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Our last podcast recording of the year.

Yeah, it's been an interesting year.

One thing I never do.

Yeah, I know, you tell all.

Years of media does any sort of year end wrap up or look forward?

Which is so good among the best parts of my life as a media person.

Is not ever doing that.

But people want that.

People are like, oh, would you like to contribute to twenty themes for the year ahead?

And I say no, no, no, get worry.

I'm sorry for introducing a hint of reflection.

It's okay, it's okay.

We can reflect about my lack of reflection.

Yeah, that's good.

How about your themes for next year?

What are you looking forward to?

Looking forward to the introduction of multi share classes?

Boy?

See, yeah, that'll be like that.

Not to be looking forward to that, Hey.

Could be big.

What are you looking forward to next year?

Oh?

I wasn't supposed to ask you that.

But I'm looking forward to coming in each day.

Yeah, to find weird news and write about it delightedly.

And if I knew what it would be, it wouldn't be that weird, it wouldn't be that exciting, it wouldn't be delightful.

It wouldn't be.

It wouldn't be as much mirth, wouldn't be.

The spontaneity and joy that I bring to my job every day.

There, it's didna sound like it?

Hello, and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money.

I'm Matt Levine and I write the Money Stuff column for Bloomberg Opinion.

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

What are you talking about today, Katie, it says on my script, Shoot.

What do you want to talk about?

First?

We actually have four topics today?

Four topics?

Do you wan the winner situation?

Yeah, it's pret Louise.

Yeah, remember you were reluctant to talk about that.

Well, okay, So here's the thing.

It went from being like a big media merger with like a lot of moving pieces and a lot of like stuff that people are cared about in terms of like anti trust and like creative direction of Hollywood and like the Trump involvement and who will own CNN and all these things, And it went from that to being a really drawn out fight about closing certainty and merger agreements, which is much more my area of interest, and it's kind of wild, like what is happening, which is that there's some debate about who has the higher bid, but Paramount are pretty sure they have the higher bid.

They also think they have a better regulatory path.

But Netflix has said no to them for the number of reasons, including bid valuations.

But what they really leaned on in their most recent like they've made an official filing telling Warner shareholders to reject the Paramount tender offer, and the Warner board really leaned on the fact that Paramount's money.

I mean, Paramu doesn't have money, right, Paramount is much smaller company than More, and it has documentments which are fairly standard UG commitments, and it has some equity commitments from like Middle Eastern sabon wealth people that Warner is kind of casting us persians on.

But really the equity is backslots by a forty billion dollar commitment from Larry Ellison's personal trust Larry Allison, the dad of parame CEO David Allison, and you know, the fifth ish richest person in the world two hundred and fifty billion dollars of Oracle stock.

But it's all on this trust, and the incredibly weird thing that's happening here is that the commitment papers are all apparently being signed by the trust.

And Warner says, well, but you could take all this stuff out of the trust and then when it comes time to the close, we'll go to you and we'll go to the trust and be like, all right, we need the forty billion in the trust can be like I don't have any money.

I'm just like an empty shell.

And I think that's right.

I think that as a technical analysis is right.

And the paramount people are like, this is crazy.

Yeah, you know, Larry Elison is good for the money.

He has sign and other big merger commitments as the trust, right, Like he committed to Elms Twitter deal and to the Electronic Arts deal.

Look, he was not the principal there, he's not the person on the hook for the whole deal.

He's like, yeah, he's committing an Elon's deal.

And so basically Paraman is like, no, look, this is fine.

This is a crazy technicality and you're misleading people by saying that this matters.

And Winner's like, no, no, no, we really need you to commit your money.

And the solution to this seems so easy that I don't understand what is happening.

It's so like the easy solution I think Warner has asked for this is in the piece of paper, where like instead of saying, like, the Larry Ellison trust signs this deal, you just say Larry Ellison signs this deal, right, and then like he owes the money and if he takes it out of his trust or any other you know, personal vehicle, he has to close the deal.

And I don't understand what's happening because the winners are just sign it in your personal you know, personally, aren't did and paramounts so far, I don't know they've said no, but they haven't said yes.

That's where we are.

Yeah, it's very weird.

