This past weekend, Donald Trump made sure everyone knew that he would personally consider any attempt to acquire Warner Discovery (WBD). That sent a warning shot across the bow of Netflix’s Ted Sarandos, who had just conducted a meeting with Trump to brighten prospects of regulatory approval.
Yesterday, Trump made his priorities known, and Sarandos may have to go back to the drawing board – assuming he still has time and money to do so. Axios reports on this new wrinkle:
President Trump on Wednesday further inserted himself into the drama around the sale of Warner Bros. Discovery, saying he believes CNN — one of several cable networks owned by WBD — should be sold as part of any deal.
Why it matters: While the president doesn’t have the power to unilaterally block a merger he doesn’t like — unless there are serious national security concerns pertaining to foreign investments — his comments do have the ability to sway the decisions of WBD shareholders and its board.
I’d ask why Trump would bother to insert himself into this deal, but the question would be purely rhetorical. At its most basic, the answer would be because he can, and that would suffice under normal circumstances. However, Trump has made his hostility to CNN excruciatingly clear, and vice-versa. Trump undoubtedly blames CNN for carrying Joe Biden’s water for four years, only to have its personnel treat Biden’s cognitive decline like a great shock after the 2024 election because no one bothered to tell them what was patently obvious to anyone with eyes and ears. And that’s only one aspect of the narrative amplification service CNN provides Democrats on a regular basis.
There’s also some other history involved, as the WSJ notes this morning:
Behind the scenes in recent days, Trump has repeatedly told allies that CNN should either be sold or get new leadership, according to people familiar with the matter, even if Netflix’s proposal is approved. The president has been unwavering in meetings with allies about his position on CNN and he has connected its future to deal negotiations with Warner Bros., the people said.
For Trump, the deal represents a second chance to take aim at CNN. During his first term, the Justice Department unsuccessfully tried to block a sale of CNN’s parent company, then known as Time Warner, to AT&T unless the network was spun off.
The president’s intervention in corporate dealmaking raises fresh questions about how a transaction might proceed.
Indeed it does, because WBD shareholders have another option. The Netflix proposal only covers the studio and streaming services of WBD, not its cable ventures (apart from HBO Max). The omission of CNN from the $87 billion bid raises questions about what WBD has in mind for its future, and why shareholders should sign onto a partial deal at all. On Monday, David Ellison’s Paramount launched a hostile bid worth $20 billion more (at the moment, as share prices fluctuate) for the entirety of WBD, including CNN. Ellison’s purchase of Paramount forced CBS into settling a lawsuit Trump filed over its coverage of the presidential election, costing $16 million and forcing changes at CBS News, which certainly made Trump a lot more sympathetic to Ellison and Paramount.
Trump can’t directly block the Netflix acquisition or force WBD shareholders to accept the Ellison/Paramount bid. As Axios points out, though, he can make the process miserable enough to convince shareholders to take the path of least resistance:
Until Trump’s comments Wednesday, Paramount argued Netflix’s bid faced more regulatory scrutiny because of its subscription streaming dominance.
- Now, Trump’s comments could be used to persuade shareholders that Netflix’s bid faces regulatory risks because it doesn’t include the acquisition of WBD’s cable networks, including CNN.
Trump isn’t exactly being subtle about it, either:
“I wouldn’t want to see the same company end up with CNN,” he said. “Because I think the people that are running CNN right now are either corrupt or incompetent (with) decision-making.”
“I don’t think the people that are running that company right now and running CNN — which is a very dishonest group of people — I don’t think that should be allowed to continue. I think CNN should be sold along with everything.”
The end is nigh, in other words, for Netflix’s bid. At least that would be true if Sarandos can’t restructure his bid to include CNN and the rest of WBD, which he’d likely be forced to do even without Trump’s comments after Paramount’s hostile bid for the whole enchilada. Can Sarandos find the financing for a complete acquisition? Does he even want the headache of running a cable news outlet with crashing ratings and worse credibility? Ellison has already invested in news-media reform, and adding CNN to CBS News actually makes sense in terms of efficiency and synergy. Sarandos would have to start from scratch in a declining market, which is very likely why the Netflix bid didn’t include CNN in the first place.
If I were a betting man, I’d push all the chips to the center on Ellison winning this round, maybe even by default. Stay tuned … perhaps even at CNN.
Addendum: I probably owe all of you Latin scholars out there an apology for my headline, which is a take-off on the famous Roman declaration Carthago delenda est from Cato the Elder. I was trying for “CNN Must Be Sold.” Please tell me that it doesn’t end up meaning, “Sale at Penney’s.”
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