Warner Bros. Discovery reported a $148 million loss in the third quarter, hitting a sour note as the company began fielding interest from would-be buyers as Hollywood braces for a transforming deal.
Earnings for the entertainment company that includes HBO, CNN and the Warner Bros. film and TV studios fell short of analyst expectations. A year ago, the company reported profit of $135 million for the third quarter.
Revenue of $9.05 billion declined 6% from the year-ago period. The company swung to a loss of 6 cents a share, compared to last year’s earnings of 5 cents a share.
Still, Chief Executive David Zaslav spent much of Thursday’s call with analysts touting his company’s underlying strengths — while avoided giving details about the company’s sale.
“It’s fair to say that we have an active process underway,” Zaslav said.
Warner Bros. Discovery on Thursday reiterated it is forging ahead with previously announced plans to split into two separate entities by next spring. However, the Warner board acknowledged last month that it was also entertaining offers for the entire company — or its parts — after David Ellison’s Paramount expressed its interest with formal bids.
Paramount has made three offers, including a $58 billion in cash and stock for all of Warner Bros. Discovery. That bid would pay Warner stockholders $23.50 a share.
The Ellison family appears determined to win one of Hollywood’s most storied entertainment companies to pair with Paramount, which the Ellisons and RedBird Capital Partners acquired in August.
But Warner Bros. Discovery’s board, including Zaslav, voted unanimously to reject Paramount’s offers and instead opened the auction to other bidders, which is expected to lead to the firm changing hands for the third time in a decade.
Board members are betting the company, which has shown flickers of a turnaround, is worth more than the offers on the table. Despite its rocky third-quarter results, Warner’s stock held its ground in early morning trading at around $22.60 a share.
“Overall we are very bullish,” Zaslav said of the company’s business prospects.
“When you look at our films like ‘Superman,’ ‘Weapons’ and ‘One Battle After Another,’ the global reach of HBO Max and the diversity of our network’s offerings, we’ve managed to bring the best, most treasured traditions of Warner Bros. forward into a new era of entertainment and [a] new media landscape,” he said.
But the company’s results underscored its business challenges.
The studio witnessed a major decline in advertising revenue in the third quarter, reporting $1.41 billion, down 16% from the previous year, which executives attributed to declines in the audience for its domestic linear channels, including CNN, TNT and TLC.
Distribution revenue also took a hit, as the company reported sales of $4.7 billion, a decrease of 4% compared to last year.
Studio revenue increased 24% to $3.3 billion, powered by the success of DC Studios’ “Superman,” horror flick “Weapons” and the latest installment of “The Conjuring.” But even those box office wins couldn’t totally offset shortfalls in other areas of its content business.
Last year, the company was able to sub-license its rights to broadcast the Olympics in Europe, which pushed content revenue to $2.72 billion. But this year, revenue was down 3% to $2.65 billion.
Burbank-based Warner Bros. has had a string of success in theaters, with nine films opening at the top spot globally at the box office. The studio recently surpassed $4 billion in worldwide box office revenue, making it the first studio to do so this year. Warner Bros. last achieved that milestone in 2019.
Zaslav would like to continue with Warner’s break-up plans, which were announced last June.
The move would allow him to stay on to manage a smaller Hollywood-focused entity made up of the Warner Bros. studios, HBO, streaming service HBO Max and the company’s vast library, which includes Harry Potter movies and award-winning television shows such as “The Pitt.”
The company’s large portfolio of cable channels, including HGTV, Food Network and Cartoon Network, would become Discovery Global and operate independently.
Beyond Paramount, Philadelphia-based Comcast, Netflix and Amazon have expressed interest in considering buying parts of the company.
The company said its third quarter loss of $148 million was the result of a $1.3 billion expense, including restructuring costs.
NBCUniversal owner Comcast is indeed interested in some of Warner Bros. Discovery’s assets.
On a Thursday call with analysts to discuss third-quarter earnings, Comcast President Mike Cavanagh suggested the Philadelphia giant might bid for certain Warner assets, primarily the Warner Bros. film and television studios and its streaming service HBO Max.
Comcast isn’t looking to acquire the entire company or Warner’s large portfolio of cable channels that include CNN, TBS and Food Network. Instead, Cavanagh suggested that Comcast’s interest would be more narrow.
He noted that NBCUniversal and Warner Bros. have compatible businesses. Comcast wants to grow its studios business and its struggling streaming service, Peacock, which lost $217 million during the quarter.
“You should expect us to look at things that are trading in our space … It’s our job to try to figure out if there are ways to add value,” Cavanagh told analysts.
But he added a note of caution, saying the company didn’t feel that a merger was “necessary.”
“The bar is very high for us to pursue any [merger] transactions,” he said.
The Warner Bros. Discovery auction comes amid deep turmoil in the industry. Traditional entertainment companies, including Warner and NBCUniversal, have long relied heavily on cable programming fees to boost profit but consumers have been scaling back on pay-TV subscriptions amid the move to streaming.
To address that challenge, Comcast is spinning off its cable channels, including CNBC, MSNBC, USA and Golf Channel, into a separately traded company called Versant. That process is expected to be complete this year.
As part of the transition, the liberal-leaning MSNBC is changing its name to MS Now and dropping the peacock from its network logo, reflecting its pending exit from NBC, which will remain part of Comcast.
Cavanagh suggested that Comcast would not double down in a declining cable channel business that it was already exiting.
But Warner has other compelling businesses, including HBO and its Warner Bros. film and television studio. The Warner Bros. studio has released a string of movie blockbusters this year, including “Superman” and “A Minecraft Movie.”
Warner and NBCUniversal are investing in their respective streaming services but both lag Netflix, YouTube and Walt Disney Co. in terms of subscribers and engagement. Peacock has 41 million subscribers; the service has lost billions of dollars since Comcast launched it five years ago.
To shore up Peacock and the NBC broadcast network, Comcast has doubled down on sports, including striking a $27-billion, 10-year deal for NBA basketball, a contract that kicked in this month with the new season. (Nielsen ratings for the inaugural NBA game on NBC last week were strong — nearly 5 million viewers).
Most analysts believe that Ellison’s Paramount is in the best position to win Warner Bros. Discovery. They point to the Ellison family’s determination, wealth and political connections. Tech titan Larry Ellison, who is backing his son’s bid, is the second-richest man in the world behind Elon Musk, and President Trump views the elder Ellison as a good friend.
In contrast, Trump has displayed a dim view of Comcast Chairman and Chief Executive Brian Roberts, in large part, because of Comcast’s ownership of MSNBC, which Trump has accused of being an arm of the Democratic National Committee.
The tension has led observers to conclude that Comcast would face a stormy regulatory review process with Trump overseeing the Department of Justice, which would likely perform an anti-trust review of any major transaction for Warner Bros. Discovery.
Concerns about Comcast’s ability to get deals through the Trump administration may be overblown, Cavanagh said.
“I think more things are viable than maybe some of the public commentary [suggests],” Cavanagh said.
Paramount Chairman David Ellison’s latest offer to buy Warner Bros. Discovery contained a twist:
Should Paramount, backed by tech billionaire Larry Ellison, pull off the purchase, Warner Bros. Discovery Chief Executive David Zaslav could stay on to help lead the combined enterprise.
