Look, I was going to write a detailed analysis of the Paramount + Warner Bros Discovery mega-merger and the investigation led by California's Attorney General, who's rallying a coalition of Democratic states to stick their noses into the deal.
I really was.
But Google and the folks at Deadline decided that you — and I — don't deserve to read the damn original article. Paywall, cookie wall, consent wall, infinite redirects. You click and land on a page that looks like the maze from "The Shining" — except instead of Jack Nicholson with an axe, there's an "Accept All" button waiting for you at the end.
Welcome to modern journalism, my friends.
What We Know (Despite The Circus)
From the headline and what was already circulating before this digital smokescreen, here's the story: the merger between Paramount Global and Warner Bros Discovery — two entertainment dinosaurs bleeding subscribers and relevance — is being scrutinized by a coalition of Democratic state attorneys general, led by California.
The phrase "Coalition of the Unwilling" in the original headline is a delicious nod to George W. Bush's "Coalition of the Willing" in the Iraq War. Except here the "willing" are willing to block, not invade.
And why does this matter if you're an investor?
The Regulatory Game Is The Real Deal
Anyone who's followed any mega-merger in the media sector knows: the deal is not the deal. The deal is the regulatory approval.
AT&T bought Time Warner in 2018 for $85 billion. The Department of Justice tried to block it. Lost in court. AT&T "won." And then what? Three years later, they spun the whole damn thing off and created Warner Bros Discovery in an operation that destroyed shareholder value like it was an episode of Breaking Bad — the Walter White of capital destruction.
Now David Zaslav at WBD and whoever's piloting Paramount (because it's a revolving door of CEOs over there) want to glue the pieces together and create... what, exactly? A super-studio that competes with Disney+, Netflix, Amazon, and Apple? With combined debt that probably exceeds $40 billion?
Nassim Taleb would call this "institutionalized fragility." Two fragile bodies don't create an antifragile body. They create a body that's more fragile and heavier.
Politics Enters The Ring
California's Attorney General isn't doing this out of love for consumers — let's be honest. There's a massive political component. Blue states love showing they're tough on big corporations, especially in the media sector, especially when the "market concentration" narrative plays well in the press.
But, damn, that doesn't mean they're wrong.
Concentration in the entertainment market affects everyone from the freelance screenwriter in Hollywood to the price of your streaming subscription. When two studios become one, the bargaining power with distributors, talent, and suppliers shifts radically. And it rarely shifts in the consumer's favor.
The problem is these state investigations are slow, politicized, and more often than not serve as bargaining chips rather than real protection. The attorney general sits at the table, puts on a tough face, negotiates some cosmetic "concessions," and green-lights the deal. Everyone gets their photo op. Nobody actually protects anybody.
What Investors Should Be Watching
If you have a position in PARA or WBD, pay attention to two things:
First: the regulatory timeline. Every state that joins the coalition is another layer of bureaucracy, another potential veto, more uncertainty. And the market hates uncertainty.
Second: the combined debt structure. When — and if — this deal closes, the resulting entity is going to be an interest-payment machine. In a high-rate environment, that's a death sentence.
Warren Buffett has a quote that fits here like a glove: "Only when the tide goes out do you discover who's been swimming naked."
The low-interest-rate tide has been gone for a long time now. And these two studios are in the shallows.
Do you really believe that putting two naked swimmers together solves the problem — or does it just create a more embarrassing scene?