Yeah, ag ansel thought I had is that you mentioned Larry Elson, the fifth wealthiest person in the world.

Oracle stock has gotten pretty flattened over the past couple of weeks.

It's just gotten rocked.

I wonder how about that person.

Right, So, like, I don't think that it is reasonable for Warner to think this guy with let's say two hundred and fifty billion dollars of Oracle stock less than it was a few weeks ago.

But you know, two hundred fifty billion is I think it's reasonable for them to think he's not good for a forty billion dollars.

I can agree, right, you know, it's a meaningful chunk of as well, but it's yeah, twenty percent.

The thing that I'm struggling to understand here is if you're Warner, the situation that they're positing is kind of absurd, right.

The situation they're positing is like Paramount or Ellison changed their minds and they don't close the deal, and Warner sues them, and Para is like, we have money, and then Larry Ellison's like, oh no, it's the trust and the trust doesn't have any money anywhere, right, Haha.

It's a crazy thing for them to do.

And I think like part of what Paramount is saying here is kind of like that would be a crazy thing for us to do, and just like as a reputational matter, like you shouldn't worry about it.

Yeah, but I think they're like ever so slightly maintaining the legal flexibility to do it if they really have to.

And you could imagine that being part of a story of Yeah, the oracle stock clout line, and you can imagine that being like if things get really bad when we join the shares out of the trust and Steff Warner, then maybe right, yeah, and like that's a you know, if your stock is riding high, that's a different story than if you like you're getting slammed in the market for having too much AI lease obligations.

Well to add insult to injury, did you also see the Jared Kushner's Affinity Partners is withdrawing from the battle all together.

And it's a little interesting, right.

It is a little bit interesting.

So like generally you're like, oh, this is such a great deal, we really want to win, and then you're like, you know, one random equity partners, Yeah, it's a bad sign somehow.

The statement from the firm was that with two strong competitors to secure the future of this unique American asset, Affinity has decided to no longer pursue the opportunity.

We continue to believe there is strong strategic rationale for Paramount's offer.

Yeah, so it's just weird.

It's like a very very like good luck, you know.

Yeah.

One thing that people really commented on and about the Affinity involvement early was you know, the deal environment is so politicized, and like the sort of subtext of the Paramoun's bid was Netflix will not get anti trust approval one because it raises anti trust concerns and two because we're friends with Trump and he'll tell them not to approve the deal.

Right, And like with Jared Kushner on Paramount's side, there's some enhancement to that argument.

And if him gone, it's like, oh, maybe that argument's off the table.

So where does this leave Paramount.

I feel, like I said this last week, they should probably raise their bid because they have said in public on television that their bid is not best in the final And then they should probably have Larry Ellison sign a personal guarantee for the deal.

It seems signary.

It seems very easy, and I'm very puzzled that it's not as easy for him as we thought, as I think.

Can I talk about one other thing about the Warner deal?

I really want you to.

There is a great Financial Time story about the advisors who you know, any big merger, Right, It's like the south side advisors are going to get paid and then like one by side team of advisors is going to get paid an ocean of money and the other one is not.

So you know, it's a bitter battle.

But they also quite people talking about how it's a deal that like kind of got negotiated over Thanksgiving and is now heating up into Christmas.

And they quote like one of the advisors saying, when the NBA players play on Christmas Day, nobody says our holidays are ruined.

They say, isn't it great You're in the NBA.

This is as good as it gets for investment bankers.

It's like a perfect quote.

It's a perfect It's also true there was nothing special if but like I worked in like high stakes of a day, and like one way you know it's high stakes is you're like working all night on holidays, right, and like it's like you feel cool about it.

It's as good as it gets for investment backers.

And that happens to me, and it happens for Christmas.

Yeah, do you want to talk about Excel sheets?

Yeah?

So tricolor, I think it's try color.

I don't know, can we just call it try?

In America, it was a subprime auto retailer and lender.

So you could like buy your car from Trickler and then they would lend you the money to pay for the car, and they went bankrupt this year because they want some trouble with their creditors.

The creditors had some complaints, and when they went bankrupt, the story was kind of they were like double pledging loans, which makes sense, right.