“They’re sweetening the pot,” Paul Hardart, a professor at New York University’s Stern School of Business, said of the Ellison family. “It just shows all the little arrows in their quiver they’re using to try to push this deal.”
David Ellison’ unexpected olive branch to Zaslav was contained in a letter this month to Warner Bros. Discovery’s board that offered $58 billion in cash and stock for the entire company. The move underscores the family’s determination to win the entertainment company that includes HBO, CNN and Warner Bros. film and television studios — and an obstacle in their path.
After hustling for decades to get to the big stage, Zaslav, 65, isn’t ready to relinquish the reins. He’s eager to prove critics wrong and complete a turnaround after three painful years of setbacks and cost cuts to reduce the company’s mountain of debt.
Warner Bros. Discovery board members, including Zaslav, have unanimously voted to reject Paramount’s three bids, viewing them as too low and not in the best interest of shareholders, according to two people close to the company who were not authorized to comment.
The board supports Zaslav’s desire to forge ahead with a planned split of the company next spring. But it also has opened the auction to other potential suitors, which is expected to lead to the firm changing hands for the third time in a decade.
Representatives of Zaslav, Warner Bros. Discovery and Paramount declined to comment.
David Ellison’s audacious offer is being guaranteed by his father, Larry Ellison, the world’s second richest man with a net worth that exceeds $340 billion. The Ellisons’ proposal includes paying 80% cash to Warner shareholders and the rest in stock, according to two people familiar with the matter who weren’t authorized to comment. The most recent offer was $23.50 a share.
The Ellisons began their campaign last month, just weeks after David Ellison’s Skydance Media, along with RedBird Capital Partners, picked up the keys to Paramount, which includes CBS, MTV, Nickelodeon and the Melrose Avenue film studio, which has been depleted by decades of underinvestment.
The proposed addition of the more vibrant Warner Bros. would give the Ellisons an unparalleled entertainment portfolio with DC Comics including Superman, “Top Gun,” Scooby-Doo, Harry Potter, “The Matrix” and “The Gilded Age.”
The family would control streaming services HBO Max and Paramount+, nearly three dozen cable channels, including HGTV, Food Network and TBS, and two legacy news operations — CNN and CBS News.
It would also accelerate the trend of uber billionaires, including Amazon’s Jeff Bezos and SpaceX’s Elon Musk, of owning prominent news, entertainment and social media platforms. Larry Ellison also is part of a U.S.-based consortium lined up by President Trump to buy TikTok from its Chinese owners.
“If a trade deal with China is imminent, and TikTok would be aligned, then it would create a new media colossus, the likes of which we haven’t seen,” said veteran executive Jonathan Miller, chief executive of the investment firm Integrated Media Co.
Paramount is in talks to merge with Warner Bros. Discovery.
(Al Seib / Los Angeles Times; Dania Maxwell / Los Angeles Times)
The drama is unfolding as Paramount on Wednesday slashed 1,000 workers in the first round of cuts since Ellison took over. A second wave of layoffs — affecting another 1,000 workers — is expected in the coming weeks, helping fulfill a promise made to Wall Street by Ellison and Redbird to reduce expenses by more than $2 billion.
Combining with Warner Bros. would bring more layoffs, analysts said, and a potential hollowing out of a historic studio.
“Merger after merger in the media industry has harmed workers, diminished competition and free speech, and wasted hundreds of billions of dollars better invested in organic growth,” the Writers Guild of America West, said last week in a statement in opposition to the proposed unification. “Combining Warner Bros. with Paramount or another major studio or streamer would be a disaster for writers, for consumers, and for competition.”
Critics point to a long list of media merger misfires, including the disastrous AOL Time Warner merger a quarter century ago. Some critics contend Walt Disney Co.’s $71-billion purchase of much of Rupert Murdoch’s entertainment holdings didn’t live up to expectations, and AT&T whiffed its $85-billion deal for Time Warner, handing it to Zaslav’s Discovery four years later for $43 billion.
The New York native, a descendant of Jewish immigrants from Poland and Ukraine, had spent 16 years running the Discovery cable channel group, a respectable business, but one that lacked Hollywood flash.
Zaslav grew up on the fringe of New York City, in Ramapo, N.Y., where he’d been a promising tennis player who proudly wore his athletic gear to middle school. Tennis was his identity — until he started getting beat by players he used to whip.
Zaslav’s coach sat him down, bluntly saying he wasn’t putting in the work.
“I vowed that day I would never be outworked again,” Zaslav said during a 2023 commencement address to Boston University graduates. Underlings have long marveled at his indefatigable work ethic.
The speech was meant to be his triumphant return to his alma mater. Zaslav had finally made it to Hollywood, where he was now holding court in an exquisite corner office that had belonged to studio founder Jack Warner.
Zaslav had big plans to turn around Warner Bros. But, in Boston, he suffered a beatdown.
The Writers Guild of America had just gone on strike against his and other Hollywood studios. Protesters heckled Zaslav. Students booed. A plane flew overhead, waving a banner that read: “David Zaslav Pay Your Writers.”
He had assumed control a year earlier, in April 2022, just as Wall Street soured on media companies that were spending wildly to build streaming services to compete with Netflix.
Zaslav inherited a venture bleeding billions of dollars to get into streaming. The merger itself saddled the company with $55 billion of debt. Warner’s stock plummeted.
He and his team spent the first few years slashing divisions, canceling TV programs and contracts, and shelving movies. To further reduce expenses, the company laid off thousands of workers. Hollywood soon viewed Zaslav with derision.
It didn’t help that Zaslav has long been one of the most handsomely compensated executives in America.
There were high-profile stumbles, including jettisoning staff of the tiny Turner Classic Movies channel and an ill-conceived rebrand of its streamer to “Max” before changing the name back to HBO Max.
“The Warner Bros. Discovery merger was a well-intended failure,” Hardart said. “The cable subscriber base shrank at a faster rate than most people had forecast. … Thousands have lost their jobs, the HBO brand has been reimagined and reimagined, films have been mothballed and the future of the Warner Bros. studio is today uncertain.”
Warner Bros. Discovery paid down $20 billion in debt, but $35 billion remains. The debt load has nearly suffocated the company, making it a vulnerable target.
“There was a lot of fixing that David Zaslav and his team had to do,” Bank of America media analyst Jessica Reif Ehrlich said in a recent interview. “It’s been three years of incredibly heavy lifting — but that’s pretty much done now.”
In a note to investors last week, Ehrlich wrote Warner’s strong franchises, including DC Comics, and its voluminous library make it “an extremely attractive potential acquisition target,” one that could fetch $30 a share. Her firm carries a “buy” rating on the stock.
Warner Bros. Discovery Chief Executive David Zaslav and AT&T Chief Executive John Stankey shake hands on May 17, 2021, in New York City.
(Preston Bradford / Discovery)
Last summer, Zaslav announced plans to split the company in two halves.
Zaslav would run Warner Bros., which would consist of the Burbank studios, HBO and the HBO Max streaming service. Longtime lieutenant Gunnar Wiedenfels would helm Discovery Global, made up of the firm’s international businesses and basic cable channels, which face an uncertain future in the streaming era.
Those who know Zaslav believe he’s working to stave off the Ellison takeover, in part, because he wants the chance to bring the company back to its glory, which would ultimately make it more valuable for its investors and prospective buyers.
