Netflix
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Larry Ellison Provides Personal Guarantee for Paramount’s Bid for Warner
Warner earlier recommended that shareholders reject Paramount’s $30-per-share bid for all of the company
Paramount PSKY 5.75%increase; green up pointing triangle amended its offer for Warner Bros. DiscoveryWBD 2.97%increase; green up pointing triangle, with billionaire Larry Ellison agreeing to personally guarantee $40.4 billion of equity financing for the deal and publish records related to the family trust that backstops it.
Paramount previously made a hostile all-cash tender offer of $77.9 billion, or $30 a share, for all of Warner, including cable channels such as CNN, TNT and Food Network. The revised offer is at the same price per share.
Warner earlier recommended shareholders reject Paramount’s bid, saying it believed Netflix’s proposal for its studios and HBO Max streaming service was still superior. Netflix’s deal for the studio and streaming assets was $72 billion in cash and stock, or $27.75 per share.
Warner’s rejection had focused on what it had called an “illusory” offer, raising concerns about the credibility of the equity being offered by Paramount. It had focused on the structure of the Ellison family’s commitment to funding the deal, and called for Ellison to provide a more enforceable personal commitment.
Paramount’s revised offer aimed to address those concerns. The company said Monday that its offer remained superior to Netflix’s and said that Ellison had agreed to provide an “irrevocable personal guarantee” on the $40.4 billion for the offer and any damages claims against Paramount.
It also increased the fee it would pay if the deal was blocked by regulators, matching Netflix’s unusually high $5.8 billion offer. Paramount extended the expiration date of its tender offer to Jan. 21, from Jan. 8.
Warner shares jumped more than 4% in premarket trading on the news. Paramount shares were up more than 3%, while Netflix was up less than 1%.
Gerry Cardinale, chief investment officer of Paramount stakeholder RedBird Capital Partners, which is providing some of the deal’s equity financing, said in a CNBC interview that the Ellisons confirmed the trust was backed with Oracle shares and were looking to take all the questions off the table.
He said that the group is confident in regulatory approval for Ellison’s deal and that the combined company would create a three-horse race among subscription streaming services with Netflix and Disney.
President Trump says CNN should have new owners as its parent company, Warner Bros. Discovery, weighs takeover bids from Netflix and Paramount. Photo: Alex Wong/Getty Images
Meantime Monday, Netflix looked to shore up its own financing for its $72 billion deal for Warner’s studios and streaming service, securing some $25 billion in bank financing to fund it.
Netflix said it had signed a $5 billion senior unsecured revolving credit facility and two senior unsecured delayed-draw term-loan facilities totaling $20 billion, according to a filing with the Securities and Exchange Commission. That would leave it with an additional $34 billion in debt it had planned to borrow, which banks would look to sell off in bonds.
Warner and its shareholders will now have to decide if the new Paramount bid answers their doubts about closing the deal.
After multiple unsuccessful bids, Paramount CEO David Ellison, with the backing of his father Larry, took his case directly to Warner shareholders, arguing that his proposal offered better financial terms and a cleaner path to regulatory approval.
The Ellisons are friendly with President Trump, who made it clear that he wants new ownership for CNN, a frequent target of his ire.
Netflix already commands a wide lead over competitors in terms of streaming subscribers, and its market share would increase after buying Warner Bros. and HBO Max. Netflix has said it is confident that its deal will pass regulatory muster. Executives say that regulators should define Netflix’s competitive landscape to include free video services such as YouTube, not just subscription-based platforms.
Warner Discovery put itself up for sale in November, drawing bids from Paramount, Netflix and Comcast. Before the official auction kicked off, Paramount made three unsolicited offers for Warner Discovery, home of Superman, “The West Wing” and “The Sopranos.”
Paramount, which David Ellison took over in August by merging it with Skydance Media production company, is hoping to use Warner Discovery’s movie and TV show-making prowess and prestigious HBO brand to turn itself into a genuine competitor of Netflix and others like Disney.
Write to Lauren Thomas at lauren.thomas@wsj.com
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