Executives at Warner Bros. Discovery have dismissed Paramount-Skydance’s recent merger push as a mere “gimmick,” comparing it to a classic screwball comedy from the 1960s. They suggested that Paramount might need to raise its offer slightly if they hope to achieve anything substantial, according to On the Money.
This commentary comes after Paramount and Skydance, led by filmmaker David Ellison and his billionaire father Larry, declared their intention to initiate a proxy fight for board control and file a lawsuit in Delaware, demanding an all-cash buyout offer of $30 per share.
WBD’s senior executives have responded to the lawsuit, labeling it a “misfire” and likening it to the farcical antics of the sitcom “F-Troop.” They seem to think it’s clear that, well, there’s no real sense of direction here. “Do they think they can just elect more board members? There’s a proper process for that,” one official remarked, calling the lawsuit “a joke” — akin to when a misfired cannonball just drops out of the barrel.
The latest move by the Ellisons marks a notable escalation in the power struggle over WBD, the media conglomerate that currently oversees Warner Studios and HBO Max, along with major cable networks like CNN and TNT.
On another note, former President Trump recently shared an opinion piece on Truth Social titled “Stop Netflix from taking over our culture,” which hints at his reservations regarding Netflix’s growing influence. Many conservatives have voiced similar concerns, accusing Netflix of promoting culturally progressive content.
Paramount’s recent announcement reaffirmed prior reports that the Ellisons were contemplating a “Defcon 1” strategy, gearing up to challenge WBD legally.
In WBD’s camp, the vibe seems to be a mix of amusement and confusion over the whole scene. They stressed that the Ellisons will have to wait for the company’s annual meeting scheduled for June to try for new board member elections, by which time the Netflix deal might be nearly finalized. The lawsuit demanding insight into how they assess the Netflix arrangement as “superior” has also been brushed off, with WBD noting that commitments to Ellison’s bid remain scarce.
Interestingly, they don’t entirely close the door on the idea of the Ellisons owning the company, though they firmly believe the cash offer would need a bump of “a few dollars” more per share.
Larry Ellison, with a fortune of $255 billion, must also secure the debt portion of his $78 billion offer. This is particularly critical as the landscape of depreciating assets looms large, especially with the decline in cable TV viewership driven by user shifts to streaming.
WBD had previously sold Warner Studios and HBO Max to Netflix for $72 billion.
A factor WBD may not be seriously accounting for is the apparent growing skepticism from the White House about the Netflix deal. The merger of Netflix, which is the top streaming service, with HBO Max, the third-largest, could attract substantial antitrust scrutiny and possible legal challenges.
Additionally, there’s this broader scrutiny on Netflix’s overall business model, given its prominent dominance in the streaming space where a significant portion of American entertainment derives. Trump’s stance on these matters also holds weight; he mentioned he would have a hand in shaping the administration’s view on WBD’s future, especially considering its influence in news and programming.
Trump shares a long-standing friendship with Larry Ellison, who was an early supporter of the MAGA movement. Recently, Netflix representatives have shown an inclination to work with him, organizing an extensive meeting between Trump and Netflix CEO Ted Sarandos. “That discussion was pivotal in conveying our perspective on the overstated antitrust implications,” a source close to Netflix revealed, noting the two-hour duration of the meeting due to their close rapport.
Under its strategy, Paramount has stated that the WBD-Netflix arrangement may be subjected to prolonged antitrust reviews by the Justice Department, particularly as the stock’s value continues to decrease and concerns about the proposed cable spin-off’s actual worth to WBD investors come to light.
Last month, Paramount launched a hostile takeover bid against WBD, accusing its board of failing to fulfill fiduciary duties by ignoring what it deems a financially superior offer while backing a $72 billion deal with Netflix and appealing to shareholders for their approval.
Recently, insiders shared that Paramount Skydance is now executing “Plan D,” opting not to back down immediately. Instead, they are focusing on a longer strategy aimed at pressuring investors and regulators concerning the risks tied to Netflix’s proposal regarding regulation, financing, and valuation.
