We present the following on recent discourse courtesy the team at the Information on the latest on the drama around Warner Brothers Discovery (as it has put itself up for Sale) and other thoughts:
The Ellison family will have plenty to talk about when they convene for Thanksgiving this week (assuming they do!). The price of Oracle has plummeted in the past six weeks, for one thing, reflecting AI bubble jitters centering on Oracle. In the same period of time, Larry Ellison and his son David have been—by all accounts—busy plotting the roughly $90 billion takeover of Warner Bros. Discovery. Their interest—conveyed through the company they now control, Paramount Skydance—sparked a bidding war that is now coming to a head. Bids were reportedly due last Thursday, with both Netflix and Comcast reportedly in the mix, which means we could see some developments this week.
Could the Ellisons’ eagerness to buy WBD be affected by the diminishing value of Larry Ellison’s 41% stake in Oracle? It’s not crazy to imagine that at the very least, the Ellisons may be less willing to overpay than they might have been. A recent securities filing showed that as of mid-September, Ellison had pledged about 30% of his Oracle stake—or 346 million shares, worth about $69 billion currently—as collateral for personal loans taken out “to fund outside personal business ventures.” That’s up from the 277 million shares he had pledged a year earlier. As Ellison backed his son‘s purchase of Paramount this past summer, he may well have done so by borrowing against his Oracle shares. Even if he didn’t, the loans suggest Ellison would be sensitive to swings in Oracle’s stock price. And it certainly has been volatile.
You might recall that word of the Ellison family’s interest in WBD emerged a day or so after Oracle shares had rocketed 36% to as high as $327 in the wake of the company’s disclosure that its cloud unit had signed hundreds of billions of dollars’ worth of business extending over the next few years, mostly with OpenAI. That translated to an increase in the value of Ellison’s stake of about $100 billion, enough to pay for WBD. But Oracle shares have fallen 39% from the high to just below $200 on Friday—costing Ellison about $149 billion.
The holidays are coming up, which means it’s time for another surge in SpaceX share prices.
The Elon Musk-founded company is planning to keep up its tradition of a twice-annual tender offer, with the new price expected to be set in December, according to multiple people familiar with the space giant’s plans.
It was last valued at $400 billion this summer in a sale of existing shares. At the time, it was the most valuable startup, but it wasn’t long before OpenAI surpassed that with its $500 billion valuation.
Rumors abound about how investors will next value the space and internet business. Could it be $420 billion, one of founder Musk’s favorite numbers? Or would it be $500 billion, tying the record for most-valuable startup, on par with Musk-rival Sam Altman? The company is surveying demand from investors but has not yet decided on a price, I’m told.
One thing that has become clear is that SpaceX’s formula of regularly allowing investors and employees to sell shares does not appear to be ending anytime soon. Demand is high and a potential public offering is a long way off, insiders say.
That’s a change from the past. A few years ago, Musk said he expected SpaceX would eventually spin off satellite internet service Starlink and take it public. But executives haven’t been working towards that outcome lately and a spinoff may never happen, the people said.
That’s because SpaceX’s rocket business is in better shape relative to Starlink than it once was. A few years ago, Starlink’s margins from selling subscriptions for $120 a month were expected to be higher than those for SpaceX’s rocket launches, making a spinoff of the stronger business more attractive. But its core rocket launch revenue has grown and there is ample demand from investors to buy part of the combined business.
Jared Carmel, founder and managing partner of Manhattan Venture Partners, which owns SpaceX shares sold by existing shareholders, said that he sees continued demand for the business “because it’s delivering on both proven revenue and moonshot potential.”
He pointed to strong market share, with SpaceX launching the vast majority of satellites and other payloads, by mass, into space globally. SpaceX’s overall business is on track for $15.5 billion in annual revenue, Musk posted on X in June. It has about $3 billion in cash, The Wall Street Journal reported in July.
“It’s rare to find a private company that’s both printing money today and positioned to define the trillion-dollar space economy tomorrow,” Carmel added.
Last year around this time, SpaceX received a large jump in demand from investors, which pushed up its valuation to $350 billion from $180 billion, in part due to Musk’s ties to newly-elected President Donald Trump after Musk poured $250 million into his re-election campaign.
The two now have a complicated relationship. Earlier this year, Musk publicly slammed Trump on the president’s landmark budget bill, prompting Trump to threaten to revoke some federal subsidies to Musk's companies. Musk was back at the White House last week for a dinner with Saudi officials.
But SpaceX has been unaffected by Musk-related drama, with investors saying they like the business fundamentals: namely that it’s growing, generates cash and has high barriers to entry. One person familiar with SpaceX’s business pointed to growth in the government business, like its recently reported $2 billion deal with the Pentagon.
Would SpaceX ever need to raise more money through private financing or an IPO? Possibly some day, said one insider. SpaceX has recently been buying costly spectrum, like the $17 billion it purchased from EchoStar to enhance Starlink’s mobile coverage for cell phones in hard-to-reach areas. The business could also spend money on artificial intelligence initiatives, with Musk tweeting in October that SpaceX will build data centers in space.
For now, SpaceX investors are still forecasting, dare I say, rocket ship-like growth.Now, there’s no guarantee the Ellisons’ Paramount will win the bidding for WBD. It’s a good bet WBD CEO David Zaslav would prefer not to sell to Paramount, which wants the whole company. After all, most public company CEOs don’t want to give up their job. Selling part of WBD to Netflix or Comcast, or sticking with previously announced plans to split WBD’s studio and streaming operations from its slowly shrinking TV channel business, would likely keep Zaslav employed. But the WBD board has to consider the interests of all shareholders, which means a sale of the entire company to Paramount can’t be ruled out. It also could make a difference to the board that the Ellisons—thanks to Larry’s closeness to President Donald Trump—will have the edge when it comes to getting regulatory approval for any deal.
No one could blame either father or son if they chose to pull back a little. After all, few other companies would buy all of WBD for the simple reason that half of the business is slowly evaporating. The risk that the Ellisons will be taking on in buying it, so shortly after acquiring Paramount, is not insignificant. It doesn’t help that Oracle is taking on enormous risk with the cloud expansion. At some point, maybe Larry Ellison will stop to wonder what on earth he’s doing.
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The narrative that OpenAI has an insurmountable lead and Nvidia a monopoly is fracturing. The dynamic in AI is shifting from a sprint for supremacy to a battle of attrition defined by financial staying power and vertical integration.
Google is waging a two-front war against incumbents. On one front, Google is leveraging $70 billion in free cash flow to pressure OpenAI—whose CEO recently warned of “rough vibes.” On the other hand, Google is deploying TPU infrastructure to erode Nvidia's dominance, convincing players like OpenAI and Meta to adopt its hardware.
We present the Minds of Modern AI courtesy the Financial Times' FTLive to close out, and also a tribute to the great Tesla (Nicholas Tesla that is) along with an admonition from Reid Hoffman:
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