The $110 Billion Grudge: How Paramount Won Warner Bros.

Transcript

He lost the auction for Warner Bros. then he agreed to pay $110.9 billion for all of it. Six offers in 12 weeks and the last message got no reply. His father signed a personal guarantee worth $43.3 billion. The president said he would be involved. It would be the biggest leveraged buyout in history with more than $90 billion of debt.

Then 12 states sued to stop him. So his company threatened to leave California after more than 100 years. A deposit officials were told was already down on the moving trucks. Days later, the state settled. This is the story of a billionaire’s son who would not take no for an answer and of what it cost Hollywood to say yes.

David Ellison got his first airplane when he turned 13. It was not a toy, but a katana stunt plane, a gift from his father, the Oracle co-founder Larry Ellison. And the two of them bonded flying stunts together. By 20, David was performing with an aerobatic team at the Air Venture Air Show. Hold on to that picture of a father and a son in the sky because it explains almost everything that happens next.

Larry Ellison was not a daily presence in his son’s early life and David grew up with his mother who nurtured his love of film. In 2005, he dropped out of film school at the University of Southern California to act in his first major film, Flybooks. His father heavily financed it and it was widely considered a failure. So, David gave up acting and moved to the business side of Hollywood. In 2006, he founded his own production company, Skydance Media.

After pitching the idea to Steve Jobs, a friend of his father, and reworking it on Jobs’s advice, his father invested heavily and became Skydance’s largest shareholder. Then the hits came. Mission, Impossible Sequels, World War Z, Star Trek into Darkness, and in 2022, Top Gun, Maverick. That film earned him a nomination for the Academy Award for best picture. Skydance had added a television division in 2013 and an animation studio in 2017.

The failed actor had become a producer with a best picture nomination and he wanted a studio of his own. Paramount Global, meanwhile, was in trouble with losses in streaming, falling cable audiences, and a heavy load of debt. In December 2023, its controlling shareholder, Shari Redstone, said she was interested in selling her stake to Skydance. In April 2024, Paramount’s own chief executive stepped down in what reports described as an ouster over his opposition to the Skyens deal. Rivals circled too.

Sony Pictures and the investment firm Apollo made a non-binding offer of $26 billion in cash. The talks with Skydance broke down in June 2024 and were revived within weeks. On July 7, 2024, Paramount’s board approved a merger with Skydance in a deal valued at $8 billion. That deal leaned on a personal investment of $6 billion from Larry Ellison. Then the deal needed Washington and Washington took a year.

In the meantime, Donald Trump had sued CBS, which Paramount owns, over a 60 Minutes interview with Kla Harris. When the case was settled, the late night host Steven Colbert called the settlement a big fat bribe on air. Paramount then ended the late show with Steven Colbert and said the reason was purely financial. On July 24, 2025, the Federal Communications Commission approved the merger and it closed on August 7. At 42, David Ellison became chairman and chief executive of the new Paramounts Guidance.

He had just bought a studio more than a century old. So why within weeks was he already knocking on the door of a company even bigger than his own? Warner Bros.

Discovery was born on April 8, 2022 when AT&T spun off Warner Media and merged it with Discovery. It came into the world carrying more than $43 billion of debt. By early 2025, its stock had lost more than 60% of its value. To cut costs, it reorganized, took controversial tax write offs, and pulled dozens of movies and shows from HBO Max. And its cable networks kept earning less than its streaming and studio businesses.

In December 2024, its chief executive, David Zasslov, split the company into two divisions, saying the new structure would provide flexibility with potential future strategic opportunities. On June 9, 2025, Warner went further and announced it would break into two companies by the middle of 2026. One half, called Warner Bros, would keep the studio HBO and the HBO Max streaming service. The other Discovery Global would take the cable networks, including CNN. Some analysts said the split quietly admitted that the 2022 merger had underperformed.

Others said it would turn the studio into a target. David Ellison did not wait for the split. Fresh from the Paramount deal, his plan was to move fast and buy the whole company before anyone else could bid for the pieces. In September 2025, he called a board meeting to discuss buying Warner Bros. Discovery, a move reportedly meant to help Paramount compete with Amazon, Disney, and Netflix.

Days later, he sat down with Zaslav at Zaslav’s home and proposed $19 a share, part cash and part stock. Warner said no. Later in September, Ellison came back with $22 a share, a $2 billion fee if regulators killed the deal, and a promise that Zastasv could stay on as co-chief executive and co-chairman. On October 13, he offered $23.50, mostly in cash, and was turned down a third time. Three rejections had an effect Ellison did not intend.

On October 21, Warner’s board put the whole company up for auction. His offers had shown the rest of Hollywood that Warner was for sale, and the rest of Hollywood showed up. In the first round on November 20, Paramount bid $25.50 a share for everything. Netflix and Comcast bid only for the studio, HBO, and HBO Max, and Stars offered $25 billion for the cable networks and a slice of the rest. On December 1, binding bids came in and Paramount raised its allcash offer to $26.50.

