Friends,
Warner Bros. Discovery shareholders voted last Thursday on the Ellison family’s purchase of the company. Some 1.743 billion shares were cast in favor of the sale; 16.3 million were cast against it, a ratio of roughly 99 to 1.
This vote came soon after more than 4,000 workers in the media industry — directors, screenwriters, producers, actors, editors, cinematographers, musicians, and composers — signed a letter predicting an industry disaster if the sale went through.
That’s because, as my friend Harold Meyerson from The American Prospect has noted, such deals typically saddle the purchased companies with gigantic debts that buyers incur to make the deal — in the case of Warner Bros. Discovery, $79 billion — and this debt, in turn, requires that buyers slash costs (especially payrolls) to pay off some of it.
More than 70 percent of all the shares in Warner Bros. Discovery are held by institutional investors — including the Vanguard Group, BlackRock, and State Street. These institutions voted for the sale because they believe it will make their shares more valuable.
The sale will also make certain individuals a lot of money. David Zaslav, the CEO of Warner Bros. Discovery, stands to collect some $886 million for shepherding it, in addition to his regular pay package (which was $51 million in 2024). Oracle’s Larry Ellison and his son, David, the new owners of Warner Bros. Discovery, are already among the richest people in the world.
But what about the workers in the industry who’ll lose their jobs as a result of the sale? What about all the people whose wages will be slashed? What about Los Angeles, which may lose a sizable portion of its major industry?
And what about the concentration of so much of the news business — so much of what Americans learn about what’s happening — under these two Trump suck-ups?
If Trump’s Justice Department approves the deal (do birds fly?), CBS News and CNN — along with CBS entertainment (home to Stephen Colbert, whose contract is about to run out and who will be taken off the air because of his criticisms of Trump) and Comedy Central (home to Jon Stewart) and HBO (John Oliver) and TikTok (where 1 out of 5 Americans now get their news) — are all about to become one giant mega-media monopoly under the control of Trump allies, the Ellisons.
At the heart of modern American capitalism is the assumption that a corporation exists for only one purpose: to make its shares more valuable.
That goal trumps (excuse me) all other goals — such as raising workers’ wages, improving workers’ job security, creating more jobs, enhancing the quality of life for the community where a company is headquartered or does business, making life better for the inhabitants of the nation and the world, even protecting democracy.
In fact, if shareholders can make more money by shafting these other “stakeholders” and destroying these other values, that’s thought to be perfectly fine. It’s simply the way “impersonal market forces” work. It’s “efficient.”
Before the 1980s, American capitalism ran on a very different principle: that large corporations had responsibilities to all their stakeholders. “The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in a 1951 address, “is to maintain an equitable and working balance among the claims of the various directly affected interest groups … stockholders, employees, customers, and the public at large.”
The sentiment may seem quaint or inauthentic today, but in the three decades after World War II, it laid the basis for rapid economic growth and, with strong unions, an equally rapid expansion of the American middle class.
It reflected the sincere views of corporate executives. Many had endured the Great Depression and the war and felt some responsibility for America’s future well-being. These views helped legitimize the role of the large corporation in the public’s mind.
Today, shareholder capitalism has replaced stakeholder capitalism — and most Americans are excluded from its benefits.
Over 92 percent of the value of all the shares of stock owned by Americans is owned by the richest 10 percent. More than half is owned by the richest 1 percent. And even they have turned over their votes to giant institutions like Vanguard, BlackRock, and State Street, which have no concern for the well-being of anyone or anything other than the short-term value of the shares they buy or sell.
We are witnessing the logical ending point of shareholder capitalism.
As the share values of America’s biggest corporations continue to soar — even as (and in many cases, because) they eliminate tens of thousands of jobs — the goal of “maximizing shareholder returns” is revealing itself to be morally bankrupt and economically rotten.
And as Artificial Intelligence takes over a growing amount of the work Americans do, the gap between share values (including the wealth of top investors and executives) and the incomes of most Americans will widen into a chasm.
But here’s the good news: We don’t have to stick with shareholder capitalism. We don’t have to be victims of “impersonal market forces” over which we supposedly have no control.
We can have control. The market is a human creation. It is based on laws that humans devise. We can make laws that alter market forces to serve the interests of the vast majority instead of mainly the oligarchs at the top.
Over the last four decades, corporate laws have been shaped by wealthy individuals to channel a large portion of the nation’s total income and wealth to themselves.
If America’s super-wealthy continue to have unbridled influence over laws and gain control over the assets at the core of Artificial Intelligence, they will end up with almost all the wealth, all the income, and all the political power. Under such conditions, our economy and society simply cannot endure.
Laws can and should be changed to produce a new version of stakeholder capitalism that shares the wealth more widely.
How? For example, corporations could be required to provide long-term employees with the same number of shares as are held by investors. Profitable corporations could be required to provide their workers a portion (a quarter?) of their profits.
Corporations whose highest-paid executives earn more than 100 times their lowest-paid employees should have to pay a surtax. Corporations over a certain size (worth, say, $1 trillion or more) or having more than a certain share of their markets (say, 25 percent) should be broken up. Unfriendly (hostile) takeovers should be banned (as they were, in effect, before 1980).
The “stepped-up basis” rule that allows the wealthy to pass assets to their heirs without ever paying capital gains taxes on them should be eliminated. Vast accumulations of private wealth (say, in excess of a billion dollars) should, after a certain number of years, automatically be turned over to a fund providing subsistence incomes — a universal basic income.
State corporate laws shouldn’t empower corporations to make any campaign donations (effectively reversing Citizens United).
Sound radical? Maybe it is. But shareholder capitalism doesn’t work — as illustrated by the Warner Bros. Discovery fiasco. Unless radical changes are made, that fiasco is just a taste of what’s to come. If Artificial Intelligence isn’t to destroy capitalism and obliterate democracy, we’re going to have to come up with something that does work, and soon.
Happy May Day, 2026.
Robert Reich,
