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The Ellison family will have plenty to talk about when they convene for Thanksgiving this week (assuming they do!). The price of Oracle has plummeted in the past six weeks, for one thing, reflecting AI bubble jitters centering on Oracle. In the same period of time, Larry Ellison and his son David have been—by all accounts—busy plotting the roughly $90 billion takeover of Warner Bros. Discovery. Their interest—conveyed through the company they now control, Paramount Skydance—sparked a bidding war that is now coming to a head. Bids were reportedly due last Thursday, with both Netflix and Comcast said to be in the mix, which means we could see some developments this week.
Could the Ellisons’ eagerness to buy WBD be affected by the diminishing value of Larry Ellison’s 41% stake in Oracle? It’s not crazy to imagine that at the very least, the Ellisons may be less willing to overpay than they might have been. A recent securities filing showed that as of mid-September, Ellison had pledged about 30% of his Oracle stake—or 346 million shares, worth about $69 billion currently—as collateral for personal loans taken out “to fund outside personal business ventures.” That’s up from the 277 million shares he had pledged a year earlier. As Ellison backed his son‘s purchase of Paramount this past summer, he may well have done so by borrowing against his Oracle shares. Even if he didn’t, the loans suggest Ellison would be sensitive to swings in Oracle’s stock price. And it certainly has been volatile.
You might recall that word of the Ellison family’s interest in WBD emerged a day or so after Oracle shares had rocketed 36% to as high as $327 in the wake of the company’s disclosure that its cloud unit had signed hundreds of billions of dollars’ worth of business extending over the next few years, mostly with OpenAI. That translated to an increase in the value of Ellison’s stake of about $100 billion, enough to pay for WBD. But Oracle shares have fallen 39% from the high to just below $200 on Friday—costing Ellison about $149 billion.
Now, there’s no guarantee the Ellisons’ Paramount will win the bidding for WBD. It’s a good bet WBD CEO David Zaslav would prefer not to sell to Paramount, which wants the whole company. After all, most public company CEOs don’t want to give up their job. Selling part of WBD to Netflix or Comcast, or sticking with previously announced plans to split WBD’s studio and streaming operations from its slowly shrinking TV channel business, would likely keep Zaslav employed. But the WBD board has to consider the interests of all shareholders, which means a sale of the entire company to Paramount can’t be ruled out. It also could make a difference to the board that the Ellisons—thanks to Larry’s closeness to President Donald Trump—will have the edge when it comes to getting regulatory approval for any deal.
No one could blame either father or son if they chose to pull back a little. After all, few other companies would buy all of WBD for the simple reason that half of the business is slowly evaporating. The risk that the Ellisons will be taking on in buying it, so shortly after acquiring Paramount, is not insignificant. It doesn’t help that Oracle is taking on enormous risk with the cloud expansion. At some point, maybe Larry Ellison will stop to wonder what on earth he’s doing.
This Week’s Earnings
Few companies are brave (or silly) enough to report earnings during Thanksgiving week. One of the few is Zoom Communications, whose Covid-era rocketship growth fell to earth a long time ago. Zoom is due to report on Monday. Analysts are expecting revenue of $1.213 billion, 3% higher than a year ago, according to S&P Global Market Intelligence. That’s in line with Zoom’s recent quarterly growth rate.
It’s quite a comedown from the 300%+ growth Zoom reported in the 2020-21 era. Talk about cramming a lifetime’s growth into one year!
In Other News
CrowdStrike and Salesforce both said this week they are investigating incidents where hackers attempted to steal internal data, and a hacking group known as Scattered Lapsus$ Hunters has publicly claimed responsibility for both breaches.
The White House is pausing plans for an executive order over state AI regulation while it waits to see if Republicans can get a provision included in the National Defense Authorization Act to block state AI regulation.
Strategy, Michael Saylor’s bitcoin-holding firm, fell 3.7% Friday amid investor concerns that the stock could get excluded from MSCI indexes. Bitcoin fell 2% and is on track for its worst monthly performance since June 2022. Strategy is down 62% from its peak in July this year while bitcoin has fallen 32% from its high in October.
Waymo cars will soon be able to run in all of the Bay Area, Sacramento and much of southern Calfornia following a new approval by the state DMV.
Friday on The Information’s TITV
Check out our latest episode of TITV in which we have a discussion about which of the big five frontier AI model companies have a sustainable advantage.
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