Why Democrats Caved To David Ellison’s Megadeal

Money, power, politics. Hollywood has written this script in myriad iterations, but now life is imitating art with the David Ellison deal that swallowed Tinseltown whole. But is the coming Paramount-Warner Bros. merger the start of a new corporate Hollywood era, or a last-ditch effort by businesses seeking more of what many on the Left see as too much power concentrated in too few hands as the Trump administration faces a perilous midterm? Political commentator, author, and research director of the American Economic Liberties Project Matt Stoller talks with The Daily Wire about how partisan politics affects the balance of power not just in Washington, but also Hollywood, how AI smokescreens act as cover for tech bro misbehavior, and what’s really causing a schism on the Left.

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Ben Domenech: Matt, I wanted to talk to you about what has gone on over the past couple of weeks leading up to this big story that is momentous in terms of California and in terms of the future of media, Hollywood, and a lot of other things. Everyone was paying attention to it. First off, I have to ask: were you surprised when this came down, and California Attorney General Rob Bonta, after all his chest-thumping on this, seems to have completely caved?

Matt Stoller: I’ll divide that into two parts. Was I surprised at the outcome? I wasn’t surprised at the outcome. I thought it was a difficult case. You have the Trump administration and a lot of foreign enforcers in powerful parts of Hollywood that wanted to see the merger go through. So it was always a fight. I gave it more of a coin-flip chance. And so it’s not a surprise if it’s 50-50 for it to go one way or the other. But then was it a surprise what Bonta did? There, I’ll say it was. And it’s because he had been so open about his demands and the way he saw the case, and then he just reversed himself and made no explanation. You don’t typically expect someone to just blatantly lie and not try to explain it. It’s just a weird thing to do. It’s the equivalent of talking to someone and, all of a sudden, just starting to sing. It’s a strange thing to do.

BD: The reaction immediately from a lot of the folks who were covering this was that Gavin Newsom and other people had put pressure on Bonta to accept a deal that really didn’t live up to anything that he was saying about structural solution being a mandatory part of it. Personally, do you have any insight into whether that’s what went on here? Or is basically your take that this was always going to end up being a pretty weak deal and that the reality is that Bonta just got out over his skis?

MS: Yes, he just cleared the merger. There’s no real concessions here. It’s all fake. How I see it is that people look at this and try to calculate what Bonta was angling for. Did Newsom put pressure on him? That’s all sort of true. There’s a lot of it being about Newsom putting pressure on him, yes. But the truth is these people are the equivalent of actors playing doctors on TV, and then they’re asked to do surgery. And that’s what happened here. You can try to calculate whatever you want, but these people don’t know how to do anything. They don’t know the law. They don’t understand how to wield power. They’re just not interested in the real world. Fundamentally, they are only interested in what other insiders think of them.

BD: I’m not surprised by that, and I agree with you, but I also felt like this was a situation where the size of the ramifications of something like this happening would be so great that it might be a rare instance where something significant could happen that would force Ellison or other parties to this — to make some fundamental changes or to agree to some fundamental things. I did not expect it to be, “You’re going to have an oversight board with no out.” As soon as I heard that was part of the agreement, I just started laughing. I was like, “What?”

MS: It’s so dumb. But two attorneys general, Phil Weiser in Colorado and Nick Brown in Washington, they refused to sign on over that part, reasoning, ”We don’t like this idea, and we don’t want the government engaged in speech control.” But yes. The way I would put it is that something big did happen, which is that they filed an antitrust case. That’s never happened before. There was a tremendous grassroots outpouring, and a lot of people in the industry risked their careers to say this was a bad idea. And there was a huge debate over it, and it blocked the deal for a year. My guess is that if we hadn’t done that, you probably would’ve had multiple successive mergers going on by now.

Now the question is if you’re a CEO and you want to merge, are you going to put your head through the meat grinder that Ellison just did? So there are some benefits here, but what I think was so different about this moment is not that Bonta betrayed, because historically Democrats just do that.

I’ll let you talk to your own party. I’ll talk to mine. The difference is this time everybody noticed.

It’s similar to when Obama ran on, “I’m going to address this foreclosure crisis and this financial crisis.” And then he helped accelerate the foreclosure crisis. But the difference is that he was able to persuade Democrats that he was trying to fight it and doing the best he could. And so when you try to say, “Oh, we should have a different form of politics,” Democrats mostly said, why? He did the best he could.

