The Scene
Paramount’s aggressive quest for Warner Bros. — which escalated into a hostile $108 billion bid for the company Monday — is backfiring in Washington, where some officials have grown frustrated with widespread speculation that a politicized Justice Department would play favorites for the conservative Ellison family.
The Paramount team seems to “believe the worst possible tropes” about corruption in the Trump administration and are “leaning into all the stereotypes,” said one person close to the administration’s deliberations. “They thought they were playing 5D chess and they were playing tiddlywinks.”
Paramount executives met with President Donald Trump in recent weeks to press their case and to argue against a Netflix victory, according to a person with knowledge of the meeting. Federal Communications Commission chair Brendan Carr was among those who attended the meeting — but when Trump asked him about his view on the deal, he demurred, saying it would likely be decided by the antitrust division of the Justice Department, not his agency, the person, who was briefed on the meeting, said. (Netflix has also made its case before the White House.)
The FCC and Paramount both declined to comment.
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Paramount’s David Ellison argued Monday that its all-cash offer offers more stability and certainty than Netflix’s cash-and-stock bid, which is only for part of Warner Bros. Discovery and would leave its declining cable assets in public shareholders’ hands.
Documents filed Monday by Paramount show deep discontent with how Warners’ bankers ran the sales process, with accusations of vague feedback, short turnaround times for document review, and a sense that Warner CEO David Zaslav openly favored Netflix. Nor, Paramount says, was there any real-time back-and-forth on price — somewhat unusual in an auction process.
“Roger I appreciate you’re crazy busy. In case you can’t call back pls note 1 we wanted to offer complete certainty 2 strong cash value 3 speed to close. Pls note more importantly we did not include “best and final” in our bid,” Centerview’s Blair Effron wrote in a text message last week to Evercore’s Roger Altman.
He never got a response. Nor did Ellison, who made repeated entreaties to Zaslav following a Nov. 24 dinner with Zaslav and Larry and David Ellison, according to a person familiar with the interactions.
Paramount said it has secured financing for half the bid from Apollo, Bank of America, and Citi, and will also tap more than $24 billion in financing from the Middle East and Jared Kushner’s Affinity as well.
Paramount is also looking to capitalize on broader concerns — from actors and creatives— that a Netflix deal would crush competition and hurt everyone in the ecosystem. A combined Netflix-HBO would control more than 40% of the global streaming market, the company says.
When the bidding began in October, Warner was widely considered Paramount’s to lose, thanks to the Ellison family’s deep pockets and political favor inside the Trump administration. Warners’ board was persuaded by a sizeable breakup fee — Netflix will owe $5.8 billion if the deal is blocked by regulators — as well as rumblings of “social issues,” M&A parlance for personality clashes, which indicated that Zaslav preferred to sell to a technology company rather than another legacy media company, even one backstopped by a tech giant.
Both sides are also scrambling to hire the right allies in Washington: One person familiar with the competition said both sides had approached former Trump campaign aide Jason Miller, who is now advising an investor on the Paramount side of the deal.
Rohan’s view
Paramount’s hostile bid — one of the largest ever — is more about ego than strict book analysis. “We’re really here to finish what we started,” the younger Ellison told CNBC Monday morning. “We put the company in play.” Ellison, reasonably, feels jilted by Warner, a company whose present $82 billion value is entirely thanks to a bidding war that Paramount kicked off and which Netflix won out.
Paramount is seeking to wildly overpay, a 140% premium, for a vanity asset — one that will give it real scale and influence in the streaming business, to be sure, but also goes a long way towards making David Ellison a real media mogul.
But their bet on having a firm ally in the White House appears to have over-read the transactional nature of a Washington in which insiders thrive, but outsiders should be careful about taking the president for granted.
Room for Disagreement
Goldman Sachs president John Waldron told Semafor’s World Economy Summit that it was now-or-never for endgame M&A: mega-consolidation in key, highly-regulated sectors. It may be an inflated number, but assets are worth what someone is willing to pay, and there’s a premium to be had for deals that are once-in-a-lifetime opportunities.