Will David Ellison be able to convince the shareholders? Paramount doubles down with a $30 offer

Paramount Skydance maintains its aggressive strategy at the table: $30 per share in cash for Warner Bros. Discovery shareholders. Following the unanimous rejection by Warner's board of directors, the company has decided to bypass intermediaries and go directly to investors, an unusual move but permitted in this type of corporate conflict.

The proposal that divides opinions

The updated offer includes a key novelty: the personal backing of Larry Ellison, father of David Ellison and a business magnate, who irrevocably guarantees the equity portion of the financing. This maneuver aims to reduce the uncertainty Warner has repeatedly expressed about the viability of a $94 billion transaction, the most leveraged in history if it were to materialize.

David Ellison, CEO of Paramount, publicly argued that his proposal offers “greater value and a faster, more reliable path to closing” compared to the alternative. Paramount's statement omitted directly addressing concerns about massive debt, instead emphasizing the cash terms and certainty of the deal.

Netflix vs. Paramount: the valuation duel

Netflix has entered the race with an alternative offer of $27.75 per share through a combination of cash and equity. Although the figure is lower, Warner's board considers it more solid due to Netflix's strong financial position and its lower exposure to debt risk.

Netflix's proposal includes the acquisition of HBO, HBO Max, and the film and television studios, while Warner would spin off its basic cable channels (CNN, HGTV, TBS, Animal Planet, among others) into an independent entity called Discovery Global, launching this summer.

The breakdown of Netflix's offer is more complex: $23.25 in cash, $4.50 in Netflix shares, plus stakes in the future cable company. This structure introduces a volatile factor: fluctuations in Netflix's stock price could significantly erode the actual value received by Warner shareholders.

The market volatility context

The media and telecommunications industry is undergoing unprecedented restructuring. Earlier this month, Comcast spun off most of its NBCUniversal cable networks (CNBC, MSNBC), creating Versant, an experiment that has not gone as planned: shares fell approximately 25% from their initial value of $45.17 to around $32.50.

This concerning precedent fuels the debate among Warner shareholders. Will creating an independent cable company be a viable strategy, or will it replicate Versant's negative performance?

Financing and critical deadlines

Paramount has secured capital backing from three Middle Eastern sovereign funds, including Saudi Arabia, in addition to debt financing from Apollo Global. The financial package sounds robust on paper, but Warner has publicly questioned whether the market could absorb such a large transaction without consequences on borrowing costs.

Shareholders have until January 21 to submit their shares, a deadline Paramount could extend. Meanwhile, both stocks remain relatively stable: Paramount was trading around $12.36 and Warner hovered around $28.50 on Thursday.

The outcome will depend on whether investors prioritize financial certainty (Netflix) or maximize cash value (Paramount), a decision that will shape the future of media consolidation in the coming months.