Good morning. Andrew here. The media industry’s biggest soap opera, the regulatory battle over the union of Paramount and Warner Bros. Discovery, ended with a whimper yesterday. Rob Bonta, California’s attorney general, declared victory after winning several concessions, but the truth is that most were on offer from the beginning. We go behind the scenes below. Also: We’ve got a scoop on Howard Schultz’s latest foray into investing in the creator-media industry. He’s teaming up with the well-known sports analyst Ryan Clark. (Was this newsletter forwarded to you? Sign up here.)
How Paramount got its big settlementThe last major hurdle for the megadeal to combine Paramount and Warner Bros. Discovery is gone. David Ellison, Paramount’s C.E.O., has resolved a lawsuit by a group of states led by California. Now he’s now free to complete a $111 billion takeover that could reshape Hollywood. How much did Ellison give up? The emerging consensus is not much:
But Paramount won’t have to sell any major assets, like CNN. That’s despite Rob Bonta, California’s attorney general, declaring this summer that he wasn’t interested in “behavioral” remedies, which are essentially promises to behave. Also important, Paramount now hopes to close the takeover in about two weeks, which would spare it from paying Warner Bros. Discovery shareholders millions in late fees if the transaction didn’t close by Oct. 1. Bonta was increasingly isolated in negotiating against Paramount, according to Bloomberg. Paramount had cut deals with movie theater chains and struck settlements with regulators around the world — including Brendan Carr of the F.C.C. It didn’t help that other Democratic officials in California, including Gov. Gavin Newsom and Xavier Becerra, the party’s candidate for governor, publicly called on Bonta to settle. One of their concerns was Paramount’s threat to pull out of California and relocate to another state, like Tennessee.
Ellison faces new challenges. He now has to integrate the two media companies, including handling what are expected to be broad layoffs. And the combined business will have some $80 billion in debt, leaving it with little financial breathing room as it seeks to take on rivals like Netflix and Disney.
Air travel in the Northeast mostly resumes after a day of chaos. Hundreds of flights were delayed or canceled yesterday while the F.A.A. dealt with disrupted communications lines, just as some world leaders were heading to the New York region for the U.N. General Assembly. FlightAware this morning reported only a few dozen delays at the affected airports. Calls for a U.S. diesel export ban grow louder. Republican candidates in tight contests, including one running for a U.S. Senate seat in Iowa, have pushed for such a measure amid soaring fuel prices. The average price of diesel in the U.S. hit $6.53 per gallon this morning, according to AAA, setting a new record. But Brent crude, the international benchmark for oil, has fallen to near $98 a barrel on hopes that Saudi Arabia can resume operations at its stricken East-West pipeline. Volkswagen’s woes continue. Shares in the German carmaker are down again today after the company was booted from the Euro Stoxx 50 benchmark index. Its stock has fallen roughly 60 percent in the past five years, according to S&P Capital IQ, battered by President Trump’s trade war and competition from low-cost Chinese rivals. It’s pursuing a plan that could lead to as many as 100,000 layoffs.
OpenAI is winning over business usersFor much of the artificial intelligence boom, Anthropic has dominated the enterprise market. Business customers gravitated toward its Claude models while consumers flocked to OpenAI’s ChatGPT. But Anthropic, a start-up, is now losing enterprise market share to its rival — which could be a concern as it prepares to go public potentially as soon as November, Sri Muppidi reports. OpenAI’s latest GPT-6 Astra model is clicking with business users. New data from Ramp, an expense management start-up, shows that OpenAI’s models overtook Anthropic’s this past week in share of business spending. Astra had the largest market share of any single A.I. model last week, according to Ramp, with nearly 19 percent of dollars spent, in front of Anthropic’s Claude Opus 5, which had 17 percent.
