David Ellison’s Paramount sets sights on WBD, preps blockbuster bid
Skydance-owned Paramount is reportedly preparing a bid to acquire all of Warner Bros Discovery (WBD).
The Wall Street Journal (WSJ) reported on Thursday that the offer, which is backed by the family of Paramount chairman and CEO David Ellison, will consist primarily of cash and would see Paramount acquiring WBD ahead of its planned split into two companies next year.
WBD shares jumped 28% to around US$16 per share after the WSJ story was published, as the market reacted warmly to the potential mega-merger. The report did not include a dollar amount and noted the bid had not yet been submitted.
WBD’s planned separation will see it divide into two publicly traded companies: Discovery Global, housing its portfolio of linear channels including Food Network and CNN, as well as streamer Discovery+; and Warner Bros, consisting of its streaming and studio assets such as HBO, HBO Max, Warner Bros Television and Warner Bros Motion Picture Group.
The reason Ellison and Paramount are looking to move so quickly, said the WSJ, is to pre-empt a potential post-split bidding war for Warner Bros that could involve big-spending tech players such as Apple and Amazon.
The report comes just six weeks after Skydance’s US$8bn deal to acquire Paramount officially closed.
In the time since, the company – whose full name is Paramount, a Skydance Corporation – has revealed major deals including a seven-year, US$7.7bn agreement for the US rights to the Ultimate Fighting Championship and an overall deal that will lure Stranger Things creators Matt and Ross Duffer away from Netflix. Outside of these deals, there has also been speculation that the Ellison family and Paramount could be involved in a deal to acquire the US operation of TikTok, if the Chinese social media app is ultimately banned in America and forced to change its ownership structure.
The combination of Paramount/Skydance and WBD would bring together some of the industry’s most prized assets and franchises, and create a company with more than 200 million combined streaming subscribers (Disney has around 183 million subs across Disney+ and Hulu, while Netflix had just over 300 million before it stopped disclosing subs at the start of the year). However, with a combined market cap today of around US$58bn, it would still be much smaller than some of its studio and streaming rivals including Disney (US$210bn) and Netflix (US$513bn).
Any deal would also need to factor in WBD’s sizeable debt load, which stands at around US$35.6bn today.
It would also likely be an unpopular move within the industry, as it would bring together two large studios with many overlapping teams and functions. While Skydance’s acquisition of Paramount will involve lay-offs, which are expected to take place in November in search of US$2bn in savings, it was seen as a positive for the wider industry as it did not involve the combination of two major legacy studios. This would not be the case if Paramount was to buy WBD, which would likely see a vast number of cuts and the closure of duplicate business units.
A potential deal would also likely face regulatory scrutiny. However, the regulatory approval process would look different than Skydance’s takeover of Paramount Global, which was reviewed by the Federal Communications Commission because it involved the transfer of broadcast licenses for CBS.
This is not the first time that a tie-up between WBD and Paramount has been mooted. In late 2023, WBD president and CEO David Zaslav and then-Paramount Global CEO Bob Bakish held preliminary discussions, though those talks came to nothing and Paramount ultimately ended up in the hands of the Ellison family.
Paramount’s offer for WBD is another demonstration of Ellison’s willingness to move rapidly in order to take on the tech giants and larger studios. That willingness to move decisively and spend big is possible because Paramount is backed by Ellison’s father, Oracle co-founder Larry Ellison, recently named the world’s richest man.
Earlier in the week, Larry Ellison’s wealth grew to US$383bn as shares in Oracle soared after it announced new contracts with AI companies including OpenAI and Nvidia.
Paramount stock was up nearly 6% on Thursday following the WSJ report.