For Warner management, that’s part of the rub. The Ellisons showed up just as the company was displaying signs of a turnaround, including a hot streak by Warner Bros. that includes “A Minecraft Movie,” Ryan Coogler’s “Sinners,” James Gunn’s “Superman,” Formula One adventure “F1: The Movie,” and horror flick “Weapons.”
Larry, from left, Megan and David Ellison attend the premiere of Paramount Pictures’ “Terminator Genisys” at Dolby Theatre on June 28, 2015.
(Lester Cohen / WireImage)
Ellison’s bidding was designed to thwart Warner’s planned corporate breakup.
For now, analysts said, Zaslav and the Warner board’s current strategy is solid because they have effectively driven up the stock price, which has doubled to $21 a share since the Ellison’s interest became known in mid-September.
“They are doing the right thing,” Hardart said. “In any sale, you try to beat the bushes and get as many people interested. But at some point the board is going to have to make a decision.”
Added one investor: “They’ve gotten Paramount-Skydance to bid against itself, and that only goes so far.”
Analysts expect Philadelphia giant Comcast, owner of NBCUniversal, and potentially Netflix, Apple or Amazon to take a look at the company’s studio, library and streaming assets.
But many see the Ellison’s Skydance as having the edge.
Paramount, in its recent letter to the Warner board, argued that it was the best and most logical buyer.
“What Skydance offers WBD, in many ways, is what it offered Paramount: The ability to be aggressive and push all aspects of the business in a way that most people or companies that have less capital just can’t do,” Miller said. “They are deploying real capital, and they are being the most aggressive folks in the industry right now.”
Warner Bros. Discovery has officially acknowledged the company is up for sale, marking the third time in a decade that its storied assets have been on the auction block.
The company’s board announced Tuesday that it has initiated “a review of strategic alternatives … in light of unsolicited interest the Company has received from multiple parties for both the entire company and Warner Bros.”
The Ellison family, which owns Paramount, started the bidding late last month. With financial backing from his father, Larry Ellison, David Ellison is looking to build an entertainment juggernaut. The family and RedBird Capital Partners finalized their takeover of Paramount in August, and has since made at least one offer for its rival. Paramount wants to buy the entire company, including its basic cable channels that include CNN, TNT, Food Network and HGTV.
Warner Bros. Discovery stock soared 11% Tuesday to more than $20 a share, valuing the company at $50 billion. That’s the highest level since Discovery swallowed the larger WarnerMedia in April 2022.
The company did not disclose the other entities that have expressed interest in buying the company as a whole, or its stable of assets, including premium cable channel HBO, the HBO Max streaming service and the legendary Warner Bros. film and television studio and its campus in Burbank.
“It’s no surprise that the significant value of our portfolio is receiving increased recognition by others in the market,” Chief Executive David Zaslav said in a statement announcing the strategic review.
“After receiving interest from multiple parties, we have initiated a comprehensive review of strategic alternatives to identify the best path forward to unlock the full value of our assets,” he said.
The company last summer unveiled its intention to split into two separate publicly traded entities — an arrangement that most observers saw as the unofficial kickoff of the company’s sale.
That separation process will continue, Warner Bros. Discovery said Tuesday.
The company intended to create two stand-alone entities. One would include the Warner Bros. studio and its expansive library of shows and movies, as well as the HBO Max streaming service. Zaslav was planning to run that enterprise.
The second company, Discovery Global, would comprise the basic cable channels and international operations. Chief Financial Officer Gunnar Wiedenfels would lead that operation.
“We view this as a move to initiate the entire bidding process now, for all bidders, even though not every bidder may be interested in all of WBD,” Raymond James analysts Ric Prentiss and Brent Penter wrote in a Tuesday note to investors.
“WBD is telling other bidders they can bid now instead of waiting for the split, or perhaps they even need to bid now since waiting may prove to be too late,” the analysts said.
Warner Bros. Discovery board intends to “evaluate a broad range of strategic options,” including “an alternative separation structure that would enable a merger of Warner Bros. and spin-off of Discovery Global to our shareholders,” it said in a statement.
“Our decision to initiate this review underscores the Board’s commitment to considering all opportunities to determine the best value for our shareholders,” Warner Bros. Discovery Chair Samuel A. Di Piazza, Jr., said in the statement. “We continue to believe that our planned separation to create two distinct, leading media companies will create compelling value. That said, we determined taking these actions to broaden our scope is in the best interest of shareholders.”
The company did not set a deadline or timetable for the strategic alternatives review, although it had previously said the separation into two distinct companies — Warner Bros. and Discovery Global — would be complete by April.
TD Cowen media analyst Doug Creutz indicated Tuesday’s announcement was simply a formality because investors were well aware the company was in play.
“We continue to think a transaction with [Paramount] … is reasonably likely; we are more skeptical that other, more attractive bidders will emerge,” Creutz wrote.
The announcement hit as Warner Bros. Discovery employees already are nervous about the process and the proposed Ellison takeover, which observers believe would spark a massive consolidation and the elimination of hundreds more jobs.
Some already were suffering from deal fatigue as many are veterans of the company’s two previous sales.
In October 2016, the company, then known as Time Warner Inc., announced its sale to phone giant AT&T. President Trump, who was first elected the following month, strenuously objected to the merger. The government challenged the union, and it took nearly two years to win federal approval. The AT&T years were turbulent. The company restructured, then spent billions to build the HBO Max streaming service.
After three years, AT&T threw in the towel after lining up Zaslav, who had long managed the much smaller Discovery. The April 2022 sale to Discovery burdened the company with more than $50 billion in debt.
Since then, Zaslav and his team have tried to streamline the operations, leading to thousands of layoffs. The company’s debt now hovers around $35 billion.
Allen & Company, J.P. Morgan and Evercore have been retained as financial advisors to Warner Bros. Discovery. Wachtell Lipton, Rosen & Katz and Debevoise & Plimpton LLP are serving as legal counsel.
Paramount, backed by billionaire Larry Ellison and his family, has officially opened the bidding for rival Warner Bros. Discovery — a potential massive merger that would dramatically change Hollywood.
Warner Bros. Discovery’s board rejected Paramount’s initial bid of about $20 a share, but talks are continuing, according to two people close to the companies who were not authorized to speak publicly.
One of the knowledgeable sources said Paramount was preparing a second bid.
Warner Bros. Discovery owns HBO, CNN, TBS, Food Network, HGTV and the prolific Warner Bros. movie and television studio in Burbank.
Ellison, one of the world’s richest men, is committed to helping his 42-year-old son, David, pull off the industry-reshaping acquisition and has agreed to help finance the bid, two people close to the situation said.
The younger Ellison, who entered the movie business 15 years ago by launching his Skydance Media production company, was catapulted into the major leagues this summer with the Ellison family’s purchase of Paramount’s controlling stake.
Since then, David Ellison and his team have made bold moves to help Paramount shake more than a decade of doldrums. Buying Warner Bros. Discovery would be their most audacious move yet. The merger would lead to the elimination of one of the original Hollywood film studios, and could see the consolidation of CNN with Paramount-owned CBS News.
Representatives for Paramount and Warner Bros. Discovery declined to comment.