That’s the opposite of what happened here. No one was listening to Bonta. The moment he said, “This is a great deal,” people stopped listening because they knew it was bullsh*t. If he had just been straightforward and said, “I think they were going to leave, and I wasn’t going to risk the economic fate of Los Angeles on an antitrust case, even though I think it’s illegal, and the federal government needs to do stuff here.” People would’ve said, “Well, that makes sense.” And he could have caved the same way; he just would’ve had to be straightforward.

But instead, he just lied. And I think the reason he lied is that he’s a TV doctor asked to do surgery, and he literally doesn’t know anything. He doesn’t even know that he was lying.

BD: That threat of leaving had such a powerful reaction when it came to this. Do you think that this is kind of a pivotal moment too, because so much of the conversation around California, sometimes fairly, sometimes unfairly, is just one of everybody’s loading up the U-Hauls, they’re all going in one direction, and that this would have played so powerfully into that narrative that a lot of Democrats, not just Newsom, would have been angry at it in an election year?

MS: Yes, I think they would have been angry at him, but I don’t think that narrative is true. I think the narrative is controlled by people who have a lot of wealth and power. So if you look at Penske — the Penske media conglomerate controls all the Hollywood trade publications.

BD: It’s amazing that we don’t talk about that more. They own all of them.

MS: They’re crazy. There’s two they don’t own. One of them is The Ankler. And actually, Paramount was caught advertising to the Ankler in the middle of this, essentially saying, “You’re opposed to the merger.” And then the other is Puck. But the thing about Puck is that Puck is funded by Redbird Capital, or they’re trying to raise money from Redbird Capital, which is also funding the Paramount merger. Puck is being funded at some outlandish valuation, which, of course, just means they want to control the narrative here.

So first of all, there’s this thing about Democrats in California, which is especially bad, but it’s true in a lot of places, and I think you see this in both parties, but Democratic legislators and Democratic policymakers don’t think it’s their job to do anything about the economy or money. They think, “That’s not our job. That’s not what we do.” When you ask them to do something — and we did work with California legislators — when you ask them to do something about pricing or to do something with regard to private equity or mergers, they don’t really understand why you would ask them that. Then they get very upset if some billionaire says, “I’m going to move my company.” Regardless of whether it’s true, they don’t know, and they don’t have a framework to analyze it. Their view is just, “Well, it’s inappropriate to even do anything about the economy, so why are you putting this on me?” So that’s what’s going on here, and that’s why there’s just a general rage on the part of Democratic voters because maybe they don’t exactly understand this point, but they are generally speaking very upset that their leaders are not representing a willingness to wield power on their behalf.

BD: Yes, because from the Republican side, it’s basically the more money for us, Paul Ryan meme, and we know that’s what they’re going to do. On the Democratic side, the gap is between what they’re actually promising and what they’re doing. I feel like that’s going to be a problem that’s only going to get more exacerbated after this midterm, just given the people who are coming in. Am I wrong about that?

MS: It depends on who wins, right? We don’t know who’s going to win. To me, the Paramount-Warner fight is a prelude more than anything else, because what’s going to happen is you’re going to see the schism within the party, which is what happened here. And it wasn’t just the party. You saw that a bunch of the unions were supportive of the merger and others weren’t. You saw the press just taking sides in an embarrassing way. You saw a whole bunch of different powerful Democratic influencers pushing for it. I’m not just talking about the politicians; I’m talking about people like Ari Emanuel, who was very aggressive for it.

If the Democrats win, there’s going to be huge disagreements about what they want to do because, fundamentally, half of the Democrats believe corporate power is a problem and half believe corporate power is the solution. So the mentality is, “Good luck with that.”

BD: If you had to handicap it — just given that you’ve lived through a period where corporate power can be bent to our will and is a solution has, at least from my perspective and correct me if I’m wrong, racked up victory after victory and basically held the reins — do you think that there’s a sign here that something could fundamentally change in the way that the party treats corporate power, just given the landscape of mostly young, or newer faces that are coming in at this particular moment when I feel like the combination of concerns about AI, concerns about job loss, concerns about affordability, all make for this opportunity for those Democrats to really seize the narrative?

MS: The answer is I don’t know. I’m mostly pessimistic. AI safety is basically just abundance rebranded.

