Welcome back to In The Room. I’m Dylan Byers.

In tonight’s email, a veritable advent calendar of news and notes on some of the biggest media storylines heading into 2024: Shari’s Paramount sweepstakes and Mark Thompson and Will Lewis’s CNN and WaPo resuscitations.

But first…

⚖️ The Journal’s Kotick quandary: Bobby Kotick’s recent settlement with the California Civil Rights Department—in brief, the state agency withdrew damning accusations against Kotick’s Activision Blizzard because it couldn’t prove them—has created an intriguing subplot over at The Wall Street Journal, which at times seemed hellbent on forcing Kotick’s ouster. This week, the Journal’s own editorial board cited the state’s “hyped lawsuit” as an example of progressive regulators’ penchant for making “unsubstantiated accusations against companies that are amplified by the press.” But, in this case, the amplification came from the Journal’s own newsroom, where reporters spent years driving the state’s narrative that Kotick had willfully disregarded a culture of sexual harassment and misconduct at Activision. But many of the initial accusations quickly fell apart under scrutiny—the “scantily clad women danc[ing] on stripper poles” at one party were, in fact, Cirque du Soleil performers, etcetera.

Nevertheless, the Journal’s news side still seems reluctant to abandon the narrative—defensive reporters hate offering corrections. The paper’s initial story on the settlement framed it as an admission of guilt by Activision, and only later added details about the state’s withdrawal of its accusations (albeit without an editor’s note). In any event, the editorial board’s interpretation here is the right one: The state is “finally conceding that its allegations against Activision were unsupported.”

🎙️ Plus: On today’s edition of The Powers That Be, Peter Hamby and I offer a talmudic reading on David Zaslav’s interest in pursuing a WBD-Paramount combination, the Shari of it all, the debt challenges, the CBS-CNN implications, and more. Listen here, and expect a lot more of this. The saga of Paramount will be a preoccupation of ours in the coming weeks and months. (Jon Kelly and I will be advancing the scholarship on these topics for a special Christmas edition of Media Monday for the naughty and the nice, alike.)

It’s too soon to tell yet whether Zaz’s recent, strategically leaked lunch with Bob Bakish is the opening scene in the story of his next megamerger, or a smoke signal to draw in a better dance partner like Brian Roberts, or merely evidence of both Zaz and Shari Redstone’s desperation for deal heat. In any event, it’s been fascinating to observe the juxtaposition of his rationale for this move and the conventional wisdom of Mr. Market. Zaz, of course, presumably sees greater scale, savings via synergy, more franchise I.P. and highly coveted NFL rights, and, let's face it, staggering eliminated redundancies; many Wall Street analysts covering the sector envision a legacy franken-co, glutted with mostly irrelevant assets and even greater exposure to linear’s secular decline—a faux Netflix competitor weighed down by its cable networks, run by one of the original cable guys, in a decidedly post-cable era. Shares for both WBD and Paramount slid on the news.

Then again, Zaz & Co. don’t have great options. The alternative to pursuing scale and consolidation is to admit failure, disband the Max streaming effort, and license content to bigger players—a move that has been aggressively encouraged by the omnipresent media analyst Rich Greenfield. And yet, player psychology factors into deals of this magnitude. Zaz’s Discovery-WarnerMedia merger was a demonstration of rare hate-the-game-not-the-player chutzpah in which the minnow ate the shark. By extension, Zaz might be seriously inclined to take over Paramount and throw Shari a bone in the form of a board seat and enough relevance to maintain her standing at the Polo Lounge, rather than answering to Roberts in quarterly board meetings.

Indeed, regardless of how logical and prudent the Greenfield argument may be, it has no audience with Zaz. In his view, the only way out is up: combine iconic assets, rationalize the business models, offload the second- and third-tier linear assets to private equity, and create a company big enough to keep a seat at the table, at least for a little while longer, with the FAANGs—and never mind the additional debt and linear exposure required to get there. After paying down $12 billion in debt and generating $5 billion in free cash flow, he’s at least earned the opportunity to test the thesis.