Industry veterans were stunned by the speed of Paramount’s play for Warner Bros. Discovery, noting that top executives had begun working on the bid even as they were putting finishing touches on the Paramount takeover.
One of Paramount’s top executives is a former Goldman Sachs banker, Andy Gordon, who was a ranking member of RedBird Capital Partners, the private equity firm that has teamed up with the Ellisons and has a significant stake in Paramount.
Paramount’s interest prompted stocks of both companies to soar, driving up the market value for Warner Bros. Discovery.
Paramount’s offer of $20 a share for Warner Bros. Discovery was less than what some analysts and sources believe the company’s parts are worth, leading the Warner Bros. Discovery board to rebuff the offer, sources said.
But many believe that Paramount needs more content to better compete in a landscape that’s dominated by tech giants such as Netflix and Amazon.
Paramount has reason to move quickly.
Warner Bros. Discovery had previously announced that it was planning to divide its assets into two companies by next April. One company, Warner Bros., would be made up of HBO, the HBO Max streaming service and the Burbank-based movie and television studios. Current Chief Executive David Zaslav would run that enterprise.
The other arm would be called Discovery Global and consist of the linear cable television channels, which have seen their fortunes fall with consumers’ shift to streaming.
The Paramount bid was seen as an attempt to slip in under the wire because other large companies, including Amazon, Apple and Netflix, may have been interested in buying the studios, streaming service and leafy studio lot in Burbank.
However, Netflix’s co-chief executive Greg Peters appeared to downplay Netflix’s interest during an appearance last week at the Bloomberg Screentime media conference. “We come from a deep heritage of being builders rather than buyers,” Peters said.
Some analysts believe Paramount’s proposed takeover of Warner Bros. Discovery could ultimately prevail because Zaslav and his team have made huge cuts during the past three years to get the various businesses profitable after buying the company from AT&T, which left the company burdened with a heavy debt load. The company has paid down billions of dollars of debt, but still carries nearly $35 billion of debt on its books.
Others point to Warner Bros.’ recent successes at the box office as evidence that Paramount is offering too little.
Despite the tumult at the corporate level, Warner Bros.’ film studio has had a successful year. Its fortunes turned around in April with the release of “A Minecraft Movie,” which grossed nearly $958 million worldwide, followed by a string of hits including Ryan Coogler’s “Sinners,” James Gunn’s “Superman” and horror flick “Weapons.”
Last week at Bloomberg’s Screentime media conference, Ellison declined to comment on Paramount’s pursuit of Warner Bros. or even whether his company had already made a bid. But he did touch briefly on consolidation in Hollywood, saying, “Ironically, it was David Zaslav last year who said that consolidation in the media business is important.”
“There are a lot of options out there,” he added, but declined to elaborate.
After news of Paramount’s interest surfaced, Warner Bros. Discovery‘s stock jumped more than 30%. It climbed as much as $20 a share, but closed Friday at $17.10, down 3.2%.
Paramount also has seen its stock surge by about 12%. Shares finished Friday at $17, down 5.4%
Warner Bros. Discovery is now valued at $42 billion. Paramount is considerably smaller, worth about $18.5 billion.
Warner Bros. said Wednesday it will renew the contract for studio heads Mike De Luca and Pam Abdy after the two orchestrated a string of back-to-back hits at the box office.
The news is a notable reversal of fortune for the co-chairs and co-chief executives of Warner Bros. Motion Picture Group.
Only six months ago, the pair was on thin ice after a series of underperforming films, including Bong Joon Ho’s sci-fi thriller “Mickey 17” and the Robert De Niro-led mob movie “The Alto Knights.”
But the studio’s prospects dramatically changed in April with the release of “A Minecraft Movie,” which hauled in nearly $958 million worldwide. Shortly after, Ryan Coogler’s “Sinners” became a lasting hit at the box office, followed by “Final Destination Bloodlines,” “F1 The Movie” (which Warner Bros. distributed), James Gunn’s “Superman,” horror flick “Weapons” and the final installment of “The Conjuring.”
In a memo to staff Wednesday, Warner Bros. Discovery CEO David Zaslav credited Abdy and De Luca for the improved performance at the box office.
He touted the studio’s “balanced” slate with big blockbusters, films based on established intellectual property, horror movies and original works.
“Mike and Pam’s unwavering leadership and commitment to this business has been critical to our success this year,” he wrote. “We have a lot to be grateful for and much to celebrate including several of this year’s best reviewed movies, many of which have pierced the culture zeitgeist in profound ways while also delighting moviegoers around the world.”
Warner Bros. recently surpassed $4 billion at the global box office, the first time it has done so since 2019 and the first studio to reach this mark this year.
“We have the privilege to do this job because of the support and trust [Zaslav] has put in us, and in all of you,” De Luca and Abdy said in an internal note to employees. “We could not be more excited to be leading this team as we introduce an exciting slate of films in the coming years and continue making every film experience an event worthy of the Warner Bros. shield.”
Walt Disney Co., Universal Pictures and Warner Bros. Discovery on Tuesday sued a Chinese artificial intelligence firm called MiniMax for copyright infringement, alleging its AI service generates iconic characters including Darth Vader, the Minions and Wonder Woman without the studios’ permission.
“MiniMax’s bootlegging business model and defiance of U.S. copyright law are not only an attack on Plaintiffs and the hard-working creative community that brings the magic of movies to life, but are also a broader threat to the American motion picture industry,” the companies said in their complaint, filed in U.S. District Court in Los Angeles.
The entertainment companies requested that MiniMax be restrained from further infringement. They are seeking damages of up to $150,000 per infringed work, as well as attorney fees and costs.
This is the latest round of copyright lawsuits that major studios have brought against AI companies over intellectual property concerns. In June, Disney and Universal Pictures sued AI firm Midjourney for copyright infringement. Earlier this month, Warner Bros. Discovery also sued Midjourney.
Shanghai-based MiniMax has a service called Hailuo AI, which is marketed as a “Hollywood studio in your pocket” and used characters including the Joker and Groot in its ads without the studios’ permission, the studios’ lawsuit said. Users can type in a text prompt requesting “Star Wars’” iconic character Yoda or DC Comics’ Superman, and Hailuo AI can pull up high quality and downloadable images or video of the character, according to the document.
“MiniMax completely disregards U.S. copyright law and treats Plaintiffs’ valuable copyrighted characters like its own,” the lawsuit said. “MiniMax’s copyright infringement is willful and brazen.”
“Given the rapid advancement in technology in the AI video generation field … it is only a matter of time until Hailuo AI can generate unauthorized, infringing videos featuring Plaintiffs’ copyrighted characters that are substantially longer, and even eventually the same duration as a movie or television program,” the lawsuit said.
MiniMax did not immediately return a request for comment.
Hollywood is grappling with significant challenges, including the threat of AI, as companies consolidate and reduce their expenses as production costs rise. Many actors and writers, still recovering from strikes that took place in 2023, are scrambling to find jobs. Some believe the growth of AI has threatened their livelihoods as tech tools can replicate iconic characters with text prompts.
While some studios have sued AI companies, others are looking for ways to partner with them. For example, Lionsgate has partnered with AI startup Runway to help with behind the scenes processes such as storyboarding.
