Welcome back to What I’m Hearing, still coming from NYC, where I saw a TV ad last night featuring
Mayor Mamdani playing basketball with congressional candidates and realized L.A. may not have the dumbest politics.
Tonight, how much pain will David Ellison endure at CBS News? I’ve got some news that makes matters worse. Plus, a Netflix firing, some not-depressing A.I. news, and Eriq Gardner grills the high-profile lawyer defending the WarnerMount merger.
Discussed in this issue: Bryan Lourd, Ted
Sarandos, Chris Nolan, David Ellison, Scott Pelley, Dani Dudeck, Lesley Stahl, Don Hewitt, Jeffrey Kessler, Sharyn Alfonsi, Cecilia Vega, Anderson Cooper, Steven Cahall, Bari Weiss, Mike Wallace, Andrew Brandon-Gordon, Bill Whitaker,
Jon Wertheim, Emily Feingold, Nick Bilton, Dana Goldberg, Araceli Martínez-Olguín, Rob Bonta, and… Bari’s goon squad.
Not a Puck member yet? Just click here. Got a news tip or an idea for me? Just reply to this email, text me, or message me on Signal at 310-804-3198.
Let’s
begin… |
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Lesley enlists Lourd: CAA won’t be sending out a New Client Alert! on this one, but agency head Bryan Lourd has quietly begun advising 60 Minutes correspondent Lesley Stahl amid the slow-moving car crash at CBS News. Lourd has known Stahl for years, but the representation is new, and it’s not decided if the 35-year veteran and last remaining on-air connection to creator Don Hewitt will follow the fired correspondents
Scott Pelley, Sharyn Alfonsi, and Cecilia Vega, as well as Anderson Cooper, out the door. (A CAA rep didn’t respond.)
What a mess. CBS News chief Bari Weiss and 60 executive producer Nick Bilton going up against Lourd highlights a fundamental problem here. Much has been made of their lack of TV news experience, but just as big an issue for a show like 60 Minutes is their
inexperience managing star talent. For all the attention on its investigations and interviews, 60 Minutes is as much about casting as any movie or TV series. The correspondents are the ultimate audience surrogates. Mike Wallace, who was perhaps the show’s biggest star, began his career doing cigarette ads, but Hewitt recognized his cranky persona was compelling TV—just like Pelley and Stahl when they grill a C.E.O. or president (or, in Pelley’s case this week,
his own boss, Bilton, in what I’ll forever call the “Enjoy the bagels” standoff.)
But as any TV news (and Hollywood) executive knows, big talent must be managed and, in many cases, coddled, even when they’re acting out, as Pelley was this week. That’s not Bari or her goon squad. Bilton and Stahl went to dinner last night, but is that too little too late? I’m told when Weiss first pitched Paramount owner David Ellison on her plan for shaking up 60
Minutes, she knew she still needed recognizable talent that the audience loved and trusted, and the plan was to build around Anderson. They could endure the pain of disrupting perhaps the most insular news organization in America if they had Cooper on board. But then he quit, and Pelley went rogue, and now they’re down to three, with Stahl, Bill Whitaker (UTA), and Jon Wertheim (CAA) hanging by a thread.
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How much pain can Ellison endure?: That’s the question, right? At some point, David will need to intervene. Paramount’s about to have a big hit this weekend with Scary Movie, but will anyone be talking about it? This is one of those New York media scandals that has metastasized to L.A. and could start impacting talent relations throughout the company. It’s already gonna be a political issue if and when Democrats take power.
There are essentially two theories for why
Ellison would allow Weiss to blow up TV’s top news show. Either a) he and his father, Larry, don’t really care about CBS News and instead see more value in using it to get their $111 billion WarnerMount deal approved, or b) he does care about CBS News and truly believes the “Broadcast is an ice cube” line that Weiss and especially Bilton keep peddling. Basically, 60 Minutes is currently a strong enough brand to endure this disruption, but it has five to seven
years tops before the linear TV economics melt to the point where the show will need to be pared way back or disappear altogether… unless it can be reinvented into something that plays in an on-demand streaming environment.
That’s a bit problematic. After all, broadcast ratings have been holding okay lately as cable audiences plummet. But the stark reality of 60 Minutes has always been that its much-celebrated dominance—9.1 million same-day viewers on CBS this season,
up 9 percent year over year!—has been dependent on its sports lead-ins, particularly the NFL. In February, once football ends and before March Madness or the Masters in April, 60 Minutes now often falls into the 5 million to 6 million viewer range—still the leader among newsmagazines but not that much ahead of Dateline on NBC or 20/20 on ABC. And minimal supplementary audience on Paramount+. So, is it the time slot or the show that should be
celebrated?
