Paramount Skydance is tapping Middle-Eastern investors in hostile bid for Warner Bros. Discovery
Why does Paramount Skydance need the Persian Gulf to finance its bid for Warner Bros.Discovery?It’s a niggling question that hasn’t gone away for Paramount Skydance owners David and Larry Ellison, the son-and-father duo now scrambling to persuade shareholders of the company, known as WBD, to sell the media giant to them instead of Netflix.As most of the investing world knows by now, the WBD board rebuffed the Ellisons’ all-cash $30-a-share bid to buy all of WBD, instead picking a $27.75-a-share offer from Netflix for the Warner Bros.
studio and the HBO Max streaming app.Their plan is to separately sell WBD’s cable properties for an extra few dollars a share in a deal they claim is effectively worth $30.75 a share.
The Ellisons are appealing to shareholders directly, going “hostile,” and arguing their bid is and was superior.They’ve ripped the Netflix deal as risky not only from a regulatory standpoint (lots of potentially antitrust-laden overlap), but also in terms of how much it values those cable properties including CNN, saying the implied $3 a share looks optimistic.Meanwhile, read the fine print of the Paramount Skydance bid, sources close to WBD counter: Larry Ellison — the Oracle co-founder whose net worth of $243 billion makes him the No.3 richest person in the world — has relatively little skin in the game to finance son David’s proposal to buy the owner of Warner Bros., HBO and CNN for $78 billion in cash.The Oracle co-founder is for now said to be ponying up just $12 billion — less than 5% of his fortune — to make the megadeal happen.
Meanwhile, a trio of Middle Eastern sovereign wealth funds has pledged twice that amount — a disclosure that was sure to raise eyebrows about foreign interests controlling US media assets.It’s also a thread that’s being tugged at by people close to wily WBD CEO David Zaslav, and Netflix CEO Ted Sarandos as they lobby investors for their $72 billion deal for the Warner Bros.studio and HBO Ma...