The Warner Bros. Discovery sale process has been nothing short of a roller coaster. After months in which it looked like David Ellison's Paramount Skydance would acquire the company, Netflix swooped in and delivered the best offer in a second round of bids. It was then revealed the streamer had won the auction, and shortly after that, it was officially announced that Netflix would acquire WBD for $27.75 per share, totaling $82.7 billion (with a $72 billion equity value).
The story, however, did not end there. Following the announcement, Paramount Skydance submitted a hostile bid for the company, offering $30 per share, totaling approximately $108.4 billion (with an equity value of $77.9 billion). The move shocked many in the industry. Yet, according to information offered by a new report, the sweetened offer might not be enough to sway Warner Bros. Discovery's shareholders. This because the source of the company's funds is said to have been an issue in the auction.
Semafor reports that a "major reason" that led the David Ellison-run company to lose the WBD auction was its backing by Middle Eastern funds. Variety reported earlier in December that Paramount had secured funding from Saudi Arabia's Public Investment Fund, Abu Dhabi Investment Authority, and Qatar Investment Authority. As reported by Semafor, the wealth funds provided $24 billion of Paramount's "initial" offer for WBD, as well as for the company's $108.4 billion hostile bid (an estimated 30% of the offer).
It's those funds that reportedly made Warner Bros. Discovery feel unsure about the bid. Per the site, according to securities filings and sources: "[The] guarantees on that money—specifically, on how and when the dollars would clear, according to people familiar with the matter—were fuzzy enough to give Warner's board one more reason to go with Netflix's $83 billion [offer]."
There appear to be more details on the matter, though. David Ellison and his father, Oracle co-founder Larry Ellison, are reported to have contributed $40 billion toward the offer alongside backer RedBird Capital—both the second one and this latest hostile one. According to the outlet, however, the Ellisons (the report does not specify if RedBird Capital was involved in the strategy) purportedly planned to "partly" pay themselves back for their investment through the funds provided by their Middle Eastern partners.
Per the outlet, according to securities filings from Paramount, such strategy—described as "cross-conditionality of the equity financing"—made WBD skeptical. As was reported by Variety, the level of the wealth funds' involvement was low enough that it would not trigger the need for approval from the Committee on Foreign Investment in the United States. Furthermore, per government filings read by Semafor, the sovereign wealth funds would "not play any management role or have board seats," which would allow the partnership to avoid scrutiny from the US government.
Given that, it's said WBD's advisors grew concerned that a business maneuver "structured to sidestep scrutiny might instead invite it." As explained by the outlet, Paramount's bid was backed by multiple parties. Aside from the aforementioned RedBird Capital, backers also included Jared Kushner's Affinity Partners, Bank of America, Apollo Global Management and Citigroup (the last three financed $54 billion of the offer through debt commitments, according to Variety).
Per Semafor, Paramount's bid relied considerably on "borrowing against Oracle stock owned by Larry Ellison." Said shares have experienced a decline due to AI bubble concerns, reportedly making Warner Bros. Discovery even more wary about accepting the offer. The amount of parties involved in Paramount's bid—described by the site as, "three different debt financing sources, three sovereign wealth funds, a media investor, and Kushner."—was also said to have been a red flag for WBD, who reportedly perceived the company's offer to be overly complex, ultimately making Netflix (whose "one-party" bid was deemed "straightforward") a more attractive buyer.
Warner Bros. Discovery now has 10 business days from the day the hostile bid (which will expire on January 8, 2026 at 5:00 p.m. ET, per Variety) was submitted to announce to its shareholders whether or not it will accept. During an appearance at a New York City UBS conference, Netflix co-CEO Ted Sarandos stated (via The Hollywood Reporter) that Paramount's move was expected, and expressed confidence in Netflix's deal with Warner Bros. Discovery going through:
"Today's move was entirely expected. We have a deal done, and we are really happy with the deal for shareholders, for consumers, it's a great way to create and protect jobs in the entertainment industry. We're super confident we are going to get it across."