Within the Paramount Skydance circle, there’s an ongoing joke about what “excuse” Warner Bros. Discovery will use next to dismiss their latest takeover proposal. One member humorously suggested they might not like the paper it’s written on.
Meanwhile, frustration is mounting towards WBD CEO David Zaslav and his board. Zaslav, known for his unpredictable nature in media circles, previously blocked Paramount Skydance’s $19 per share offer last September, igniting a bidding war that’s escalated considerably.
For now, it seems streaming giant Netflix has the upper hand.
However, David Ellison, the CEO of Paramount Skydance, supported by financial backing from his father, Larry Ellison, is determined to pursue this opportunity. He and his partner Jerry Cardinale are not backing down easily.
Considering Legal Action
Despite continuous attractive bids failing to gain traction, they are now looking into potential litigation as a sort of DEFCON 1 strategy, believing the process has been skewed in favor of Netflix from the outset.
While they haven’t ruled out raising their offer again, there’s a prevailing sentiment that taking a long-term approach may be more effective—convincing investors that their proposal could be superior to Netflix’s, possibly even suing Zaslav and his team for manipulating the bidding process.
Zaslav and his team deny any wrongdoing and claim to have documented the entire bidding process, including various meetings with the Ellisons.
Still, some in the Paramount Skydance camp point out the relationship between Zaslav and Netflix’s Ted Sarandos as a possible red flag, though this is arguably the weakest aspect of their concern. The media industry often operates like a boys’ club, and Zaslav is seen as someone focused mainly on profit.
Even more puzzling is how the Ellisons feel they have been treated unfairly. Initially, Zaslav wanted $30 per share for the company and, after the Ellisons agreed, demanded a fully cash offer of $78 billion, plus a hefty penalty tied to the Netflix contract.
Though the Ellisons have expressed willingness to meet Zaslav’s conditions, they suspect the WBD board may still reject them come next week.
It’s hard to predict how this will all play out, but if I had to guess, Zaslav seems to be softening a bit, sharing admiration for Larry Ellison and complimenting David Ellison’s production skills. He’s reportedly open to considering higher bids, with figures around $34 per share frequently mentioned.
Big Egos at Play
It seems to me the Ellisons and Cardinale are likely to pursue this further, but there are certainly some hurdles. Big personalities are in play, from Zaslav to Sarandos, and even Larry Ellison himself, who is obviously a powerful figure.
Paramount Skydance genuinely believes their offer is more compelling. They’re not just bidding for studios; they’re looking to take the entire company, which potentially involves less regulatory scrutiny compared to a Netflix acquisition, where they’d have to justify a merger of the major streaming services.
Also, the Ellisons argue that the valuation connected to Netflix includes their own declining stock, casting doubt on its true worth in a deal.
WBD shareholders may find the perceived value confusing due to how the deal treats various assets, like cable portions still burdened with debt—a scenario that doesn’t look particularly bright for CNN, TNT, and Discovery.
There’s skepticism about whether a $34 offer will even materialize, but insiders close to Paramount Skydance assert the bid is simply superior.
People at Paramount Skydance are understandably frustrated. They feel Zaslav, who has a history with NBCU and Discovery, was too clever by half in favoring Sarandos, even while their offer was more advantageous.
Now, four months into this saga, there remains a lot of noise and resentment. Yet, if I were to speculate, I’d say that with cooler minds behind the wheel, the Ellisons might adjust their offer, making Zaslav reconsider his position in a significant way.
