Paramount Skydance prepares bid for Warner Bros Discovery, source says

PARAMOUNT Skydance is preparing a bid to buy Warner Bros Discovery, a source familiar with the matter told Reuters on Thursday, potentially marrying two of the biggest Hollywood studios and girding for a streaming battle against big tech.

It will be a majority cash bid and backed by the Ellison family, said the Wall Street Journal, which reported the news first, citing unnamed sources.

The news comes just weeks after David Ellison’s company Skydance bought Paramount Global for US$8.4 billion. David Ellison is the son of Oracle co-founder Larry Ellison, the world’s No. 2 billionaire.

Shares of Warner Bros surged as much as 30 per cent after the news while Paramount‘s jumped 15 per cent. Paramount declined to comment while Warner Bros did not immediately respond to a Reuters request for comment.

A bid has not yet been submitted and the plans could still fall apart, WSJ said. It would be for the entire company, including Warner Bros Discovery’s cable networks and movie studio, the report said.

If successful, the deal would bring together two of Hollywood’s best-known studios as well as streaming services HBO MAX and Paramount+. It would need Larry Ellison’s deep pockets and political heft as a long-time ally of US President Donald Trump to come together and clear monopoly concerns.

“This deal is the Hollywood equivalent of a sequel no one expected but everyone sort of saw coming,” said eMarketer analyst Jeremy Goldman.

“For WBD shareholders, a cash-rich exit is far more appealing than waiting around for Zaslav’s restructuring magic to (maybe) pay off,” he said, referring to CEO David Zaslav’s plan to separate Warner Bros Discovery’s cable business from its studios and streaming operations, unwinding a merger that took place less than four years ago.

The potential bid underscores intensifying competition in the media sector, as traditional players race to gain scale and strengthen their streaming services as TV viewership declines.

They also face heightened competition from technology giants Apple and Amazon.com, which have launched competing streaming services and are using their deep financial resources to attract top talent and acquire sports rights.

Such a deal is likely to face antitrust scrutiny, legal experts said.

“The DOJ will want to investigate whether the merger could lead to higher prices for consumers, reduce bargaining power for creators and diminish content diversity,” said Andre Barlow, an antitrust attorney in Washington.

“At the same, the Trump administration’s DOJ Antitrust Division could be more lenient toward the deal compared to the prior Biden era’s aggressive stance.”

The deal would reduce the number of independent major studios, giving the merged entity greater market share in theatrical releases, home entertainment, and content licensing, Barlow said.

Combining the two companies’ cable businesses could increase its bargaining power, which could lead to higher ad rates and carriage fees with cable providers, he added.

The combination would create a stronger streaming rival to Netflix, Disney and Comcast.

‘Doable deal’

Larry Ellison, 81, whose 41 per cent stake in cloud giant Oracle has propelled him to No. 2 on the global billionaires list, saw his fortune surge earlier this week by close to US$100 billion.

On Thursday, he was worth more than US$360 billion, according to Forbes.

The Ellison family has been instrumental in financing Skydance’s expansion. Analysts have said any acquisition of Warner Bros Discovery would likely require significant private financing, given the size of the deal and the limitations of Paramount Skydance’s balance sheet.

Paramount Skydance’s market value was US$16.4 billion before news of the potential offer broke and Warner Bros Discovery’s was about US$30 billion. While Warner Bros Discovery has worked to cut its debt, it still sits with a net debt of about US$30 billion, a figure it has promised would decline significantly by the end of the year.

“It’s a very doable deal, I think it might even make sense,” said Douglas Arthur, an analyst with Huber Research. “Certainly, there’s no lack of cash in the Ellison family. And everybody’s talked about consolidation in studios and streaming.”

After Paramount‘s merger with Skydance Media, David Ellison said he would look to strengthen the company’s film slate and streaming ambitions while cutting costs and restructuring its struggling Paramount+ service, citing people familiar with the situation. REUTERS