For the fourth time since September, Paramount chief executive David Ellison is making a multibillion-dollar bid to buy Warner Bros Discovery, a deal that would unite two studios that have been rivals for more than a century — and dramatically reshape Hollywood in the process.
Ellison, the ambitious 42-year-old son of billionaire Oracle founder Larry Ellison, is hustling to build a Hollywood empire. Flush with his father’s cash, the younger Ellison’s pursuit of Warner Bros began only weeks after he closed an $8bn acquisition of Paramount by his much smaller company, Skydance, in August.
Now he has competition. After rejecting his third bid in October, Warner Bros chief executive David Zaslav essentially put a for sale sign on the company and began to actively pursue suitors. Zaslav attracted two strong bidders: Comcast, parent company of NBCUniversal, and Netflix, the streaming pioneer that disrupted the old Hollywood studios — and prompted the current wave of consolidation.
Founded in 1923 by four brothers — Harry, Albert, Sam and Jack — Warner Bros has been coveted by dealmakers and would-be moguls for decades, and is once again a takeover target at a transformative moment in Hollywood. The pillars of the big studios — box office hits and cable television subscriptions — are in decline. For Paramount and Comcast, the hope is that Warner Bros will provide the scale to compete with Netflix and the deep pockets of Apple, Amazon and YouTube.
On Wall Street, many believe Ellison is trying to make the company a real force in the streaming market, where its Paramount+ service reaches only about 2 per cent of the monthly viewing in the US. Adding Warner Bros’ HBO Max and its valuable library of movies and TV could make it a more robust service in a hurry.
“We believe that a bid for Warner Bros Discovery remains a logical next step for the company, one that could meaningfully alter its current trajectory,” wrote analysts at MoffettNathanson, a research firm.
Paramount, Comcast and Netflix are due to submit bids to the Warner Bros board on Thursday. In the run-up to the bid, David Ellison sought to bolster his financial firepower by holding preliminary talks with Saudi Arabia’s sovereign wealth fund and other big Gulf investors about backing his company’s effort. People close to Ellison said Paramount would not bid much higher than its previous offer of $23.50 per share — a nearly 90 per cent premium from its price before Ellison began eyeing it.
Zaslav has so far resisted the approaches from the Ellisons. But several people involved in the talks say the Ellisons enjoy a notable advantage in Washington, at a time when President Donald Trump has been pressuring big media groups. Paramount’s new chief legal officer, Makan Delrahim, served as Trump’s antitrust chief at the Department of Justice during his first term.
The president has warm relations with Larry Ellison, a prominent Republican donor, and David has been building ties with the administration. This week he was among the guests at Trump’s black-tie dinner for Crown Prince Mohammed bin Salman of Saudi Arabia at the White House.
Advisers involved in the Warner Bros auction say the company’s goal — “insane”, as one put it — is to wrap up a deal by the end of the year. Few believe the timing is realistic given the potential political and regulatory obstacles ahead. At least two additional rounds of bids are expected.
Ellison is seeking to buy the whole company — the studio, the Warner Bros studio lot, HBO and even the shrinking cable TV properties, which have been a significant drag on the business for years. If his offer is ultimately accepted by Zaslav and the Warner Bros board, the resulting deal would bring together some of the most coveted properties in media and entertainment.
Paramount’s trophy assets — including The Godfather and Top Gun movies, CBS News and 60 Minutes, Yellowstone and Star Trek — would be under the same roof as Warner Bros’ Casablanca, the Harry Potter films, CNN, HBO and Friends.
Unlike Paramount, Comcast wants only Warner Bros’ movie, TV and streaming businesses, which would sit alongside its own powerful NBCUniversal entertainment group. Comcast is in the middle of a spin-off of its cable TV assets and has no appetite for taking on Warner Bros’ large portfolio of pay-TV businesses.
Comcast executives believe their company is a better fit for Warner Bros, arguing that an NBCUniversal-Warner Bros combination would create a formidable portfolio of studios, networks and intellectual property. But they also acknowledge that there could be political hurdles — starting, perhaps, with the group’s leadership.
Comcast is led by Brian Roberts, whom Trump has criticised on social media. The president also has repeatedly attacked MSNBC, the left-leaning cable news network recently rebranded as MS NOW, as well as the NBC network, once home to the president’s reality show The Apprentice. In April Trump accused the company of being a “disgrace to the integrity of broadcasting”.
People close to Comcast say the idea the president would block a transaction on personal grounds is overstated. The company also appears to have taken steps to repair the relationship, including by contributing money to help fund construction of a new ballroom at the White House.
Like Comcast, Netflix is bidding on the Warner Bros studio lot, the film studios and its extensive film and TV library — but not the cable TV assets. Some observers have questioned how serious Netflix is, given its management’s lack of interest in the traditional movie business, which remains at the heart of Warner Bros.
And with its roots in Silicon Valley, Netflix has preferred to build businesses internally instead of buying them. It has made only a handful of deals — the Animal Logic animation studio, a few games companies — but no acquisitions of this scale in its 27-year history.
Netflix has hired Moelis, an investment bank, to examine Warner Bros’ assets, a move that surprised rivals who did not expect it to entertain the idea of a legacy media acquisition. However, some people close to Netflix believe it is primarily using the process as a rare opportunity to scrutinise Warner Bros’ operations, particularly HBO.
Others say the Warner Bros library of film and TV shows could be of great value to Netflix. And Ted Sarandos, co-chief executive officer, had in the past been interested in owning the Paramount studio lot — leading to assumptions that he might want the Warner Bros lot this time around.
Antitrust issues have been raised around Netflix’s interest in Warner Bros. Darrell Issa, a California Republican, wrote in a letter to the justice department this week that Netflix “wields unequalled market power” in the streaming market, and that combining its service with HBO Max’s subscribers and Warner Bros content would “further enhance this position”.
For now, most people involved in the negotiations view the contest as Paramount’s to lose. The company, operating with a more favourable political tailwind than its rivals, is regarded as the best-positioned bidder as the process moves into what is expected to be a fast-moving — and unusually political — end-of-year sprint.
But Zaslav, an experienced dealmaker, seems determined to make the bidding for Warner Bros as competitive as he can. Some say he has made the most out of a weak hand.
“He’s done a good job,” one Hollywood banker said of Zaslav. “He’s got a real auction here.”
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