Good morning. Andrew here. Breaking: Warner Bros. Discovery just published why it would stick with Netflix’s takeover bid over Paramount’s. It questioned Paramount’s offer, suggesting that it is backed by a revocable trust from Larry Ellison that has too much wiggle room for its comfort. Warner Bros. also said it wasn’t buying the Paramount argument that a Netflix deal carries a higher risk of being blocked by regulators, essentially rejecting speculation that Ellison’s relationship with President Trump would advantage that offer. We’ve got a lot more below. (Was this newsletter forwarded to you? Sign up here.)
An “illusory” offerWarner Bros. Discovery has just rejected Paramount’s $78 billion hostile takeover bid, calling it “inadequate” and “illusory” compared with the $72 billion deal it signed to sell many of its assets to Netflix. In its official notice, Warner Bros. Discovery rejected Paramount’s argument that the $40 billion in equity backing its bid was truly backstopped by Larry Ellison, the billionaire tech tycoon and father of its C.E.O., David Ellison. And Warner Bros. Discovery said that it didn’t believe Paramount’s offer was any more likely to clear regulatory review than Netflix’s, despite the Ellison family’s political maneuvering. “PSKY’s tender offer remains inferior to the Netflix merger,” the Warner Bros. Discovery board wrote to shareholders today, referring to Paramount’s stock ticker. Among its points:
Netflix quickly released its own letter to Warner Bros. Discovery shareholders defending its deal. (Among its points: The streaming giant said it would commit to “industry-standard windows” for Warner movies to be shown in theaters.) Concerns about the political advantages of the Paramount bid also stand out. “The board believes that each transaction is capable of obtaining the necessary U.S. and foreign regulatory approvals and that any difference between the respective regulatory risk levels is not material,” the Warner Bros. Discovery directors wrote. That hits at one of the strongest arguments Paramount has made about its offer — that it was more likely to receive antitrust clearance than Netflix, which dominates paid streaming. Paramount has also leaned on the political connections of its controlling Ellison family, which has reportedly been courting Trump administration officials. The fate of Warner Bros. Discovery is likely to rest in large part on President Trump, who has said he would be “involved in” government review of any takeover bid. Recent developments may have undercut some of Paramount’s political capital. Affinity Partners, the investment firm run by Jared Kushner, the Trump son-in-law, has backed out of Paramount’s consortium of backers. And Trump — whether to keep everyone on their toes or out of pique — has continued to criticize Paramount over programming by CBS shows like “60 Minutes,” suggesting that his mind isn’t made up yet. Yesterday, he wrote this on Truth Social: For those people that think I am close with the new owners of CBS, please understand that 60 Minutes has treated me far worse since the so-called “takeover,” than they have ever treated me before. If they are friends, I’d hate to see my enemies! What’s next: Paramount has suggested it was willing to raise its offer. The question is how much would be enough to win over Warner Bros. Discovery’s board and shareholders.
OpenAI may add to its team of rivals. The artificial intelligence giant is in talks to raise at least $10 billion from Amazon at a valuation above its current $500 billion level, according to The Information. A deal would help OpenAI pay the company’s growing bill for cloud computing, including for Amazon services; OpenAI would also use Amazon’s chips in its data services, further diversifying away from processors by Nvidia (itself an OpenAI investor). Reminder: Amazon has been a longtime backer of a competing A.I. start-up, Anthropic. Tesla shares hit a record despite mounting legal woes. The electric carmaker’s stock has been on an impressive rally, erasing losses from earlier in the year at a point when Elon Musk was criticized for his government work. Tesla shares are defying bad news, including a California regulatory agency warning that sales of its models could be suspended there for 30 days unless it changes what the regulator calls deceptive marketing of its assisted-driving programs. The Trump administration clashes with the E.U. over tech oversight. U.S. trade officials threatened to penalize European tech companies in retaliation for what they called “harassing lawsuits, taxes, fines and directives” by the bloc and some member states aimed at American companies. The warning comes as Washington and Brussels seek to finalize a trade framework, and as the administration grows increasingly frustrated with the E.U.’s tough scrutiny of Big Tech. How Trump’s Venezuela clash could rock ChinaPresident Trump’s order for a “complete blockade of all sanctioned oil tankers” going to and from Venezuela has jolted the oil market. Brent crude, the global benchmark, spiked this morning, a day after oil futures sank to nearly five-year lows. The action — and the likelihood of further seizures of tankers — may be rattling one player