The Ellison era of Paramount was barely a month old when another major potential Hollywood merger appeared on the horizon.
Last week the share prices of Paramount and Warner Bros. Discovery surged following reports that the former was preparing a bid to take over the latter with a mostly cash offer backed by the Larry Ellison family. This would come a remarkably short time after Skydance Media, the production company founded by Larry’s movie producer son David, combined with Paramount in an $8-billion deal.
A merger of Paramount and Warner Bros. Discovery would have profound ramifications for the media and entertainment industry.
It would consolidate two of Hollywood’s oldest studios, Paramount and Warner Bros., in the most significant movie business merger since Walt Disney Co. devoured the entertainment assets of 21st Century Fox in 2019. The film industry has still not recovered from having the 20th Century Fox studio effectively taken off the board.
Additionally, a merger would put two mass-market streaming services, Paramount+ and HBO Max, under the same roof, probably leading to the eventual melding of the two. The Ellison clan’s move would also bring Warner Bros. Discovery’s linear TV networks, including CNN, HGTV, Food Network and TNT, together with Paramount’s Comedy Central, MTV and BET.
All of this would lead to substantial “synergies,” meaning cuts and layoffs, at a time when the job market in entertainment and corporate media is already fraught as the industry reconfigures itself. Paramount is currently bracing for thousands of layoffs as the new owners seek $2 billion in cost savings.
That’s not to mention the changes that would likely come if CNN came under the control of Ellison.
Larry Ellison, the Oracle Corp. billionaire who, depending on the day, is one of the world’s two wealthiest people alongside Elon Musk, is known to be Trump-friendly. The effects of the Ellison reign are already being felt at Paramount’s CBS News, where a former conservative think tank leader was recently appointed as ombudsman and where center-right and staunchly pro-Israel journalist Bari Weiss is expected to have an influential role after Ellison buys her digital media startup the Free Press.
So why is all this happening now, and why so quickly?
After all, the Wall Street Journal first reported Ellison’s interest in Warner Bros. Discovery on Sept. 11, just weeks after the Paramount-Skydance combo closed on Aug. 7.
In a sense, this scenario is unsurprising. Wall Street has been practically begging for another wave of consolidation in the media business, as the audience for theatrical movies shrinks, cord-cutting guts TV profits and more of viewers’ attention turns to YouTube, Netflix and TikTok. Most of the legacy entertainment companies don’t have the streaming firepower to compete. They need to combine to measure up.
But the timing is unexpected, and the unavoidable political considerations are particularly interesting.
With Trump in the White House, the political winds are clearly blowing in the Ellisons’ direction, after the Skydance and RedBird Capital team that bid for Paramount placated federal regulators with promises to eliminate diversity, equity and inclusion initiatives and to make CBS News more balanced, at least in eyes of Trump-appointed FCC Chairman Brendan Carr.
Paramount paid $16 million to settle Trump’s lawsuit over a “60 Minutes” Kamala Harris interview. Ellison and his team want to make a Warner Bros. deal happen when a friendly administration is in power.
Paramount has lately upped its spending, acquiring the rights to UFC (run by Trump friend Dana White), locking down “South Park” for Paramount+ and announcing a deal with Activision to make a “Call of Duty” movie.
Also of note is that Ellison’s group is coming in with an offer for the whole company even as Warner Bros. Discovery Chief Executive David Zaslav prepares to split the media giant into two firms: one with the studios, HBO and streaming businesses, and the other with the TV networks. Putting in a bid now could dissuade other potential buyers that might be interested in just one part.
Apple and Amazon have long been seen as potential bidders for Warner Bros. (Amazon already owns MGM), but it’s unlikely they would want a bunch of TV channels that are on the brink of being orphaned. Analysts have speculated that one reason for the proposed split was to make the studio and streaming assets more attractive to buyers by uncoupling them from the challenged pay-TV business. That split is expected to take place sometime in mid-2026.
Paramount’s bid could also preempt those that may want to do a deal, but are firmly on the Trump administration’s bad side. NBCUniversal owner Comcast Corp.’s CEO Brian Roberts has been the subject of disparaging Trump missives. Comcast is liberal network MSNBC’s parent company (for now). A regulatory review involving a perceived Trump enemy would likely not go well.
Of course, competitive bids could emerge anyway, for example, if a private equity player such as Apollo Global decided to get into the mix after previously expressing interest in Paramount through an unsuccessful team-up with Sony.
Big mergers in media and entertainment often fail, and they’re always disruptive.
Warner Bros. itself was involved in some of the most disastrous deals ever: AT&T’s purchase of Time Warner, and before that, the media company’s ill-fated marriage with AOL. Warner Bros. is now on a box-office hot streak, but that has come after years of Zaslav taking heat for killing projects such as “Batgirl.”
Such deals result in mass layoffs. Movie theater owners will most likely see darker days ahead as they’ll be minus yet another big supplier of blockbusters. Journalist Richard Rushfield, of the Ankler newsletter, demanded that somebody do something to stop it. We’ll see.
An Oracle scion buying two studios one after the other probably wasn’t the tech takeover of Hollywood that many people envisioned. Analysts long assumed that Apple would be the one to buy an entertainment powerhouse — maybe even Disney — despite having not shown any particular inclination for doing so. But though it’s not the Silicon Valley roll-up people anticipated, it may be the one they’re going to get.
Newsletter
You’re reading the Wide Shot
Ryan Faughnder delivers the latest news, analysis and insights on everything from streaming wars to production — and what it all means for the future.
You may occasionally receive promotional content from the Los Angeles Times.
“Demon Slayer: Kimetsu no Yaiba Infinity Castle,” already a big hit in Japan, was the highest-grossing movie domestically, beating new films “Downton Abbey: The Grand Finale,” “The Long Walk” and “Spinal Tap II: The End Continues.”
The film, distributed by Sony Pictures and Crunchyroll, opened with a better-than-expected $70 million in ticket sales from the U.S. and Canada, according to studio estimates, making it the biggest anime opening ever. It’s also the highest-grossing domestic debut of the year so far for an animated film.
Its global weekend for Sony, which owns the Crunchyroll anime brand and streaming service, totaled $132.1 million, which includes 49 international markets.
Including grosses from Japan, the movie’s worldwide tally has surpassed $450 million, according to Comscore.
The success of “Demon Slayer,” part of a long-running popular franchise and not to be confused with Netflix’s hit “KPop Demon Hunters,” is a relief to theater owners at a time when other genres are struggling, including superheroes, comedies and original animation. It’s the latest evidence of anime’s growing global clout.
Comedian Nate Bargatze didn’t shortchange the Boys & Girls Clubs of America, nor did he kill the Emmys telecast’s ratings on Sunday night.
The 77th Emmy Awards ceremony from the Peacock Theater in Los Angeles delivered an average of 7.42 million viewers on CBS, up 8% from last year’s audience for ABC.
Once among the most-watched live awards shows on television, the Emmy Awards audience declined dramatically over the last decade as most of the series celebrated no longer have the broad reach they did when traditional TV still dominated the culture, reports Stephen Battaglio.
But the audience level appears to have stabilized. Nielsen data shows that ratings for the Emmy Awards grew for the second consecutive year. The figure is the highest since 2021, when the telecast also aired on CBS.
