Media mogul David Ellison is preparing to finally submit an official merger bid for Warner Bros. Discovery, On The Money has learned – but don’t expect wedding bells and rose petals anytime soon.
Ellison – who has stayed eerily silent since reports leaked last month that his media giant Paramount Skydance might bid for WBD – could disclose a takeover bid as soon as this week for the owner of the Warner Bros. studio, HBO and CNN, sources close to the situation said.
The process is fluid, and it’s also possible that a bid will get delayed once again or not submitted at all, the sources added.
If an offer does surface, insiders noted that talks could take a decidedly persnickety turn as Ellison begins haggling with David Zaslav, the wily, deal-savvy CEO of WBD.
As I reported this week, “Zas” has signaled that he wants $30 a share and maybe more for his company — and that Ellison’s reported $20-a-share offer is a nonstarter. The stock on Tuesday closed at $17.98.
As I have also reported, Ellison has been in talks with buyout giant Apollo Global Management to finance any bid, as his dad Larry Ellison – the world’s second-richest person with a net worth approaching $400 billion – may have a limited appetite for media deals.
If the Ellisons and their partners at media conglomerate RedBird Capital do respond with a publicly disclosed bid in the coming days, don’t count them meeting Zaslav’s dream bid, sources close to the situation said.
“The Ellisons aren’t going to overpay for this dumpster fire,” a source close to Ellison told On The Money.
Of course, in any merger dance, both sides like to control the narrative to gain an edge. In the case of Ellison, the plan is to persuade Zaslav’s board that WBD needs to be sold, and that there are no other viable buyers given antitrust concerns that will negate a Netflix or Amazon coming in to pay top dollar for the assets.
And with CEOs, money can make even the most hardened rivalries melt. if Ellison comes close to what Zaslav sees as a fair deal, you can bet both he and Ellison will be all smiles in announcing the new firm of Paramount Skydance WBD, or however the alphabet soup arranges itself.
For now, however, the Ellisons are mounting a PR campaign with reporters to degrade Zaslav’s two-year record as head of WBD, the product of the 2023 merger of Discovery Inc., and Warner Media.
“Zaslav has missed just about every earnings projection, his stock has racked up billions in losses and his compensation compared to his employees is severely inflated,” the source close to Ellison said.
On the other hand, a source familiar with Zaslav’s thinking counters that Ellison did, in fact, overpay for Paramount – a hot mess of a media conglomerate that amounts to a “s–t studio” plus a “melting ice cube” of shrinking, has-been cable-TV networks like MTV and Comedy Central.
Likewise, the source opined that Ellison also overpaid when he shelled out $1.1 billion for Ultimate Fighting Championship. Most recently, Ellison ponied up $150 million for Bari Weiss’s news site, The Free Press, which generates just $15 million in revenue.
“He’s not dealing with Shari Redstone now,” the source quipped, implying that the media heiress who sold Paramount to Ellison for $8 billion wasn’t the skilled negotiator that Zaslav is, having waited too long to unload her shrinking empire.
Zaslav’s studio also was the first to crack more $4 billion in revenues this year amid a string of hits like “The Minecraft Movie” and “Alto Nights”. Unlike Paramount, he has a profitable streaming service, with HBO Max being the third largest behind Netflix and Amazon.
Meanwhile, Zaslav has slashed debt, and the corporate restructuring he envisions for early next year has been applauded by analysts who agree the streaming and studio units alone are worth upwards of $30 a share.
So far, Zaslav also has the support of the WBD board. They believe that once the company is split in two, there will be other bidders like Netflix, Amazon and even Apple to acquire content and a studio. Zaslav believes the pressure is on Ellison to move fast so he isn’t competing with these large players.
Given Skydance’s thin balance sheet, Ellison is also reliant on borrowed money, whether it’s from private equity firms like Apollo – or from his dad.
A spokeswoman for Paramount Skydance had no comment; a rep for Zaslav didn’t return a request for comment.
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