Trump's shadow looms over the Warner deal

BarcelonaOne of the cornerstones of American audiovisual production is up for sale and has three suitors, two of whom have already revealed how much money they are willing to spend to acquire the Warner Bros. Discovery conglomerate. But the game isn't just about a financial auction: whoever wants to acquire the company's lucrative assets must first receive approval from the Federal Communications Commission (FCC), a regulatory body that, since Brendan Carr took over as chairman, has become one of Donald Trump's key tools of leverage.

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Netflix seemed to be leading the race, announcing an agreement with Warner to acquire two of the company's three pillars: the film studios and the HBO Max streaming service. But the US president has made it clear that this is not his preferred option. Just days after the acquisition plans were announced, Trump said the takeover "could be a problem" because Netflix already has "a huge market," and adding Warner Bros. would create "too much concentration of power in too few hands." He also explained that he would be personally involved in the decision. One of Netflix's shortcuts to circumvent a potential FCC block has been to relinquish the third pillar of Warner, its television companies, such as CNN and Discovery Channel. If the deal doesn't involve any broadcast media, then FCC approval isn't necessary, although it would still face scrutiny from the Justice Department's Antitrust Division (and the European Union will likely weigh in as well).

Trump's statements impacted Netflix's stock price, which fell 3.2% that day. The company has signed a clause stipulating that if the merger is not completed, it will pay Warner $5 billion. The entire deal is valued at $72 billion. It's worth remembering that Trump has historically criticized Netflix, such as when he labeled the documentary Democracy on Trial, which focused on his trial, as "propaganda."

A few days after the presentation of the agreement between Netflix and the board that governs Warner Bros. Discovery, the second contender appeared: Paramount Skymedia. And, in this case, it didn't do so by charming the executives, but rather by appealing directly to the shareholders. Through a hostile takeover bid, he valued the company at $102 billion and made a point of saying that this way he could buy the entire company without having to break it up first.

At first glance, it might seem that this option would have an even tougher time succeeding because it would raise even more concerns about concentrating so much power in a single company. But several factors suggest that it has a powerful lubricant to get the ball rolling: Trump's favor. Although he didn't directly state that it was his preferred option, he did declare that neither Netflix nor Comcast—the third contender, which didn't make any public offer—were "very friendly" with him. By process of elimination, Paramount ends up being singled out as the chosen one.

This communications giant is chaired by David Ellison, and in recent times, it has become clear that the company wants to reorient itself to the right to be closer to the interests of Trump and his audience. The appointment of the conservative critic of the wokism Bari Weiss's appointment as head of CBS News, without prior television experience, caused a stir both within the industry and across the country. Furthermore, Trump has consistently praised Ellison's father, Larry, the world's fifth-richest man and founder of Oracle. When discussing his plan to transfer TikTok from Chinese ownership to American control—a move that would grant the coveted algorithm—he directly cited Larry Ellison as an example of an executive he would trust. And it's not just empty words. Trump's son-in-law, Jared Kushner, is directly involved in Paramount's bid to acquire Warner: he chairs Affinity Partners, one of the investors providing the necessary funds to facilitate the deal. In this case, since television networks are involved, FCC approval would be required. And, if this goes through, it would mean Paramount would have a second news network, in addition to CBS News, since the influential CNN is already part of the package. Traditionally aligned with the Democrats, Trump has repeatedly expressed his discomfort with the network. A potential change of ownership raises questions about whether the new owners would alter its editorial line to make it less hostile to the American president.