Paramount CEO David Ellison says he knows the Warner Bros. Discovery board can’t accept his latest offer of $30 per share for the company.
Why?
“If they accept the offer exactly as it is today, right, then they’re admitting breach of fiduciary duty, so I don’t think they can just take that,” Ellison was overheard saying at the UBS media event on Tuesday, Business Insider has exclusively learned.
On Friday, WBD announced it had accepted Netflix’s offer of $27.75 per share for WBD’s studio and streaming assets. Then on Monday, Paramount launched a hostile bid for the entire company, including its TV networks like CNN and TNT.
Ellison said Paramount’s Monday offer was the same as the one it delivered privately to WBD on Thursday.
“We wanted to communicate to everyone: We didn’t change the offer. This is exactly what we sent them,” Ellison said at the UBS event.
That’s why Ellison says it would be fraught for WBD’s board, which is duty-bound to act in the best interests of shareholders, to accept it. How can they accept the offer they already indicated wasn’t good enough?
WBD issued a statement in response to Paramount’s hostile bid, saying that its board would “carefully review and consider Paramount Skydance’s offer” in a way that’s “consistent with its fiduciary duties and in consultation with its independent financial and legal advisors.”
Moving forward, Ellison’s comments suggest he knows he might have to sweeten the deal to get it over the finish line, even though he said he thinks Paramount’s current bid is “by far the superior offer” compared to Netflix’s. Another possibility: Instead of changing his offer, Ellison could let WBD shareholders decide on its merits. Shareholders have until January 8 to back his bid.
There have been indications that Ellison could be willing to move on price.
Paramount disclosed in an SEC filing that Ellison texted WBD CEO David Zaslav on Thursday, saying the following: “Please note importantly we did not include ‘best and final’ in our bid.”
Many media industry insiders suspect that the bidding war isn’t over yet.
Kevin Mayer, Disney’s former top dealmaker, said the Paramount-Netflix face-off reminds him of the bidding war between Disney and Comcast for Fox’s studio assets.
“I would be very surprised if we don’t see a sweetened, and perhaps meaningfully sweetened, offer” from Paramount or Netflix, Mayer said on Tuesday at the UBS conference.
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