By Dom Serafini
This is my take on the seemingly unreasonable acquisition of Warner Bros. Discovery by Paramount Skydance’s David Ellison.
Why would a new owner do something that the old owner couldn’t do? In other words, how does Ellison hope to succeed with the $81 billion in debt needed to acquire WBD when David Zaslav couldn’t make it work with a $31 billion debt? (Zaslav took on $43 billion in debt when he acquired WB from AT&T in 2022.)
And why is Wall Street willingly lining up to participate in this (again) seemingly unreasonable investment?
In my opinion, the 43-year-old Ellison, who acquired Paramount in 2025 for $8 billion, always had his eye on Warner Bros., but he needed the Paramount leverage to make the deal happen.
However, in order to achieve his goal, Ellison first had to satisfy Zaslav, the WBD CEO and architect of the WB acquisition from AT&T, with a reported $800 million severance package (for Zaslav), and Netflix, the original WBD suitor, with a $2.8 billion breakup fee (since Ellison committed to reimbursing Netflix’s fee if it pulled out of the deal).
If the acquisition is approved by the various authorities (FCC, DOJ, FTC, several U.S. states, the E.U. Commission, etc.), the Turtle (Paramount) will have in effect overrun Bugs Bunny (WBD), since, with $37.3 billion in revenues in 2025, WBD is 1.3 times bigger than Paramount (with revenues of $29.03 billion in 2025). This was also the case for Zaslav’s Discovery (with $13.1 billion in annual revenues) acquiring WB (with $36.7 billion in annual revenues), except in this case, WB was 2.8 times bigger than Discovery.
In my final analysis, Ellison would not fret if regulators (and/or the “Block the Merger” Hollywood movement) ask him to divest of Paramount in order to acquire WBD since that was the studio that he always wanted. And I think that he’d sell Paramount for a hefty $50 billion (possibly with the help of Paramount investor Gerry Cardinale of RedBird Capital), which would bring his debt load to acquire WBD to the same $31 billion level that Zaslav faced, but with a winning strategy (that’s yet to emerge).
Plus consider this: By selling Paramount, the FCC wouldn’t be able to interfere with the foreign investment of $24 billion that Gulf funds (Saudi Arabia, Qatar, and Abu Dhabi) want to commit to Ellison’s WBD acquisition. (Paramount owns CBS network, which owns 28 local TV stations that are under the federal jurisdiction of the FCC.) In addition, Larry Ellison (David’s father) could reduce his $40 billion commitment to the WBD acquisition.
Larry Ellison owns 40 percent of Oracle, making him worth $212.9 billion, however, 24 percent of his Oracle shares have been pledged in order to help finance the WBD acquisition.
Great scenario, Dom. As always, follow the money 💰