if the center of [00:39:00] gravity is in the US. I, kinda have a feeling that this is much more ... It has an impact in Europe. It's a big- Evan Shapiro: But if the Europeans wanted to block it, they could, couldn't they? Roben Farzad: I mean if the state AGs wanted to band together and block it, could they? Could California and Connecticut and the others? My impression is that- And New York ... you're racing, to get this approved before he officially becomes a lame duck in Donald Trump. Because the worm might turn in a certain way, as with Iran. Whereas after November, if you're a US senator, if you're other people, you can inveigh against this. You can run against this. You can say, "We have to have hearings on why this needs to be broken up." So I wonder if after that the, Ellisons moderate their positions. There's reporting that Bari Weiss is not long for the top job at CBS. Maybe they bring in someone more Evan Shapiro: Because she's incompetent. Because she's incompetent. Roben Farzad: She's not a TV person. Evan Shapiro: Because she's incompetent. I, this, in the piece that you mentioned earlier, I not only detailed the accounting that shows that the show [00:40:00] is without question profitable, I then outline just how incompetent all of the decisions Nepo Ellison has made. Hiring Bari Weiss, paying around $150 million. Roben Farzad: That's just ... Yeah. Evan Shapiro: It, for her fucking newsletter. Roben Farzad: And $150 million versus what- Evan Shapiro: Which is more than the cost of the whole, of the Late Show. Yeah. And then the utter ... She fucks up the premiere because she gets in the teleprompter and changes the script herself seconds before they go live, and then it's embarrassing. It's like The Anchorman. You gotta watch that tape. Roben Farzad: What's happened with China and Taiwan. Evan Shapiro: And his other competing- And then he can't get into China 'cause he doesn't have a fucking visa, and then they get kicked out of their hotel. She's incompetent. The ratings are bottoming out. They have the lowest ratings for the evening news and the morning show this century. Roben Farzad: But I think it's more that it's an embar- it's more that it's an embarrassment for the prodigal son. It's not that it's a financial- Evan Shapiro: Jeff Shell, his handpicked person to run the whole enterprise, gets kicked [00:41:00] out 'cause he's a sex addict. it's, an entire, it's a bad look overall. My question, though, is just mechanically, it's a race against time to get this thing approved before the fall election, right? Is it, you've got private, nonprofit organizations suing to get access to the records of the conversation between Ellison and the FCC. There, there are other movements afoot. Rob Banta wants to be President of the United States. He's gonna make this, Gavin Newsom wants to be President of the United States. Roben Farzad: But what can the AG, what can the AG in California do? I don't know the other levers you could pull if the FCC is kinda bent on waving this through. In fact, posthaste. You never, you would never have seen, one, I'm not sure this would pass regulatory muster, period. Evan Shapiro: Ever. Forget about any other administration. Roben Farzad: But again, they're not even- they don't even have, Skydance doesn't even have Paramount CBS in the gullet, much less digested and amortized, and is saying, "I'm going after this thing." So you could throttle it, but they're saying, [00:42:00] "We want it done," and the president wants CNN specifically changing hands between now and then. CNN I don't think is the priority of the Ellisons. Evan Shapiro: I'm gonna put a fun- we do predictions on this show. Yeah. I don't know about your show. Yeah. We make, we put our necks on the line figuratively and literally, well figuratively, on the line here. So I'm gonna ask you, what do you think the odds that this, merger gets through at all? Roben Farzad: I put them at two-thirds the odds that, that it gets through, and that there's a time delay aspect in it that the Ellisons- Evan Shapiro: 75% chance this gets, or 66% chance this gets- Roben Farzad: No, I put it at two-thirds. Yeah, I put it at roughly 65% that it gets through. If, in their world, in their perfect world, it would get through by the end of summer, which is unbelief. Again, we, you know that just doesn't happen. These mergers take time. Years but they lined up the equity, that they were very responsive. There was even like, "Zazov, you're not returning our call." He masterfully played Netflix against the other people and got the $31 bid. Evan Shapiro: Yeah. Credit to him. Roben Farzad: And his [00:43:00] shareholders, the shareholders want that $31 and the president wants it. Evan Shapiro: But they did vote down his pay package, the shareholders. Marion, what do you think, the odds are? Again, I, I think the EU's gonna take a look at this, but I could be wrong. What, do you think the odds are- Marion Ranchet: Yeah, Evan Shapiro: this gets through? Marion Ranchet: Honestly, I doubt that we'll go against it if it gets approved on your side. I don't think we're gonna go fight for this. There's a lot of other things we're not fighting the way we should, right? Just like talking about taxes at the moment, we ended up cutting a deal, a very lousy one. So honestly, I don't think they're gonna fight it. So whatever happens on your end will dictate what happens on our end. And timing wise, the timing is tricky, but it ... I don't know. Who knows? It, could go fast if people are putting enough effort on your, on your side. Roben Farzad: Evan, I do have sources in the Senate saying that if this does, it, if let's say the Dems capture the Senate in 2028, they could go back and bring [00:44:00] up hearings about using foreign corrupt practice, what is it? The corrupt practices. Yeah. If you codified bribery, in this case the payoffs for the 60 Minutes or ABC things or the quid pro quos and everything, and you open up hearings to that, you could theoretically have an agitation for a breakup. But by then, this is really yesterday's news. I think what's really worrisome is the, layoffs you would see in news gathering which everyone is talking about. That's the fat, pinata