Paramount, backed by Larry Ellison, was close to acquiring Warner Bros. Discovery for at least $60 billion, a move that would have significantly consolidated power in Hollywood. However, this plan was thwarted when Netflix unexpectedly submitted a higher bid of $82.7 billion for Warner Bros. Discovery, which included HBO Max and HBO but not CNN or other basic cable channels. The Warner Bros. Discovery board ultimately accepted Netflix's offer, deeming it more favorable for shareholders, despite widespread expectations that Paramount would succeed due to Ellison's vast financial backing.
Several factors contributed to Paramount's failure to secure the deal. Paramount's initial low-ball offers, including one for $19 a share, were rejected by the Warner Bros. Discovery board, which felt the bids did not reflect the company's value. Paramount's leadership also appeared to underestimate Netflix's interest and capabilities, possibly believing they were the primary bidder. Additionally, Paramount's efforts to secure additional financing from Middle Eastern sovereign wealth funds may have raised doubts among the Warner Bros. Discovery board about the certainty of their commitment. Concerns about Larry Ellison's close ties to former President Trump also reportedly dampened enthusiasm for Paramount's bid in Hollywood.
Following the rejection of their bid, Paramount, through its legal counsel, accused Warner Bros. Discovery of rigging the auction process in favor of a single bidder and failing to act in the best interests of its stockholders. Paramount is reportedly preparing for a legal battle and intends to urge the Securities & Exchange Commission and the Department of Justice to investigate potential anticompetitive practices related to the Netflix deal. Despite this setback, sources close to Larry Ellison suggest he is not deterred and is prepared for a prolonged fight.