Exclusive | Sale of Warner Bros. Discovery heats up as Ellisons weigh DefCon 1 litigation over selection of Netflix bid

Warner Bros.Discovery is signaling that it wants Paramount Skydance chief David Ellison and his multibillionaire father Larry Ellison to increase their $30-per-share, all-cash “hostile” offer for the media conglomerate – and if they’re willing to do so, WBD is ready to negotiate a possible sale to the duo, The Post has learned.Not so fast, say the people at Paramount Skydance and their partners at RedBird Capital. The Ellisons and RedBird, run by savvy media dealmaker Gerry Cardinale, are mulling something known internally as “DefCon 1” – using lingo for the security level when nuclear war is imminent.

That plan would entail walking away from the bidding process – including their recent hostile appeal to shareholders – and possibly litigating how WBD’s board handled the process, The Post has learned.People inside Paramount Skydance allege that directors and management ignored their sixth all-cash offer for the company and favored Netflix’s cash-stock bid throughout the bidding process because of a personal bond between WBD chief David Zaslav and Netflix CEO Ted Sarandos.As this article went to press, they still believed their $78 billion, all-cash offer was far superior to the cash-stock, $82.7 billion winning bid from rival Netflix – and had no intention of increasing the price as they press their case directly to shareholders.Meanwhile, WBD is expected to formally address Larry Ellison’s personal guarantee backing Paramount’s bid and its impact on the deal process in the coming days.

Press reps for WBD, Paramount Skydance and Netflix declined to comment. WBD has in the past denied personal relationships figured in the decision to select Netflix as the winner of the bid war, saying the streaming giant came up with the best offer. Whatever happens, one thing is certain: The biggest corporate acquisition in recent history has turned into a nasty tug-of-war among the most powerful people in tech and media, with the added complexity of ...