David Ellison’s Paramount Skydance is not giving up in its aggressive campaign to acquire Warner Bros Discovery (WBD), launching a hostile bid for the entertainment company despite the announcement on Friday that Netflix had agreed to buy its studio and streaming operation.
Netflix’s bid for WBD’s storied Hollywood movie studio, as well as its premier HBO cable network, valued the company at $82.7bn. But it did not agree to acquire WBD’s traditional television assets, including the news network CNN and the Discovery channel.
Paramount’s all-cash tender offer sent directly to shareholders on Monday morning would be for the entire company, and puts a total enterprise value of $108.4bn on WBD, a major premium to its stock price.
In making its case to shareholders, Paramount claimed its acquisition of the company provides significantly better value for shareholders, and would be much likelier to survive regulatory scrutiny.
David Ellison and his father, the billionaire tech mogul Larry Ellison, whose family is financially backing the deal, are both friendly with the Trump administration, which had previously indicated that it supported a Paramount purchase of WBD. Larry Ellison, founder of Oracle, had even had early conversations with a senior Trump aide about what changes he might want to see at CNN.
Donald Trump has praised recent changes at Paramount since its acquisition by the Ellisons, including the selection of the heterodox writer Bari Weiss as editor in chief of CBS News. Paramount is also bringing back the Rush Hour franchise for a fourth film, reportedly at the request of Trump.
Shortly before the Ellisons won regulatory approval for their takeover of Paramount, the firm agreed to pay $16m to settle a lawsuit filed by Trump, who had claimed a pre-election interview with the 2024 Democratic candidate for president, Kamala Harris, was falsely edited. Many legal experts had widely dismissed the lawsuit as “meritless” and unlikely to hold up under the first amendment.
A regulatory filing on Monday revealed that the Ellisons’ bid for WBD was backed by outside funders including Affinity Partners, an investment fund founded by Trump’s son-in-law Jared Kushner; Saudi Arabia’s Public Investment Fund; and the Qatar Investment Authority.
In a statement, David Ellison called the Netflix deal “an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process”.
“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company,” he said. “Our public offer, which is on the same terms we provided to the Warner Bros Discovery board of directors in private, provides superior value, and a more certain and quicker path to completion.”
Ellison’s Paramount Skydance had already made several offers that were rejected during the bidding process for WBD. The company said Monday it was concerned that shareholders “were not presented [the] most compelling and superior transaction”.
Last week, attorneys for Paramount sent a letter to WBD suggesting the company was not fairly considering its offer. “It has become increasingly clear, through media reporting and otherwise, that WBD appears to have abandoned the semblance and reality of a fair transaction process, thereby abdicating its duties to stockholders, and embarked on a myopic process with a predetermined outcome that favors a single bidder,” they wrote.
Netflix’s acquisition of the studio and streaming assets of WBD fleetingly provided some relief for some employees at CNN, who had been concerned about the prospects of a merger between the network and CBS News, now led by Weiss.
“I think this is the best outcome for CNN for sure,” a senior network producer told the Guardian after the Netflix acquisition was announced, describing a “palpable sense of relief” at the network. But, the person added, “there is still a hell of a lot of anxiety around the Discovery Global spin-off and what comes next”.
In a memo to CNN employees on Friday, the network’s CEO Mark Thompson framed the deal as a positive. “I’ve been asked by many of you what today’s news means for us,” he wrote. “And the answer is that it will enable us to continue to roll out our strategy to secure a great future for CNN by successfully navigating our digital transition.”
Some employees at CBS News had also feared a merger with CNN’s parent company, and that a tie-up could lead to significant job losses. “A merger with CNN is the one thing that would make me genuinely worried about losing my job,” one CBS News staffer said. (Paramount’s offer on Monday noted that the combination of television networks would “dramatically improve cash flow and increase efficiencies, leading to a division more capable of managing structural declines”.)
Paramount’s offer on Monday for WBD could re-ignite those concerns for employees at both networks. If the Netflix deal moves forward, however, CNN will be spun off – as planned – into a standalone company, encompassing WBD’s traditional television networks, from Cartoon Network to TLC.
On a conference call with analysts, David Ellison did not answer a question about whether he’d be interested in acquiring the television group by itself if the greater Netflix deal goes through.
On Sunday evening, before Paramount tabled its hostile bid, Trump had said he would be personally involved in the review for the Netflix-WBD transaction, which he said would have implications for competition considering Netflix’s “big market share”. But he had kind words for Netflix’s co-chief executive Ted Sarandos, who visited the White House recently.
Several American politicians, including US Senator Elizabeth Warren, and entertainment unions, however, had expressed strong reservations about the deal.
Because no television licenses would be transferred in a potential acquisition, the acquisition of WBD is very unlikely to be subject to the review of the Federal Communications Commission and its Trump-picked chair, Brendan Carr. But anti-trust concerns around any such deal would be reviewed by the Department of Justice.
“Paramount is highly confident in achieving expeditious regulatory clearance for its proposed offer,” the company said Monday, “as it enhances competition and is pro-consumer, while creating a strong champion for creative talent and consumer choice.”
The Ellisons’ offer is set to expire at 5pm on 8 January, unless it is extended.
On the Monday call, David Ellison said the company’s offers for WBD had not received a response. “We’re here to fight for value – for our shareholders and for WBD shareholders,” he said. “This transaction is about building more, not cutting back. … Our proposal is superior to Netflix’s in every dimension.”
While Trump has been very supportive of the Ellison’s takeover of CBS News, he lashed out the network and its new management on Monday morning for a 60 Minutes broadcast the night before, featuring outgoing GOP House member Marjorie Taylor Greene, who told correspondent Lesley Stahl that many Republican legislators privately mocked Trump.
“My real problem with the show, however, wasn’t the low IQ traitor, it was that the new ownership of 60 Minutes, Paramount, would allow a show like this to air,” Trump wrote on his Truth Social platform. “THEY ARE NO BETTER THAN THE OLD OWNERSHIP, who just paid me millions of Dollars for FAKE REPORTING about your favorite President, ME! Since they bought it, 60 Minutes has actually gotten WORSE!”
