After a long, arduous and complex process, Netflix entered into an official deal with Warner Bros. Discovery to buy the company. However, the battle was not over yet. Shortly after the monumental announcement, David Ellison's Paramount Skydance submitted a hostile bid worth $30 per share and totaling $108.4 billion for the entire company, which includes studio and streaming assets, and well as traditional cable ones. The move has garnered a lot of attention in the industry, prompting the release of a lot of intereting information.
The latest development to come out is regarding the timeline of communication between David Zaslav and David Ellison, and its eventual abrupt end. Paramount recently submittted an SEC filing (via Variety) detailing the timeline of interactions between the two CEOs. During the initial sale process, Paramount seemed to be the top candidate to acquire WBD, and Ellison went to great lengths to please the Warner Bros. head.
Per the filing, the Paramount chief and his father, Larry Ellison, hosted a dinner for Zaslav. The WBD CEO also had David Ellison over at his home for dinner to discuss a deal between their two companies. However, despite an initial promising outlook, a potential deal between the two companies began to appear more unlikely as time progressed. As further detailed by the filing, Warner Bros. Discovery eventually ended up rejecting six proposals made by Ellison's company,
That ultimately led to its $30 per share, all-cash offer, which would have also positioned Zaslav as the co-CEO and co-chairman of the resultant entity from a Paramount-WBD merger. According to the company, its new offer made it clear that Paramount was ready to "immediately sign the transaction," with "fully committed" debt and equity financing. However, according to the Ellison-led entity:
"Despite these facts, the Warner Bros. Board and its advisors chose on that pivotal December 4th to make no effort to even speak with Paramount or its representatives about anything. Instead, the Warner Bros. Board, in possession of a $30 per share cash offer with a clearer and faster path to regulatory approval, committed Warner Bros. and its stockholders to an obviously financially inferior transaction with extraordinary regulatory risk and a longer timeline to a possible closing."
After the ambitious $30 per share offer was submitted, Ellison texted David Zaslav on December 4, telling him the company's new offer addressed all of Zaslav's concerns, and asking the CEO to call him back to discuss the proposal: "Just tried calling you about new bid we have submitted. I heard you on all your concerns and believe we have addressed them in our new proposal. Please give me a call back when you can to discuss in detail."
Hours later, after—as the filing noted—"having heard nothing all day," Ellison texted Zaslav again. This time, Ellison acknowledged the CEO's work commitments, and reiterated that Paramount's new offer had addressed the issues that Zaslav had expressed: "Daivd [sic], I appreciate you're underwater today so I wanted to send you a quick text. Please note when you next meet as a board we wanted to offer you a package that addressed all of the issues you discussed we [sic] me. Those were 1 we wanted to offer complete certainty 2 strong cash value 3 speed to close."
Ellison then hinted at the $30 cash offer not being Paramount's "best and final." He also complimented Zaslav, expressing his respect and admiration for him, and calling the possibility of working together the "honor of a lifetime":
"Please note importantly we did not include 'best and final' in our bid. Also please know despite the noise of the last 24 hours I have nothing but respect and admiration for you and the company. It would be the honor of a lifetime to be your partner and to be the owner of these iconic assets. If we have the privilege to work together you will see that my father and I are the people you had dinner with. We are always loyal and honorable to our partners and hope we have the opportunity to prove that to you. Best, David."
Per the documents, the text received no response from either Zaslav or Warner Bros. Discovery. A few hours later, it was revealed that WBD had entered exclusive negotiations with Netflix. Now, it remains to be seen whether or not Ellison's hostile bid is accepted by the company. A recent report indicated mutliple analysts believed Paramount's offer was better than Netflix's winning bid, with Kim Chua, from OC&C Strategy Consultants calling it the "cleaner" option between the two.
Another report from Semafor stated that WBD had issues with the source of the funds secured by Paramount Skydance for its bid. As of now, it's unclear whether that reported skepticism will carry over for the hostile bid. Warner Bros. Discovery has 10 business days to inform shareholders whether or not the company is accepting the bid, so a final answer should be coming soon.