is a reporter who writes about tech, money, and human behavior. She joined The Verge in 2014 as science editor. Previously, she was a reporter at Bloomberg.
Media is a business about dreams, and Larry Ellison’s son is dreaming big. This might explain why the case for Paramount Skydance to buy Warner Bros. Discovery is so incoherent.
In October, Warner Bros. put itself up for sale, leading to a number of bids. The two we are concerned with are a bid from Netflix and another from two nepo babies: David Ellison and Jared Kushner. David Ellison is the head of Paramount, but most famous for being Larry’s son. Jared Kushner is most famous for being Donald Trump’s son-in-law, though he also got his start in business by taking over his felon father’s firm when Charles was in prison; his firm is involved in the financing.
Netflix won the bidding. Warner Bros. made an agreement to sell most of its business — the studio part — to the streaming giant for $83 billion, including debt. (That figure is a bit more than five times Paramount’s market cap.) Warner Bros. felt that spinning itself into two companies, the Netflix acquisition and the cable networks, gave shareholders a value of $31 to $31 a share, rather than the $30 a share Paramount was offering, according to The Wall Street Journal.
If the elder Ellison is serious about this, I’d like some of what he’s smoking
Nonetheless, Paramount announced a hostile bid to take over Warner Bros. for $30 per share, which puts the total at $108.4 billion, including debt. Apparently, Paramount has been after Warner Bros. for the last two years, even before Ellison père et fils entered the picture. But now, it’s backstopped the deal with the Ellison family trust, which includes a war chest of about 1.16 billion Oracle shares. The current offer from Paramount is not the “best and final” — at least, according to The New York Times — so this dumb fight is likely to drag on for a while.
Let’s pause here and notice that what Paramount is doing doesn’t make any fucking sense. At least, not business sense. Maybe I can see a case for consolidation among the streamers, rolling HBO Max into Paramount Plus, and acquiring a larger library. But HBO Max isn’t that big, and its library isn’t exclusive. So why would Larry Ellison trade Oracle stock (with, at maximum, AI-rules-the-world multiples) for garbage media multiples? If the elder Ellison is serious about this, I’d like some of what he’s smoking.
Warner Bros., in fact, also appears concerned about how serious Ellison senior is. Part of the reason Warner Bros. went with the Netflix bid was that its board was “worried that Mr. [Larry] Ellison did not personally guarantee the bid under his name and is planning to contribute equity for the deal through a trust with holdings that could be modified at any time,” wrote The New York Times. Yeah, I’d worry about that shit too!
And there are signs Larry Ellison doesn’t see his son’s vision as a sure thing, since he’s not the sole bankroll involved. The deal relies on third parties’ money, which includes $24 billion from three Middle Eastern funds. That’s in addition, of course, to Kushner’s Affinity Partners and Apollo Global Management, both of which manage significant money from other Middle Eastern investors. Larry Ellison’s trust, which he can change at any time, is only a backstop on this financing.
Still, Larry Ellison has called the White House to whine about antitrust concerns in the Netflix/Warner Bros. deal, which is not nothing.
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