The worst acquisition in history, again
profgmedia.com

・

103 points

・

JumpCrisscross

・

7 hours ago

79 comments

pinkmuffinere ・ 6 hours ago

> With his new toy having a leverage ratio north of 6x, David Ellison has promised $6 billion in “synergies” within three years. (Netflix Co-CEO Ted Sarandos put the figure closer to $16 billion, after examining WBD’s books.

What is it that these CEOs think they are seeing, that everyone else is missing? I can believe they have inflated egos, but they’re not totally crazy, right? My impression is that Netflix is fairly sober and results oriented, so I’m confused by the whole thing.

  • bluegatty ・ 6 hours ago

    They're buying control of narrative on issues they care about; the history of media is mostly that. Newspapers were kind of invented for that reason. Our ideas of ethics in journalism are fairly modern.

    • butterisgood ・ 5 hours ago

      Indeed Edgar Allan Poe had a thing or two to say about newspapers. https://poestories.com/quotes.php (and scroll down a bit).

      > “We should bear in mind that, in general, it is the object of our newspapers rather to create a sensation — to make a point — than to further the cause of truth.”

      • PearlRiver ・ 3 hours ago

        We as citizens are supposed to keep ourselves informed and vote on things. Very few of us can fly all over the world to see things with our own two eyes so we have to outsource this fact finding. Priests, journalists, the goddamn CIA- they all have agendas.

  • coliveira ・ 6 hours ago

    Rich people don't buy media companies because this is the best business in the world. Quite the opposite, most media companies are mediocre or lose money. They do this because of the political clout they get with the control of these media properties.

    • JumpCrisscross ・ 5 hours ago

      > They do this because of the political clout they get with the control of these media properties

      Bezos bought the Post for clout. Ellison (and his investors) are buying Warner Brothers first and foremost to make money.

      • coliveira ・ 19 minutes ago

        As the article shows, the most probable result of buying Warner Bros will be another loss. Which won't stop more people from buying it again later.

  • JumpCrisscross ・ 5 hours ago

    > that everyone else is missing?

    To be fair, sometimes they do. Musk saw genuine bloat at Twitter. I’m doubtful one can optimize that much out of WarnerBrothers. But Hollywood isn’t exactly known for being efficient.

    • pinkmuffinere ・ 5 hours ago

      Ya, I totally agree, given that both CEOs see some significant value here, and I trust one to be fairly calculated, I assume they’re at least partially correct. But I sincerely don’t know _what_ they think they see. If it’s just layoffs, then why doesn’t WBD see the same thing and do the layoffs themselves? If it’s IP, then why do shareholders disagree? Wtf is it, lol

    • rayiner ・ 4 hours ago

      Can’t you replace a lot of Hollywood with AI now? What am I missing?

  • readthenotes1 ・ 6 hours ago

    There is a large history of companies with too much money (or access to borrowing) using it to buy up shiny objects. Whether it is CEO pride, greed, anger, or envy, it does not seem to matter.

  • toomuchtodo ・ 6 hours ago

    Layoffs as you consolidate operations between enterprises. See Capital One laying off thousands at Discover Financial after their acquisition.

    Capital One to lay off more than 1,100 in latest cuts at Discover Financial HQ - https://news.ycombinator.com/item?id=47270442 - March 2026

  • alephnerd ・ 6 hours ago

    Succession planning.

    This appears to be Larry Ellison trying to manage succession for his kids. We'll probably see a second major acquisition like this for Megan (who tends to be more progressive leaning) [edit: I was right. Megan Ellison is making moves as well now [0]]

    Larry would not be able to do something similar at Oracle today (definitely in the 2000s though), as by the 2010s operational control at Oracle increasingly shifted to operators like Catz, Hurd, and Kurian. It also would have led to bad blood à la the Murdochs.

    One heir cultivating the right wing (David) and the other heir cultivating the progressive wing (Megan) buys a level of political impunity for the next generation that is hard to come by.

