EXCLUSIVE: With new contracts for Warner Bros Motion Picture chairs Michael De Luca and Pam Abdy signed, sealed and delivered, the (still) David Zaslav-run Warner Bros. Discovery is truly poised for a purchase by David Ellison and Paramount.
Coming off a $4 billion global box office year-to-date, De Luca and Abdy are clearly among WBD’s crown jewels and major assets for the Ellisons, which is more than you can say for Zaslav. With the duo re-upped, it’s akin to Ellison buying a house and discovering a Warhol painting hanging out back.
Sources at both studios tell us that while no formal offer has yet been sent from PSKY to WBD, the Jeff Shell and Gerry Cardinale-advised Ellison is just biding his time before making a bid for another iconic studio. However, it is unclear how far “informal” pitches and discussions between the parties have evolved.
Watch on Deadline
To that, specifically, Ellison and his father Larry Ellison, the second richest man in the world depending on what time of day it is, don’t want to see a repeat of the prolonged painful saga that marked Skydance‘s $8 billion acquisition of Paramount. Nor do they want to step on landmines or find any surprises at the debt-heavy WBD.
And they don’t currently see a significant role for Zaslav in the newly merged mega studio.
To be honest, studio sources tell us, it would be very unlikely that Zas would want to hang around once a sale is complete, and tech guys like Larry Ellison want a clean sheet with no surprises.
At most, right now, Zas could be looking at an offer of a board seat and perhaps a “strategic advisor” position, insiders inform us.
When contacted by Deadline today, reps for Paramount and WBD had no comment for any potential deal and more.
Word around town is that Zaslav, enjoying his role at the head of WBD, was jockeying for some sort of grand poobah type of position in any Warner Bros acquisition, hence the reason why he’s been trying to drum up bidders for the conglom, other than Paramount — read, Netflix.
However analysts like Richard Greenfield of Lightshed Partners have their doubts as to whether Netflix wants to be in the running at all.
The streamer, believes Rich Greenfield, “is simply not going to spend $75-$100 billion to acquire Warner Bros Discovery.” (That number comes from WBD’s current market cap of $47 billion with $30 billion of net debt.)
Netflix has no interest in owning linear cable networks. It could wait until the studio and HBO Max split. But HBO is still tied to the legacy multichannel ecosystem, he pointed out in a note this week, with an increasing array of wholesale distribution relationships spanning Amazon Prime, Charter, and DirecTV, he pointed out in a note this week. “Why would Netflix want to deal with all those entanglements?”
Also, the content driving Netflix’s subscriber growth has been original IP. And Netflix is having no trouble at all licensing catalog content from Hollywood studios.
WBD is splitting, and maybe it’s in the Ellisons’ best interest to snap it up now in full, in cash, before linear networks and film and TV production go their separate ways, risking a bidding war around the studio and streamer that pushes up the price. Meaning, he could get it cheaper if he was willing to swallow the company whole, cable and all. At second glance, however, the number of potential suitors is limited after all — for or for part of WBD. Comcast, a frequent target of Trump’s ire, would face tough regulatory scrutiny. The deal might be a big one for Sony, although it could team up again with a PE partner like Apollo. Apple? Amazon? Really?
And the fact that Oracle co-founder and chair Larry Ellison was recently the wealthiest human on the planet could deter most bidders.
The rationale for PSKY to move is as much political as business – meaning “standard analytical frameworks are probably less useful than normal,” wrote TD Cowen’s Doug Creutz in a note last month. The probability of an Ellison bidding is high, of his getting accepted is high, as is the probability of getting the deal past government watchdogs. “We tend to think there is a bigger game going on here given the overly dynamic domestic and world geopolitical situation and the ongoing unprecedented AI investment.” Larry Ellison looks soon to be an overlord of TikTok.
A question mark is stock price. The shadow bid has already inflated WBD shares. They kind of almost doubled. “We don’t love the risk-reward here given the potential for WBD shares to quickly round trip to $11-$12 if the bid doesn’t materialize,” said Creutz.