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Behind Paramount’s Relentless Campaign to Woo Warner Discovery and Trump
The fight for Warner has become a battle between Paramount, the 113-year-old Hollywood institution, and Netflix
Paramount Chief Executive David Ellison knew his latest bid for Warner Bros. Discovery was in trouble when the company’s CEO David Zaslav started ghosting him.
Paramount had spent the morning of Dec. 4 finalizing its sixth bid to acquire all of Warner Discovery: an all-cash $77.9 billion offer. But Paramount was worried that Warner Bros. had already settled on their preferred dance partner: Netflix.
“Just tried calling you about new bid we have submitted,” Ellison texted Zaslav. “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.”
He didn’t hear back.
Sensing trouble, Ellison followed up, saying Paramount had offered a package that covered all the issues Warner Discovery had raised, including the need for “strong cash value” and “speed to close.”
“It would be the honor of a lifetime to be your partner and to be the owner of these iconic assets,” he texted, according to a regulatory filing.
On Friday, Ellison’s concerns were realized. Warner Discovery and Netflix announced a deal for the streaming giant to acquire the iconic Warner Bros. and HBO properties for $72 billion, a proposed merger that could radically reshape entertainment.
Ellison’s father, billionaire Oracle co-founder Larry Ellison, a Trump ally, called the president after the Netflix deal was announced and told him the transaction would hurt competition, according to a White House official and a person familiar with the matter.
An Oracle spokeswoman didn’t immediately respond to a request for comment.
During a December visit to Washington, David Ellison offered assurances to Trump administration officials that if he bought Warner, he’d make sweeping changes to CNN, a common target of President Trump’s ire, people familiar with the matter said. Trump has told people close to him that he wants new ownership of CNN as well as changes to CNN programming.
The White House declined to comment. A White House official said they don’t comment on Trump’s private conversations.
Not ready to give up, Paramount on Monday launched a hostile takeover effort for Warner Bros. Discovery, taking its case directly to shareholders. Ellison says his offer for Warner is a better deal for shareholders and more likely to pass regulatory muster. Paramount said its offer provides shareholders $18 billion more in cash than Netflix’s.
“We’re really here to finish what we started,” Ellison said on CNBC Monday morning. Three Middle East sovereign-wealth funds and Trump’s son-in-law Jared Kushner are among the financial backers of Paramount’s bid.
Warner’s board said it planned to stay the course with Netflix.
The fight for Warner has become a battle between Paramount, the 113-year-old Hollywood institution, and Netflix, the technology startup-turned entertainment juggernaut. With a huge library of classic movies and television shows including “Casablanca” and “The West Wing” as well as HBO, home to “The Sopranos” and “Game of Thrones,” Warner Discovery is considered a crown jewel of Hollywood.
Trump has so far avoided publicly backing a bidder. “None of them are particularly great friends of mine,” he said at a White House roundtable on Monday. A person close to Trump said the president will want Paramount and Netflix to compete for his approval of a deal.
Trump has told aides he wants to be kept regularly apprised of any potential antitrust probe into Netflix’s deal for Warner. A spokesman for Attorney General Pam Bondi said while it is still early days, she and the DOJ’s antitrust division will oversee this merger.
Hot pursuit
Ellison, who recently merged his Skydance production company with Paramount, had long planned to pursue Warner Bros. He saw Paramount as too small on its own to compete against Netflix, Disney and others, according to people familiar with his thinking.
Paramount “genuinely needs an acquisition to compete with Netflix, Disney and Amazon, all of which enjoy a substantial head start in global scale, content output and engagement,” said Moffett Nathanson analyst Robert Fishman in a Monday report.
Ellison initially took a friendlier approach.
Paramount’s board met in September to discuss a bid for Warner. A few days later, David Ellison visited Zaslav’s Beverly Hills home, once owned by legendary Paramount studio chief Robert Evans, to make his pitch in person. Ellison proposed a $19-per-share cash-and-stock bid for the company.
He followed that offer up with a formal letter to Warner Discovery with Paramount’s proposal, which would be 60% cash. Larry Ellison met virtually with Zaslav and Warner Discovery chairman emeritus John Malone days later.
But Zaslav already had a plan to split his empire into two companies—one to house the studios and HBO Max, and the other to shepherd the TV networks business. Warner rejected the Ellison overture as inadequate.
In late September, Ellison sent his second offer letter to the Warner board, upping the price to $22.00 per share, and boosting the cash mix from 60% to nearly 67%. The new proposal offered a $2 billion payment if the deal was quashed by regulators and also offered Zaslav a role as co-CEO and co-Chairman of the combined company.
Paramount made its third attempt on Oct. 13, offering $23.50 per share, again upping the amount of cash to 80%.
Upping the ante
After the three rebuffed Paramount offers, Zaslav essentially put his company up for sale. Warner Discovery said it had interest from multiple parties about acquiring its businesses and would set up an auction.
First-round nonbinding bids came in Nov. 20, with Paramount’s offering $25.50 per share for the whole company while Netflix and Comcast pursued just its studios and HBO Max streaming business.
Soon after, the Ellisons had dinner with Zaslav to again make their case for a deal, and offer him a leadership role. They raised their offer in the next round of bids, upping it to an all-cash bid of $26.50 per share.
On the eve of what would be Paramount’s last bid during the auction process, the company asked investment bank Allen & Co., which was working with Warner Discovery, what factors would be considered. “Cash is king,” an Allen & Co. representative said, according to Paramount’s regulatory filing.
Paramount submitted its $30 per-share offer on Thursday morning, altering some of its financing arrangements with the three Middle East sovereign-wealth funds to avoid triggering a review by the panel that examines foreign investments. The sovereign-wealth funds agreed to forgo any governance rights in the combined company, including board representation.
By 4:30 p.m. that afternoon, Ellison and his team hadn’t heard from Warner. Around 11 p.m., news broke that Warner had entered into an exclusivity agreement with Netflix.
Write to Joe Flint at Joe.Flint@wsj.com, Brian Schwartz at brian.schwartz@wsj.com and Natalie Andrews at natalie.andrews@wsj.com