to whack. because there's a tremendous amount of debt to have to bring down. It's, like we've seen this story before, Warner Brothers has done terrible things to several kingdoms. We saw AOL Time Warner, we saw the AT&T Time Warner catastrophe, we saw Warner Brothers Discovery, and now a rose by any other name, Evan Shapiro: Let's end on, a big question, which we haven't done in a, couple weeks, the question of the week. So you look at all this and, I think there's a lot to be said. First of all, Marion's point with regards to the regulatory protection around media and media jobs [00:45:00] is really crucial here. but I think when you look back, to the '80s and early '90s and the removal of the fair- fairness doctrine and a couple of other major protections, the installation of Section 230, really the combination of capitalism and news gathering and journalism has been really destructive for the art form. Or the science. Is there a way-- What is the answer to professional journalism in the era of rampant capitalism? Does, journalism need to be nonprofit? Is that the only way, does it have to be public service like NewsHour here in the United States or, as it is on public broadcasting in Europe? Is that the only answer financially long term for quality journalism? I'll throw it to both of you, Marian, or Roben. Roben Farzad: It's depressing stuff. How many billionaire backstops have you had who, that have not worked? The LA Times, obviously The Washington [00:46:00] Post. That was supposed to be a panacea, like a patient investor. It was 2007 that Rupert Murdoch came in and bought Dow Jones for $5 billion and got The Wall Street Journal. He's been a better parent than most. I'd say The Wall Street Journal now digitally looks great, but there's something sweet generous about that. That's you know, hedge funds and brokerage firms and law firms, they all have to have a Wall Street Journal subscription. The New York Times, Meredith pulled off some other crazy thing. You might call it a lifestyle brand. I think they doubled down on their indispensable- Evan Shapiro: She's done a nice job. Roben Farzad: Yeah, their indispensable journalism. They didn't blink with Trump one, and they were able to capitalize that, and now suddenly they have a $12 billion market cap. But you look at my sphere- Evan Shapiro: But they're, as much a gaming company or a podcast company. Roben Farzad: Are they? Why do you covet your New York Times? Do you really covet your New York Times subscription for the, is it really for cooking or for Wordle? I think it's for the news, and it's a, there's... It's not a janky app. It's something that you're like, "Yes." Sure. So we're not talking about print revenue going away at the New York Times anymore. But [00:47:00] I'll say that, it's, you look at our, my sphere, public media, it's not done a great job. It has not leaned into digital at all. I deal with a lot of member stations. Whereas what they know is pledge drives. What they know is the radio pledge drive and how to hit up boomers and late-stage Gen Xers for money, and they've always been really skeptical of being kinda digital natives. Meanwhile, we've had people called NPR apostates. They've gone off to Vox Media. They've gone off to The New York Times, right? You think of Lourdes Garcia-Navarro, Lulu Garcia-Navarro. That was, this is a lot of it out of frustration of things they could not do for a publicgood.org company that was not a digital native. So they take their act to a for-profit company with a family protection and everything, and they do amazing things. James Murdoch is buying the Vox podcast- network right now. You see the people who went and did the bulwark are getting funded. So it could be so much better if it wasn't running scared, if it wasn't terrified of the defunding and the CPB thing. [00:48:00] It's so necessary, as is Amtrak, as is public transportation, but it's neglected, and it's not digital, it's not digital native. Do you know, Evan, that I have never been allowed to tout my show on the NPR One app? They always say, "Just get, tell them to get it where they get all podcasts." Was that, does that really offend stations so much that when you tell them to go to NPR One? Evan Shapiro: I mean- Roben Farzad: This is technology. We're not all beholden to your gigantic antenna anymore. But, meanwhile, government comes in and cuts CPB funding. I can go on and on and on and on for this. I'm not hopeful. there's ProPublica. There are a handful of other situations that have been, you know- Evan Shapiro: And then you bring, up Oliver Darcy, and you bring up, you bring up, there's, Semafor, there's Heather Cox Richardson. There are a bunch of journalists out there going direct to consumer. That could be the other answer to it. And you let people self-select to a certain extent, but it does leave out those who can't afford to subscribe to, to pay journalism. But anyway, [00:49:00] this has been a fascinating conversation. I have really enjoyed. I'm glad for our friendship, but I'm also really happy that we've found a way to, bring these two worlds together. Roben Farzad: I'm sorry I botched, I'm sorry I botched the intro. Maybe I could, cover myself in glory on the air like- Evan Shapiro: It's better. People love- Roben Farzad: Super Friends unite. But, in all honesty, I love what you guys do. I love that I can get it on demand. I love that your Substack is getting great momentum. I love that the pod sounds great. I love that you don't fill it with hydrogenated crappy stuff and fossil fuel ads. So keep doing it. I'm a big fan from my cheap seats. Evan Shapiro: Same. Thanks. Marion Ranchet: Thank you so much, Roben. Evan Shapiro: Thanks so much for being here. So this has been the crossover episode of Full Disclosure and The Media Odyssey podcast. That is Roben Farzad. Roben Farzad: That is Evan Shapiro. Evan Shapiro: Shapiro. Roben Farzad: Oh, I messed it up. Shapiro again. Evan Shapiro: You fucked it up again. Roben Farzad: Wow. That is Evan Shapiro. Can we [00:50:00] rewind? Go back again? Evan Shapiro: No, and that, is Marion Ranchet. Thank you very much for listening. We'll all see you next week on our various feeds. Roben Farzad: Thank you, guys.