They make a bunch of car loans, they put them all on an excel file.

They send the excel file to one of six lenders.

And you know, if you send the the same excel file to two different lenders and you can borrow twice as much twenty That's kind of what people were talking about and what they assumed.

But this week the CEO of Track Color, Daniel Cheu, was indicted by federal prosecutors, and the accusation is, yes, a lot of double pledging, but also sillier stuff.

The one that I think everyone really enjoyed is that so they made a lot of like subprime model loans, and a lot of them are not current, right, people don't make payments, and so the way that their deals with their lenders work is that you can't borrow against the loan that's more than sixty days delinquent, right, Like if people haven't paid in two months.

Then you can't use that as your borrowing base to borrow from your lenders.

And they had a lot of those loans and they needed money, and so they're we're just going to pretend those loans are current.

So they marked them all as current and they could then borrow more money against them.

But they made a little mistake, which is that if the loan is current, then it's getting paid every month, which means that it goes down.

The balance goes down every month, right, because each month you make a little payment on your car loan, and your carlan goes down at And they didn't decrease the amount of these loans because they weren't current.

They weren't getting paid, and they just marked them current to trick their lenders.

Yeah, and this worked for a while.

And then the reporting from Bloomberg is that it's a junior analyst that Waterfall Capital is one of.

Their lenders, very fitting name for the situation.

Looked at this that these accel sheets and said why are these bounces not going down?

And so the lender called them called tri color.

I was like, hey, what's up?

And so like two things happen there.

When is that Tricolor and like Daniel Chu are like scrambling too, or allegedly scrambling to tell the lender some story.

Right.

But the other thing that's happening is that like the people who are marking the spreadsheet are like, oh, I need a lawyer.

So there are calls.

The indictment says their calls among the Tricolor executives that one or more like some of them were recorded by two different people on the call because everyone is like, I need to be able to bring something to prosecutors so that I get the cooperation agreement, so I'm not the one who goes to prison on this deal, which is really like yeah, quick thinking.

So there are all these recorded calls where they say wild things, including Daniel Chio allegedly had a call with Waterfall where he was like, oh no, no, this is some sort of system's problem.

I don't know what it is, but we'll fix it.

And he said, quote, look, if we were trying to commit fraud, we wouldn't be so stupid as to keep the same balances on there.

Nobody would be that.

Stall, which is just like it's perfect, yeah, hiding in plain sight.

Right.

I said in my column, like nobody would be so stupid as to do fraud this way.

I was, like, it sounds appealing, but it's not a good argument, because, like, there are a lot of stupid frauds out there.

I mean, the defense did work for a little bit.

He says on the call that I worked, but like the thing unraveled pretty quickly afterwards.

I don't think it worked.

Worked.

Yeah, I also love this detail.

This is from the Bloomberg News story that by late August, Cho was plotting with other Tricolor executives, including co defendant David good Game another great name, and Jerome Caller on how to settle with JP Morgan.

Except during the call, she likened Tricolors melt down to Enron, the energy giant felled by counting fraud.

He even discussed the idea of pinning the blame on banks for allegedly ignoring reg flags, a threat they hope to wield as leverage.

Right, it's bold.

Hey guys, what if we were en Rod?

Yeah, well, he did say Enron has a nice ring to it, right, She said, Enron raises the blood pressure of lenders when they see that.

He added, yeah, yeah, really a high wire act to be like we're Enron, but we're not going to prison.

And also perhaps this is your fault.

It's a difficult needle, but.

This is your fault.

Argument is like, we were so blatantly committing from that, I can't believe you didn't catch us.

So when you think about it, it's your fault.

You got to make that argument to then settle with the banks and have them not go to the police.

And it's tough.

Doesn't seem to work here.

Really charming though, this was a nice December read.

Yes, yes, you know what else was?

Tell me no one else.

Has a real I was going to say end of year vibe, but really more like end of civilization.

But oh god, Trump Media, the three billion dollar public company that runs a social media site and also like a ETU of some kind.

I can't say with the straight face they bought a nuclear fusion company.

Yeah, they sure did.

Why not?

Really?

Why not?

Yeah?

This was very sign of the times.

