In a significant move on Wednesday, Warner Bros Discovery’s (WBD) board urged investors to reject a $108 billion hostile takeover bid from Paramount, labeling it as inferior to their own $83 billion agreement with Netflix. This announcement marks another chapter in a contentious takeover battle that could drastically alter the landscape of Hollywood, regardless of which contender ultimately prevails.
Paramount is racing against a January 8 deadline to generate shareholder support for its bid, intensifying the stakes in a fight that could redefine the future of a storied 102-year-old Hollywood brand. The company holds valuable assets, including the studio known for the Harry Potter franchise and the popular HBO Max streaming service.
Key revelations from WBD’s recent filing include an early proposition made by Paramount, wherein Chief Executive David Zaslav disclosed that Larry and David Ellison had offered him a “compensation package worth several hundred million dollars” along with a potential role as co-CEO and co-chairman of the merged entity, should the deal materialize. Zaslav deemed it “inappropriate” to discuss such arrangements at that time.
Regarding financial arrangements, WBD’s banking partners, including Allen & Co, JPMorgan, and Evercore, are set to collect approximately $225 million in fees for their services in the acquisition process. Allen & Co and JPMorgan will each receive $85 million, while Evercore’s share is $55 million, marking one of the largest financial compensations for investment bankers this year.
WBD’s filing also spotlighted buyer interest in its cable operations, which encompass CNN and Discovery, yet did not assign a value to this business segment—an essential factor in the ongoing negotiations with Paramount and Netflix. A firm, identified only as “Company B,” showed interest in a deal for the networks division, although it lacks actionable offers at this time.
Meanwhile, Comcast, referred to as “Company A,” proposed a merger plan with its NBCUniversal operations. This bid, valuing shares at $35.43—substantially higher than both Netflix’s and Paramount’s offers—was largely in stock and included a $5 billion termination fee. A governance structure was suggested, comprising eleven board members, with a distribution of six for Comcast and five for WBD, notably lacking any future employment commitments for WBD executives.
Tensions escalated further when WBD’s legal counsel informed Paramount that their representatives had been in unauthorized discussions with WBD board members, violating existing non-disclosure agreements. Paramount’s continued engagement, despite cease-and-desist warnings, raised legal red flags.
The filing indicated that a prior threat from Paramount—claiming unfounded allegations as a pressure tactic—backfired upon them, as even their advisors acknowledged that such communications were counterproductive. Additionally, revelations about the backing of Paramount’s bid through various Middle Eastern sovereign wealth funds emerged only late in the discussions, after initial denials from their bankers.
The need for a personal guarantee from the Ellison family, which WBD insisted on throughout the bidding process, became a point of contention. The final bid from Paramount promised to secure funding from the family’s revocable trust instead of a personal guarantee, which WBD insisted was crucial given the substantial equity commitments required.
WBD had set December 1 as the deadline for final bids from all parties, emphasizing that no further opportunities for improvement would be presented after this date. Paramount executives indicated, through messages sent post-deadline, that their last bid was not their “best and final,” showcasing the ongoing maneuvering in the high-stakes bidding war.
In a final push, Netflix’s legal team warned WBD that if a decision was not reached by market open the next morning, their offer would be rescinded, ultimately exerting significant pressure on WBD to finalize negotiations promptly.
As the deadline approaches and with multiple parties vying for WBD, the future of this iconic Hollywood entity hangs in the balance, poised for a potentially transformative shift in the media industry landscape.