    [0] - https://www.hollywoodreporter.com/movies/movie-news/megan-el...

monkeydreams ・ 6 hours ago

On top of this Ellison is likely to have to sell off the dried husk of Cerner in order to fuel his circular AI transactions with NVidia.

  • levinb ・ 5 hours ago

    Remember, the Cerner acquisition enabled an essentially permanent beachhead for Oracle in the VA. It will pay off over time in 'we already run Oracle' across many dimensions of government.

    See the career of Seema Verma from last DT admin.

ggm ・ 6 hours ago

Netflix use BSD heavily. Oracle is Solaris. It was just BSD vs SysV all over again.

  • hungryhobbit ・ 5 hours ago

    Legitimate question (I'm not trying to be mean, I'm just ignorant): why?

    Linux is just as free (or free-er), and it's a ton better supported: why would these major companies not use it?

    • perfmode ・ 3 hours ago

      FreeBSD's kernel is smaller and more cohesive than Linux's. The whole OS (kernel and userland) is developed as a single project, whereas Linux is just a kernel with a massive and fragmented contributor base. When you need to make deep cross-cutting changes, like modifying how sendfile interacts with TLS interacts with the TCP stack interacts with the NIC driver, that's way easier in a smaller, coherent codebase.

      Netflix's CDN nodes are basically single-purpose appliances that do one thing: push video bytes to your screen as fast as possible. For that kind of workload FreeBSD's network stack was historically stronger, and the codebase was easier for a small team to reach into and tune aggressively. They've gotten individual servers past 100 Gbps of TLS-encrypted traffic. A lot of the optimizations they needed (kernel TLS offload, sendfile improvements, custom TCP tuning) they built themselves and contributed back to FreeBSD, and the kernel's size and structure made that practical in a way that would've been harder in Linux.

      The other piece is licensing. BSD license is permissive, GPL isn't. Netflix wanted the option to make deep kernel modifications without being required to open source everything. They ended up open sourcing a lot of it anyway, but having the choice mattered.

      Worth noting they only use FreeBSD for the CDN. All their backend services, recommendations, control plane, that's all Linux on AWS. So it's not that they rejected Linux, they just picked FreeBSD for the one job where it had a real edge.

      • antod ・ an hour ago

        > Netflix wanted the option to make deep kernel modifications without being required to open source everything.

        GPL2 would've let them do that just fine as long as they didn't distribute the Linux kernel to someone else.

        AGPL was invented to close that "gap".

  • gh02t ・ 5 hours ago

    Does Oracle still significantly use Solaris? I was under the impression they barely keep it on enough life support to satisfy leftover contracts from Sun.

    • btian ・ 5 hours ago

      Nope. It's almost all Oracle Linux.

MengerSponge ・ 6 hours ago

This is the same as acquiring the Washington Post or Twitter, right? It's more about media control than any classic business case.

Once you start meddling with the money machine it's not just Net Profit = Revenue – All Expenses (COGS + Operating Expenses + Interest + Taxes)

  • ribosometronome ・ 4 hours ago

    Netflix's deal included spinning off the news networks. If the Ellisons just wanted that, they could have had that for a considerably more digestible price point. They genuinely want Harry Potter and the Sopranos, too.

    • MengerSponge ・ an hour ago

      Hollywood is more glamorous which is fun, but the real value is how shifting which films and shows get made will also shift the national narrative.

      Riefenstahl wasn't a journalist.

jmclnx ・ 7 hours ago

They could be right, but I still have to go with Compaq buying Digital. Just about everyone working in IT in my area thought that was a crazy move by Compaq.

  • mikestew ・ 6 hours ago

    I dunno, look at the numbers in TFA. TFA is a bit lengthy, but worth the read. I think Compaq bought Digital in good faith, even if it went poorly. Whereas even an idiot like me can look at those numbers (in summary, you could buy Disney for the same money) and see Ellison buying a new toy for Junior to play with, rather than a well-thought business deal.