I'm not going to pretend to really really know what nuclear fusion is.

Nuclear fission is when you like smash your atoms together and they go flying out and they produce energy from like breaking apart.

A nuclear fusion is when you smash your adams together and they stay together and they produce even more energy from staying together.

Nuclear fusion is what power is such notable sources of power as the sun, oh sure, and not a ton of commercial nuclear fusion generation currently.

Yeah, but a lot of people have thought about it because it would be pretty good source of power.

And some of the people who thought about it worked for this company called tay which is a nuclear fusion company, found it in nineteen ninety eight, like you know, real people.

So as I can tell from their investor presentation, they seem to have first all raised over a billion dollars in funding from like you know, people like Google and Chevron, and secondly too you know the pictures of reactors, right, so yeah, maybe they're on their way to commercial grade nuclear fusion.

But in any case, yeah, they e merged with truth social hate.

Me a picture of a world where this makes sense?

What could be the logic here?

I want to just make sure that we keep my laughing into me?

But no, I mean, okay, there's a press release.

You can read the press release.

Yeah.

One thing in the press release is like one thing they say about their mission is that's to like free the world of big tech censorship, which not applicable to nuclear fusion probably.

But another thing is like, oh, it's America first strategic, like it all kind of like fits in a vague like strategic America nuclear power.

Yeah.

But the other reason for the deal, which is also in the press is they say in the press, pays the deal is to quote combine tmtg's access to significant capital and tay's leading fusion technology.

So like one way to put that on way to rephrase that Trump Media has raised a lot of money, has a big stock price.

Isn't like doing a ton with that stock price.

Stock price was higher, now it's lower because people had high hopes they bought the stock and then like yeah, it's like social media like ets whatever, right, and like there's not been a ton of exciting news and the stock is drifted off.

But they have a lot of access to capital.

They announced big news, the stock will go up.

The stock was up a lot on Thursday.

And one thing you might do if you have a lot of access to capital and not much of a profitable or revenue generating business is use your access to capital by other businesses, because then at the end of the day, you have a nuclear fusion company, right, You've used your access to capital markets to acquire real assets, right, Yeah, you know, like the truth social is an asset, is not, you know, not three billion dollars of assets.

And then from taste perspective, if you are building nuclear fusion reactors, you have a lot of need for capital.

And if someone has a lot of access to capital, and like, that's a good trade for you, right, So like Trump media brings the stock raising ability and hey brings the possibility of nuclear fusion.

But it's a very strange combination because it's like people whose business is somewhere between like running a social media company and like being friends with Donald Trump.

Yeah, and like now they're in charge of nuclear fusion.

It's just a strange pivot.

You point to AMC buying a gold mine.

There is they did do that thing some some tenuous precedent for this.

Is there precedent for meme stocks getting into unrelated businesses because like, you know, the point of a meme stock is that your stock is really high without necessarily the underlying business justifying it.

So you're like, well, Okay, I'm going to use this high stock price to go buy an underlying business that justifies it, right, Like we're totally precedent for that, Like games that was playing that game for years, you know, like, yeah, there's definitely a precedent for trying that, for trying it.

Game Stop never went out and bought anything super cool though, right, No, I just revealed that.

I think buying a gold mine is super cool.

But that's fine.

It's kind of unarguably cool, Like it's cool.

Yeah, like whatever else it is, that was a cool yeah.

Yeah, nuclear fusion.

Also, you got to give it to them.

I was not expecting that, and I was like.

Good game, good game.

Not of course the co defendant in the tricolor good game.

Should talking about watching videos?

Yes, tell me about this.

So South Korean's right.

South Koreans they love They didn't know this until recently.

They love crazy trading in American financial products, probably also South Korean financial products.

But like there's yeah, and so like Leverty ETFs great up the time, and so there's a big boom in South Korean retail speculation on stuff like Leverty dfs, which we've talked about.

Are you know, they're a product that sometimes loses people money and that like how it works is not necessarily intuitive to everyone who looks at it, right.

I mean, in particular, like the way Levertyts work is they provide two or three x the daily returns, and so they don't provide necessarily two to three xts the yearly returns.

Discuss.