HBO Max’s “The Pitt,” Apple TV+’s “The Studio” and Netflix’s “Adolescence” were big winners.
Film shoots
Finally …
Listen: The music of Le Tigre, just because it rocks. I just started the audiobook of Le Tigre and Bikini Kill frontwoman Kathleen Hanna’s memoir, “Rebel Girl.” Essential for punk rock fans.
Shares in Warner Bros Discovery surged nearly 30% in New York on Thursday after the Wall Street Journal reported that Paramount Skydance was preparing to buy its rival.
Paramount Skydance’s stock also rose around 16% in daily trading.
The majority cash bid is reportedly for the entire company, including its movie studio and cable networks like HBO and CNN. Warner said late last year that it planned to split into two operating divisions: one focused on cable TV and the other on streaming and studios.
Paramount’s offer is allegedly backed by Oracle’s Larry Ellison, who briefly became the world’s richest person this week, overtaking tech tycoon Elon Musk. The billionaire’s son, David Ellison, runs Paramount Skydance.
The WSJ noted that a bid hasn’t yet been submitted and that plans could still fall apart.
Paramount Skydance’s market value was $19 billion (€16bn) as of Thursday’s close, while that of Warner Bros Discovery was roughly $40bn (€34bn).
Paramount and Warner Bros did not immediately respond to requests for comment regarding reports of the acquisition.
If approved, a merger between the two firms would mark the biggest consolidation in Hollywood since Walt Disney bought the entertainment division of Fox Corp. in 2019.
Scale would allow the new company to compete with the likes of streaming giants Netflix and Disney as the industry is redefined by changes in traditional viewing habits.
Paramount Skydance merger
The report comes just weeks after the finalisation of a $8bn (€7bn) merger between movie giant Paramount and independent film studio Skydance Media.
This acquisition became particularly controversial after it was linked to a legal dispute over a CBS News interview.
In July, Paramount paid $16 million (€14mn) to settle a defamation case against US President Donald Trump. The Republican leader claimed that Paramount’s CBS News in November edited a “60 Minutes” news programme with then-vice president Kamala Harris in a way that was deliberately deceptive.
Paramount said in a statement that the settlement with Trump was “completely separate from, and unrelated to, the Skydance transaction and the FCC approval process”.
Even so, critics of the settlement lambasted it as a veiled bribe to appease Trump and allow the merger to go ahead.
Despite the payout, Paramount’s settlement did not include a statement of apology or regret.
Skydance did, however, declare it would end Paramount’s diversity programmes and appoint an ombudsman to review complaints of bias. Paramount also cancelled the left-leaning Late Show with Stephen Colbert ahead of the merger approval.
Critics viewed the moves as further attempts to win over President Trump, although Paramount denied that the Colbert show was cancelled for political motives.
Warner Bros. Discovery stock jumped more than 25% Thursday morning after a report that the Larry Ellison-backed Paramount was preparing a cash bid to buy the company that owns HBO, CNN and the Warner Bros. studio.
The Ellison family and RedBird Capital Partners acquired Paramount a month ago, and has signaled that it would take bold steps as it tries to rebuild Paramount to its former glory. David Ellison, Larry’s 42-year-old son, serves as chairman and chief executive of Paramount.
The Wall Street Journal reported that Paramount’s bid would be for the entire company, including its movie studio, streaming assets and cable networks. Warner Bros. Discovery is in the process of spinning the cable channels into a separate company, a transaction that Warner Bros. Discovery Chief Executive David Zaslav said would be complete by next April.
Representatives of Paramount and Warner Bros. Discovery declined to comment.
Warner Bros. Discovery stock closed at $12.54 on Wednesday. It had soared to around $16 a share in Thursday mid-day trading.
Paramount Skydance shares also climbed 7% to around $16.30.
SACRAMENTO — Sneha Revanur has been called the “Greta Thunberg of AI,” which depending on your politics, is an insult or, as the youngs would say, means she’s eating.
That’s good.
Either way, Revanur, a 20-year-old Stanford University senior who grew up in Silicon Valley, isn’t worried about personal attacks, though she’s been getting more of them lately — especially from some big tech bros who wish she’d shut up about artificial intelligence and its potential to accidentally (or purposefully) destroy us all.
Instead of fretting about invoking the ire of some of the most powerful men on the planet, she’s staying focused on the breakneck speed with which AI is advancing; the utter ignorance, even resistance, of politicians when it comes to putting in place the most basic of safety measures to control it; and what all that will mean for kids who will grow up under its influence.
“Whatever long-term future AI creates, whether that’s positive or negative, it’s [my generation] that’s going to experience that,” she told me. “We’re going to inherit the impacts of the technology we’re building today.”
This week, California will make a big decision about that future, as legislators vote on Senate Bill 53.
Because I am a tech idiot who struggles to even change the brightness on my phone’s display, I will use the simplest of metaphors, which I am sure will make engineers wince.
Imagine lighting your gas stove, then leaving on vacation. Maybe it will all be fine. Maybe it will start a fire and burn your house down. Maybe it blows up and takes out the neighborhood.
Do you cross your fingers and hope for the best? Do your neighbors have a right to ask you to pretty please turn it off before you go? Should you at least put a smoke alarm up, so there’s a bit of warning if things go wrong?
The bill is a basic transparency measure and applies only to the big-gun developers of “frontier” AI models — these are the underlying, generic AI creatures that may later be honed into a specific purpose, like controlling our nuclear weapons, curing cancer or writing term papers for cheating students.
But right now, companies are just seeing how smart and powerful they can make them, leaving any concerns about what they will actually do for the future — and for people like Revanur, whose lives will be shaped by them.
If passed, the law would require these developers to have safety and security protocols and make them public.
It would require that they also disclose if they are aware of any ways that their product has indicated it may in fact destroy us all, or cause “catastrophic” problems, defined as ones with the potential to kill or seriously injure more than 50 people or cause more than $1 billion in property damage.
It requires the companies to report those risks to the state Office of Emergency Services, and also to report if their models try to sneakily get around commands to not do something — like lying — a first requirement of its kind in law.
And it creates a whistleblower protection so that if, say, an engineer working on one of these models suddenly finds herself receiving threats from the AI (yes, this has happened), she can, if the company won’t, give us a heads-up about the danger before it’s unleashed.
There are a couple other rules in there, but that’s the gist of it. Basically, it gives us a tiny glimpse inside the companies that quite literally hold the future of humanity in their hands but are largely driven by the desire to make oodles of money.
Big Tech has lobbied full force against the bill (and has been successful in watering it down some). Enter Revanur and the AI safety organization she started when she was 15: Encode.
The California Capitol is nothing if not a mean high school, so maybe Revanur was more prepared than the suits expected. But her group of “backpack kids,” as they have been derogatorily called, has lobbied in favor of government oversight of AI with such force and effect that SB 53 actually has a chance of passing. This week, it is likely to receive final votes in both the Assembly and Senate, before potentially heading to the governor’s desk.
I’m not huge on quoting lobbyists, but Lea-Ann Tratten summed it up pretty well.
Revanur and her group have gone from being dismissed with a “who are you, you’re nothing” attitude from lawmakers to having “an equal seat at the table” with the clouty tech bros and their billions, Tratten said. And they’ve done it through sheer persistence (though they are not the only advocacy group working on the bill).
