Media Monday: Ellison’s Manifesto & The B.I. New Guy

**Jon Kelly** (0:01)
I always get frustrated in these sort of business predicaments because the news business is fundamentally supposed to be honest, right? Like you're in the honesty business.

**Dylan Byers** (0:14)
Welcome to The Powers That Be Daily, Pucks podcast focused on the intersection of Wall Street, Washington, Silicon Valley, and Hollywood and the players who run it all. I'm Dylan Byers sitting in for Peter Hamby. It's Monday, August 10th. That means it's Media Monday and I'm joined by the boss man, Jon Kelly to talk about the recent op-ed in the New York Times from none other than David Ellison, who sought to make the case that the fight against his Paramount Warner Brothers discovery merger from Democratic Attorneys General is really all about what else? CNN. Jon and I are going to dig into what this pretends for the deal and for the future of both CNN and CBS News. And then we are going to turn our attention to Business Insider, which has just named a new CEO, who it is hoping can transform its business from the scaled social and search traffic juggernaut that it was back in the aughts to something looking a little more like Puck.
We'll talk about all that and more on today's episode of The Powers That Be.
Welcome to The Powers That Be. It is Media Monday. I am Dylan Byers sitting in for Peter Hamby. I am joined, of course, by the boss man, Jon Kelly. Jon, how are you?

**Jon Kelly** (1:46)
Good. I didn't realize I was getting the replacement players, Dylan. I'm so sorry. You have to say it's August.

**Dylan Byers** (1:52)
It's August. Jon, I don't think anyone, I know I'm a replacement player, but I don't think anyone in the media business has poured more ink on CNN than myself.

**Jon Kelly** (2:06)
I think that's definitely true.

**Dylan Byers** (2:08)
I cannot tell you how delighted I was when I saw that David Ellison published an editorial in the New York Times seeking to make a case that all of the hullabaloo from Rob Bonta and the other Democratic Attorneys General about their opposition to parabros really just came down to CNN. What he wrote is, I believe a plainer worry sits beneath the briefs and the news releases the news. The issue is whether I can be trusted as a steward of Warner's CNN. What did you make of this?

**Jon Kelly** (2:44)
It was a fascinating surprise, Dylan. Clearly, he and Melissa Zuckerman have decided to become more offensive about their position in the Warner Mountain gambit. A couple of immediate thoughts, and we've talked about this on and offline. I think that you and I both agree that the Rob Bonta series of definitions seems pretty gerrymandered and I think that the business consequences of delaying a merger will lead to significantly more layoffs than the merger itself ever would have.
You know, the people have talked about this ticking fee as if it's some sort of, the daily $7 million ticking fee that begins in the fall, as if it's some sort of tactic. You know how the ticking fee is going to get made up or accounted for, Dylan, right? It's going to lead to probably further synergies. So Ellison has a right to speak his mind, certainly, and a right to recognize that he's going through some potential lawfare here that may be misdirected. I am not sure, however, that there are plenty of people inside CNN, as you're about to tell me, who don't want the Ellisons to own the network. But I don't think that that's actually where the loudest objections are coming from. As we've discussed in the past, there are deeply held vibes in the creative community in Hollywood where people just hate this deal and hate the idea of deleting one of the traditional studio players. So, yes, the CNN thing is an issue. But as you noted in your own work, it wasn't like Bonta spilled much ink on this when he was filing his lawsuits, right?
The bigger point is that they worry about the economic downstream consequences of not making as many movies. So, let me just say this, Dylan.
So, I think that one of the real challenges, almost like intellectual challenges with this deal, is that there is a lot of sentiment in holding up some of the least growth-oriented assets inside of the conglomerate, right? So, the Ellisons have pledged to make 30 movies a year, 15 from each of the studios that they would own in a combination.
Does that seem like the best use of resources for this conglomerate, knowing how challenging the box office is for all but Spider-Man and the Audacy? Probably not, right? There are probably better ways to preserve resources and to manage the projected EBITDA, which is significant in the pro forma. Ditto CNN. CNN is an amazing asset, and it's going to be incredibly viable for decades to come. Everyone believes that, but the sense that it's like this basically shrine unto itself, that it needs to be naturally preserved, like a national park, that just can't happen. I'm sure Ellison is surrounded by people who presented that view to him, but I think that his conscientious objectors are in LA, not Hudson Yards.