  • alephnerd ・ 6 hours ago

    The Compaq acquisition made sense - it gave an upstart in Houston the distribution it needed to expand into enterprise and survive in an increasingly commodified PC and Server market.

coliveira ・ 6 hours ago

There is a kind of business people who do most of their money engineering failed business takeovers and mergers. A good example is John C. Malone. This guys is always involved in some takeover or merger of companies, most of the time leading to no gain for investors, but he himself became billionaire with this strategy. Media companies are some of the best ways to engineer these business "opportunities".

helaoban ・ 6 hours ago

>Another culture clash, this time between Discovery’s unscripted empire and Warner’s premium sensibilities, a wannabe mogul overpaying so he could cosplay as Robert Evans (ask Claude), and a 5x debt-to-EBITDA ratio. The good news? The sequel had a short runtime. CEO David Zaslav slashed costs, engineered a good bank / bad bank structure to spin WBD’s declining linear assets, and ultimately orchestrated a bidding war that restored shareholder value. As an operator, Zaz is Ed Wood (see: the worst branding decision in history, deprecating HBO), but as an investment banker, he’s Steven Spielberg.

WTF is this slop? I've never seen a an article so riddled with analogies and pop culture references that actively degrade the ability to understand whatever argument might be lurking behind the obscurantism.

What body of work has Scott Galloway produced that should cause me or any other reader to suffer this kind of self-indulgence normally found in a 8th grade creative writing class, in the hopes of learning something meaningful about these topics?

Gurus are going to guru I guess.

  • borski ・ 5 hours ago

    It depends on whether or not you like that style of writing. It has always been consistent with Galloway; I like it, but I prefer listening to it over reading it.

    Whereas I definitely prefer reading PG’s writing over listening to it, interestingly enough.

    Just personal preference. Scott’s a good storyteller; if you let him finish the story. :)

  • HDThoreaun ・ 6 hours ago

    I also find Scott to be an unsufferable writer. It all feels so forced

    • steve_adams_86 ・ 5 hours ago

      To me it feels like you're reading his insecurity. He can't be direct. He needs to fluff it up so you know how smart he is. I'm guilty of the same bullshit.

alephnerd ・ 6 hours ago

Something I've mulled about this acquisition is that it appears to be a form of succession planning by Larry Ellison for his kids David (Skydance) and Megan (Annapurna).

Oracle was always an Ellison driven enterprise, but neither David nor Megan had much aptitude or interest in enterprise SaaS, and a newer generation of operators took the reigns at Oracle in the 2010s like Catz, Hurd, Scilia, Magouyrk, and even Kurian before he left for GCP.

Given the ferocity with which this acquisition was fought (much more ferocious that similarly political fraught M&As like Sinclair) and the relatively weak fundamentals, there clearly is an emotional and family succession planning aspect to it.

Ellison has taken similar decisions with an emotional lens previously, such as his support for Steve Jobs retaking control of Apple.

  • cyanydeez ・ 6 hours ago

    Seems more cynical far right media control. You can call that succession planning i suppose.

    • alephnerd ・ 6 hours ago

      There are easier and less fraught methods to build a politically controlled media empire, such as Sinclar's methodological and quiet approach, or quietly creating a family office that purchases commanding voting stakes in media enterprises like Laurene Powell Jobs' Emerson Collective.

      The Skydance-WBD acquisition was extremely messy because emotion was clearly involved.

  • gamblor956 ・ 6 hours ago

    David is fairly good at Hollywood production. He's got a surprising number of blockbusters under his belt.

    It remains to be seen whether his rightward turn is just pandering to Trump to get stuff done or if he's gone of the rails. If its the latter, the Paramount acquisition will likely be regarded as one of the biggest failures of all time.

lotsofpulp ・ 6 hours ago

Why is Netflix in the "Big Tech" categorization in the "value in market cap" graphic?

