Another billionaire thinks he can fix Warner Bros.

Eli Patel interviews Peter Kafka about the newly closed Skydance acquisition of Warner Bros. Discovery, which is now being rebranded simply as Skydance—a move that eliminates two iconic Hollywood names. The conversation centers on whether David Ellison, son of Oracle CEO Larry Ellison, will succeed where others have failed, given the company's history of unsuccessful ownership transitions under AOL, AT&T, and Discovery.

Kafka emphasizes that the primary problem facing Skydance is not regulatory constraints but mathematical ones: the company is saddled with $80 billion in debt and lacks any articulated plan for revenue growth. Previous acquisition attempts by other companies all followed the same failed pattern: taking iconic Warner content, combining it with new distribution, cutting costs, and hoping to reduce debt—but offering no path to growth. Ellison's advantage is seemingly unlimited financial backing from his father's Oracle wealth, but this doesn't solve the fundamental business model problem.

The conversation explores the regulatory settlement with California and other states, which Kafka argues represents a complete cave-in by California Attorney General Rob Bonta. Rather than structural remedies, the settlement merely codified pledges Ellison was already making—including the commitment to produce 30 films annually (rising to 32). Kafka questions whether the market can support this volume of theatrical releases, especially when the primary goal is debt reduction.

Enon Kreese, the new co-CEO (though David Ellison remains CEO), emerges as the key operational figure. Kreese is characterized as a cost-cutter and consolidator, brought in specifically to find $6 billion in synergies—his primary credential being his success at Mattel, where he orchestrated the Barbie film deal and cut 22% of the workforce. The structural arrangement, where Kreese has operational responsibility while Ellison maintains ownership, allows Ellison to distance himself from unpopular decisions.

A critical tension emerges around Oracle's simultaneous bet on OpenAI and AI technology. Kafka argues that if OpenAI succeeds at the scale necessary to keep the Ellison family wealthy, it could render traditional media libraries worthless by making it trivially cheap and easy to generate any content. This creates a fundamental conflict: the value of Skydance's existence depends on intellectual property scarcity, while the Ellisons are investing in technology that could eliminate that scarcity.

The discussion extends to social media's role in destroying traditional media economics. Kafka notes that the real threat to media companies isn't the news industry's mistakes but rather influencers on social platforms who undermine trust by consistently claiming 'here's what they're not telling you.' He identifies AI and social media as the two biggest structural threats to the businesses Ellison now owns.

Regarding Barry Weiss and CBS News, Kafka argues that while her stewardship has been controversial, the systemic decline is not uniquely her fault. The one ideological through-line for the Ellison family is support for Israel, which may explain their retention of Weiss despite poor ratings and public trust metrics.

The conversation touches on Netflix's failed bid for Warner Bros., which lasted several months before withdrawing in February 2024 due to Wall Street pressure. Rather than a master plan, Kafka characterizes this as Netflix genuinely wanting the deal, being blocked by public market dynamics, and subsequently moving on—though Ted Sarandos appears publicly upset about the loss.

Kafka concludes that no clear path forward has been articulated for how Skydance will generate sufficient revenue to service its debt, making the entire enterprise dependent on either successful cost-cutting, beneficial market conditions, or the emergence of a new business model. The first press conference with Enon Kreese might provide clarity, but Kafka remains skeptical.