New Skydance Already Worth Less Than Half Of Warner Brothers, Paramount Were Combined

I've documented for years how major media consolidation is simultaneously completely pointless and incredibly harmful. Such deals exist exclusively so that unremarkable rich men with no real ideas can grab some tax breaks, create the illusion of perpetual growth, and pretend they're savvy dealmakers."

Yet every single time a major media merger is completed the massive debt load results in layoffs, corner cutting, higher prices, and lower-quality service for everyone. It simply doesn't matter what the companies promise; the end result is always carnage. A country with functional regulators would simply enforce antitrust law to protect markets, labors, and consumers. We aren't that.

Paramount's recent $111 billion merger with Warner Brothers is poised to be even worse than deals' past. Paramount had barely beaten back a flimsy state antitrust enforcement effort before it began talking about mass layoffs to try and pay down the massive $80 billion in debt from the Ellison family's recent merger spree.

The company's massive debt - combined with higher interest rates from a tumultuous bond market - and a dying (intentionally exploited and destroyed?) traditional film and TV industry - has scared even growth-for-growth's sake" obsessed Wall Street.

It's clear that Paramount execs think the high interest rates (attached to a historic debt sale) are worth it because they think they'll cleverly be able to create a hugely profitable Harry Potter and Batman AI slop machine. And, just like the AT&T execs before them, have deluded themselves into believing they can turn the whole soggy mess into a new tech company" that rivals Google:

Are we paying a little more in interest?" Cinelli said in an interview. We are. But we'd much rather get the deal done and then manage that accordingly."

But again, by manage," they mean fire thousands of people, dramatically cut corners on production, reduce employee perks and pay, and raise rates hand over fist on consumers, as per tradition. That sort of con used to be easier to sell back when traditional and streaming TV was seeing growth; but now that these markets have saturated (and consumers are balking at constant rate hikes) the game has changed.

And it will get all significantly worse if the economy tanks and consumer disposable income spending drops off a cliff.

Amusingly, investors' jitters (combined with an automated sell off triggered by confusion over warrant distribution) have already resulted in the new company technically being worth less than half of what Paramount and Warner Brothers were worth separately:

As of Oct. 5, the last day of trading for WBD and Paramount Skydance (PSKY) on Nasdaq, Warner Bros. Discovery had a market capitalization of $77.7 billion and Paramount was around $11 billion. Today, Skydance has a market cap of under $40 billion - less than half the predecessor companies' combined value."

Great stuff! Should the AI bubble well and truly pop thanks to the industry's ongoing financial fraud, Larry Ellison's likely to take a significant brunt of the blow. While his gambit for nepobaby media domination simultaneously falls flat on its face. As usual, consumers and labor will be the ones paying the price.

The most likely outcome remains that a tech giant like Netflix, Google, or Amazon just buys the whole soggy mess in a few years, and all of the execs responsible (as well as all of the people and lawmakers that defended the deal) will simply pretend none of this ever happened.