Yeah, if you buy an hold of leverty TF, it might might rip your hand off, hurt, might not might be great, not investment advice.

But the South Korean regulators are sick of this, and so they've said, like, as of this week, brokerage as will this is from a Financial Times story.

As of this week, brokerages will automatically block investors wanting to put their funds into leveraged or in verse ETFs and who cannot provide the certification number given to those who have completed a one hour online training one hour.

Okay, so I didn't read the story click through.

An online they get an hour long online.

I was thinking, like the little video ad you get before YouTube video where it's fifteen seconds and then you can click through.

Yeah, right, us chance, Literally it's like with like options, you know, like you have to click some forms to be approved to trade options, right, and like an hour is aggressive?

Yeah, there's someone emailed me to be like there's going to be an aftermarket in those codes, Like he has the video, you're right down the corde.

You send it to some of your friends for money.

Can make an ETF out of that.

Yeah, levered a few times.

But I will say I love those.

Yeah, because you think that there should be gated access to the products?

Absolutely, Wow, Yeah, I'm a gatekeeper.

Wow, I think there should be gated access.

I also think that, like, if you're a securities regulator, one real bind that you have is that when stuff is going up, if you are ever like we don't want people to be able to invest in this stuff, Like, people get really mad at you because you're standing in the way of the fun.

And then when this stuff goes down, it's like, oh, this was a terrible product.

They come to the regulators like where were you on stopping this terrible product?

And as if you're the regulators, it's an unpleasant bind to be in.

A Yeah, you can't really do anything other than try to put the decision on the retail investors and try to give them as much information as you can and also like make it not your problem, which means like you know people.

Maybe like there's gonna be an aftermarket in those codes, right, Like, yeah, people are going to trade these ETFs without watching the hour long video.

Yeah, but like that's not a problem because from the regulat's perspective, those people can't complain.

Right if you like didn't watch the video and then you buy the ETF and you go to the regulatory Oh why did you let me buy the CTF?

I didn't watch the video.

The regulator is like, you're a problem man.

You should have watched the video.

Yeah.

I don't know, Like I think it's a good move.

I have some practical questions.

Is this before every single purchase that you make or is.

It just like it's like to get turned onto trade levery you tube.

Oh interesting, So I do think that, like if it works, you can have a separate airline training video for all sorts of products.

I really want to like record the library of like dark by these product videos.

People would actually watch the video, then good, that would be fun.

I should turn this podcast into that.

Yeah, yeah, we can monetize that.

This reminded me of episode in twenty twenty two, when Finra apparently opened a consultation on whether complex exchange traded products should be basically curbed, so complex in their world means leverage and in verse crypto, certain crypto funds, and some of the things that they were considering were enhanced disclosure and a knowledge check for retail customers.

So basically like a little quiz was the understanding at the time, and I was saying to look at my reporting from the time.

Apparently when I wrote this in mid May, FINRA had received twelve thousand comments on this proposal, and for context, usually FINRA notices get fewer than twenty comments, So it meant violent opposition in the US, right, But I think I assume.

That's not like mostly from burkers being like I want to sell stuffs or roobs.

You don't understand it.

I think it's mostly from retail customers I don't want to watch a video before I buy stuff, yeah.

Or like I don't want to take a little quiz.

Yeah.

I'm surprised that it met with violent onsicion.

I just like it.

I would love that.

I would love to take the quiz though.

I think that sounds fun.

Someone I don't know had one.

I'd be interested in taking it soon.

Could check our knowledge good game have a great holiday season.

We'll see you back here.

Well, they'll see us on January second.

Yeah, I was gonna say we're off next week.

Yeah, but probably back the following week with a mel back episode US something goes wrong, uns it goods to leave it looks.

And that was The Money Stuff Podcast.

I'm Matt Levine and I'm Katie Greifeld.

You can find my work by subscribing to The Money stuffnewsletter on Bloomberg.

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The Money Stuff Podcast is produced by Ana ma Aserakis and Moses ondam Our.

Theme music was composed by Blake Maples.

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And Sage Bauman is Bloomberg's head of Podcasts.

Thanks for listening to The Money Stuff Podcast.