Paramount Merger Pause, Meta AI Optimism, and the Peptide Boom

Pivot

The episode explores the stalled Paramount-Skydance merger amid legal challenges, with Scott Galloway and Kara Swisher dissecting its economic and political implications. They analyze Meta's AI optimism campaign as cynic

Key takeaways

• Paramount paused its $23B merger with Skydance due to a federal court’s temporary restraining order, delaying closure until at least June 1, 2027

Transcript preview

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Terms apply. of companies are investing in AI, but most only have a small group actually using it, and an even smaller group who are really seeing the value. Superhuman fixes that. From the makers of Grammarly, Superhuman AI lives in every tool your team already uses, for instance, help with drafts, summaries, and more. So habits and proficiency form naturally. When every person on your team works at their best, that's when your AI investment starts to compound. See what Superhuman can do at superhuman.com. I like it when baller women have like a trophy husband. I think that's, we've been doing that shit forever. Why should you be the only one with a trophy husband? Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher. And I'm Scott Galloway. Where are you, Scott? Los Angeles. I'm still in Los Angeles where it is 70 degrees and spectacular here. I turn the camera around. I'd love you to see the Hollywood Hills here, but it's fantastic. Yeah, actually, it's nice here in New York, I have to tell you. It's a lovely. Yeah, I heard it was great. Really beautiful weather. I did a lot of stuff here in New York. Tell me about it. I went to see Jellicle Ball Cats, the first time I've ever liked cats in my life, which I do not like cats. Jellicle Ball Cats? Yes, they set it at a drag show, essentially, and now it works. Cats now works perfectly. Wasn't it always a drag show? No, it was like a bunch of people wandering around being cat-like, you know, with makeup, a lot of makeup situation. They were playing cats. They were actually playing cats. But in this case, it was a drag show, and it makes total sense. And you're like, ah, I see. Yes. It's like, you know, vogueing and doing all the stuff you've seen in the films and stuff like that in the documentaries. It was wonderful. And it was beautiful. It was joyful. The crowd was packed. Now, this show is closing because of the high costs of Broadway. But I have to tell you, it was absolutely packed and absolutely people. It was such a joyful experience. It was just a lot of fun. Nice. And what else? It can't be it. No, I went and visited an ex-president and an ex-secretary of state at their home this weekend. Oh, you're so coy because you're so important. I'm not important. I just am visiting. Yes, I can't mention who it is. I'm I'm curious and I never name drop. I can't say why. I only keep people anonymous when it's obvious who they are and it's the ultimate name drop. No, I went and visited Hillary Clinton and Bill Clinton at their home, but I was visiting Hillary on something helping her with. Let me guess. Does it remind with podcasts? I don't know. We'll see. I don't know. Can I give you and her some advice? Yeah, please do. She should pick the half dozen or a dozen or three to six podcasts that she really enjoys that a little bit unexpected and be a regular guest. She shouldn't do her own podcast. Oh, well, too bad. Why is that? Why is that Mr. 500 podcasts and won't stop making them? Well, yeah, but Scott Galloway needs the relevance and the money. She doesn't. Secretary Clinton, first off, at this point in her life, and I'm projecting, I don't know if this is true. I think she should be just doing whatever the fuck. she wants and enjoying herself. And the thing as you know, maybe this is what the fuck she wants. But go ahead. Yeah, maybe. I think she would have more flexibility, more relevance, and be less of a, I mean, there's just a lot of downside risk to her starting her own podcast with her name on it, quite frankly. And I think she can have her cake and eat it too and have as much relevance and impact by being a guest on various podcasts. But that's just my view. I think she's going to regret it if she starts it. Not that I know her, but I think a year and a half in, like, you know what this is like. I mean, you're a work. So is she. She's a hard worker. Yeah. Are you kidding? That woman is like, that woman could like instantly tell you like a very detailed intrepulcate explanation of almost any world event. And domestic. She's really quite a brilliant person. Agreed. Agreed. I think it's just the format and the cadence of which she wants to demonstrate that excellence. I hope she does something. I just think she should be appearing on yours and some other people. Yeah, yeah, well, we'll see. I think she still has a lot to say, and actually people have not met her yet in a way that I know her and others do. And so, you know, a lot of people, a lot of people still have a lot to say. And she's incredible shape and so sharp. She looks great. And she's very vibrant. Very vibrant. And so we'll see how it goes. You know, it's interesting because YouTube just signed Becky Kennedy's doctor, very popular on social for a show. There's whole renaissance of things happening now again in terms of sort of reformulating television and everything else that I think is really interesting at this moment. I think we were very early to it and have done a very nice job figuring out. Pioneers, we're trailblazers. We're trailblazers. We're made it to California. We're the innovators in our seventh decade. It finally happened. No, but that's what I mean. I think it's just a really interesting time for substantive voices. I think post-Trump, there's