Splitting the Paramount empire

Ever since Sony Pictures Entertainment and Apollo Global Management expressed interest in buying Paramount Global, a big question has loomed over the potential $26 billion deal: What would they do with the company?

The answer: Break it up, write The Times’s Ben Mullin and DealBook’s Lauren Hirsch. But that plan could lead to complications.

Sony and Apollo would keep Paramount Pictures. Sony, a Japanese company, has long wanted to acquire the movie studio behind “The Godfather” and “Top Gun.” It approached Paramount about a sale or merger years ago, only to be rebuffed after Paramount signaled it was interested only in a deal for the whole company.

Paramount Pictures would become part of a joint venture controlled by Sony, with Apollo taking a minority stake in the new entity that it could eventually sell to Sony or to another buyer. The venture would also keep Paramount’s library of films and TV shows, as well as the rights to characters like the Teenage Mutant Ninja Turtles.

Everything else would be up for sale, including CBS, cable channels such as MTV and Nickelodeon, and the Paramount Plus streaming service. Here’s how that might play out:

• CBS could be sold to a company such as Warner Bros. Discovery, which doesn’t own a broadcast network

• Some of CBS’s owned-and-operated TV stations could be acquired by groups like Nexstar and Tegna.

• Paramount Plus could be sold to a rival platform, like Comcast’s Peacock or Warner Bros. Discovery’s Max. (Sony doesn’t have a general-interest streaming platform, instead licensing movies and TV shows to operators such as Netflix, and would most likely stick to that strategy.)

• The cable networks would probably be the toughest divisions to unload, but they could be attractive to TV programmers looking to scale up to gain leverage in negotiations with big cable companies such as Charter and Comcast.

There are complicating factors. Shari Redstone, Paramount’s controlling shareholder, would prefer not to break up the company that, in some form or another, has been controlled by her family for decades. But it’s not necessarily a deal breaker — if the offer is compelling enough. (The plan hasn’t yet been presented to Paramount or its advisers.)

And investors in Sony are showing some concern about what a Paramount deal might mean for the company’s balance sheet. Shares in the Japanese conglomerate are down 9 percent over the past five days — though asset sales may allay those worries.

HERE’S WHAT’S HAPPENING

President Biden says the U.S. won’t supply weapons to Israel for a Rafah assault. While his administration will still help Israel protect itself via systems like the Iron Dome missile shield, he would not permit shipments of arms that could be fired into the Gazan city, where more than a million Palestinians are sheltering.

Speaker Mike Johnson survives an effort to oust him. House Democrats effectively protected him from a bid by Representative Marjorie Taylor Greene, Republican of Georgia, to remove him from his post. The move by Democrats came after Johnson pushed through bills to send funds to Ukraine and Israel over Republican objections.

Extending the Trump tax cuts could cost $4.6 trillion, the C.B.O. warns. Calculations by the nonpartisan Congressional Budget Office show that renewing the 2017 reduction in personal income taxes alone would cost $3.8 trillion over the next decade. The findings may escalate a fight in Washington about how to tame the soaring federal deficit: Biden has proposed new taxes on businesses and the wealthy, while Donald Trump favors renewing the cuts.

U.S. authorities reportedly examine Tesla’s driver assistance software claims. The inquiry by federal prosecutors centers on whether Elon Musk’s electric vehicle maker committed securities or wire fraud by suggesting its cars can drive themselves, when its systems require human supervision, according to Reuters. Separately, Musk’s xAI is poised to close a funding round that values it at $18 billion, Bloomberg reports.

A new bid to police A.I.

A powerful Republican lawmaker is pushing to keep new American-made artificial intelligence systems with national security implications out of China’s grasp.

Representative Michael McCaul, the Texas Republican who chairs the House Foreign Affairs Committee, will file a bill on Thursday to regulate the sale of A.I. systems abroad, Cameron Joseph is first to report for DealBook.

The Commerce Department would be given new powers. The proposal seeks to beef up the authority of the Bureau of Industry and Security, an agency within the department that can block hardware exports — like chips — that pose a national security risk. But the B.I.S. can’t block the export of software or stop companies from selling their A.I. models to foreign adversaries.

Mark Beall, a former Pentagon official and co-founder of the consulting firm Gladstone AI, who provided feedback on the bill, said that without such authority, “You have a big gaping hole in your export control regime.”

McCaul wants to extend the reach of B.I.S. One way would be to prevent researchers from working for rivals to produce systems capable of hacking U.S. infrastructure or developing bioweapons, according to a summary of the legislation viewed by DealBook.

McCaul has long pushed for a tougher approach on China. Last year, he accused the Commerce Department of putting trade with Beijing ahead of national security and called for the B.I.S. to be overhauled.

But he has worked with the Biden administration on this bill. A National Security Council spokesman said it was “providing input” to McCaul to “help shape” the bill. Members of McCaul’s staff say they’ve incorporated changes requested by the N.S.C., and have been in contact with the B.I.S. and other Commerce officials.

