Paramount Skydance CEO David Ellison speaks throughout 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.
Just some months in the past, the Paramount Skydance CEO despatched a letter to the Warner Bros. Discovery board of administrators arguing a mixture of the 2 media and leisure firms made sense. That letter was the primary of a number of that provided more and more greater costs to amass the corporate together with arguments of why the property have been higher collectively.
Paramount’s curiosity spurred a proper sale course of — bringing Comcast and Netflix into the combination — which finally doubled the worth of Warner Bros. Discovery shares and culminated, a minimum of for the second, in Paramount dropping out within the bidding struggle it began.
On Friday, Netflix introduced a deal to amass 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, equivalent 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 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, they usually definitely hadn’t cleaned up the property or separated the property in the way in which they’ve proper now,” stated Netflix co-CEO Ted Sarandos in a convention name Friday morning after saying the deal. “I believe that form 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 govt crew and its shareholders.
Zaslav’s share
Zaslav at the moment owns greater than 4.2 million shares of Warner Bros. Discovery, with one other 6.2 million shares that will be delivered to him sooner or later by way of beforehand granted inventory awards, in line with Equilar. Zaslav additionally has a grant of virtually 20.9 million choices with an train worth of $10.16, Equilar discovered.
Primarily based on the Netflix-WBD transaction worth 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 about to obtain in January, in line with an individual near the state of affairs who declined to be named talking in regards to the govt’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 Road 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 worth and a return to 2022 ranges when WarnerMedia and Discovery first merged.
That is vindication for Zaslav, who has spent almost 4 years coming below 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 finished with its pursuit of shopping for all of Warner Bros. Discovery.
Paramount’s hostile play
Because the 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 primarily based 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 largest 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 route. Paramount has accused Warner Bros. Discovery of failing to correctly contemplate its provide of $30, all-cash, and as an alternative promoting to Netflix as a predetermined final result.
Netflix made an preliminary bid for WBD’s studio and streaming property of $27 a share, in line with 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 route, stated the particular person, who requested to not be named as a result of the discussions have been personal.
Paramount was the one bidder fascinated with buying all of WBD’s property — the movie studio, streaming service and TV networks. It has maintained that its provide is superior.
Paramount’s executives and advisors valued the Discovery International networks portfolio at near $2 a share, primarily based on its predicted buying and selling a number of and estimated leverage ratio, in line with folks conversant in the matter, who requested to not be named as a result of the discussions have been personal. Discovery International would come with the CNN, TNT Sports activities and Discovery channels.
Warner Bros. Discovery believes Discovery International might have a price of $3 per share or extra if it trades effectively within the public markets, in line with different folks with direct information of the matter.
Paramount has additionally argued there are tax efficiencies for shareholders in buying the entire firm reasonably than shopping for solely a portion of it, and that Netflix’s bid comes with steeper regulatory threat. The Trump administration’s view of the proposed mixture is one among “heavy skepticism,” CNBC reported Friday.
Paramount provided a break-up payment of $5 billion if the proposed deal did not get regulatory approval, in line with the folks acquainted.
Netflix’s bid included a $5.8 billion break-up payment in case the deal would not get regulatory approval, in line with a Securities and Alternate Fee submitting Friday.
Paramount is now weighing its choices about whether or not to go straight to shareholders with another improved bid — maybe even greater 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 end result would imply much more cash for WBD shareholders — and extra money for Zaslav.
— CNBC’s Nick Wells contributed to this report.
Disclosure: Comcast is the dad or mum firm of NBCUniversal, which owns CNBC. Versant would turn out to be the brand new dad or mum firm of CNBC upon Comcast’s deliberate spinoff of Versant.
