Paramount Skydance is considering raising its takeover offer for Warner Bros. Discovery by as much as 10% as it plots its next move to break up a merger agreement with Netflix, The Post has learned.
David and Larry Ellison, who created Paramount Skydance with a media merger over the summer, are now poised to bump their all-cash, $30-a-share offer for the owner of Warner Bros., HBO and CNN to as much as $33 a share, according to sources close to the situation.
The raised offer – which amounts to nearly $86 billion – would easily cover the $2.8 billion breakup fee, worth about $1 a share, that WBD would face if it nixes the Netflix merger, insiders noted.
The Ellisons are also willing to add a “sweetener” of at least two more dollars a share to try to seal the deal with the WBD shareholders they have been courting this week with their now “hostile” overture for the company, people with knowledge of the matter say.
“(They’re) not going to be jerked around,” one source said of the Ellisons. “But yeah, they’re prepared to move higher.”
Executives inside Paramount Skydance, including the Ellisons and their partners at RedBird Capital run by media dealmaker Gerry Cardinale, have made no formal decision on increasing their offer, people close to the matter said.
Before throwing more money at a deal, they plan to wait until Dec. 22, when the WBD its board is slated to provide a formal answer to Paramount Skydance’s pitch, which argues its $30-a-share, all-cash offer for the entire company was superior to the $30.75 cash-and-stock winning bid made by Netflix for the Warner Bros. studio and HBO Max streaming service.
The Ellisons cited several reasons including “regulatory certainty,” given the streaming overlap of the Netflix deal.
Meanwhile, Netflix is contemplating its own counter bid for WBD if and when Paramount Skydance makes its next move, according to a person with knowledge of its intentions.
How high the bidding could go is anyone’s guess. David Zaslav, despite declaring Netflix the winner of his months long bake off, has told people that if Paramount Skydance came to the table with $35 a share he and his board might well turn the keys over to the Ellisons.
But people with knowledge of the thinking inside Paramount Skydance say a $35 offer – valuing WBD at more than $90 billion – is as of now a non-starter. But that’s exactly what deal players said when Zaslav said he was seeking at least a $30 a share valuation during the height of the bidding war.
A Paramount Skydance rep had no comment; a rep for Zalav didn’t return a request for comment as did a rep for Netflix.
Both sides have lawyered up and hired teams of flacks to woo reporters to their side of the story. Ted Sarandos, the CEO of Netflix, as the Post has reported, has met with President Trump, who has taken the unusual step of getting directly involved in the regulatory approval that should be made by his DOJ antitrust chief Gail Slater.
The Ellisons have also been spending time in DC; Larry Ellison is a long-time friend of the president and political supporter.
On the legal front, the Ellisons and Redbird are arguing not only is their deal is superior because they are paying cash for the entire company, but there’s little overlap with Paramount Skydance from an antitrust standpoint.
Trump, as reported, as stated he wants the allegedly MAGA-hating CNN cable news network to be under new management in its new corporate configuration, seemingly favoring the Elllisons who would bring a centrist approach to CNN, as they’ve been doing at their CBS subsidiary run by independent journalist Bari Weiss.
Since Netflix isn’t buying WBD’s cable assets they would be spun out in a new company run by members of WBDs current management team including CNN’s current bosses. Paramount Skydance is also arguing that the spin off provides WBD shareholders with stock that won’t be worth anywhere close to $3 a share that is needed to reach the Netflix bid of $30.75
Netflix, meanwhile, is arguing that streaming is a small portion of the viewing ecosystem dominated by the likes of YouTube and social media, thus negating antitrust concerns. As far as the spin off is concerned, that could provide investors with as much as $4 a share given that properties like CNN still generate a healthy profit.
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