That’s important not just because the patina of the largest audience in news has allowed 60 Minutes to air aggressive journalism. The other stark reality is that a big chunk of the program is devoted to so-called “rollout” pieces: participation profiles timed to a new product (remember the 2001 unveiling of the Segway?), a popular sporting event (the famous 1999 profile of women’s basketball coach Pat Summitt), or a new entertainment release
(Chris Nolan’s recent sit-down plugging The Odyssey). 60 Minutes is considered the top U.S. booking because it’s got that huge audience, and it’s prestigious. If the linear numbers soon decline without a boost from streaming, a big chunk of the value proposition goes away, and so might those big gets.
Which would explain, at least in theory, the attempt to reinvent for streaming now. I’m told by one agent that Weiss and Bilton have been
casting a wide net in seeking correspondents and producers. Either by choice or necessity, the pitch is that Bilton wants fewer “generalists” and more domain experts to add authenticity and authority to the show. Think a National Geographic editor handling nature or wildlife pieces, or an established British journalist covering stories based in Europe, plus additional contributions posting online with a more frequent cadence. Maybe that would work—as a viewer, I sometimes chuckle at the
expertise imbalance when Stahl sits down with someone like Mark Zuckerberg—but with exceptions, that’s not the 60 Minutes model, where Stahl interviewing Zuckerberg is the point. We want to see it because it’s her; we regular people know and trust the correspondents to guide us through the confusing world.
Still… beyond the pure ratings issue, the prestige is obviously what’s most at stake here. A likely scenario now is 60 Minutes
returns this fall, the product is slightly less good without its star correspondents and producers, and the ratings—thanks to that time slot—will be fine. But the noise around the show won’t go away. The think pieces, the disgruntled staffers leaking or speaking out, the discourse. It will lose some of that prestige. And maybe 60 Minutes doesn’t get Chris Nolan next time, or whomever—name your big get that isn’t Donald Trump. Maybe they become
Dateline, a diminished news brand that nonetheless does big numbers on YouTube and boasts a popular podcast. That may ultimately be what the Ellisons want, but it still seems a lot less valuable than 60 Minutes. - Could A.I. create “another Netflix” for Hollywood?: Wells Fargo analyst Steven Cahall is out with a new report estimating the studios and streamers will save about $15 billion a year from A.I.
initiatives. He cites studio estimates that A.I. will bring down costs about 15 percent to 20 percent by streamlining visual effects, reshoots, storyboarding, and other aspects of filmmaking. If the Hollywood content spend in 2027 is about $100 billion (not including sports), and 80 percent to 90 percent of that is original scripted content (not news or reality or licensed programming), then the studios could take the $13 billion to $16 billion in “found” money and reinvest it back into more
movies and shows. Or… they could just pocket that money or pay off debt, or extract it via stock options given to top executives as reward for boosting cashflow. But $15 billion would be “equivalent to another Netflix” in the market—potentially great for creatives and a way to boost the volume of programming to counter the A.I. slop that is already starting to proliferate on YouTube.
- Netflix had a competent publicist… so she had to be fired: I suppose
when you go for and don’t get the top job at a big streamer, your days are likely numbered. Such was the case with Emily Feingold, the very good V.P. of communications for North America at Netflix, whose ouster this week after eight years at the company (and expertly fighting with me multiple times a week) has caused a level of outrage among industry P.R. people I’ve rarely seen. The new Netflix global communications boss, Dani Dudeck, who, ironically, made few
friends when she ran comms for MySpace in its Fox era before moving to Zynga and, most recently, Instacart, wants to hire her own team. And while my P.R. contributor known as the Spin Doctor had heard Feingold was taking the fall for Netflix’s failed bid for Warner Bros., which featured co-C.E.O. Ted Sarandos popping up at the White House and on Fox News to reach the Trump people, Netflix sources say that’s untrue. More simply, Bay Area–based Dudek is stocking the Netflix P.R.
pond with her people, albeit people with little entertainment experience. That L.A.-based hire is coming, I’m told.
- Box office over/under: Paramount/Miramax’s Scary Movie 6 might get stabbed by the Backrooms/Obsession phenomenon, but I’ll still take the over on $47 million domestic. Amazon’s $175 million Masters of the Universe is already underperforming overseas, so let’s take the under on $33 million.
