Warner Bros. Discovery has moved from signaling resistance to going on the offensive, urging shareholders to reject Paramount’s takeover bid. It’s accusing the Ellison family of misleading investors about how the deal would be financed.
In a letter sent to shareholders on Wednesday, Warner Bros. directly challenged Paramount’s claim that its $108 billion offer is fully backed by billionaire Larry Ellison and his family. Warner Bros. said that the claim is simply not true.
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“It does not, and never has,” Warner Bros. wrote, disputing Paramount’s repeated assertions that the bid has a full financial backstop.
Warner draws a hard line
The escalation marks a turning point in Paramount’s hostile takeover attempt. It’s a campaign that analysts have described as make-or-break for the company as it tried to compete with streaming giants like Netflix, Disney and Amazon.
Earlier this month, Warner Bros. agreed to sell a large portion of its business, including HBO Max and its film and television studios, to Netflix, in an $83 billion cash-and-stock deal, rejecting Paramount’s all-cash bid to buy the entire company.
Paramount responded by taking its offer directly to Warner Bros. shareholders, arguing it delivers higher value and a faster path to completion.
Warner Bros. now says otherwise.
The company told shareholders it ran a “full, transparent and competitive” process and held dozens of calls and meetings with Paramount. These included multiple in-person meetings between Warner Bros. CEO David Zaslav and members of the Ellison family.
Financing becomes the flashpoint
At the heart of Warner Bros.’ pushback is financing.
Paramount says its offer is backed primarily by a revocable trust controlled by Larry Ellison, along with commitments from sovereign wealth funds and lenders. Warner Bros. says that structure leaves shareholders exposed.
“A revocable trust is no replacement for a secured commitment by a controlling stockholder,” Warner Bros. wrote, arguing that the assets and liabilities of such trusts are not public and can be altered at any time.
Warner Bros. said it repeatedly told Paramount that a full, unconditional personal guarantee from the Ellison family was critical, and never received one.
Paramount, whose market value is roughly $15 billion, has pushed back hard, calling suggestions that it is not good for the money “absurd.” The company says the Ellison trust holds more than $250 billion in assets, including a massive stake in Oracle, and has backed other large public-company deals.
The Kushner and CNN subplot
The fight over financing comes as Paramount has also lost a politically sensitive backer.
Jared Kushner’s private equity firm, Affinity Partners, said Tuesday it is no longer participating as an equity investor in Paramount’s bid.
In a statement reported across multiple outlets, the firm said the “dynamics of the investment have changed significantly since we initially became involved in October.” However, it still called Paramount’s offer strategically sound.
Several reports stress Affinity’s check was expected to be relatively small compared to the overall financing package, closer to $200 million, according to a person familiar with the matter cited by The New York Times.
Affinity’s involvement drew extra attention because Warner Bros. owns CNN, and because Kushner is President Donald Trump’s son-in-law.
Trump has been openly critical of CNN. He has also said he wants to be involved in the regulatory review of the deal. In earlier comments reported by SAN, Trump has suggested CNN’s ownership should change as part of any broader transaction.
What happens next
Warner Bros.’ deal with Netflix prevents it from soliciting competing offers, but Paramount still has options. These include raising its bid or urging shareholders to vote against the Netflix transaction. A shareholder vote is not expected before April.
Any deal will face antitrust scrutiny in the U.S. and abroad. Warner Bros. said Wednesday it does not see a meaningful difference in regulatory risk between the Paramount and Netflix deals. It noted that Netflix has agreed to pay a $5.8 billion breakup fee if regulators block the transaction, compared with $5 billion from Paramount.
