In the latest twist in Hollywood’s own corporate soap opera, tech billionaire Larry Ellison has personally guaranteed $40.4bn (£30bn) to support Paramount Skydance’s $108.4bn bid for Warner Bros Discovery (WBD), in a bid to outflank Netflix in the fight for the entertainment giant.
Warner Bros urged shareholders last week to reject Paramount’s all-cash offer, citing concerns over financing and the absence of a full Ellison family guarantee.
The board had already agreed to sell the company’s movie studios, HBO, and streaming service to Netflix for $82.7bn earlier this month.
But Paramount, controlled by Ellison’s family, is pursuing control of the entire company, including CNN, Cartoon Network, and the Discovery Channel.
David Ellison, Paramount’s boss and Larry’s son, defended the bid: “Our $30 per share, fully financed all-cash offer continues to be the superior option to maximise value for WBD shareholders.”
“Our acquisition will be superior for all stakeholders, as a catalyst for greater content production, theatrical output, and consumer choice.”
Ellison steps in
Paramount’s latest move is designed to address WBD’s doubts about its financing.
Alongside the $40.4bn personal backstop, Ellison, who is a close friend of President Donald Trump, has agreed not to revoke or transfer assets from the family trust pending the transaction.
Meanwhile, Paramount also raised its reverse termination fee to $5.8bn from $5bn and extended the tender offer deadline to 21 January.
Paolo Pescatore of PP Foresight said: “The improved offer is a step in the right direction, but it is unlikely to be enough.”
Still, some WBD shareholders, including Harris Associates, have indicated they might consider a revised Paramount bid if funding concerns are resolved and the valuation improves.
But both deals face regulatory hurdles: a Paramount-WBD merger is set to create a US media giant rivalling Disney, while a Netflix-WBD tie-up risks consolidating the streaming leader’s dominance with 428 million subscribers.
Lawmakers on both sides of the Atlantic are watching closely, raising potential antitrust concerns.
WBD shares rose nearly four per cent on Monday afternoon following the Ellison-backed announcement, with Paramount up about three per cent.
Netflix and WBD declined to comment on the latest move.