The Scene
Paramount CEO David Ellison spent Tuesday morning and afternoon meeting with major shareholders in Warner Bros. Discovery, trying to convince them to turn their shares over to him in his hostile takeover bid, according to people familiar with the matter.
Three people involved in different meetings with Ellison said investors walked away reassured by what they saw from Ellison and his top team, according to those who met with him — and were ready to tender their shares in support of his upstart bid.
In the back-to-back meetings on the sidelines of UBS’ technology conference in Midtown Ellison, legal chief Makan Delrahim, and strategy chief Andy Gordon were pressed by investors on the durability of Ellison’s Gulf financing, about the family’s commitment to the bid, about whether the bid will really secure antitrust blessings in the US or, more pressingly, in the EU, according to people in those meetings.
Ellison and his team reassured investors —mostly merger arbitrage hedge funds — that their Mideast financing is secure, pointing out that it took a great deal of confidence for three regional rivals to come together. They reminded shareholders that $11.8 billion, while a lot of money for most bidders, is a small portion of the Ellison family’s Oracle fortune. And they pointed to public comments from regulators and policymakers worried about the consequences of a Netflix deal for unionized workers and consumers alike.
Investors walked away impressed — and are now waiting to see how Netflix and WBD each respond. WBD has 10 days from Paramount’s announcement to reply to it; shareholders have 20 business days to turn over their shares to Paramount, if they’re won over by Ellison’s arguments.
Spokespeople for both WBD and Paramount declined to comment.
And as all parties make their case in New York, they’re also bulking up in DC. Paramount has hired ex-Trump advisor Jason Miller, Semafor previously reported, as their ground game begins to frustrate some administration officials. Warner has tapped ex-Trump advisor Chris LaCivita to help it make its case in the Beltway, according to two people close to the deal. LaCivita didn’t respond to requests for comment.
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Rohan’s view
In the final season of HBO’s Succession, Waystar Royco’s general counsel warns Roman Roy against the dangers of fighting a well-endowed tech giant: “You cannot win against the money. The money is going to wash you away.”
That’s Ellison’s bet too. In hostile takeovers, a company’s regular shareholder base turns over. Now long-term shareholders have largely sold, and merger arbitrageurs have moved in: motivated by nothing more or less than squeezing every penny of value they can from a stock.
It’s a different kind of dance than peacetime CEOs are used to — confidence in your decisionmaking isn’t any longer about quarter-to-quarter growth, but your ability to get maximum price and close a deal. The question now facing WBD CEO David Zaslav is whether investors will sour on the deal he’s signed with Netflix.
These early meetings suggest that sentiment already favors the Ellisons and their deep pockets, meaning it’s a question of when, not if, Warner comes back to the negotiating table. There’s a broad expectation from investors that both Netflix and Paramount have the wherewithal — and the desire — to bump their bids up.
The View From Netflix
“Today’s move was entirely expected,” Netflix co-CEO Ted Sarandos told investors and analysts at that same UBS conference Monday. “We have a deal done, and we are incredibly happy with the deal. We think it’s great for our shareholders. We think it’s great for consumers. We think it’s a great way to create and protect jobs in the entertainment industry. We’re super confident we’re going to get it across the line and finish.”