Ellison believed his was the cleaner offer because he would take the cable networks, too. He had also told everyone that Warner was part of a master plan to turn Paramount into a global player. But as the deadline approached, his team heard that Zaslav was leaning toward someone else. Who was Zaslav leaning toward? And why was Paramount about to accuse his board of running an auction with a predetermined outcome?

The answer

was Netflix. For months, Netflix’s leaders had played it cool in public. And in October, its other co-chief executive had warned that big media mergers do not have an amazing track record. Yet, its co-chief executive, Ted Sarandos, and his team were already in touch with Warner about a deal. This was a company that had always called itself a builder, not a buyer.

Analysts had not even expected it to take part. On December 3, Paramount’s lawyers sent Zaslav a letter that soon leaked to the press. It accused Warner’s board of a myopic process with a predetermined outcome. It pointed to the friendship between Zaslav and Sarandos. Warner’s lawyers answered that the board had fully and robustly complied with its duties.

On December 4, Ellison offered $30 a share in cash, his sixth offer in 12 weeks. That same day, he texted Zastas Love. It would be the honor of a lifetime to be your partner and to be the owner of these iconic assets. Ellison never received a reply. After several marathon days of calls, emails, and text chains, Netflix and Warner finished their agreement at about 7 that evening, Pacific time.

On December 5, Netflix announced it would buy the Warner Bros. studio, HBO, and HBO Max, in a deal that valued them at $82.7 billion, debt included. Netflix would pay $27.75 a share for the studio and streaming half once the cable networks were split off. Warner’s board judged that worth more than Paramount’s $30 for the whole company, cable networks included. Warner also made Netflix promise a record breakup fee of $5.8 billion if the deal ran into resistance. Shortly after 5:00 in the morning, Sarandos told Wall Street analysts, “I know some of you are surprised that we’re making this acquisition.” The prize included Casablanca, Citizen Canain, Harry Potter, Friends, the Warner Bros.

Games Division, and the historic Warner Bros lot in Burbank, California. Warner was having a great year, too, leading the box office with Sinners, a Minecraft movie, Superman, and Weapons. Netflix expected two to3 billion dollar a year in cost savings and analysts estimated the combined company would control 30.3% of streaming in the United States. Hollywood’s reaction was fierce. Theater owners feared for their screens and their trade group Cinema United warned of a possible loss of 25% of domestic box office revenue.

The share tied to Warner’s releases. Its chief called the deal an unprecedented threat to the global exhibition business. Earlier that year, Sarandos had called the theatrical experience outdated. Writers and directors warned that one company would control too much of what gets made. Paramount had lost the auction.

So, how do you buy a company whose chief executive will not even answer your texts? 3 days later,

Ellison went around Warner’s board. On December 8th, Paramount launched a hostile allcash offer of $30 a share straight to Warner’s shareholders. It valued the company at about $18.4 billion, debt included. We’re taking our offer directly to shareholders because they deserve transparency. Ellison told investors and he called his proposal superior to Netflix’s in every dimension.

Sarandos was unruffled. Today’s move was entirely expected. He said, “We have a deal done.” Variety called it the most contentious fight over a media deal since the early 1990s when rival moguls battled over Paramount Pictures itself. Then the president stepped in. According to Trump, Sarandos had visited the Oval Office to reassure him that Netflix would not amass anything close to monopoly power.

On December 7, on his way into the Kennedy Center honors, Trump said he would be involved in reviewing the Netflix deal. He called Sarandos a fantastic man, but said it was a lot of market share and could be a problem. The Ellisons, Trump had boasted, were big supporters of his. Yet the same week, he lashed out at Paramount over a 60 Minutes interview, writing that the new owners were no better than the old ones. Behind the bid stood the Ellison fortune.

Larry Ellison signed an irrevocable personal guarantee of $43.3 billion covering the equity behind the offer. Sovereign wealth funds from Saudi Arabia. Qatar and Abu Dhabi had already put $24 billion into Paramount’s December 1 offer. Trump’s son-in-law, Jarred Kushner, also worked with Ellison to finance the bid, and the Wall Street Journal reported that Ellison had assured Trump he would make major changes at CNN if he won. Meanwhile, the Netflix deal drew scrutiny of its own.

In January 2026, the Justice Department opened an antirust review of it. Warner kept rejecting Paramount and backing Netflix. So, in February 2026, Ellison raised his offer to $31 a share and piled on the sweeteners. Paramount would pay the $2.8 billion fee Warner owed Netflix for walking away. It would owe Warner $7 billion if regulators blocked the deal, one of the largest breakup fees in corporate history.

And if the sale had not closed by September 30, 2026, Warner’s shareholders would collect a ticking fee of 25 cents a share for every quarter of delay. On February 26, Warner’s board declared Paramount’s offer superior. Netflix had 4 days to match it and walked away immediately. The next day, Paramount announced it would buy all of Warner Bros. Discovery for $110.9 billion.

An analyst at Moffett, Nathansen, summed it up. Warner was a necessity for Paramount. While Netflix had been opportunistic, Ellison had beaten Netflix, but could he get a deal this big past the governments that still had to say yes? The price of victory was

staggering. The Ellison Family Trust committed $45.7 billion of equity, guaranteed by Larry Ellison himself, then the sixth richest person on the Forbes list with an estimated 194.9 billion. Bank of America, Cityroup, and Apollo lined up another 57.5 billion of debt. Warner already owed $33.5 billion at the end of 2025. So, the combined company would carry more than $90 billion of debt.

