The Brief

News that Warner Bros. Discovery is up for sale has Hollywood buzzing. The legendary film studio, which has grown to include streaming services and cable channels, is currently accepting non-binding bids until Thursday. According to company spokesperson Robert Gibbs, they expect to have a decision about the sale by Christmas.

It's become something of a Hollywood parlor game to guess who will ultimately take over the business, which was founded in 1923 by four brothers: Harry, Albert, Sam and Jack Warner. They owned a movie theater in Pennsylvania before coming to Hollywood to make movies.

Warner Brothers Pictures found one of its first silent picture stars in a German shepherd named Rin Tin Tin. By 1927, the studio made history with its feature-length "talkie" picture: The Jazz Singer, starring Al Jolson.

Over the years, Warner Brothers has made or distributed countless iconic films including: Casablanca, The Big Sleep and The Maltese Falcon in the 1940's. The list goes on, with titles like A Clockwork Orange, Goodfellas, Barbie, as well as Bugs Bunny and all the Looney Tunes cartoons.

Warners Brothers has had multiple owners over the decades. Three years ago, Warner Media, as it was called, merged with Discovery. And in June, the company announced it would split in two, with film, TV and streaming studios in one camp, and in the other, mostly legacy cable channels, including CNN.

The planned split has not yet happened, and a new buyer might get the entirety of Warner Bros. Discovery and its film and TV libraries.

As the film industry continues to consolidate, there's speculation that Warner Brothers' old rival Paramount could take over. Having just merged as Paramount Skydance, CEO David Ellison has already made several overtures.

The idea of streaming giant Netflix buying the company has raised antitrust concerns on Capitol Hill. In an earnings call last month, Netflix co-CEO Ted Sarandos told investors, "We've been very clear in the past that we have no interest in owning legacy media networks. There is no change there."

Industry watchers suggest other suitors could be Comcast, Amazon, or an investor who's not already in the entertainment business.

Regardless of whoever does end up buying the company, theater owners say they hope making movies for cinemas will be a priority.

"As long as we have more movies," says Daniel Loria, senior vice president at The Boxoffice Company, which analyzes data from studios and theaters. "That doesn't mean the same amount, doesn't mean less, but more movies. I think you're going to find folks in the movie theater industry support any business decision that gets us there."

Loria recalls that after Disney purchased Fox and Fox Searchlight, their combined studios significantly reduced the number of films they released in the theaters. Crunching the numbers, Loria says in 2016, a year before the merger announcement, Disney and Fox released a total of 38 theatrical films. This year, the consolidated studios released 18.

That's a problem for theater owners who've been struggling to bring audiences back to cinemas after the COVID-19 pandemic shut them down; they're competing with movie-watching on TVs, computers and phones.

Some theater owners and cinephiles also fear studio conglomerates will only greenlight a few big-budget blockbusters, leaving the lower budget indies behind.

"The concern is you're going to see less of that risk taking, less of that experimentation and less of that embracing new directors, new filmmakers in the future," says Max Friend, the CEO of Filmbot, the ticketing platform for independent cinemas in the U.S. "It's really important that there are studios that are funding and supporting, cultivating that kind of work."

He points out that this year, Warner Brothers made a string of critical hits, including Ryan Coogler's Sinners, the horror film Weapons and Paul Thomas Anderson's One Battle After Another.

Friend wonders if the next owner will take similar risks with future original, creative films.

Warner Bros. Discovery is a financial supporter of NPR.

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A downtown hearing kicked off Wednesday, during which a federal judge will consider holding the city of Los Angeles in contempt of court. The hearing is the latest step in a long-running legal saga regarding the city's response to the region’s homelessness crisis.

The hearing was ordered by U.S. District Judge David O. Carter, who has been overseeing a settlement in a lawsuit brought against the city by the L.A. Alliance for Human Rights, a group of downtown business and property owners. L.A. Alliance sued the city, and county, in 2020 for failing to adequately address homelessness.

Several witnesses are expected to testify during the contempt-of-court hearing, including Gita O’Neill, the new head of the region’s top homeless services agency, and Matt Szabo, the L.A. city administrative officer.

L.A. County Supervisor Kathryn Barger watched at least part of Wednesday’s hearing in the courtroom.

Why now?

Carter said in court documents that he’s concerned “the city has demonstrated a continuous pattern of delay” in meeting its obligations under court orders. During a hearing last week, the judge pointed to several delays, including recently reported issues related to data and interviewing city employees.