a real market for smarts, experts, smarts. scientists, things like that. Well, I mean, if there's any one thing, it's that these institutions and this middleware is going away. Yeah. And great talent bubbles through. I mean, that's the most positive thing. I think you can say about these platforms and social media is that people no longer need to give money to the DNC. They just give money to John Ossoff. Right. Exactly. Yeah. And people don't need to go kiss the ass of some executive on the 45th floor, the Rockefeller Center, to try and get on MS now. They can just go live on substack. Yeah, it's an exciting time. It's an exciting time. It is an exciting time, especially with the reinvention of that iconic piece of culture, cats. Jesus Christ, talk about something I'm definitely not going to see. I'm telling you, I did not want to see cats, and it's amazing. Everyone who doesn't like cats loves this, and I'm telling you, it was joyful. I don't like anything cultural, though. Do you're not, come on. That's not true. That is not true. The Odyssey will be the most cultural. thing I've done in years. The Odyssey in the World Cup. That's it. Yeah. My funniest one for The Odyssey, there's this continuing discussion of it and what it means and everything else and all these sort of knock-on effects. And when it says it's a movie about a man who finally faces consequences, which I was funny. Anyway, there's a lot of really interesting discussion. I love all the discussion around the Odyssey. It's all interesting in different ways. And people are having a good time talking about mythology. They're having good time talking about literature, about the movie making, itself, some of the stuff he did, around the themes, around the arguments about the themes. I just love it. I love the whole thing. People are... Yeah, I'm going to see it. I'm going to see it on Thursday with my son. I'm excited for what you think. I can't wait. Yeah, I'm excited to see it too. Yeah, because you're not part of the cultural conversation, if you haven't seen. Anyway, it's sold out here in New York at the IMAX until late August at this point, which is really interesting. Anyway, I highly recommend it. I was either going to go see the Odyssey or I was going to go see Phantom of the opera performed by, I'm trying to think of a politically correct term for someone who's incredibly woke. I can't go there. Anyways. All right. In any case, I'm having a great time in New York. New York is very exciting. I have lots of fun things to do this week. Anyway, we've got a lot to get to today. Speaking of Hollywood, Paramount Skydance is pausing in Warner Brothers Discovery merger until legal challenges are resolved or until June 1st, 2027. That's like a long time from now, folks, whichever happens first. The decision comes after a federal court granted a temporary restraining order, preventing the merger from closing for at least 28 days. Paramount is calling the pause a significant win, which is not, saying it provides a direct path to a trial based on evidence, but investors do not agree. Neither does Caroswisher. Paramount shares hit a 52-week low on the news. The delay could get costly. $650 million per quarter ticking fee begins in October, and if the deal falls apart entirely, Paramut would owe $7 billion breakup fee. By the way, Paramount just brought on Beth Wilkinson, someone I know pretty well as its lead attorney, very good attorney. She successfully defended Microsoft's Activision Acquisition. She's also representing Next Star in its antitrust case, Beth. The company you keep. She's going to win. She'll win. Well, we'll see. We'll see. What's winning at this point, at this point? So talk a little bit about what you think. I have thoughts on it, but I'd love to hear yours first. Well, I don't think they have a legal. to stand on. What they have is delay. And delay costs shareholders, employees. It's effective, and they'll probably extract a pound of flesh because in order to win the deal, one of the things that Paramount Skydance offered in the purchase agreement was a ticking fee of $650 million per quarter while this deal sits in limbo. That's roughly $7 million per weight. So these Democratic AGs who are probably sick of a Republican weaponized DOJ, I've said, fine, what's good for the goose is good for the gander. And they'll probably be able to extract something, whether it's guarantees of certain shooting within their state or spinning a certain thing. They're going to, and, you know, no one, all of a sudden, less than no one is going to know who the California AG is going to be, right? They'll start getting a lot of time on MS now. So this is political. They'll get some awareness. They might get a pound of flesh. But I think ultimately Beth will show, will bring up a bunch of expert witnesses in the form of economists who will say emerged Warner Brothers Skydance is 8% or 6% of all viewing time versus Netflix at 9 and YouTube at 13. The market has already voted. Paramount, as you referenced, hit a 52-week low after celebrating what management called a legal win. This was such a Trump thing, trying to pretend this is anything but bad news. And investors understand something executives often don't, and that is winning in court can still mean losing economically. So, So, again, the real competitor here isn't Skydance or Warner Brothers. It's YouTube, Netflix, TikTok, and increasingly probably AI-generated entertainment. And as usual, legacy media is fighting yesterday's war while tomorrow's competitors are scaling. But this is, again, this seeds economic value and advantage from the legacy players to the new guys who aren't caught up in court right now. And YouTube can just scale. Yeah, that's absolutely true. I don't think