with a lot at stake in the region: China, Grady McGregor reports. Venezuela sells roughly 80 percent of its exported oil to China, forming an economic lifeline for President Nicolás Maduro’s government. “I think Beijing is worried,” Ryan Berg, director of the Americas Program at the Center for Strategic and International Studies, told DealBook. Trump has long prized Venezuela’s vast oil reserves and is intent on keeping countries like China and Russia from having access to them. Disrupting Venezuela’s exports will make China “less able to continue propping up” Maduro’s government, Berg said. China benefits from buying Venezuelan crude at a steep discount, and continues to invest significantly in Venezuela’s oil sector. But analysts say Beijing is not necessarily concerned about losing Venezuela as a trading partner. The Chinese are frustrated with Venezuela’s slow repayment of loans. Venezuelan oil makes up just around 4 percent of China’s total crude imports. And purchasing crude from the embattled nation comes with the added burden of needing to conceal shipments and route them through countries like Cuba to evade U.S. sanctions. Instead, Beijing’s denunciation of the seizures may signal a broader worry that the U.S. is targeting China’s expanding interests in Latin America. Strategic standoff: Trump may be easing off on tariffs and some export curbs directed at Beijing, but a new National Security Strategy prioritizes U.S. dominance in the Western Hemisphere and identifies China as a leading threat to American influence. China cares about three main economic issues in Latin and South America, Margaret Myers, who works on the Asia and Latin America Program at the Inter-American Dialogue, a research organization, told DealBook. They are soybeans (mostly via Brazil); minerals from the so-called Lithium Triangle of Argentina, Bolivia and Chile; and the creation of new markets for electric vehicles and other Chinese goods. For now, analysts say, Beijing is more likely to work behind the scenes to support Venezuela. “Maduro falling would take an important piece of the puzzle away for China’s influence in the Americas,” Berg said. “They’re not keen to see that happen.” How Epstein made his moneyThe answer to one of the big questions about Jeffrey Epstein — how did he amass the wealth and power that enabled his sex-trafficking operation? — appears to be simple, if improbable: a series of lucky breaks and an apparent willingness to scam his business and social connections. The disgraced financier’s big break appears to have come from Wall Street and Jimmy Cayne, who later ran Bear Stearns, a new Times investigation reveals. “That’s what really catapulted him,” recalled Michael Tennenbaum, a former Bear executive. (Tennenbaum called Epstein and Cayne “two sleazeballs.”) More from The Times’s report: Abundant conspiracy theories hold that Epstein worked for spy services or ran a lucrative blackmail operation, but we found a more prosaic explanation for how he built a fortune. A relentless scammer, he abused expense accounts, engineered inside deals and demonstrated a remarkable knack for separating seemingly sophisticated investors and businessmen from their money. He started small, testing his tactics and seeing what he could get away with. His early successes laid the foundation for more ambitious ploys down the road. Again and again, he proved willing to operate on the edge of criminality and burn bridges in his pursuit of wealth and power. Epstein’s associations with Les Wexner, the billionaire retail tycoon who ran The Limited and Victoria’s Secret, and the private equity mogul Leon Black would also help bring him into the orbit of more rich and powerful connections. Here are more takeaways from the investigation. “I said: ‘This is where we’re going to end up. So figure out how you can work into what he’s already thinking.’ Well, they couldn’t get there.”—Susie Wiles, the White House chief of staff, on what she said she told advisers to President Trump who were divided over his tariff rollout At one point, Wiles told Vanity Fair, that she tried to get Vice President JD Vance to help persuade Trump to pause the plan. The remarkably candid interview has also made waves for what Wiles said about Vance (“a conspiracy theorist”), Elon Musk (“an avowed ketamine” user) and Attorney General Pam Bondi (“completely whiffed” in handling the Jeffrey Epstein files). DEALBOOK QUIZ This question comes from a recent Times story. Click an answer to see if you’re right. (The link will be free.) President Trump has declared himself the first crypto president, and he has delivered on that claim. Trump has promoted crypto from the Oval Office, signed pro-crypto legislation and started his own memecoin. His embrace of the industry has helped to unleash a wave of boundary-pushing new ventures, raising concerns about risk. And under the Trump administration, the S.E.C. has eased off its crackdown on crypto. Under the Biden administration, the S.E.C. brought 105 crypto cases in four years. How many crypto cases has the S.E.C. brought since Trump took office in January? We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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