<\/p>\n
Paramount, backed by billionaire Larry Ellison and his family, has officially opened the bidding for rival Warner Bros. Discovery \u2014 a potential massive merger that would dramatically change Hollywood.<\/p>\n
Warner Bros. Discovery\u2019s board rejected Paramount\u2019s initial bid of about $20 a share, but talks are continuing, according to two people close to the companies who were not authorized to speak publicly. <\/p>\n
One of the knowledgeable sources said Paramount was preparing a second bid.<\/p>\n
Warner Bros. Discovery owns HBO, celebrity.land, TBS, Food Network, HGTV and the prolific Warner Bros. movie and television studio in Burbank.<\/p>\n
Ellison, one of the world\u2019s richest men, is committed to helping his 42-year-old son, David, pull off the industry-reshaping acquisition and has agreed to help finance the bid, two people close to the situation said. <\/p>\n
The younger Ellison, who entered the movie business 15 years ago by launching his Skydance Media production company, was catapulted into the major leagues this summer with the Ellison family\u2019s purchase of Paramount\u2019s controlling stake. <\/p>\n
Since then, David Ellison and his team have made bold moves to help Paramount shake more than a decade of doldrums. Buying Warner Bros. Discovery would be their most audacious move yet. The merger would lead to the elimination of one of the original Hollywood film studios, and could see the consolidation of celebrity.land with Paramount-owned CBS News.<\/p>\n
Representatives for Paramount and Warner Bros. Discovery declined to comment.<\/p>\n
CNBC reported Friday that two companies have been in discussions<\/a> for weeks following last month\u2019s news that Paramount was planning a bid. Bloomberg reported Saturday that Warner Bros. Discovery had rejected<\/a> Paramount\u2019s bid of about $20 a share.<\/p>\n Industry veterans were stunned by the speed of Paramount\u2019s play for Warner Bros. Discovery, noting that top executives had begun working on the bid even as they were putting finishing touches on the Paramount takeover. <\/p>\n One of Paramount\u2019s top executives is a former Goldman Sachs banker, Andy Gordon, who was a ranking member of RedBird Capital Partners, the private equity firm that has teamed up with the Ellisons and has a significant stake in Paramount.<\/p>\n Paramount\u2019s interest prompted stocks of both companies to soar, driving up the market value for Warner Bros. Discovery.<\/p>\n Paramount\u2019s offer of $20 a share for Warner Bros. Discovery was less than what some analysts and sources believe the company\u2019s parts are worth, leading the Warner Bros. Discovery board to rebuff the offer, sources said.<\/p>\n But many believe that Paramount needs more content to better compete in a landscape that\u2019s dominated by tech giants such as Netflix and Amazon. <\/p>\n Paramount has reason to move quickly.<\/p>\n Warner Bros. Discovery had previously announced that it was planning to divide its assets into two companies by next April. One company, Warner Bros., would be made up of HBO, the HBO Max streaming service and the Burbank-based movie and television studios. Current Chief Executive David Zaslav would run that enterprise.<\/p>\n The other arm would be called Discovery Global and consist of the linear cable television channels, which have seen their fortunes fall with consumers\u2019 shift to streaming.<\/p>\n The Paramount bid was seen as an attempt to slip in under the wire because other large companies, including Amazon, Apple and Netflix, may have been interested in buying the studios, streaming service and leafy studio lot in Burbank. <\/p>\n However, Netflix\u2019s co-chief executive Greg Peters appeared to downplay Netflix\u2019s interest during an appearance last week at the Bloomberg Screentime media conference. \u201cWe come from a deep heritage of being builders rather than buyers,\u201d Peters said.<\/p>\n Some analysts believe Paramount\u2019s proposed takeover of Warner Bros. Discovery could ultimately prevail because Zaslav and his team have made huge cuts during the past three years to get the various businesses profitable after buying the company from AT&T, which left the company burdened with a heavy debt load. The company has paid down billions of dollars of debt, but still carries nearly $35 billion of debt on its books.<\/p>\n Others point to Warner Bros.\u2019 recent successes at the box office as evidence that Paramount is offering too little. <\/p>\n Despite the tumult at the corporate level, Warner Bros.\u2019 film studio has had a successful year. Its fortunes turned around in April with the release of \u201cA Minecraft Movie,\u201d which grossed nearly $958 million worldwide, followed by a string of hits including Ryan Coogler\u2019s \u201cSinners,\u201d James Gunn\u2019s \u201cSuperman\u201d and horror flick \u201cWeapons.\u201d <\/p>\n Meanwhile, Paramount has been on a buying spree. <\/p>\n Just in the last two months, Paramount made a $7.7 billion deal for UFC media rights<\/a> and closed two deals that will pay the creators of \u201cSouth Park\u201d more than $1.25 billion over five years<\/a> to secure streaming rights to the popular cartoon. <\/p>\n