Astra is cheaper to run than it first appears, because it’s significantly more efficient, Ara Kharazian, Ramp’s lead economist, told DealBook. “I would say we were majority Anthropic for quite a long time,” Scott Stevenson, a founder and the C.E.O. of the A.I. contracts start-up Spellbook, told DealBook. “That’s starting to shift. The new Astra model is wildly good.” More companies are trying to remain platform agnostic. Anthropic, Google, OpenAI and others are constantly vying for the top spot for the best models, so it makes sense for customers to stay flexible. Businesses can use different A.I. models for different types of tasks. Companies can use expensive models for highly complicated tasks and low-cost models for simpler ones. Anthropic’s A.I. models, for instance, have been particularly strong at orchestrating tasks, or being the “brain” when coordinating streams of work, said Saam Mashhad of EvenUp, an A.I. start-up focused on personal injury law. Some good news for Anthropic: The overall market for A.I. is still growing fast. Anthropic’s revenue will probably continue to rise despite losing enterprise market share. “Some spend has rebalanced from Anthropic to OpenAI, but it’s also true that we’re probably spending more on Anthropic now than we were spending a year ago,” said Patrick Wendell, a founder and the vice president of engineering at Databricks, an A.I. data company.
Putting the brakes on data center I.P.O.sWall Street is champing at the bit for the biggest artificial intelligence start-ups to go public. Until recently, that excitement extended to companies that build data centers and supply them with energy. But the political backlash against the A.I. build-out has caused some of these companies to delay their plans, Maureen Farrell reports for The Times: SB Energy, a subsidiary of the Japanese conglomerate SoftBank that has proposed to build the largest data center project in the world in Ohio, had originally planned its I.P.O. for this month. But the offering has been delayed, as investors question the company’s sought-after valuation of $50 billion or more, according to interviews with four people familiar with the deal’s marketing efforts. So far, bankers have struggled to find enough buyers of SB Energy stock within price ranges the company and its bankers had sought. SB Energy’s struggles to win over investors come as Holtec, a company serving the nuclear energy industry that is looking to supply power for A.I., said last week that it was pausing its I.P.O. plans indefinitely, citing several factors that have “impaired investor confidence in the market for new public offerings.” What to watch for: PIMCO and other firms have estimated that more than $5 trillion in A.I. infrastructure spending will be needed by 2030 to support the A.I. boom. If such projections pan out, Wall Street could reconsider some of these I.P.O.s. Silver linings: Nvidia said in a regulatory filing yesterday that it planned to buy an additional $1.5 billion in shares in SB Energy at a discount, essentially doubling its stake in the company. And the Nasdaq Composite is back in record territory this morning as the A.I. trade came roaring back. But red and blue states continue to toughen their stance:
A new hat for Howard Schultz: online media investorHoward Schultz, the former C.E.O. of Starbucks, is getting into the creator economy business. He is taking a stake in Pivot25 Productions, the media enterprise Ryan Clark, the Super Bowl champion turned broadcaster, helped found, DealBook is first to report. The deal comes after Clark’s high-profile dismissal from ESPN this summer, when network executives told him his contract was terminated during a commercial break on “NFL Live.” Clark rejected suggestions that he was laid off. “I wasn’t laid off — I was fired,” he has said. “They’re using layoffs as a cover and a camouflage.” Schultz will become an investor and strategic adviser to Pivot25. He intends to help the company move beyond podcasting into live experiences, executive corporate partnerships, brand licensing and multiplatform entertainment projects.
“Audiences are increasingly choosing people and platforms they trust over traditional institutions,” Schultz said in a statement. “The barriers between sports, business, culture and entertainment are disappearing, creating an extraordinary opportunity for entrepreneurs who can build authentic communities and lasting relationships with their audiences.”
Pivot25 has reached a multiyear Netflix distribution agreement for its flagship show, “The Pivot,” a weekly studio show produced with NFL Films that now has over 1.5 million subscribers on YouTube. Behind the scenes, Schultz worked with Clark and Pivot25’s other founder, Alicia Zubikowski, the Emmy-winning producer, to secure the Netflix deal. Clark’s exit from ESPN underscores the shifting economics of legacy media. The network recently poured tens of millions of dollars into huge licensing deals with media creators — consider Pat McAfee’s contract extension, reportedly worth about $60 million. That has squeezed the payroll for traditional sports analysts on the network. But that hunger for popular sports creators could create an ironic situation: If Clark’s foray into creator media succeeds, could he end up back at ESPN with his own big deal? We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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