Paramount Skydance CEO David Ellison speaks in the course of the Bloomberg Screentime convention in Los Angeles on October 9, 2025.
Patrick T. Fallon | Afp | Getty Pictures
This is not precisely what David Ellison had deliberate in September.
Only a few months in the past, the Paramount Skydance CEO despatched a letter to the Warner Bros. Discovery board of administrators arguing a mix of the 2 media and leisure corporations made sense. That letter was the primary of a number of that supplied more and more larger costs to accumulate the corporate together with arguments of why the belongings have been higher collectively.
Paramount’s curiosity spurred a proper sale course of — bringing Comcast and Netflix into the combination — which in the end doubled the worth of Warner Bros. Discovery shares and culminated, a minimum of for the second, in Paramount shedding out within the bidding conflict it began.
On Friday, Netflix introduced a deal to accumulate HBO Max and the famed Warner Bros. movie studio for $27.75 per share, or an fairness worth of $72 billion. WBD will transfer ahead with a plan to separate out its pay-TV networks, similar to CNN and TNT Sports activities, earlier than the deal closes.
As an alternative of supercharging Paramount, simply months after gaining management of the corporate by means of a merger with Skydance, Ellison successfully handed a prized jewel of the media and leisure business to its most dominant participant, strengthening Netflix’s attain and stripping Paramount and Comcast’s NBCUniversal of an apparent merger goal.
“It wasn’t on the market earlier than, and so they definitely hadn’t cleaned up the belongings or separated the belongings in the best way they’ve proper now,” mentioned Netflix co-CEO Ted Sarandos in a convention name Friday morning after saying the deal. “I believe that sort of goes to the ‘why now.'”
Ellison jump-started a course of that has made some huge cash for Warner Bros. Discovery CEO David Zaslav, WBD’s government crew and its shareholders.
Zaslav’s share
Zaslav presently owns greater than 4.2 million shares of Warner Bros. Discovery, with one other 6.2 million shares that might be delivered to him sooner or later through beforehand granted inventory awards, based on Equilar. Zaslav additionally has a grant of just about 20.9 million choices with an train value of $10.16, Equilar discovered.
Based mostly on the Netflix-WBD transaction value of $27.75 per share, all of that provides as much as greater than $554 million for the WBD CEO.
Factoring in one other 4 million shares that Zaslav is ready to obtain in January, based on an individual near the state of affairs who declined to be named talking in regards to the government’s holdings, the true complete is nearer to $660 million.
For shareholders, the sale course of has introduced an identical windfall. Warner Bros. Discovery inventory closed at $12.54 on Sept. 10, the day earlier than The Wall Avenue Journal reported Paramount was getting ready a bid for the corporate.
On Friday morning, Warner Bros. Discovery shares have been up nearly 3% to greater than $25 apiece. That is greater than double Warner Bros. Discovery’s unaffected sale course of value and a return to 2022 ranges when WarnerMedia and Discovery first merged.
That is vindication for Zaslav, who has spent almost 4 years coming beneath hearth from Hollywood and traders for failing to ship for shareholders. With Friday’s announcement, he is successfully pulled victory from the jaws of defeat.
And nonetheless, Paramount is probably going not achieved with its pursuit of shopping for all of Warner Bros. Discovery.
Paramount’s hostile play
For the reason that merger closed in August, Paramount has introduced on C-suite executives and high-profile Hollywood expertise such because the Duffer Brothers. It secured the rights to develop a live-action function movie based mostly on Activision’s Name of Obligation online game franchise and struck a $7.7 billion deal for UFC rights.
Ellison’s hunt for Warner Bros. Discovery was his greatest endeavor since taking management of the corporate.
Paramount’s attorneys despatched a letter to Warner Bros. Discovery this week, first reported by CNBC, claiming the sale course of had been rigged in Netflix’s path. Paramount has accused Warner Bros. Discovery of failing to correctly think about its provide of $30, all-cash, and as a substitute promoting to Netflix as a predetermined final result.
Netflix made an preliminary bid for WBD’s studio and streaming belongings of $27 a share, based on an individual conversant in the matter. That trumped Paramount’s provide on the time and turned the trajectory of the gross sales talks in Netflix’s path, mentioned the particular person, who requested to not be named as a result of the discussions have been non-public.
Paramount was the one bidder fascinated about buying all of WBD’s belongings — the movie studio, streaming service and TV networks. It has maintained that its provide is superior.
Paramount’s executives and advisors valued the Discovery World networks portfolio at near $2 a share, based mostly on its predicted buying and selling a number of and estimated leverage ratio, based on individuals conversant in the matter, who requested to not be named as a result of the discussions have been non-public. Discovery World would come with the CNN, TNT Sports activities and Discovery channels.
Warner Bros. Discovery believes Discovery World may have a worth of $3 per share or extra if it trades effectively within the public markets, based on different individuals with direct data of the matter.
Paramount has additionally argued there are tax efficiencies for shareholders in buying the entire firm quite than shopping for solely a portion of it, and that Netflix’s bid comes with steeper regulatory danger. The Trump administration’s view of the proposed mixture is one in all “heavy skepticism,” CNBC reported Friday.
Paramount supplied a break-up price of $5 billion if the proposed deal did not get regulatory approval, based on the individuals acquainted.
Netflix’s bid included a $5.8 billion break-up price in case the deal would not get regulatory approval, based on a Securities and Trade Fee submitting Friday.
Paramount is now weighing its choices about whether or not to go straight to shareholders with yet one more improved bid — even perhaps larger than the $30-per-share, all-cash provide it submitted to WBD this week.
If it does, Netflix would have an opportunity to match that bid. The tip outcome would imply much more cash for WBD shareholders — and more cash for Zaslav.
— CNBC’s Nick Wells contributed to this report.
Disclosure: Comcast is the guardian firm of NBCUniversal, which owns CNBC. Versant would turn out to be the brand new guardian firm of CNBC upon Comcast’s deliberate spinoff of Versant.
