Tech billionaire Larry Ellison has committed over $40 billion to back Paramount’s Skydance bid for Warner Bros. Discovery, amid a contentious takeover effort.
Tech billionaire Larry Ellison has agreed to provide a personal guarantee exceeding $40 billion for Paramount’s Skydance bid to acquire Warner Bros. Discovery (WBD). This move comes as Paramount has initiated a hostile takeover attempt, following Netflix’s recent acquisition of WBD’s television, film studios, and streaming assets.
In response to the takeover bid, WBD has urged its shareholders to reject Paramount’s offer. The company has accused Paramount of misleading investors by asserting that its proposal had a “full backstop” from the Ellisons, who control the company. This claim raised concerns about the financial backing of the bid.
In a significant development, Larry Ellison, also the co-founder of Oracle, has stepped in to personally guarantee $40.4 billion in equity financing for the proposed acquisition.
David Ellison, chairman and CEO of Paramount and Larry’s son, emphasized the company’s commitment to acquiring WBD. He stated, “Our $30 per share, fully financed all-cash offer was made on December 4th, and continues to be the superior option to maximize value for WBD shareholders.”
The Ellisons have faced scrutiny regarding the funding of the bid, particularly after a regulatory filing revealed that it was supported by external investors, including Affinity Partners, an investment firm founded by Jared Kushner, the son-in-law of former President Donald Trump, as well as Saudi Arabia’s Public Investment Fund and the Qatar Investment Authority. However, Affinity Partners withdrew from the bid last week.
Seth Shafer, principal analyst at S&P Global Market Intelligence Kagan, commented on the situation, saying, “I doubt many Warner Bros. shareholders that are on the fence or planning to vote no were holding out due to issues with the revised bid addresses such as a guarantee from Larry Ellison on the funding front.”
For both Paramount and Netflix, securing shareholder support is merely the first hurdle. The proposed deal is expected to undergo intense scrutiny from lawmakers across the political spectrum, who have expressed concerns about consolidation within the media industry. President Trump has also indicated plans to weigh in on the transactions.
A merger between Paramount and Warner Bros. would create a studio larger than the industry leader, Disney, and would combine two significant television operators. Some Democratic senators have voiced concerns that such a move would grant one company control over “almost everything Americans watch on TV.”
On the other hand, a partnership between Netflix and WBD would solidify Netflix’s dominance in the streaming sector, resulting in a combined subscriber base of 428 million. Netflix has assured that it would honor Warner Bros.’ theatrical commitments and argues that the deal would ultimately benefit consumers by lowering costs through bundled offerings.
The implications of these potential mergers extend beyond financial considerations, as they raise significant questions about market competition and consumer choice in the media landscape.
According to The American Bazaar, the developments surrounding the bids and the involvement of high-profile investors like Larry Ellison highlight the ongoing evolution of the media industry and the strategic maneuvers companies are willing to undertake to secure their positions.