How high will Ellison go with Paramount’s takeover bid for Warner Bros Discovery?
Warner Bros. Discovery is right in the eye of the latest M&A maelstrom in the media – and its staffers are bracing themselves for the possibility that they will have a new business leader in the near future.
The main takeover candidate is aspiring Hollywood empire builder David Ellison, son of one of the richest people in the world. Ellison, fresh off orchestrating Skydance’s merger with Paramount, is now aggressively pursuing a much bigger prey in Warner Bros. Discovery.
This week, WBD chief David Zaslav and the company’s board of directors publicly announced that they are conducting due diligence on incoming acquisition interests from “multiple parties.” The company did not name Paramount or others who have undertaken mergers and acquisitions. But Ellison has worked extremely hard to win over WBD and Zaslav with a series of escalating offers, backed in part by his father, Larry Ellison (net worth: more than $330 billion).
In three letters to WBD’s board, Ellison made offers of $19, $22 and $23.50 per share, the last coming Oct. 13, a source with knowledge of the matter said, which a New York Times report confirmed. report. The latter offer would value WBD at more than $58 billion; individually, the company has net debt of nearly $36 billion. (Shares of Warner Bros. Discovery closed at $21.25 per share on October 23, up 69% since news of Ellison’s interest broke last month.)
Ellison, wanting to do some ego massage, even gave Zaslav the opportunity to become co-chief executive and co-chairman of a merged Paramount-WBD in his most recent mission. Each offer was rejected by the WBD board. (Company representatives declined to comment.)
What Happens When Paramount Warner Bros. Discovery takes over? HBO Max-Paramount+ combo, massive layoffs and more
Clearly, the Ellisons and their investment partners have a ceiling: They won’t go after Warner Bros. at any cost. Discovery on. Their latest proposal of $23.50/share is not a best and final offer. Now that WBD’s board has initiated an M&A review process and opened the books, the Paramount camp will have the opportunity to come back with a higher (or modified) offer. But it is clear that Ellison believes he has pole position among potential buyers of WBD and is unlikely to go much higher on the deal price.
Zaslav, of course, would like to pit rival suitors against each other to get a maximum amount of dollars for WBD, either in whole or in pieces. “It is no surprise that the significant value of our portfolio is increasingly recognized by others in the market,” he said in the company’s statement on Tuesday.
Netflix, Amazon and Apple would be in the mix as potential buyers, but likely only for WBD’s studios and streaming companies. This is in line with Warner Bros’ already ongoing plan. Discovery to split into two companies in mid-2026: Warner Bros., which houses HBO Max and its studios, and Discovery Global, which largely includes the TV networks. But a senior industry manager tells the story Variety that for the technology-oriented companies, WBD as a whole – including TV networks – is “simply not core” to their growth strategies.
Netflix co-CEO Ted Sarandos told investors during the Q3 earnings call that the company has “no interest in owning legacy media networks,” pouring cold water on the prospect of a deal for WBD as a whole. While Sarandos left the door open by saying Netflix can be “picky” about its M&A goals, he added, “Nothing is a must-have for us to achieve the goals we have for the company.”
In the announcement, WBD said it would consider a sale of the spun-off Warner Bros. entity to a third party, in addition to a spin-off of Discovery Global to shareholders. Meanwhile, there is speculation that Sony may play for WBD, but sources say this Variety the company is not interested.
Comcast is circling Warner Bros., but it is also transferring most of its cable TV assets to spinoff company Versant, potentially complicating any talks to buy WBD. Moreover, analysts say, Trump’s enmity toward CEO Brian Roberts gives the Ellisons — who are hamstrung with the president — a better chance of getting a deal done. Trump, angered by MSNBC’s coverage of him, once called Roberts the “chairman of ‘Concast'” and a “lowlife.”
“Given past commentary against Comcast from both the White House and the FCC over the past year, a successful Comcast acquisition of almost anything seems almost unthinkable,” MoffettNathanson chief analyst Craig Moffett said in an Oct. 21 letter to clients.
What’s behind Ellison’s desire to marry Paramount with Warner Bros. Discovery? These are the same trends that have swept the media world in recent years, says Scott Purdy, media strategy leader at professional services firm KPMG US.
Major media companies have seen a decline in their linear TV businesses, and “industries in decline tend to consolidate,” says Purdy. “The only important factor is scale.” In addition, buyers often want to acquire high-end entertainment franchises and intellectual property, he says, in part to keep them out of the hands of competitors.
A mega-merger of Paramount and WBD would bring a massive series of layoffs, allowing the new entity to consolidate the functions of corporate divisions, studios, TV and streaming. In the meantime, Ellison and his team are expected to begin mass layoffs at Paramount Skydance next week, eliminating about 2,000 U.S. jobs, with more international cuts.
Ellison, speaking at the Bloomberg Screentime conference in LA earlier this month, would not confirm that Paramount Skydance has made an offer for WBD. But he explained why he thinks Paramount needs to leverage more content-producing engines to achieve sustainable growth in a streaming-centric world. He even cited Zaslav’s comments from a year ago that the sector needs more consolidation.
“I think there are a lot of them [M&A] There are options out there in terms of what is actually possible in the near future,” Ellison said. “You actually need more content to drive more engagement.”
Now Warner Bros. Discovery has begun a formal M&A review process, the question is whether Ellison will come back with an even higher offer – and whether WBD’s board believes this is really the best path forward.