That said, one presumes that a deal with WBD would be a majority stock transaction. This duo has the advantage of being able to offer Shari cold hard cash. Another fascinating subplot of that bid is the very real possibility that Jeff Zucker, currently the C.E.O. of RedBird IMI, might be installed as head of Paramount—a move that would add insult to injury for Zaz, and once again put the two men back in the arena with one another. (Bobby Kotick also met with Shari at one point about a possible Paramount purchase, as first reported by the Journal, though that appears to have taken place a long time ago, as a Plan B if the Microsoft-Activision deal fell through.)

No matter who lands Paramount, or is saddled with it, the prospects for the company’s workforce will be pretty dire. Several media executives I spoke with this week noted that the vast majority of Paramount’s current staff is likely to be cut as linear assets are wound down and divested. The restructuring of Paramount’s super-senior executive parachutes incentivizes them to exit, no matter what happens to their legions of underlings.

Mergers are always brutal—initially ostensible marks of strength that, beneath the surface, demonstrate industrial decay. In an interview with my partner Matt Belloni, Greenfield himself suggested that 90 percent of the cable network employees at a combined WBD-Paramount could lose their jobs. Of course, that is probably inevitable for all of Hollywood’s old-media giants. And as Zaz endeavors to roll those assets up, he at least has the advantage of being clear-eyed about the aggressive cuts that will have to be made along the way.

Probably a little of both, especially given that Thompson is a leader of high repute who doesn’t have to manage down. After the Licht debacle, Zaz has offered him a seemingly infinite leash to help reposition CNN for the future. And the future, of course, is the font of these anxieties that inevitably make their way to me with yuletide fervor. Underpinning these frustrations are the broader anxieties about CNN’s lackluster ratings performance despite a dramatic news cycle heading into the 2024 primary season. Last week, the network averaged fewer than 500,000 viewers in primetime and fewer than 100,000 in the 25-to-54 new demo. “It’s a dire state of affairs,” one CNN journalist told me, “and the captain of the ship is missing.”

Counterpoint: The ratings are disappointing, sure, but Thompson is busy tending to even more pressing challenges. CNN isn’t simply a declining cable network; it’s a prestige asset segueing from the incredible business model of yore to riskier terrain where its content will likely need to be monetized across multiple models. CNN needs to maintain its relevance in the cable wars, even as consumers cut the cord, all while reinvesting in its digital business, presumably by orienting toward either a subscription footing or at least premium advertising. This course isn’t taught at Harvard Business School, and Thompson is trying to make a go of it in full view of hundreds of excellent journalists who have their UTA and WME agents on speed dial.

Like every new leader, Thompson should be afforded runway, especially given the Herculean nature of his challenge. Devising a plan to pivot a legacy TV news brand to a multiplatform business model, all while keeping big egos happy and covering complex breaking news events around the world, isn’t the kind of thing you come up with in a matter of weeks. At the same time, the mounting impatience for leadership inside CNN is understandable, and testament to the newsroom’s acute anxiety about its future.

What does Jeff Bezos actually want this paper to be? To date, Bezos and Lewis have emphasized the importance of returning the Post to profitability, which is hardly a rallying cry for righteous ink-stained journalists who crave mission and purpose and Pulitzers, but profitable media is almost always good media. And what comes after that? The Post remains a prestigious asset, of course, even if it’s a troubled business. Is there a desire for greater innovation on both the business and editorial sides that might make the Post a stronger fixture in people’s daily lives? Does that require greater investment in the user experience, marketing, coverage beyond Washington, or all of the above? And does it mean becoming more acquisitive? Most importantly, is all this something Bezos is willing to invest in?

Presumably, The New York Times should not have a monopoly on success in the news media business. Indeed, the Times’ own path from sudden collapse to sudden success, as James Bennet recently put it, is a reminder that the fate of any prestigious media brand is not preordained by market forces. It simply requires vision, investment and, importantly, leadership. In the months ahead, two British media executives will try their hand at resuscitating two of America’s most storied news brands (while, coincidentally, one of America’s most storied media executives tries to acquire and resuscitate one of the U.K.’s most storied news brands). Their success is by no means guaranteed, but neither is their failure. In any event, in the spirit of Christmas charity, I’m rooting for both of them.