Larry Ellison Pledges Billion-Dollar “Ironclad” Backstop for Paramount

In a dramatic escalation of the media industry’s most intense bidding war, Paramount Skydance Corporation has amended its hostile takeover bid for Warner Bros. Discovery (WBD). The move seeks to dismantle the WBD board’s preference for a rival deal with Netflix by offering ironclad financial guarantees from Oracle founder Larry Ellison.

The Billion-Dollar Guarantee

The centerpiece of the amended offer is an irrevocable personal guarantee of $40.4 billion from billionaire Larry Ellison. This move directly addresses the WBD board’s primary criticism that Paramount’s initial $108.4 billion bid relied on an “opaque” and “revocable” family trust.

Key Amendments in the Paramount Bid

Here’s what changed in Paramount’s bid for Warner Bros. Discovery.

• The Personal Backstop: Larry Ellison is now personally on the hook for the $40.4 billion equity portion of the deal, putting roughly one-sixth of his net worth on the line.
• Trust Transparency: Paramount has published records confirming the Ellison family trust owns 1.16 billion shares of Oracle, worth approximately $200 billion, to prove its solvency.
• Increased “Break-up” Fee: To match the Netflix agreement, Paramount increased its regulatory reverse termination fee from $5 billion to $5.8 billion, promising WBD a massive payout if the deal fails to pass antitrust scrutiny.
• Debt Flexibility: The revised merger agreement offers WBD more flexibility in how it handles debt refinancing during the transition period.

Paramount vs. Netflix: The Battle for WBD

Warner Bros. Discovery is currently a “house divided.” While the board of directors has officially recommended a $72 billion deal with Netflix, Paramount CEO David Ellison is appealing directly to shareholders with an all-cash offer that is significantly higher on a per-share basis.

Why WBD’s Board is Resisting Paramount’s Offer?

Despite Paramount’s higher price tag, WBD Chair Samuel A. Di Piazza Jr. and the board have remained steadfast in their support for Netflix. Their concerns center on two main pillars. The first is regulatory risk, as combining Paramount (owner of CBS) and WBD (owner of Newsportu) would put two major news organizations under one roof, likely triggering intense DOJ and FTC scrutiny. Moreover, the board argues that Netflix, with its $400 billion+ market cap, is a more stable “sure thing” compared to the smaller Paramount-Skydance entity.

Paramount Extends the Expiration Date of Its Tender Offer

Paramount has extended the expiration date of its tender offer to January 21, 2026. This gives WBD shareholders more time to weigh the guaranteed $30-per-share cash against the board-endorsed Netflix combination.

The outcome of this “Hollywood tug-of-war” will fundamentally reshape the streaming landscape, determining whether the industry consolidates further around tech giants like Netflix or forms a new “legacy” powerhouse in a Paramount-Warner merger.

Bidding War for WBD

The bidding war between Netflix and Paramount might intensify. The primary difference between the two offers lies in scope and structure. The Netflix offer is a “friendly,” board-approved deal valued at approximately $72 billion (about $27.75 per share) and is a mix of cash and stock. Crucially, Netflix does not want the whole company; it is cherry-picking the “crown jewels”—specifically the Warner Bros. movie studios and HBO/Max—while leaving the “Global Networks” (like Newsportu, TNT, and Discovery) to be spun off or sold separately.

In contrast, the Paramount Skydance bid is a “hostile” all-cash tender offer valued at $108.4 billion ($30 per share). Paramount is bidding for 100% of WBD, including its debt and its struggling linear cable networks.

Why Netflix Wants to Buy WBD?

By owning this content, Netflix eliminates billions in future licensing costs and the risk of titles being pulled by rivals. The sheer volume of new content reduces “hit-rate risk” and strengthens the value proposition for its subscribers globally. As Netflix Co-CEO Ted Sarandos noted, the mission to “entertain the world” is better achieved by combining their “culture-defining titles” with Warner Bros.’ century-long legacy.

The merger combines the world’s largest streaming service by subscribers with HBO Max, a premium, critically acclaimed competitor. Analysts predict the combined entity will command over 21% of US streaming viewership, creating a significant market gap between Netflix and its remaining competitors, like Disney+ and Amazon.

Netflix expects to realize at least $2-3 billion in annual cost savings by the third year. This will come from eliminating duplicated services (like merging HBO Max into the Netflix platform), integrating production infrastructure, and optimizing back-office functions. This massive saving provides a financial cushion to reinvest in original content or pass savings on to consumers through bundled offerings.

Netflix will gain one of Hollywood’s most powerful, century-old production and global theatrical distribution studios. This vertical integration provides greater control over the entire production cycle, from greenlight to global release, enhancing studio capabilities and production capacity.

Why is Paramount Interested in Buying Warner Bros. Discovery?

Paramount’s interest in acquiring Warner Bros. Discovery is driven by a desire for rapid survival through scale. In a landscape dominated by tech giants like Netflix, Amazon, and Disney, Paramount CEO David Ellison views this merger as the only way to transform Paramount from a “vulnerable legacy player” into a “global media titan.”

Streaming is currently a game of scale where only the largest survive. By combining Paramount+ with Max (HBO), the new entity would control the fourth-largest streaming library in the world, with over 207 million subscribers. This would give the combined company the leverage needed to negotiate better pricing with advertisers and reduce the “churn” (subscribers canceling) that plagues smaller services.

Moreover, the deal will create the most powerful sports broadcasting platform in history, making the combined company an essential partner for every cable and satellite provider in the world.

Potential Antitrust Hurdles in Acquiring WBD

The Department of Justice (DOJ) and the Federal Trade Commission (FTC) are expected to scrutinize a Paramount-WBD merger through several lenses:

• Media Concentration and News Monopolies: A Paramount-WBD merger would bring CBS News and Newsportu under the same corporate umbrella. Regulators often view the consolidation of major news organizations as a threat to “media plurality” and democratic discourse. This alone could force the divestiture of one of the networks.
• The “Big Five” Studio Consolidation: Both companies own “legacy” film studios (Paramount Pictures and Warner Bros. Pictures). Reducing the number of major Hollywood studios from five to four would likely be seen as harmful to competition in film production and distribution, potentially driving up costs for theaters and reducing diversity in content.
• Sports Broadcasting Power: A combined entity would control a massive share of premium sports rights, including the NFL (via CBS) and the NBA, MLB, and NHL (via TNT/WBD). This “sports juggernaut” could give the new company excessive leverage over cable providers and streamers when negotiating carriage fees, likely leading to higher bills for consumers.
• Foreign Investment Scrutiny (CFIUS): Paramount’s bid is backed by significant funding from Middle Eastern sovereign wealth funds. This could trigger a review by the Committee on Foreign Investment in the United States (CFIUS) on national security grounds, particularly regarding foreign influence over a major American news and culture provider like WBD.