The Warner Bros. Sale to the Ellisons Illustrates Perfectly Why Shareholder Capitalism Is a Disaster
When Warner Bros. Discovery shareholders voted last Thursday on the Ellison family’s purchase of the company, the result wasn’t exactly close. Approximately 1.743 billion shares were cast in favor of the sale, while just 16.3 million were cast against it. That’s a ratio of roughly 99-to-1.
I can’t say with complete certainty that had the vote been taken among Warner Bros. employees and the Hollywood community at large, the ratio would also have been 99-to-1, but in this case against, not for. But by all available, if imperfect, metrics, including the signatures of more than 4,000 media industry workers on a letter predicting industry disaster if the sale went through, it’s clear that the people most affected by the sale were resolutely against it. Not a single actor, director, screenwriter, producer, cinematographer, editor, composer, musician, stunt worker, grip—anyone who actually works in the industry—has come out in favor of the deal. Not one. Maybe their vote wouldn’t have been 99-to-1 against. More likely, it would have been 100-to-0.
The industry workers have good reason to be opposed. As I noted one week ago, deals of this kind saddle the purchased companies with the debt the buyer incurred to make the deal—in this case, it’s a cool $79 billion—that compel cutbacks in production in order to pay off some of that debt. That was exactly what happened when Disney bought 21st Century Fox in 2019, despite the assurances that Fox would remain unscathed. Instead, Fox barely exists today, and the signatories to that letter warned of similar consequences coming to Warners, which has produced many more and generally better pictures in recent years than the Ellison-owned Paramount. Indeed, Warners films took in $4 billion in revenue last year (an all-time record) while also winning 11 Oscars (also a record) last month, chiefly for the two most acclaimed studio films of 2025, One Battle After Another and Sinners.
It’s not clear that the holders of the 1 percent of shares voted against the purchase were influenced by any of this; it’s very clear that the owners of the 99 percent of shares voted in favor of the Ellison purchase were not. About 71 percent of all the shares in the company are held by institutional investors, including the Vanguard Group, BlackRock, and State Street; the Newhouse publishing empire, previously the largest shareholder, sold off much of its stake last year, but, along with at least one Newhouse family member, still holds a significant share. After the vote, the company reported that the 99 percent of the shares voted in favor of the sale represented about 70 percent of all outstanding shares, which is to say that the voters, not surprisingly, were the institutional shareholders.
All this is notable not because it violates any norms of current American capitalism, but because it exemplifies those norms. During the meeting, Warner Bros. Discovery board chair Samuel Di Piazza Jr. hailed the board for navigating “this strategic review process that led us to approve the merger agreement … Your board served you, the investors, with commitment, courage and deep sense of responsibility to creating shareholder value.”
Thus does the doctrine that the sole purpose of the corporation is to serve the interests of its shareholders still govern America’s boardrooms, 56 years after Milton Friedman propounded that idea in a 1970 New York Times essay. In that year, the legacies of the New Deal—the tax rates, the unions, the public investment that had produced the broadly shared prosperity of the postwar decades—was still largely in place, and it was not yet clear that the ideas in Friedman’s article would so mutate American capitalism that broadly shared prosperity is just a dim memory today. It wasn’t yet sufficiently clear that actualizing Friedman’s perspectives would produce today’s K-shaped economy in which those Americans who can afford significant stock holdings—broadly, the wealthiest 10 percent—would be thriving while the bottom 80 percent would be largely shut out of not only the home-buying market but the new-car market as well. It was not immediately apparent that the interests of workers and shareholders would be so calamitously counterposed as they were in the Ellisons’ takeover of Warners, or they are in the daily lives of our leading companies. In just the past year, the share value of the Big Tech companies has continued to soar even as they’ve eliminated tens of thousands of jobs, replacing workers with AI. Indeed, those values soar on the very days that they announce those layoffs.
You don’t have to be on the left to share the critiques of shareholder capitalism. Earlier this month, Robert Atkinson of the Information Technology and Innovation Foundation (ITIF), a staunch critic of socialism and liberal economic perspectives, penned a withering critique of financial capitalism, noting that share buybacks and other forms of disproportionate shareholder rewards misappropriate funds that should otherwise go to building the R&D and production capacities of our tech companies, and that the tax code should be changed to reward retaining earnings for such investments.
How can we change an economic system now centered on rewarding shareholders over workers and, as Atkinson would note, even the enterprises where they work? My distinctly un-Atkinsonian suggestion would be to vest a corporation’s employees and de facto employees (contractors and such) with the same amount of stock that shareholders have, or splitting corporate boards between worker and shareholder representatives, or, that failing, some kind of veto power for workers on deals like the Warners sale—though I acknowledge that a revolution of this scale goes well beyond anything that Bernie Sanders, Zohran Mamdani, AOC, and DSA have proposed. At minimum, we could make income and wealth taxes way more progressive and stop the buybacks (hello, Rob Atkinson) with which corporate CEOs and board members reward themselves and their well-heeled ilk.
Because if we look at the Warners purchase and yet fail to understand that it perfectly illustrates what’s wrong with our economic system, and how that system imperils America’s future prospects, then we’re—well—doomed. Or at minimum, fucked.
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