Paramount Skydance prepares Ellison-backed bid for Warner Bros Discovery, WSJ reports

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By Zaheer Kachwala and Dawn Chmielewski

(Reuters) – Paramount Skydance is preparing a majority cash bid for Warner Bros Discovery that is backed by the Ellison family, the Wall Street Journal reported on Thursday, citing people familiar with the situation. 

Shares of Warner Bros surged nearly 30% while Paramount was up 7% after the news. A bid has not yet been submitted and the plans could still fall apart, WSJ said.

Paramount declined to comment while Warner Bros did not immediately respond to a Reuters request for comment. 

The bid will be for the entire company, including its cable networks and movie studio, the report said. The news comes just weeks after David Ellison’s company Skydance bought Paramount Global for $8.4 billion.

David Ellison is the son of billionaire Larry Ellison, whose 40% stake in cloud giant Oracle has propelled him to No. 2 on the global billionaires list. A long-time ally of U.S. President Donald Trump, Larry Ellison is likely to leverage his formidable wealth as well as political heft in Washington to close such a deal.

The Ellison family has been instrumental in financing Skydance’s expansion. Analysts have noted that 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.

Warner Bros Discovery had a market capitalization of about $30 billion before news of the potential offer broke. Ellison, 81, saw his fortune rise earlier this week by close to $100 billion and on Thursday was worth more than $360 billion, according to Forbes.

If successful, such a deal would likely face antitrust scrutiny, as it would bring together Warner Bros – a media giant in its own right with assets like HBO Max, “Barbie,” and the Harry Potter franchise as well as cable networks like CNN – and Skydance Paramount’s film studio, CBS News, and streaming service Paramount+.

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, which have launched competing streaming services, and are using their deep financial resources to attract top talent and acquire sports rights.

“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.

“There’s always going to be antitrust scrutiny … but when you’re talking about competing with Netflix and Disney, I don’t see antitrust issues on the streaming side. The studio and cable business I think probably will,” he said.

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. 

Warner Bros Discovery had earlier announced plans to separate its cable business from its studios and streaming operations, unwinding a merger that took place less than four years ago to grow the streaming and studios business without the drag of the declining networks unit. While the company has worked to cut its debt, it still sits with a net debt of about $30 billion, a figure it has promised would decline significantly by the end of the year.

(Reporting by Zaheer Kachwala and Deborah Sophia in Bengaluru; Editing by Alan Barona, Sayantani Ghosh and Nia Williams)