How High Will David Ellison Go in Paramount’s Bid to Bag Warner Bros. Discovery?

The media landscape is in constant flux, with major players continually recalibrating their strategies to thrive in an evolving digital environment. Currently, Warner Bros. Discovery (WBD) finds itself at the center of a significant M&A maelstrom, with multiple parties expressing interest in acquiring parts or all of the entertainment giant. Among the most prominent suitors is David Ellison, through his newly merged Skydance-Paramount entity, who has been aggressively pursuing WBD. The critical question for industry observers is: how high will David Ellison go in Paramount’s bid to bag Warner Bros. Discovery?

David Ellison’s Escalating Offers for Warner Bros. Discovery

David Ellison, with the substantial backing of his father, Larry Ellison, has demonstrated a clear and persistent interest in acquiring Warner Bros. Discovery. His pursuit has unfolded through a series of escalating offers presented to the WBD board. Initially, Ellison reportedly put forward a bid of $19 per share, which was subsequently increased to $22 per share. The most recent publicly known offer, made on October 13, stood at $23.50 per share.

This latest proposal, if accepted, would value Warner Bros. Discovery at an estimated $93 billion, a figure that includes WBD’s considerable net debt of nearly $36 billion. Despite the rising valuations, each of Ellison’s bids, including the most recent one, has reportedly been rejected by WBD’s board. Interestingly, Ellison even extended an offer to David Zaslav, WBD’s chief, suggesting a co-chief executive and co-chairman role in a merged Paramount-WBD entity, a move perhaps intended to smooth the path for a deal.

WBD’s Strategic Position and Other Potential Suitors

Warner Bros. Discovery has publicly acknowledged that it is evaluating acquisition interest from “multiple parties”. This announcement suggests a strategic play by WBD chief David Zaslav and the board to foster a competitive bidding environment, aiming to secure the maximum possible value for the company, whether as a whole or in fragmented parts.

The company is already exploring a plan to split into two distinct entities by mid-2026: Warner Bros., encompassing HBO Max and its studios, and Discovery Global, which would primarily consist of its traditional TV networks. This potential separation could make certain assets more attractive to specific buyers.

Several other prominent companies have been mentioned as potential buyers, though their interest often focuses on specific segments of WBD:

• Netflix, Amazon, and Apple: These tech giants are reportedly in the mix, but their interest is primarily directed towards WBD’s studios and streaming businesses. Netflix co-CEO Ted Sarandos, for instance, has explicitly stated the company has “no interest in owning legacy media networks,” indicating a disinclination towards acquiring WBD in its entirety, especially its linear TV assets.
• Sony: Despite speculation, sources suggest that Sony is not currently interested in making a play for WBD.
• Comcast: Comcast is reportedly circling Warner Bros. assets. However, its own ongoing divestiture of cable TV assets into a spinoff company named Versant could complicate any significant acquisition talks. Additionally, political considerations, such as former President Trump’s past criticism of Comcast CEO Brian Roberts, could potentially hinder regulatory approval for such a large-scale deal.

The Rationale Behind Ellison’s Pursuit

David Ellison’s fervent desire to merge Paramount with Warner Bros. Discovery aligns with broader trends reshaping the media industry. Scott Purdy, a media strategy leader at KPMG U.S., notes that the decline in linear TV businesses often leads to consolidation within the industry, driven by a fundamental need for scale. Acquiring WBD would provide the combined entity with an expansive portfolio of high-value entertainment franchises and intellectual property, crucial for attracting and retaining audiences in the competitive streaming landscape.

Ellison himself has echoed these sentiments, suggesting that in a streaming-centric world, “you actually need more content to yield more engagement”. He has even referenced David Zaslav’s previous comments about the industry’s need for further consolidation, indicating a shared understanding of the market forces at play. A megamerger between Paramount and WBD would create a colossal content powerhouse, theoretically capable of competing more effectively with industry leaders.

Potential Implications of a Merger

While the allure of increased scale and IP is strong, a merger of this magnitude would inevitably lead to significant operational changes. Industry experts anticipate a substantial number of layoffs as the new entity would seek to consolidate functions across corporate divisions, studios, TV, and streaming operations. This consolidation of resources and elimination of redundancies is a common outcome of large mergers, aimed at achieving cost efficiencies. Ellison’s Skydance-Paramount entity is already facing mass layoffs, with approximately 2,000 jobs expected to be cut in the U.S. and more internationally.

How High Will Ellison Go?

With Warner Bros. Discovery now engaged in a formal M&A review process, the ball is back in David Ellison’s court. While his previous $23.50 per share offer was rejected, it is not considered his “best and final” offer. The opening of WBD’s books to potential buyers will provide Ellison’s team with more detailed financial insights, which could inform a revised bid. However, it is also understood that Ellison believes he holds a strong position among potential buyers and may be hesitant to significantly increase his offer price much further.

The situation remains dynamic, with WBD’s board likely to weigh Ellison’s potential revised offers against the attractiveness of bids from other parties, or even the option of proceeding with its planned split. The ultimate price will depend on a complex interplay of strategic imperatives, market conditions, and the competitive tension generated by multiple interested parties.

Conclusion

David Ellison’s ambition to create a formidable media empire is evident in his persistent pursuit of Warner Bros. Discovery. His willingness to make escalating offers, coupled with his strategic vision for content scale and engagement, underscores the high stakes involved in this potential deal. While there’s a clear ceiling to any bidder’s financial commitment, the formal M&A review initiated by WBD suggests that Ellison may yet have another play to make. The coming months will reveal whether his resolve and financial backing are sufficient to overcome WBD’s price expectations and secure one of Hollywood’s most coveted prizes.