David Ellison faces a crucial decision on whether to pursue ownership of Warner Bros.’ Discovery Media empire, with a timeline set for the next few weeks.
This urgency was conveyed by WBD’s CEO, David Zaslav, as the company submitted a revised proxy statement to the Securities and Exchange Commission on Monday. This filing signals to investors that WBD is preparing for a quick shareholder vote concerning Netflix’s $72 billion acquisition of Warner Bros. Studios and HBO Max.
WBD anticipates SEC approval for the vote in the coming days, which could lead to a decision by the end of this month or in early next month. Sources close to WBD suggest that Paramount Skydance, led by Ellison, needs to present a soft bid to shareholders soon.
According to a WBD executive who preferred to remain unnamed, “Based on the current circumstances, we have around two weeks to put forth a counter-bid, and this is now the eighth instance.” They added, “If we fail to present a strong counter-offer, WBD will likely shift towards becoming part of Netflix, as shareholders are not likely to dismiss the $27.75 per share offer.” It’s essential to note that the proxy vote is specifically to approve Netflix’s acquisition of WBD, rather than choosing between Paramount and Netflix—unless another proposal arises.
Recent reports have indicated that Zaslav has been urging Ellison to entertain a “hostile” $78 billion takeover bid for the entirety of WBD, valued at around $30 per share. During this time, Ellison initiated a fast-tracked shareholder vote to favor WBD’s preferred $72 billion arrangement with Netflix.
On Monday, the amended proxy statement was filed with the SEC, and expedited voting commenced. This move appears to be aimed at pressuring Paramount Skydance and Ellison to revisit the negotiating table with a more substantial offer.
As negotiations intensify, Zaslav is reportedly pursuing an additional $4 per share from Paramount, alongside a $2.8 billion separation fee that WBD could incur if it opts out of Netflix’s agreement.
Ellison, whose wealth according to Oracle stock holdings has recently fluctuated, might need to offer personal guarantees for the significant debts associated with his bid—similar to a prior guarantee he made regarding a $40 billion stock offer from his son.
However, insiders at WBD suggest that the decline in Ellison’s fortune, dropping by about $200 billion recently, could be causing concern, making Paramount Skydance hesitant about the $78 billion offer.
Paramount Skydance maintains that financial factors shouldn’t deter them, emphasizing that Ellison is still very wealthy and asserting that their offer is superior to Netflix’s, which hinges on uncertain sales of WBD’s cable assets.
Moreover, Netflix must persuade regulators, both in the U.S. and internationally, that merging its leading streaming service with WBD’s HBO Max does not breach antitrust regulations.
In recent days, Netflix has been engaged in extensive discussions with regulators in the U.S., UK, and EU, arguing that the company faces robust competition from social media platforms like YouTube and highlighting that over 80% of subscribers use both Netflix and HBO Max.
The efforts to garner support are escalating ahead of a Senate Judiciary Subcommittee hearing scheduled for Tuesday, where Sen. Mike Lee has raised various antitrust concerns regarding the deal. Netflix CEO Ted Sarandos and representatives from WBD are slated to provide testimony during this session.