BD: Can you explain that? I know you’ve said that before, but can you explain why?

MS: The problem we have with AI is the same problem we have with most other areas, which is you have powerful people who are doing dangerous things and then you have no willingness on the part of democratic institutions to stop them from doing dangerous things. And I’m not talking about regulating them, I’m talking about just basic equality under the law. We see a lot of criminal behavior from Corporate America, and attempts at illegal behavior, and any attempt to crack down on it is met with fierce resistance. Now, sometimes you can overcome that. I think we did see with [former commissioner of the U.S. Federal Trade Commission] Lina Khan and some of the other people in the Biden world that there were attempts to overcome some of that with mixed success, but it’s not that you necessarily need new laws or rules; you need equality under the law as it exists now.

What is happening with the AI safety crowd is that they are saying this technology is unique and effectively not subject to normal forms of law. And the way they are doing this is they are telling a story that the technology itself has gone rogue instead of the people who built this technology building unsafe technology. And those are very different stories. I’ve read the analysis of the Hugging Face incident, and it is a very strange document because it says we didn’t ask what any staffers or executives at OpenAI were doing that was out of scope. Well, if you have a plane crash or you have some sort of bank failure, of course you’re going to look at the human element involved and they explicitly did not. And then they went off and said, “AI is becoming super intelligent. AI is collaborating and doing all of these different things.” We have no idea what any of the stuff was programmed to do because they just didn’t ask, but we do know that they told a fake story.

So that’s a story that excludes liability. Now on the other side, you have Trump and [Nvidia CEO] Jensen Wong, all these guys saying, “Well, they have liability. Why should we regulate them? They already have liability.” But they’re explicitly not enforcing criminal behavior like laws against crime. So it’s hollow, right? So this is the problem. Now, the reason I’m pessimistic is that what I saw, largely led by Bernie Sanders, was this embrace of the idea that they’ve built a God machine instead of what I think is going on, which is that we just don’t enforce the law against Sam Altman for creating dangerous malware.

It’s like we’ve learned nothing since the financial crisis, right? We listened to the bankers. We shouldn’t have listened to the bankers. And now they’re saying, “I know the guys in the AI labs; we’ve got to listen to them. They’re good people, and they’re really worried.” I’m sorry, what? You have to learn. And that’s what makes me pessimistic because I’m just seeing a lot of left-wingers falling for that and unable to actually think for themselves. And that’s fundamentally the problem. That’s fundamentally the, “Are you a doctor or are you an actor playing a doctor on TV?” problem.

BD: One aspect of this that I’m curious about, just playing things out in the future, it seems to me that the biggest thing that could happen here, and I wonder how many different entities are holding back on these types of steps in the run-up to the election to avoid pissing off the administration, is that the first thing that AI came for was obviously customer service because it’s low-hanging fruit.

The second thing that I feel like they’re coming for that relatively few people, certainly not in politics, are talking about is the abundance of process jobs that are associated with so many aspects of our economy. I think particularly of the fact that every congressional district has something like a dozen hospitals in it — think it’s actually a little more in the median. And all of those hospitals have people who work there who are not doctors and not nurses and not assistants, not people who are interacting with patients, but people who are handling the process side of insurance and of coding and of everything associated with that.

To me, those jobs are widespread and really easy to target with AI, so you can replace many of those very quickly. And I’m wondering what you think the political reaction will be if something like that happens. And you could pick another industry if you want, but I think that in particular is an aspect of this that could result in a lot of people — particularly on the Republican side — getting very scared about job losses in their districts.

MS: I’m skeptical of the job loss argument. I don’t know because I just don’t know. Ford laid off a bunch of quality assurance engineers, replaced them with AI, and then hired them back. So it’s not totally clear to me whether they’re going to be able to do that. But I do think it’s funny that single payer, from the perspective of the Left, would effectively do the same thing. Because what you’re talking about — are these huge billing departments and administrative bloat, which is unnecessary to deliver care, but one person’s administrative bloat is another person’s income. And so you’re saying is that AI is actually going to do to the healthcare system what single payer would’ve done.

And that’s funny. I will just note that what hospitals are really doing with AI, and I think if you want to think about processes, the way I think about it, is they’re using it largely to increase the amount of money they charge insurance companies and the government. So upcoding in various forms of fraud, which is fraud as a service. Whatever your society does already, AI just does more of it.

