Larry and David Ellison, who personal Paramount, need to use $24 billion in Middle Eastern money to finance their bid for Warner Bros. Discovery. Is that an issue for WBD?
You would possibly assume so — particularly since $10 billion of that got here from the Saudi authorities. That is the identical authorities that US intelligence mentioned killed a Washington Post journalist in 2018. The type of companion you would possibly assume a significant American media conglomerate would need to hold at arm’s size.
However that is not an issue WBD raises in its latest communication to shareholders, the place it urges them to take the deal offered by Netflix as a substitute.
What really worries WBD in regards to the Ellisons’ bid is not the Ellisons’ explicit companions. It is that the Ellisons had companions.
In a regulatory filing that tells the backstory of the proposed WBD sale, WBD execs and their reps repeatedly instructed the Ellisons they wished a agency dedication that Larry Ellison — presently the world’s 5th-richest man, with an estimated web price of $243 billion — would assure the deal himself.
As an alternative, WBD argues, the Ellisons by no means gave them the assurances they wished.
The submitting does convey up the truth that cash from Center Jap sovereign wealth funds would seemingly complicate regulatory points for a proposed Ellison/Paramount deal. (Ditto for a proposed $1 billion funding from China’s Tencent, which the Ellisons later took out of their proposal.) However these are offered as technical hurdles. Not ethical or patriotic dealbreakers.
And so they’re simply a part of a laundry listing of complaints WBD makes in regards to the Ellisons. Amongst them: A December 2 tweet from New York Post reporter Charlie Gasparino, which WBD mentioned violated a confidentiality agreement Paramount had signed.
And with regards to the primary pitch WBD is making to traders, all of that stuff disappears. It simply boils all the way down to “we did our homework, and the Netflix deal is healthier.”
That is not stunning: If you happen to’re a WBD investor, you’re (supposedly) solely desirous about getting the utmost worth for shares. And WBD’s submitting argues that Netflix is the one that may pay probably the most.
Now we’re ready to see what the Ellisons do subsequent: Many observers imagine they’re going to return with one more, increased bid. Will this one have Gulf cash, too?