The judge noted that similar concerns have come up at previous hearings. Carter told attorneys for the city in March 2024 that he “indicated to the mayor that I’ve already reached the decision that the plaintiffs were misled” and “this is bad faith,” according to court transcripts.

The judge said in a Nov. 14 order that he’s concerned the “delay continues to this day.”

The contempt hearing is expected to cover whether the city has complied with court orders and provided regular updates to the court under the settlement agreement.

Reducing delays

Attorneys for the city have pushed back against the hearing, filing objections with the judge and making an unsuccessful emergency request with the 9th Circuit Court of Appeals to block it from happening.

City authorities also asked the appeals court to press pause on the judge’s order to appoint a monitor in the case to make sure the city stays on track with the settlement. The city argued that Carter handed the monitor “a blank check to interfere with the democratic process,” according to court documents.

The appeals court partly denied the city’s request. It allowed Wednesday’s hearing to move forward, but it agreed to pause the appointment of Daniel Garrie as monitor.

In light of that response, attorneys for the city have argued that looking at the city’s cooperation with Garrie “would be inappropriate” during the hearing and that L.A. “cannot be held in contempt for either the substance or the manner of its compliance with the order,” according to court documents.

Previous hearings related to the settlement have elicited tense questioning of witnesses and harsh words from the judge, who has been vocal about reducing delays and moving the case forward.

In an opening statement Wednesday, Theane Evangelis — one of the attorneys representing the city — urged the judge to “turn down the heat” on the closely watched case. Evangelis said the “city is constantly under fire” in court while L.A. has made “enormous strides” in getting people off the streets.

Elizabeth Mitchell, lead attorney for L.A. Alliance, said the city treats transparency as a burden.

She said Wednesday that the “city still fights oversight harder than it fights homelessness” and that the court should address L.A. 's “consistent” delays throughout the case.

What’s next?

The hearing will resume Dec. 2, when more witnesses can appear in person.

City authorities told the court they believed a one-day hearing wouldn't be enough time to go over all the evidence.

If the judge does find the city of L.A. in contempt of court and that it "isn't doing what it promised to do," the consequences could range from nothing all the way up to serious sanctions, according to Matthew Umhofer, an attorney for L.A. Alliance.

Umhofer told LAist after the hearing that sanctions could include the court ordering more intensive monitoring of the city’s performance, imposing new requirements on the city, monetary penalties or possibly a receivership.

Carter previously stopped short of seizing control of the city’s hundreds of millions of dollars in homelessness spending and handing it to a court-appointed receiver, deciding against that option in a June ruling.

L.A. Alliance is considering asking for an extension to the settlement agreement, Umhofer said.

“The city has gotten away with not complying for a very long time,” he said. “So extending the agreement can be among the things that we might ask for ... given the pattern of delay and obstruction."

Evangelis and Bradley Hamburger, another attorney representing the city, declined LAist’s request for comment after the hearing.

California will face a nearly $18 billion budget deficit in the new fiscal year due to higher-than-expected spending, despite an economic boom largely driven by AI enthusiasm and strong revenue, the nonpartisan Legislative Analyst’s Office said Wednesday.

To make things worse, the $17.7 billion shortfall could balloon to an annual $35 billion by fiscal year 2027-28, as spending continues to grow and debts come due, the office warned in its annual fiscal outlook.

The gloomy forecast is a refreshed look at California’s financial future since June, when the state Department of Finance projected a $17.4 billion deficit for the upcoming fiscal year. The widened budget gap could undercut the legacy of Gov. Gavin Newsom, as he will likely be forced to make tough budget choices in his last year as governor.

It also means that for the fourth year in a row in his tenure, California is projected to have a deficit despite revenue growth.

“Today’s fiscal outlook underscores the challenging decisions ahead,” said Assembly budget chair Jesse Gabriel of Encino. He said the committee “remains committed to crafting a responsible budget that prioritizes essential services, uplifts working families and protects our most vulnerable communities.”

But state Sen. Roger Niello of Roseville, the Republican vice chair of the Senate Budget Committee, attributed the structural deficit to Democrats’ “unstoppable spending problems.”

“The state must assess the effectiveness and sustainability of the programs that were created during the surplus and make necessary corrections,” he said in a statement.

Since June, the state has witnessed stronger-than-expected tax revenues, raking in $6 billion more than projected between July and October. But the revenue gains in the new fiscal year will “almost entirely” go toward K-12 schools, community colleges and state reserves by constitutional requirements, the office projected.