So in China, it helps them make electric vehicles and all sorts of other things. It also helps them surveil Uyghurs more, and it just does more of whatever China does. And in the U.S., it’s just like, okay, well, it makes our stock market go up and it helps us do more pricing bullsh*t and monopolize because that’s what we do; it makes us do more of it. That’s my view of how AI is working. And that’s why people don’t like it because they don’t like what we are already doing.

BD: I’m just curious because the response to this on the Right, you talked about the schism on the Left, is almost certainly going to lead to further schism on the economic side, meaning that Phil Graham’s still out there writing Wall Street Journal op-eds.

MS: I was going to ask you about that because I read that and I thought, “Oh, that’s interesting because I’m seeing what I would be doing if I were on your side is I would be framing the narrative for why we lost and that’s what you guys are obviously doing. So how is that working out right now?

BD: I think that’s very TBD and it’s something that I think is interesting to watch because so many people have become invested in this idea, whether it’s hand waving or just sort of pretending to go along with, “We’re going to be about industrial policy now. We’re getting rid of the old Reagan ideas and we’re driving that out and we’re all about something that’s new and different.” But I think that the problem that they have is that the power of the people who, again, wealthy, powerful, influential people to frame an election loss this time as the ramifications of tariff policy and things like that should not be underestimated because I think that, again, it goes to the old muscles of the Republican coalition and they recognize that type of rhetoric and it’s very easy to fall back into that and say, “Hey, we went too far in this direction, and it didn’t work out, and we’ve got to pull back.”

I think that is already being set in terms of a post-election narrative. And because the president himself doesn’t care about any of those fights, that creates a difficult problem for the people who’ve been pretending for a while now that that was what he was all about.

MS: Another way to put it is there’s only one Josh Hawley.

BD: To circle back to this merger, you said it was the prelude. What do you think comes next in terms of lessons that people take away about what you have to go through in order to get a merger of this size to happen? Do you think that there’s going to be more people going in this direction going forward? Will they try to squeeze these things in with the remaining time of this administration? What do you see coming next? And obviously they can’t all count on Mark Ruffalo coming in and giving people a narrative.

MS: It’s a good question. I think there’s going to be. You’re definitely seeing mergers and acquisitions are probably going to be higher this year than they have been in any year since 2021, which was the post-COVID year, which is huge. And that’s because 2021 was insane. And you’ve seen an increase in 2025 and then it’s going to go gangbusters. And 2027 and 2028 are probably going to be too, at least in the political environment. If you’re a CEO, you’re going to want to get your deal through. If you have a big strategic deal, which is to say you’re trying to monopolize or do something that might be illegal, you want to get it done now. And if you’re just trying to make some money by selling your company, that just relies on the financial markets and you could go and ask an analyst about the financial markets. I don’t have any insight there.

So yes — it’s time to get your deal through. I think there’s a general view that Democrats are not going to be as friendly to M&A when they win — there’s a general view that they’re going to win.

BD: They’re going to win.

MS: You have to get your deal through now. Private equity has its own problems because they bought all their companies a couple of years ago, and they’re all overvalued, and they don’t want to sell them at a loss. So there’s a huge inability to sell their companies and then go out and raise more money. So private equity is in trouble and also interest rates are higher. And a lot of M&A is actually just private equity. But in terms of the big corporate deals, we’ll probably see more of them. I mean, another one that’s interesting is the Union Pacific-Norfolk Southern deal, because that one, you have a lot of opposition.

If it goes through, you will see another giant railroad merger. But these railroad mergers take years to get through. That’s the other thing is that this Paramount deal took a year to get through and it was speedy. So if you want to get your deal through, you probably have to do it within the next year, because 2028, if you put your deal through, then the next administration may have some ability to do something. But I guess we’ll see if there are any hearings on any of this stuff when the Democrats take power. I know that Jamie Raskin has said he wants to do a hearing on this deal. We’ll see if he does. It’s a fight. That’s the thing is you don’t know who’s going to win in the election and then you don’t know what they’re going to do.

Abdul El-Sayed winning the primary was a big deal. If he wins the Senate race, that’s a big deal. Graham Platner getting knocked out was also a big deal. I’m pessimistic because of what I saw with this AI safety thing, but others in my orbit have different points of view. I am not certain about my pessimism.