David Ellison fought hard to win Warner Bros. Discovery. But despite his strenuous efforts, he lost out to Netflix — and now Ellison is switching from carrots to sticks: Paramount Skydance is taking its case directly to shareholders in a hostile takeover bid for WBD.
New details disclosed in a Paramount SEC filing reveal the lengths Ellison went to try to clinch a pact with David Zaslav, president and CEO of Warner Bros. Discovery. Ellison courted Zaslav as hard as he could: He hosted Zaslav at a dinner with his father, Larry Ellison. David Ellison met with Zaslav at the latter’s home in Beverly Hills to discuss a potential deal. And Larry Ellison met over a videoconference with Zaslav and John Malone, chairman emeritus of Warner Bros. and a major shareholder, to “discuss Paramount’s interest in a combination with Warner Bros.,” per the filing.
David Ellison and his teams at Paramount Skydance, together with their outside legal and financial advisory firms, worked over Thanksgiving to put together a more compelling offer to buy all of WBD — ultimately extending an all-cash offer of $30/share, with an equity value of $77.9 billion. Ellison even offered offered Zaslav a co-CEO and co-chairman role in a combined Paramount-Warner Bros. Discovery.
But the board of WBD rejected every proposal Ellison put forward, and on Friday, Dec. 5, the company announced a deal with Netflix to sell Warner Bros. studios and HBO Max in a deal with an equity value of $72 billion.
“Paramount made six proposals over 12 weeks to the Warner Bros. Board,” culminating in the all-cash offer of $30 per share on Dec. 4, according to the Paramount Skydance filing outlining the parameters of its WBD takeover efforts and the background to the negotiations. “The final proposal stated Paramount was ready to immediately sign the transaction, accompanied by fully executable agreements with fully committed debt financing and fully committed equity financing from the Ellison family. Despite these facts, the Warner Bros. Board and its advisors chose on that pivotal December 4th to make no effort to even speak with Paramount or its representatives about anything. Instead, the Warner Bros. Board, in possession of a $30 per share cash offer with a clearer and faster path to regulatory approval, committed Warner Bros. and its stockholders to an obviously financially inferior transaction” — the Netflix agreement — “with extraordinary regulatory risk and a longer timeline to a possible closing.”
Ellison, who felt the WBD board hadn’t treated him fairly, wasn’t done fighting to get his hands on the prize. On Monday, Paramount Skydance announced its intention to stage a hostile takeover bid for Warner Bros. Discovery. “We’re taking our offer directly to shareholders because they deserve transparency and the ability to make an informed decision,” Ellison told investors on a call. “Our proposal is superior to Netflix’s in every dimension, higher headline value, increased certainty in that value, greater regulatory certainty and a pro-Hollywood, pro-consumer and pro competition future. We’re confident that once shareholders have the opportunity to choose for themselves, they’ll choose Paramount.”
On Dec. 4, following Paramount’s submission of a $30/share offer to the WBD board, Ellison sent the following text to Zaslav: “Just tried calling you about new bid we have submitted. I heard you on all your concerns and believe we have addressed them in our new proposal. Please give me a call back when you can to discuss in detail.”
At approximately 4 p.m. ET on Dec. 4 — “having heard nothing all day,” per the Paramount filing — Ellison sent the following text to Zaslav: “Daivd [sic], I appreciate you’re underwater today so I wanted to send you a quick text. Please note when you next meet as a board we wanted to offer you a package that addressed all of the issues you discussed we [sic] me. Those were 1 we wanted to offer complete certainty 2 strong cash value 3 speed to close. Please note importantly we did not include ‘best and final’ in our bid. Also please know despite the noise of the last 24 hours I have nothing but respect and admiration for you and the company. It would be the honor of a lifetime to be your partner and to be the owner of these iconic assets. If we have the privilege to work together you will see that my father and I are the people you had dinner with. We are always loyal and honorable to our partners and hope we have the opportunity to prove that to you. Best, David.”
Neither Zaslav nor any representative of WBD responded, according to Paramount.
At approximately 11 p.m. ET on Dec. 4, news outlets (including Variety) began reporting that Warner Bros. had entered into an exclusivity agreement with Netflix.
As revealed in Paramount’s SEC filing, Warner Bros. Discovery and Paramount spent a lot of time fighting over the terms of a confidentiality agreement that would require “no contact with the Warner Bros. Board or any other person at Warner Bros. other than Mr. Zaslav, a requirement to seek permission before Paramount could engage with any debt or equity financing sources and a broad waiver of claims and challenges against Warner Bros. and its representatives relating to Warner Bros.’ sale process.”
WBD and Paramount also tussled over foreign financing, reflecting Warner Bros. Discovery’s desire to steer the deal away from review by the Committee on Foreign Investment in the United States, the U.S. government’s interagency body that reviews foreign investments in U.S. businesses potential national security risks.
According to Paramount’s deal terms to acquire WBD, the three Middle Eastern sovereign wealth funds (Saudi Arabia, Qatar and Abu Dhabi) and Jared Kushner’s Affinity Partners are backing the $30/share offer for Warner Bros. Discovery, along with Larry Ellison, RedBird Capital Partners. But the Arab wealth funds and Kushner’s Affinity “have agreed to forgo any governance rights — including board representation — associated with their non-voting equity investments.” As such, the deal would not require CFIUS review, according to Paramount. In addition, Chinese internet company Tencent, which had previously committed $1 billion toward the WBD takeover deal, is no longer a financing partner.
Meanwhile, before the Skydance-Paramount deal was reached in mid-2024, Warner Bros. Discovery and Shari Redstone’s Paramount Global talked about combinations in 2023 and 2024. As Variety has previously reported, Zaslav had met with Paramount’s then-CEO Bob Bakish in December 2023 to explore a possible WBD-Paramount merger. WBD and Paramount execs continued discussions through April of 2024 and the companies engaged in “mutual due diligence” — but Warner Bros. Discovery never submitted a formal bid for Paramount Global. “None of those discussions led to entry into any definitive agreement for a business combination,” the Paramount filing says.