Additionally, the fiscal challenges California faces also have persisted, if not deepened, due to steep federal cuts to health care and housing and homelessness services, as well as growing stock market uncertainties driven in part by President Donald Trump’s drastic tariff shifts. It raises a major question as to if, and how, the state can absorb the costs of those federal cuts.

Spending outpacing revenues

The state is projected to spend $6 billion more than previously anticipated next year, including $1.3 billion implementing Trump’s budget bill, which is expected to kick millions of Californians off Medi-Cal, hike health care premiums and shift much of the cost for programs such as food stamps onto the state, the LAO said. The increase is largely because the state must now shoulder a larger share of the cost to continue to provide benefits, said Carolyn Chu, chief deputy analyst with LAO.

The added cost of the federal cuts to health care will grow to $5 billion annually by fiscal year 2029-30, the office projected.

California also stands to lose hundreds of millions of dollars in funding for permanent housing under new policies the Trump administration rolled out last week, just as some counties are starting to see drops in their homeless population. Homelessness agencies warn that thousands of Californians could be kicked out of their subsidized housing and back on the streets.

The loss of federal funding could put more pressure on the state to step in with financial assistance — at a time when Newsom has expressed no interest in releasing more homelessness dollars to cities and counties.

Blaming local officials for stagnant progress on homelessness, Newsom in January proposed zero dollars for the Homeless Housing, Assistance and Prevention program, the main source of homelessness funding for local governments. The Legislature later successfully negotiated a $500 million investment — half what it used to be — and delayed the funds until next year with virtually no guarantee they will continue.

Graham Knaus, CEO of the California State Association of Counties, told CalMatters he expects the state to follow through on its funding commitment.

“We are now facing a federal government that is eviscerating the same funding at the federal level, so we should expect a substantial increase in homelessness,” he said. “And our only chance is for the state to stand with us … and protect those that are the most vulnerable.”

Fourth fiscal year in a row of deficits

The annual forecast by the nonpartisan fiscal adviser is a mere snapshot of California’s fiscal future and can be drastically different from the state finance department’s own projection, which is expected in January. In January 2024, Newsom’s office projected a $38 billion deficit for fiscal year 2024-25 — roughly half the $68 billion budget shortfall the LAO had projected a month before.

Earlier this year, California’s Democratic leaders scrambled to plug a $12 billion budget hole in fiscal year 2025-26, relying on internal borrowing, dipping into state reserves and halting new Medi-Cal enrollment for undocumented immigrants to avoid other deep cuts to social services. They largely blamed Trump for the shortfall, arguing the threat of sweeping tariffs and federal funding loss plunged the state into “deep uncertainty.”

Coffee is among the products facing steep tariffs under the Trump administration.

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But even before Trump retook office, California already faced a structural money problem, in part due to the state’s heavy reliance on wealthy earners’ income tax and capital gains, which rise and fall with the stock market. The state witnessed a record $97.5 billion surplus in 2022 during an economic boom, followed by an estimated $56 billion deficit over the next two fiscal years.

The state for three years used “temporary fixes,” such as internal borrowing, spending down reserves and suspending tax credits to plug multibillion-dollar budget holes, but now it’s “critical” for state lawmakers to reduce spending, raise revenues or both, the legislative analyst warned.

“California’s budget is undeniably less prepared for downturns,” the analysts noted in their report. “Continuing to use temporary tools — like budgetary borrowing — would only defer the problem and, ultimately, leave the state ill‑equipped to respond to a recession or downturn in the stock market.”

How sustainable is the AI-driven economy?

While all signs point to high uncertainty and low consumer confidence in the state economy, tech companies’ investment in AI has propelled the stock market to a “record high” and boosted tech workers’ income — the “lone bright spot” in the state’s economic outlook, Petek said.

But is it sustainable? Petek is cautious.

The stock market appears to be “overly exuberant,” as some investors are borrowing more to buy high-cost stocks, a sign of a stock market downturn, the report notes. Even if the market holds, lawmakers should treat it as a temporary or unsustainable gain, Petek said.

And there’s no guarantee that revenue gains from the stock market would be enough to fill a deficit of $30 billion to $35 billion, which the state is projected to hit in a few years. Since the state is constitutionally required to spend roughly half of any excess revenue gains on schools and reserves, it would need $60 billion in revenue higher than anticipated to close a budget gap that big, Petek said.

“Our view is that that’s highly unlikely to occur,” he said.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.