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Now here’s Eriq Gardner’s exclusive chat with Paramount’s new antitrust defender…
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Jeffrey Kessler, the legendary antitrust and entertainment industry litigator, goes on the
record to explain why he’s defending the Paramount–Warner Bros. merger, how politics is impacting the opposition, and what it all means for CBS News and CNN. |
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Earlier this spring, Winston Taylor partner Jeffrey Kessler was the trust-busting hero of
the Live Nation monopolization trial. In that case, he argued successfully on behalf of 36 states and Washington D.C. that the concert promoter’s tie-up with Ticketmaster had harmed competition. But Kessler induced whiplash a couple weeks ago when he signed on for a different sort of high-profile assignment: defending the Paramount–Warner Bros. megamerger against many of the state attorneys general he had just repped, alongside any consumer actions attempting to block the
deal.
Kessler and his team have been active this week, filing a new motion today to knock down the first consumer-led suit—an early showcase presaging how these battles might play out in court. Kessler and his team could have confined their response to technical arguments on standing and market definition. Instead, they made a broader case: that the
WarnerMount merger is pro-competitive, and that blocking it would do more harm than good. A judge could hear arguments on the injunction as soon as July 2.
What can we expect? With declarations from Paramount studio executive Dana Goldberg, who describes plans to increase output (30 movies a year in theaters!), and Paramount chief
strategy officer Andrew Brandon-Gordon, who touts the deal’s synergies, the company seems to be speaking not only to U.S. District Judge Araceli Martínez-Olguín, who will soon decide whether to preserve the status quo. It is also addressing regulators around the country and abroad who may be weighing their own challenges.
To
better understand the strategy, I spoke with Kessler about everything from antitrust enforcement in the Trump era to CNN’s independence. We began with the obvious question: Why take the case? |
Eriq Gardner: You’ve spent your career on the plaintiff side of antitrust.
How did you end up defending a merger most people would expect you to be fighting?
Jeffrey Kessler: If you actually look at my career, I’ve spent a lot of time defending cases where I believed the antitrust claim wasn’t well-founded. The most influential antitrust case I ever worked on was Matsushita v. Zenith in the Supreme Court, where I defended
Panasonic and the Japanese television industry against an attack on lower, more efficient prices. We won five to four. The consistent theme across everything I do is that I work on cases where my client’s position is actually the pro-competitive one. Here, that’s the merger side.
But your recent work against Live Nation rested on concerns about concentration and gatekeeper power. So what’s the limiting principle that tells you that this transaction is pro-competitive rather than
the sort of consolidation you just argued against?
Great question. The claim against Live Nation was based on the fact that it had actual monopoly power. Now look at the streaming markets. Who is the monopolist? Is it Paramount and Warner Bros. Discovery, who are dwarfed by Netflix first, Prime Video second, and Disney third? No, [Paramount and WBD] are more akin to the competitors of Live Nation. My case for the states was trying to give SeatGeek a chance to get to scale to
compete against the dominant companies. This is exactly the same dynamic: two struggling players combining to mount a credible challenge to the giants. |
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In Live Nation, you successfully persuaded a jury to look past the company’s assurances and focus
instead on incentives and market structure. Here, via the declarations of Dana Goldberg and Andy Brandon-Gordon, Paramount is effectively asking the court to believe that the merger will lead to more films, more television, and more opportunities for creative talent. Isn’t that the same kind of forward-looking corporate promise that you once urged courts to treat skeptically?
The importance of those declarations isn’t that Dana Goldberg and Andy Gordon are promising to do things.
It’s that they lay out a business plan that only makes economic sense if the company makes the investments and grows the content. They are compelled to do this—not because they’re Boy Scouts, but because if they don’t grow content and scale through theatrical distribution first, the combined streaming services aren’t going to have a long-term prospect of success. You don’t have to trust them because they said so. You trust them because the economics compel it. |
The issue of whether this merger is pro-competitive or anti-competitive is a good debate. But what’s
on the table is whether there should be a preliminary injunction to block it. A judge recently temporarily enjoined the Nexstar-Tegna merger because once a merger closes, the eggs can’t be unscrambled. The Paramount–Warner Bros. plaintiffs argue something similar. Why isn’t irreversibility enough?
