Paramount Hijacks Netflix's Hollywood Dream in $108 Billion Power Play

Paramount Skydance Corp. PSKY just detonated Hollywood's biggest takeover clash in years, moving to undercut Netflix NFLX's agreement with Warner Bros. Discovery only days after it was announced. The bid is powered by a rare mix of Wall Street lenders, sovereign wealth capital and billionaire backing, including debt support from Bank of America, Citigroup and Apollo Global Management. On the equity side, RedBird Capital and Larry Ellison are guaranteeing $40.7 billion, supported partly by Saudi Arabia's Public Investment Fund, the Qatar Investment Authority, Abu Dhabi's L'imad Holding Company and Jared Kushner's Affinity Partners. All of these parties agreed to forgo governance rights, an unusual step designed to potentially limit regulatory scrutiny as the US president watches the process closely.

Behind the scenes, the financing reflects a marathon negotiation cycle. Paramount made six proposals over 12 weeks, including a personal visit to Warner Bros. CEO David Zaslav's Beverly Hills home. The latest version, submitted Dec. 4, includes a $54 billion bridge loan evenly split between the three US lenders, while the simplified equity structure is completely backstopped by the Ellison family and RedBird after Warner Bros.' board raised concerns about previous arrangements. Larry Ellison's trust controls 1.16 billion Oracle shares valued at about $252 billion, which Paramount highlighted as well above what is needed to secure the bid. Earlier talks involving Tencent and a proposed $1 billion equity component were dropped after the Warner Bros. board questioned adding another non-US partner to the mix.

Paramount is offering $30 a share in cash for the entirety of Warner Bros., compared with Netflix's $27.75 per share bid, which only targets the studio and streaming units. Warner Bros. already intends to divide into two separate publicly traded companies by mid-2026. Paramount designed its debt package with the goal of helping the combined entity move toward an investment-grade credit profile, potentially a step up from Paramount's current BB+ rating from S&P and BBB- from Fitch. Company executives signaled that about $17 billion of the $54 billion bridge loan would be reserved to retire and extend Warner Bros.' existing borrowing, and ratings firms could assess the combined balance sheet based on deleveraging plans in the two years following a possible close.