I do not see how Netflix's primary business is any different than the businesses in the "Hollywood" categorization that also pay to make media and then sell it.

Apple and Amazon can be in a different category because making and selling media is an ancillary part of their business. Alphabet does not make or curate any media, it just distributes it.

  • arthurjj ・ 6 hours ago

    Netflix pays like a Big Tech company, is valued like a Big Tech company and was part of FAANG. 10 years ago the streaming tech they had was fairly high tech, even if it's now pretty standard. So they're considered Big Tech for historical reason

    • jasonfarnon ・ 3 hours ago

      "Netflix pays like a Big Tech company, is valued like a Big Tech company and was part of FAANG."

      That would be circular. The author was trying to show how much smaller hollywood media companies are than big tech.

    • raw_anon_1111 ・ 6 hours ago

      There was no world that Netflix should have been part of FANG (notice the missing A as original conceived by Cramer). At the time it was coined, Apple was already the most valuable company. But was left out as was Microsoft

      • travisjungroth ・ 6 hours ago

        It was the companies that were performing well in the stock market. Microsoft and Apple are much older and didn’t have the growth those did.

    • est31 ・ 5 hours ago

      They also have their own global CDN, while Disney/HBO et al use various third party CDNs.

  • samrus ・ 6 hours ago

    Netflix is a streaming platform first and an entertainment studio second.

    Its like youtube if youtube red didnt fail

    • kgwgk ・ 6 hours ago

      Netflix may be a streaming platform but it’s streaming mostly Netflix’s content.

    • lotsofpulp ・ 6 hours ago

      The streaming platform and entertainment studio cannot be considered 1st and 2nd things in 2026. The streaming platform is the delivery mechanism of the product made by the entertainment studio, no different than what Disney/Comcast/Paramount/WarnerBros Discovery does.

      Youtube Red just got rebranded as Youtube Premium, and does not seem comparable because Youtube does not curate, it just sells advertising spots, and subscriptions to be able to skip ad breaks. You can watch any random person's content on Youtube or Youtube Premium, but you cannot on Netflix/Disney/etc.

  • alephnerd ・ 6 hours ago

    > I do not see how Netflix's primary business is any different than the businesses in the "Hollywood" categorization that also pay to make media and then sell it

    Netflix owns distribution and owns+sells VFX and animation services via Eyeline. Most "Netflix orignals" aren't actually produced by Netflix - Netflix just takes a capital stake in a production that was already in the works by an existing production company.

    This made Netflix closer to Valve, and allows their IR team to make a valid case that they should be compared against (and thus deserve a valuation) comparable to other tech companies.

  • Forgeties79 ・ 6 hours ago

    My guess is because Netflix gets money from subscriptions, which is a very different revenue model from traditional Hollywood. But again, completely a guess

    • lotsofpulp ・ 6 hours ago

      I am under the impression traditional Hollywood also got much of its money from subscriptions, it just happened to pass through a middleman known as the cable or satellite TV company. Hence the constant threats of not being able to watch so and so channel due to contract dispute of "carriage fees" or whatever they called the amount per subscriber that a cable/satellite TV company paid Warner Bros/Disney/etc.

      • jrjeksjd8d ・ an hour ago

        Movie studios want billion-dollar box office franchises. Netflix wants to make a show with 7 seasons they can slowly trickle out to keep you paying 20 dollars a month. Netflix prestige acquisitions are a mix of "building the catalog" and ego.

jmyeet ・ 6 hours ago

Control of the media has become more important than the direct financial results of that acquisition. We are at a precarious point in history and it's becoming increasingly necessary to manufacture consent to maintain the American imperial project.

Don't think of this in terms on a financial return on investment. A half dozen people control almost all American media because the fear is that without the manufactured consent, the entire system is going to collapse. Historically, that's tended to result in heads on spikes or being hunt from the city walls.