Because you have to actually demonstrate a likelihood that the merger will be anticompetitive—and you need evidence to do that, not just an allegation. Read the Nexstar-Tegna opinion:
The court was presented with a ton of evidence suggesting the plaintiffs could likely show anticompetitive effects. That’s what entitles you to an injunction. What we have here is five consumers filing a lawsuit with no evidence that this particular transaction will restrain competition. If that were enough, anyone could put a multibillion-dollar deal on hold because they don’t like it. That’s not the system we have, and for good reason.
I detect skepticism about private citizens
playing a role in merger enforcement, but as you know, there’s some concern these days about Trump-era federal enforcement. So maybe private plaintiffs should be playing a larger role?
I agree that if plaintiffs legitimately have standing, then it is fine. Like for example in Nexstar-Tegna, I don’t think there was any doubt that DirecTV was a company that had standing because they were directly affected. In such cases, in principle, I
don’t have an objection. It’s part of antitrust law. Now, that’s very different from these particular five consumers, who, frankly, we don’t think have demonstrated that they’re going to suffer any particular harm from this merger.
Can you offer any clarity about the expected timing of the closing of the WarnerMount merger?
Not specifically. I think the company has previously indicated it hopes to close this summer sometime, but it has to get through various
regulatory clearances, like the Department of Justice, although we’re optimistic they will sign off. It has to also get through the E.U.
Let me say one thing that’s addressed in the papers. If they don’t close by an agreed-upon date in September, then Paramount has to start paying a daily fee [estimated at $7 million]. It’s not insignificant, so there’s a lot of incentive that this closes by September. |
How much of the vocal opposition to this merger do you think is genuinely antitrust, and how much is
political?
There have been people who have expressed political objections to this merger—I think we’ve all heard them. Our view is that none of those are antitrust issues. The antitrust law is not designed to address political concerns, and those objections don’t become antitrust claims simply because someone files them in court. Some of this is politically motivated. I don’t think anyone would seriously disagree with that.
Does the atmosphere impact your case?
Take the stuff going on these past couple days with 60 Minutes? Are you paying attention to that—the firings and whatnot? Does it have any impact for you?
That issue has nothing to do with this merger. CBS owns 60 Minutes; Paramount owns CBS. Whether or not this deal closes, that situation is exactly the same. Any concerns about it are not antitrust concerns about this transaction, and they won’t be part of what I’m arguing
before the court.
Well, one of the markets implicated by this merger is news—with the combination of CBS and CNN. Is that an antitrust concern?
The market for news is clearly not limited to CNN and CBS. You have ABC News, NBC News, Fox News, MSNOW, Newsmax—and then you layer in social media, where everyone under a certain age is actually getting their national news. There is greater diversity of viewpoints in national news today than at any point in my career. The
idea that combining CBS News and CNN would represent a material concentration of news sources in this country doesn’t really pass the smell test.
What about editorial independence at CNN? Should that factor?
That’s a value people can hold. It’s not an antitrust issue. Antitrust focuses on whether concentration eliminates competition—not on social policy questions about editorial direction. What I can say is that the company has made a public commitment that CNN
will keep its editorial independence and that no changes to its operations are planned. Someone else will have to adjudicate those broader concerns. They’re outside the scope of what I’m here to litigate.
The plaintiffs also argue fewer studios means fewer buyers of creative labor. Why is that wrong?
What drives opportunities for talent is the number of films being made. Ask any actor or writer—what they care about is how many projects are out there to audition
for, to pitch to. This merger is going to lead to an increase in theatrical films made every year. Warner Bros. and Paramount will continue to operate separately, with different brands and different creative teams. If the plan were to eliminate one of the studios and produce half as many films as the two currently make combined, those concerns would be valid. The business plan here is the opposite.
Do you think we’ll see more lawsuits over the merger?
I hope not. I
don’t have a crystal ball. I know that the California A.G. [Rob Bonta] has said that he has an open mind, but that he has concerns. Hopefully, the rest of the legal team will be able to convince him that his concerns could be addressed, but we’ll find out.
Would you be involved in those state A.G. actions, or would you be conflicted out since you’re currently representing some of those states in the Live Nation case?
If cases are filed in court and
go to trial, that’s what I’ve been hired to do. I’m the trial lawyer. If there’s a trial, I’ll be at the trial. |
Thanks, Eriq. See you Monday,
Matt
Got a question, comment, complaint, or some black market
tickets to ‘The Odyssey’ in 70mm? Email me at Matt@puck.news or call/text me at 310-804-3198. |
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