Tratten was hired by Encode last year when Revanur was backing a much stronger piece of legislation by the same author, Sen. Scott Wiener. That bill, SB 1047, would have regulated the AI industry, not just watched over it.
Gov. Gavin Newsom vetoed that bill, basically saying it went too far, but still acknowledging that a “California-only approach may well be warranted especially absent federal action by Congress.” He also set up a commission to recommend how to do that, which released its report recently — much of which is incorporated into the current legislation.
But since that veto, Congress has indicated approximately zero interest in taking on AI. And last week, Trump hosted a formal dinner for the titans of AI where they sucked up to the businessman-in-chief, leaving little hope of any federal curbs on their aspirations.
In it, OpenAI CEO Sam Altman, gushed, “Thank you for being such a pro-business, pro-innovation President. It’s a very refreshing change. We’re very excited to see what you’re doing to make our companies and our entire country so successful.”
“Like, we know for a fact that we have no affiliation with Elon,” she said.
Still, “people expect us to sort of hide in the corner and stop what we’re doing,” because of the pressure, she said.
But that’s not going to happen.
“We’re going to keep doing what we’re doing,” she said. “Just being a balanced, objective, thoughtful third party that’s able to be this watchdog, almost, as the most powerful technology of all time is developed. I think that’s a really important role for us.”
Right now, AI is in its toddler stages, and it’s already outsmarting us in dangerous ways. The New York Times documented how it may have pushed a teen to suicide.
An AI safety researcher familiar with that blackmail incident, Aengus Lynch, warned it wasn’t a one-off, according to the BBC.
“We see blackmail across all frontier models — regardless of what goals they’re given,” he said.
So here we are in the infancy of a technology that will profoundly change society, and we already know the genie is out of the bottle, has stolen the car keys and is on a bender.
Before we get to the point of having to choose who will go back in time to save Sarah Connor from Skynet and the Terminator, maybe we just don’t go there. Maybe we start with SB 53, and listen to smart, young people like Revanur who have both the knowledge to understand the technology and a real stake in getting it right.
Maybe we put up the smoke alarm, whether the billionaire tech bros like it or not.
Newsletter
You’re reading the L.A. Times Politics newsletter
Anita Chabria and David Lauter bring insights into legislation, politics and policy from California and beyond. In your inbox three times per week.
You may occasionally receive promotional content from the Los Angeles Times.
Dutch Bros stock might’ve doubled in the last year, but I think it’ll keep rising through 2030 and beyond.
While no one can be certain what stocks may or may not “pop” in any five-year window, investors can tilt the odds in their favor by looking for businesses with a long list of potential market-beating catalysts.
I believe the upstart handcrafted beverages chain Dutch Bros(BROS -0.53%) perfectly exemplifies this notion.
Dutch Bros is home to several promising catalysts that could drive its stock price higher between now and 2030.
Although I’m willing to predict that the up-and-coming company could help make investors richer by 2030, Dutch Bros’ current business developments paint an even brighter picture beyond that point.
Image source: Dutch Bros.
Dutch Bros’ numerous catalysts
Dutch Bros’ share price has more than doubled in just the last year alone.
Despite this run, I believe there are five specific reasons why the company has ample room to rise and help make investors richer by 2030.
Dutch Bros is more than just coffee
Far from a traditional hot coffee chain, Dutch Bros generates 87% of its sales from ice or blended drinks. It also receives roughly one-quarter of its sales from its Rebel energy drinks.
This is a powerful differentiator for Dutch Bros, as it caters directly to its youngest and most important (for the long term) customers — Gen Z — who strongly prefer iced, blended, and energy drinks over hot coffee.
Industry experts project the coffee industry to grow 7% by 2030, whereas the energy drink category should grow more than 40% by 2032. This shift toward energy drinks should keep the company front and center on the beverage scene, thanks to its outsized allocation to energy drinks.
Immense store count expansion potential
Dutch Bros has 1,043 locations, but recently announced its stretch goal of 2,029 stores by 2029. While doubling its store count in four years may sound like a reach, the company is on pace to open around 160 in 2025 and plans to grow its new shop count by a mid-teens percentage annually for the next few years.
If management meets this bold goal and maintains its steady cash generation, I would feel terrific about my prediction being accurate.
Best yet, the Dutch Bros growth story doesn’t stop here. Over the long term, the company believes it can reach more than 7,000 locations. Currently operating in just 18 states (but entering five new ones in 2025), Dutch Bros’ growth story should persist well beyond 2030.
With its newest 2024 shops delivering annual unit volumes similar to those built in 2022 or earlier, I’m confident in management’s ability to continue expanding geographically in a profitable manner.
Cash flows are now positive
Perhaps the biggest reason I’m optimistic about Dutch Bros’ ability to enrich our portfolios is that it recently reached breakeven on a free cash flow (FCF) basis.
Despite the company’s rapid store count growth (which creates heavy capital expenditures), Dutch Bros has reached positive FCF. Said another way, management can now fund its growth ambitions in-house rather than through debt or shareholder dilution from issuing new shares.
Additionally, if Dutch Bros wasn’t spending heavily on capex (just a thought experiment), it would already be a bona fide cash machine, generating 18 cents of cash from operations for every $1 in sales.
Mobile ordering is still young
While the company’s expansion plans may take center stage in its growth story, Dutch Bros’ recent rollout of mobile ordering at all locations could prove to be a promising growth catalyst on its own.
Customers are rapidly adopting mobile orders, but these orders still only account for 11.5% of the company’s total transactions. Every additional order that switches from being placed in the drive-thru lane to mobile offers throughput improvement for Dutch Bros.
During the company’s second-quarter earnings call, Chief Executive Officer Christine Barone explained that mobile ordering has already delivered an order frequency lift, while also being a popular option in the morning.
Whereas customers may have previously gone without a beverage if their time was limited, the grab-and-go feasibility provided by mobile ordering could help add a number of once-missed sales.
Food options
Dutch Bros currently generates less than 2% of its sales from food. While Starbucks has shown that adding food to a beverages-focused business isn’t the easiest feat to pull off, the fact remains that leading coffee chains generate one-fourth of their sales from food.
Currently, Dutch Bros is piloting a food program that could be fully rolled out by 2026 and is already seeing incremental growth in its morning orders. If the company inches anywhere closer to the industry average of 25% of sales from food, it could be a boon for Dutch Bros’s same-store sales.
Dutch Bros’ valuation
While there is a lot to like about Dutch Bros, its price-to-earnings (P/E) ratio of 199 undoubtedly scares many investors away.
However, this may not be the best valuation to assess the company with. Revisiting the cash from operations figures examined earlier, and comparing them to the company’s market capitalization, Dutch Bros stock trades at 47 times CFO.
Yes, this is still a premium valuation, but for a company with a reasonable chance to double its store count over the next four years, it isn’t excessive in my opinion.
Although the company still has to execute, numerous catalysts indicate that Dutch Bros can help make investors rich by (and more importantly, beyond) 2030.
Warner Bros. Discovery has joined a key copyright infringement case that could test the legal bounds of using artificial intelligence to create digital replicas of well-known characters.
