Paramount on Dec.8 launched a hostile takeover offer for Warner Bros. Discovery, initiating a potentially bruising battle with rival bidder Netflix to buy the company behind HBO, CNN.
The fight for Warner drew strong reaction in Washington, with politicians from both major parties weighing in on the likely impact on streaming prices, movie theater employment and the diversity of entertainment choices and political views.
Paramount, run by David Ellison, whose family is closely allied with U.S. President Trump, said it had submitted six proposals to Warner over a 12-week period before the latest offer.
A regulatory document released on Dec. 8 suggested that an investment firm run by Trump's son-in-law Jared Kushner would be investing in the deal, too.
Also participating would be funds controlled by the governments of three unnamed Persian Gulf countries, widely reported as Saudi Arabia, Abu Dhabi and Qatar.
Trump's family company has struck deals this year for buildings and resorts that bear his name in Saudi Arabia and Qatar, partnering in the former with a company closely tied to the government and in the latter with the government fund itself.
Also possibly in Paramount's favor are recent changes at CBS News since its October purchase of the news and commentary website The Free Press. The site's founder, Bari Weiss, who has a reputation for fighting “woke” culture, was then installed as editor-in-chief in a signal Ellison intended to shake up the storied network of Walter Cronkite, Dan Rather and “60 Minutes," long viewed by many conservatives as the personification of a liberal media establishment.
Trump is a wild card given his tendency to make decisions based on gut and his personal mood. Over the weekend, Trump said the Netflix-Warner combo “could be a problem” because of the size of the combined market share and that he planned to review the deal personally.
The drama surrounding control of Warner began on Dec. 5 when Netflix made the surprise announcement that it had struck a deal with its management to buy the Hollywood giant.
Emerging just days after top Warner managers agreed to Netflix's $72 billion purchase, the Paramount bid seeks to go over the heads of those leaders by appealing directly to Warner shareholders with more money — $74.4 billion — and a plan to buy all of Warner's business, including the cable business that Netflix does not want.
The federal government has the authority to kill any big media deals if it has antitrust concerns, but such matters are usually left to experts at the Department of Justice. In his decision to get involved personally, Trump has decided, as he has with other government norms, to make a sharp break with precedent.
That worries Usha Haley, a Wichita State University specialist in international business strategy, who noted that Ellison is the son of longtime Trump supporter Larry Ellison, the world’s second-richest person.
“He said he’s going to be involved in the decision. We should take him at face value,” Haley said of Trump. “For him, it’s just greater control over the media."
But others are uncertain how big a role Trump will play.
John Mayo, an antitrust expert at Georgetown University, said the scrutiny will be serious whichever offer is approved by shareholders and goes before the DOJ, and that he thinks experts there will keep partisanship out of their decisions despite the politically charged atmosphere.
“That may affect at least the rhetoric that occurs in the press," he said, "though I doubt it will affect the analysis that occurs at the Department of Justice.”
