Paramount Skydance Co. currently has no plans to modify its $30-per-share cash takeover bid for Warner Bros. Discovery. Instead, they’re leaning into the argument that their $78 billion offer is preferable to the one with Netflix, as reported by The Post.
David Ellison, Larry Ellison, and their partners at Redbird Capital intend to inform shareholders that if a sufficient number of investors support the Paramount deal by the January 8 deadline, they will cover the $2.8 billion breakup fee—essentially the equivalent of one share—and keep the bid entirely in cash.
Interestingly, many investors, along with some insiders at Warner Bros. Discovery, anticipated a bidding war given that Paramount Skydance went “hostile” last week, directly urging WBD shareholders to reject the decision to sell Warner Bros. studios and HBO Max to Netflix for $27.75 per share.
Conversations about a bidding war intensified on Tuesday as WBD gears up to formally encourage investors to dismiss Paramount Skydance’s hostile bid. They plan to submit a formal request, potentially as soon as early Wednesday, outlining why shareholders should stay with Netflix, focusing on the “lack of certainty” regarding the funding sources backing Paramount Skydance.
However, those close to Paramount Skydance, including Redbird Capital, assert that there’s nothing uncertain about their financing.
Within Paramount Skydance, the prevailing thought is that “there’s no rush to act immediately. We need to be cautious and listen to investor feedback,” according to one source. “The response to the all-cash $30 bid has been generally positive, though not everyone is fully convinced that Netflix has presented a better offer.”
Mario Gabelli, a recognized media investor, indicated he would favor Paramount’s all-cash bid over Netflix’s offer, which involves more complex financing and potential regulatory delays. Gabelli also sees no issue with acquiring some investment from the Persian Gulf, countering WBD’s reasoning for rejecting the takeover proposal.
He stated, “I want money for my customers, and I want it quickly,” highlighting a common concern among investors.
Neither WBD nor Paramount Skydance offered immediate comments when approached.
Paramount Skydance has secured financing from Bank of America, Apollo, and Larry Ellison, asserting they’ve committed $12 billion in cash, along with an additional $24 billion from Gulf state funds. If successful, this sovereign wealth fund would invest without taking a board seat or influencing the management of the combined company, as per sources.
Executive claims from Paramount Skydance argue that their deal offers regulatory certainty, unlike Netflix’s potential merger that could trigger a prolonged Justice Department antitrust investigation.
WBD and Netflix, on their end, argue that regulatory concerns are exaggerated due to shifting media consumption, with many opting for social media or platforms like YouTube instead of traditional streaming services. They also express doubts about how Paramount Skydance constructed a $78 billion bid that exceeds Gulf state funds, a narrative they plan to detail in a forthcoming regulatory filing.
Larry Ellison, reportedly worth $235 billion, has pledged to fully support the takeover with his wealth, primarily from Oracle stock. Yet, the value of those stocks has dropped by over $160 billion since the bidding competition emerged in September, coinciding with a fall in AI stocks.
Additionally, it’s claimed that Ellison isn’t personally backing the bid but is instead collateralizing assets in a revocable trust, a point of contention since Paramount Skydance argues this trust underpins significant wealth and has facilitated other transactions.
As earlier mentioned, there were initial discussions within Paramount Skydance to possibly raise their offer to around $30 per share to gain control of WBD from Netflix.
After a long battle, WBD’s CEO David Zaslav clinched the bid to Netflix, including major assets like Warner Bros. studios, HBO Max, CNN, Discovery, and various tech media giants like Apple, Amazon, and Comcast, leaving Netflix and Paramount as the final contenders.
When WBD confirmed Netflix as the victor, Paramount Skydance quickly initiated a hostile bid targeting shareholders, stressing the advantages of their cash offer compared to Netflix’s more complex proposal, which depended on uncertain asset sales next year.