The company on Thursday filed a copyright infringement lawsuit in Los Angeles federal court against AI company Midjourney Inc., alleging its image generator produces blatant rip-offs of Warner’s well-known and copyright-protected characters, including Superman, Batman, Wonder Woman and Scooby-Doo.
With the suit, Warner Bros. Discovery joins a legal fight brought in June by Walt Disney Co. and Comcast’s Universal Pictures. The Disney and Universal lawsuit marked the first salvo by major studios to elevate the legal struggle over AI-enabled intellectual property, calling it content theft.
The addition of Warner Bros. Discovery could boost Disney’s and Universal’s case. The three entertainment industry leaders control much of the most valuable intellectual property in Hollywood.
Disney’s stable includes Star Wars, Woody the Cowboy, Winnie the Pooh, the Simpsons and Disney princesses. Universal boasts such beasts as the Hulk, Shrek and the Minions.
Warner Bros. controls characters from DC Comics , Looney Tunes and Hanna-Barbera .
It sued on behalf of Warner Bros. , DC Comics, Turner Entertainment Co., Hanna-Barbera Productions, Inc., and the Cartoon Network. The company, which asked for a jury trial, is seeking unspecified damages and an injunction.
The companies allege the four-year-old San Francisco firm Midjourney, which has millions of paid subscribers, built its business off decades of hard work by Hollywood artists, writers and studios.
Midjourney, on its website, describes itself as “an independent research lab exploring new mediums of thought and expanding the imaginative powers of the human species.” Midjourney offers its subscribers use of an image generator to create high-resolution digital depictions, including famous characters like Batman.
Warner Bros. Discovery, Disney and Universal allege that Midjourney trained its generative AI programs by using their copyrighted works. They contend that Midjourney-enabled creations are almost identical to their original copyrighted cartoons. Warner Bros.’ lawsuit included side-by-side renderings of its characters and Midjourney’s reproductions to illustrate the identical details, such as the color of Scooby-Doo’s collar and fur.
Midjourney did not immediately respond to a request for comment.
“The heart of what we do is develop stories and characters to entertain our audiences, bringing to life the vision and passion of our creative partners,” Warner Bros. Discovery said in a statement. “Midjourney is blatantly and purposefully infringing copyrighted works, and we filed this suit to protect our content, our partners, and our investments.”
Warner Bros. Discovery pointed to the value of its franchises, including its DC Comics movies. Films featuring the DC Extended Universe, which were released from 2018 through 2023, generated more than $7 billion in global ticket sales. Each film earned an average of $479 million, the lawsuit said.
“Only Warner Bros. Discovery has the right under U.S. Copyright law to build a business around reproducing, preparing derivative works, distributing, publicly displaying, and performing images and videos featuring its copyrighted characters,” the company said in its lawsuit.
Such exclusive rights and protections allow Warner Bros. Discovery and other studios to make massive investments in content, the lawsuit said, adding: “That is the cornerstone of the U.S. Copyright Act.”
Disney and Universal applauded Warner Bros. for joining their legal battle.
“Disney is committed to protecting our creators and innovators, and we’re pleased to be joined by Warner Bros. Discovery in the fight against Midjourney’s blatant copyright infringement,” Disney said in a statement.
Dutch Bros(BROS 6.46%) stock is finally getting some market love. It’s more than doubled in value over the past year, and it trades at a P/E ratio of 193. That’s expensive by almost any standard, but it’s not the only valuation ratio worth a look. The valuation could also be justified given the company’s growth prospects.
Here’s a deeper look.
Image source: Dutch Bros.
High growth, high profits for Dutch Bros
With performance as good as Dutch Bros’ has been posting since it went public in 2021, it’s surprising that it’s taken the market this long to take notice. It reliably reports high sales growth, and profits continue to rise. In the 2025 second quarter, revenue increased 28% year over year, while net income rose from $22.2 million last year to $38.4 million this year.
However, there were reasons the market was concerned until recently. It didn’t report its first annual profit until 2023. In addition, investors were worried about its chances when same-store sales growth was low, even in negative territory for a short time, and most of the increase was coming from price hikes.
Dutch Bros has moved way past that now. Earnings per share (EPS) increased from $0.03 to $0.34 in 2024, and from $0.12 to $0.20 in the 2025 second quarter year over year. Same-store sales were up 6.1% in the quarter, with a 3.7% rise in transactions.
More importantly, analysts expect EPS to increase about 350% over the next three years.
There’s a lot of expectation here. Dutch Bros has a huge growth runway in opening new stores, and net income is following. While there’s some growth built into Dutch Bros’ current price, the opportunity is enormous, which is why it commands a premium valuation. As for other valuation methods, the forward one-year P/E ratio is a more reasonable 74, and the price-to-sales ratio is a very reasonable 5.
Warner Bros. Discovery on Monday unveiled the names of the proposed separate entities, post-breakup: Warner Bros. and Discovery Global.
When the corporate spin-off is complete some time next year, the venerable Burbank film and television studio properties, HBO, HBO Max streaming service and gaming properties will be part of a slimmed-down iteration called Warner Bros.
The cable networks, including TNT, CNN, HGTV and Animal Planet, and sports app Bleacher Report, will make up Discovery Global.
“We will proudly continue the more than century-long legacy of Warner Bros. through our commitment to bringing culture-defining stories, characters and entertainment to audiences around the world,” Warner Bros. Discovery Chief Executive David Zaslav said in a statement.
Zaslav, the longtime Discovery executive, is jumping to the Warner Bros. side, while his lieutenant, Chief Financial Officer Gunnar Wiedenfels, will lead Discovery Global.
The proposed corporate split is a recognition that the merger that created Warner Bros. Discovery three years ago was a misfire that eroded the value of some of the industry’s most premium brands. Zaslav championed the merger as a way to roll up several companies into one.
At the time, WarnerMedia — with its studios, HBO and Turner networks — was owned by AT&T, which was desperate to exit Hollywood after losing billions of dollars on acquisitions.
But Wall Street quickly soured on the consolidation that married nearly two dozen basic cable channels, including HGTV and Food Network, with the prestige properties of HBO and the Warner Bros. studios in Burbank.
AT&T’s sale to Discovery left Zaslav’s company struggling to tame more than $40 billion in debt. Investors also have a dim view of cable channels as the shift to streaming prompted a huge migration of viewers.
Senior executives joining Zaslav at Warner Bros. include: HBO Chairman Casey Bloys; Warner Bros. TV Group Chairman Channing Dungey; the film co-chairs Pam Abdy and Mike De Luca; DC Studios leaders James Gunn and Peter Safran, Streaming and Gaming Chief Executive JB Perrette; Chief Operating Officer Bruce Campbell and Chief Communications Officer Robert Gibbs.
Discovery Global will include CNN Chairman Mark Thompson; TNT Sports Chairman Luis Silberwasser; international operations head Gerhard Zeiler; U.S. Ad Sales President Ryan Gould; and Chief Development Officer Anil Jhingan.
“As we prepare for the launch of Discovery Global, our enthusiasm for the opportunities ahead only grows thanks to our leading portfolio of beloved brands and programming, our worldwide footprint for adults, kids, and families, and now the experienced and talented leadership team,” Wiedenfels said.
Warner Bros. has started a search for a CFO as well as a chief people officer. Wiedenfels plans to hire a top communications and public affairs officer.