The restrictions would probably only apply to the most powerful, emerging A.I. technologies. That means that new systems built by companies such as OpenAI, Microsoft, Anthropic and Alphabet could be subject to B.I.S. authority.

Open-source A.I. models like Meta’s may face extra scrutiny. Chinese companies have already tapped into Meta’s generative A.I. system to create their own tech. If McCaul’s bill passes, American firms could be forced to restrict access if their models are deemed to have national security implications.

It’s unclear whether the bill will pass — but McCaul says A.I. is a huge concern. The next generations of A.I. systems will “dramatically change everything, including warfare,” he told DealBook.

Some defense experts see limitations. “It’s not to stop China, it’s to slow China,” said Vivek Chilukuri, a director at the Center for a New American Security.

What ride-hailing says about returning to the office

Many industries, including the embattled commercial real estate sector, are pushing for workers to return to the office. (Even Zoom, a paragon of the work-from-home era, has been calling employees back in.) Data suggests that the trend is accelerating — with more evidence coming from an unexpected source.

Uber and Lyft, the ride-hailing companies, said in their first-quarter earnings this week that they’ve seen gains from workers schlepping back to the office.

Here’s what they had to say:

• Erin Brewer, Lyft’s C.F.O.: “Total rides grew 23 percent year-over-year, reflecting strong demand across use cases. Growth in early morning commute and weekend evening trips was particularly strong, which is a continuation of the trends we saw in the back half of 2023.”

• Dara Khosrowshahi, Uber’s C.E.O.: “We see the weekday commute use case being particularly strong as people are coming back to work.” He added that the company had lost some of its most frequent customers during pandemic lockdowns.

Both companies offer partnerships with businesses to ferry employees to their workplaces.

The trend is especially important to Lyft. Unlike Uber, whose Uber Eats food and meal delivery service propped up the company during lockdowns, Lyft offers only ride hailing. Its stock jumped more than 7 percent on Wednesday; Uber shares fell, though that was also driven by rising legal costs.

Khosrowshahi made clear where he stands on back-to-the-office. Such mandates have been polarizing, with many workers complaining about a return to the commuting slog. The Uber chief, who introduced a hybrid-working scheme for his company in 2022, is firmly in favor of a return to the prepandemic workplace norm.

“Some folks may not like that, but we love it here at Uber, people getting back to work and getting back to the office,” he told analysts. “We were a daily habit. And hopefully, we will see that audience come back, and we’re seeing evidence of that in terms of the weekday volumes being super strong.”

“Everything has to get rewired. It’s like taking a brain and a heart out of a human and then planting a new brain and a new heart.”

— Nir Bar Dea, C.E.O. of Bridgewater Associates, on his overhaul of the hedge fund since taking over a year ago. Bar Dea told The Financial Times that the changes were made to improve performance and to mark a shift from the approach of the firm’s founder, Ray Dalio.

Bad Apple

Wall Street analysts and tech reviewers gave Apple decent marks for its new lineup of iPads that go on sale next week. But a new ad for the device is generating the biggest buzz this morning — and not for the best reasons.

Why the fuss: Titled “Crush,” the spot shows musical instruments, cans of paint, squishy toys, a turntable and other objects getting flattened by a large industrial compressor while Sonny and Cher’s “All I Ever Need is You” plays. After the squashed destruction, the new sleek iPad appears.

Tim Cook, Apple’s C.E.O., posted the ad on X and wrote, “Just imagine all the things it’ll be used to create.”

Critics swiftly weighed in. Some saw it as a “sad” and “distasteful” symbol of the technology industry putting the squeeze on the creator community. Hugh Grant, the British actor, called it, “The destruction of the human experience. Courtesy of Silicon Valley.”

The Times’s Tripp Mickle explains why the ad seems to have struck the wrong chord with so many:

For decades, Apple has been the toast of the creative class. It has won over designers, musicians and film editors with promises that its products would help them “Think Different.”

But some creators took a different message from the one-minute iPad ad. Rather than seeing a device that could help them create, as Mr. Cook suggested, they saw a metaphor for how Big Tech has cashed in on their work by crushing or co-opting the artistic tools that humanity has used for centuries.

THE SPEED READ

Deals

• The Spanish lender BBVA made a $12.4 billion hostile takeover bid for a rival, Sabadell, after its initial approach was spurned. (Bloomberg)

• Blackstone appears poised to win the bidding contest for the music rights owner Hipgnosis Songs Fun after a rival, Concord, declined to raise its takeover offer. (Reuters)

Policy

Best of the rest

• Who might succeed Tim Cook as Apple C.E.O.? Company insiders reportedly point to John Ternus, the iPhone maker’s hardware chief. (Bloomberg Businessweek)

• “Meet AdVon, the AI-Powered Content Monster Infecting the Media Industry” (Futurism)

• “Was the 401(K) a Mistake?” (NYT Magazine)

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