she's going to win at all, actually. Really? Yes, they don't. And I look at right now the price of Warner's shares, $25. The delta between the 31 and 25, as Bill Cohen actually pointed out, is quite high. It's supposed to be about 4%. It's a lot. That's a lot. Investors have decided this deal isn't happening. That's what I think is exactly. Well, they want a premium. So what you're referring to is merger arbitrage. There's a whole class of investors who, when a deal is announced at, say, I think this is announced at 31 bucks a share, whatever it is, if it's trading at 25, what is that? That's about a 22 or 23% premium. They don't think the deal is happening. That's right. But what merger ARB guys do is they say, okay, I think it's going to close. I buy the stock now. When it closes, I got my 31. And it's hard to find 20 or 2 or 23% return. But what you're saying is, to your point, the market is saying there's now approximately, if I'm doing my math correctly, a one in four chance this deal doesn't happen. That's correct. And what would be interesting is what happens to the stock if it doesn't. It wasn't close. Collapse. Here's what I think. This is what I think. All right, let me go. This is someone sent me a very interesting legal document, which I thought was great. They chose financial hemorrhage over legal precedent. This tells you everything about how they assess their chances on August 3rd. They were going to lose on the preliminary injunction. They were absolutely going to lose on that. And that would have devastated the stock, devastated the stock. And you couldn't overturn it on appeal. This is something called abuse of discretion. standard. And the merger would have been over if they lost on August 3rd. So they're push, this, this lawyer they had, a guy named Kessler in hiring Beth. It's a great hire. She's great. She's terrific. I don't really care how terrific she is. This is, they have, I think they have decided. Let me read you this. Paramount Blank. They looked at August 3rd hearing, two PI motions, two markets, A-list writer declarations, a judge who already tipped her hand, and decided that no ruling was better than another bad ruling. That's a rational litigation decision and a catastrophic business signal. Peace Guy isn't just scared. They've entered a survival mode and they're trying to control the bleeding. The question is whether the patient can survive long enough to reach the operating room. And as you said, other competitors are scaling, including all these tech competitors and also Disney and others. They have all kinds of freedom to do things. They have this ticking fee that's very expensive. And at some point, the savings that they were going to recognize in this deal are going to disappear, right, that they were going to do through the coordination. And so Oracle stock is way off. This is what's paying for part of this. This is delay. You don't have to win at litigation here. You have to delay the litigation. And Beth can push for, and she's going to try to do this in court, a shorter time span in between, you know, what's happening here. But she, she, it's frozen. It's really pretty much frozen. So she can say, let's try a scheduling. It's on July 31st. want to get it this fall, it's not going to happen this fall. And the judge is going to set this schedule, and this judge doesn't seem in any rush. Now they've also forgone the appeal into the Ninth Circuit. That's going to take until the trial's over. So you know the California and the group is going to appeal if they lose. It just keeps dragging and dragging on. And so I don't see how they get this out the door, unless they have a settlement. And so another another document I got, which was really interesting, and they said these are the most likely ones. One, states win at trial, permanent injunction merger blocks, Skydance Walks, Paramount restructures, or finds a new buyer's settlement, possible. Paramount offers structural remedies, divest the studio, sell cable networks, states accept or reject. Deal collapses economically, also possible. Ticking fees exceed value of Warner Brothers or Skydance invokes termination, clause, merger dies without a verdict. And then if Paramount wins at trial, merger closes after more than $1 billion in ticking views and severe reputational damage near certain appeal by states. I just don't. I got to say, I don't know. She's a talented lady, but this is not, time is not on the side of Paramount here in that regard. So again, as I often do here, I'm just sort of flying on instruments and thinking out loud, but I wonder if the fulcrum here, so economically, if this goes on long enough, it will close because... It will close, the deal. If it goes on long enough, but, and there's a big butt here, the data, the only way this legally doesn't close when they chase it all down, and they've had a chance to actually evaluate it is to prove it's a monopoly. And I don't, I think they're going to have a very difficult time. The AG is proving that because essentially a combined, the combined Warner Brothers and Paramount would represent about 12% of total US TV watch time, and YouTube currently stands at 13. And in terms of box office sales, a combined Paramount and Warner Brothers represent roughly 25% of the domestic box office. Now, having said that, if the fees, if this becomes economically untenable because of delay and ticking fees, they might just say throw up their arms and blame Democrats. And by the way, this is political. All 12AGs filing cases are Democrats here. The judge decided this was a Biden appointee. But what's good, again, what's good for the goose? But the Trump administration waved it through when lawyers of the Justice Department didn't want to. What's good for the goose is