Perhaps it's nihilistic of me but I thought that after the 2024 election, we're now beyond the point where any of this is going to get better through electoral politics. Any democracy now is performative. Both sides are bought and paid for. There is no significant, organized resistance to any of this. Material conditions will continue to get worse.

Think about it: it doesn't matter if you, as Larry Ellison or Jeff Bezos or Elon Musk, have $200 billion or $300 billion or $400 billion. Like that has no impact on your life. There is nothing you can possibly buy that requires more wealth. The goal now is to preserve the system at any cost.

bdangubic ・ 6 hours ago

amazing that people still write articles like this and get away with it… everyone knows why this purchase was made and this mate is discussing things even my 12-year old would not bring up. X purchase maybe was understandable discussion but in 2026 writing article like this is borderline “criminal”

  • rgbrgb ・ 6 hours ago

    > everyone knows why this purchase was made

    you should say what you're talking about because I for one have no idea.

    • DaveFr ・ 6 hours ago

      The idea is that this is a political deal, not a business deal - by buying WBD, the Ellisons add CNN to a portfolio that already includes CBS and TikTok, and shaping coverage matters more to them than the stock price.

      • CodesInChaos ・ 6 hours ago
        ・ 3 more

        If that's the case, shouldn't they have been able to work out a much cheaper deal with Netflix where they get CNN and Netflix everything else?

        • jandrese ・ 4 hours ago

          Probably hard to cut a deal like this with someone you are actively engaged in a hostile bidding war with.

        • jasonfarnon ・ 3 hours ago

          I think this was actually on the table and rejected. Which is why the "control the narrative" argument is fishy, or at least missing something. And now having just defended Oracle I have to go take a shower.

    • afavour ・ 6 hours ago

      I assume OP is talking about an ideological motive to take over the media industry and pivot it in a rightward direction. That’s certainly what happened with CBS News, I think it’s fair to speculate about CNN too.

      No idea why OP alluded to it rather than just said it though.

      • warkdarrior ・ 6 hours ago
        ・ 2 more

        Even if that is indeed the motive, the article is useful in showing how from a financial perspective this is bad deal for Paramount.

        • afavour ・ 5 hours ago

          Absolutely. But it’s still relevant because depending on your goal (and your resources) a bad deal that burns cash might still be a positive outcome.

          Not dissimilar from Musk buying Twitter, objectively he overpaid by a ton for a business that wasn’t thriving. But I think time has shown that his purchase has paid political and ideological dividends. Which might be worth the money to him.

      • bdangubic ・ 6 hours ago

        didn’t think I had to actually explain it :)

    • cyanydeez ・ 6 hours ago

      Its a cynical media control strategy to prevent taxes on the rich.

      • ViktorRay ・ 6 hours ago
        ・ 2 more

        This doesn’t make sense. Surely paying taxes would be cheaper than buying Warner Bros?

        • cyanydeez ・ 6 hours ago

          That's what a poor person would say. Fox news managed to get Donald Trump elected, whose net worth has gone up by billions.

          Also, it's not real money, it's debt equity. Equity transfers are just rich people toys. They move the actual cost into the entity they purchase, and if it fails, whatever, it didn't cost them anything.

  • samrus ・ 6 hours ago

    Elaborate please. This is the place for insiders to inform others

    • bdangubic ・ 6 hours ago

      After this merger, how many MSM outlets (including social media too) will not be in control by right wing billionaire nutcases? It is like when people for months discussed how much value X lost after Musk bought it (it was the greatest single investment made by any human ever)

    • popalchemist ・ 6 hours ago

      It was an elaborate scam between Trump and his billionaire buddy (and contributor) Ellison to make money in various ways (both the acquisition as well as driving down shares in Netflix so Trump could buy the dip - as was reported earlier in the week) as well as to MAGA-ify the entertainment industry further.

      It's all a grift.

james2doyle ・ 6 hours ago

This article sure uses a lot of em dashes. I see 9 in the article body.