Deadline called it what would be the biggest leveraged buyout in history. To pay for it, Paramount promised $6 billion in cost savings. And in Hollywood, savings like that mean layoffs. On April 23, 2026, Warner’s shareholders approved the sale. That same month, more than 1,000 entertainment professionals signed an open letter warning that the deal would further consolidate an already concentrated media landscape.

In Washington, Ellison hosted an event titled Honoring the Trump White House, and federal regulators overseeing the merger were among the guests. On June 12th, the Justice Department approved the deal after an 8-month investigation and more than 2 million documents. It found the merger not likely to result in harm to competition or American consumers. Around the same time, his handpicked editor-inchief at CBS News fired several 60 Minutes correspondents. Senator Elizabeth Warren called it terrible news for every American.

This fight isn’t over, she wrote. State Attorneys General must block this merger. California’s attorney general was already investigating and New York’s office was part of the probe. Europe and Britain added conditions of their own. From leaving a film distribution venture with Universal to protecting the independence of Warner’s news and children’s businesses, European officials also looked hard at who was paying funds from Saudi Arabia, Abu Dhabi, and Qatar.

Then on July 13, 2026, the states answered her call. California and 11 other states sued to stop the takeover and the Writers Guild of America sued too, citing specific harm to writers. They argued the combined company would have too much power over movie theaters and pay television. The states were led by the attorney general of California, Rob Bonta. Paramount agreed to hold off closing until June 2027 while the case played out and a trial was set for March.

The deal would sit in limbo for most of a year. For Paramount, every quarter of Delay had a price. Under the ticking fee it had offered to Win Warner, it would owe shareholders about $650 million for every quarter after September 30. Paramount had added that fee itself as a sweetener in its fight with Netflix. and Ellison had promised at least 30 films a year and standard release windows, a pledge that won praise from theater owners. With a trial months away and that meter about to start, what would the Ellison’s do to make the case go away? The answer was a

threat aimed at Hollywood itself. In September, Paramount told key officials it was deadly serious about leaving California, its home for more than 100 years. Los Angeles Mayor Karen Bass and Attorney General Bonta were told a deposit had been put down on the moving trucks. Georgia, Tennessee, and Texas were reportedly on the list, and Tennessee had strong links to the Ellison family. Bont had already accused Paramount of blackmail, and his office now called the moving threat saber rattling.

The pressure came with numbers attached. A report delivered to Los Angeles County warned that moving everything out would cost California between 28,990 and 57,980 jobs. It put the lost economic output at 10.6 to 21.2 billion a year. Deadline reported that Paramount itself had helped put that report together. Meanwhile, the ticking fee was due to start on October 1 at roughly $7.2 $2 million a day.

Paramount asked the court to make the states post a $1.88 billion bond to cover its losses, and the Justice Department sided with Paramount on that request. With the trial set for March 2, deadline wrote, “The wait felt like an eternity for an industry on edge. On September 21, 2026, the state settled. Paramount agreed to spend at least $300 million more a year on production in the United States and to keep both the Paramount and Warner Bros. lots in Lowe’s Angels. Only about 5% of its film production is domestic today.

Bontis said it must release 30 films in theaters a year for 2 years and 32 a year after that or pay a $30 million penalty for every missing film with 90% going to workers. At least 20 of those films must open wide in more than 2,000 theaters and a fifth of each year’s releases must be tentpoles with budgets above $50 million. Miss the release goal and it must sell the production company Murramax. Paramount and Warner must keep negotiating their cable packages separately or give up a group of cable channels. CBS News and CNN get a new board to guard their editorial independence, and a trustee will watch every promise.

It will also pay $9.5 million a year for workforce training and arts programs. The Writer Guild settled too for no writer layoffs on CBS News’s broadcast team for 5 years and $17.5 million for its health fund. Bont insisted the settlement was not a vote of support for this merger. Paramount shares fell 3% after his press conference. Ellison thanked Bont, the other attorneys general and Governor Gavin Nuzam, and told his staff the deal would close in about 2 weeks.

The moving trucks, it seemed, would not be needed. So, who really won? The billionaire’s son, the States, or the people who actually make the movies?

Soon, two studios, one 114 years old and one 116, will answer to a single 43-year-old chief executive under the same roof. CBS, CNN, HBO Max, and Paramount Plus. Supporters say that is the scale a studio needs to compete with the tech companies that have moved into entertainment. His promise of 30 films a year is now written into a court settlement. And no studio has put out more than 25 wide releases in a single year for the past 25 years.

The last big studio merger points the other way. Since Disney bought Fox, their combined releases have peaked at 16 a year. The Writers Guild still believes the merger will damage writers and the industry at large. Critics still worry about the family’s ties to the Trump administration and what that could mean for CNN. And Bont says further consolidation does not serve the American economy, consumers, or competition.

What the Ellison’s proved is simpler. With enough money and enough pressure, a no from a board, from Netflix, and from a dozen states could still become a yes.