As Paramount explores a potential acquisition of Warner Bros. Discovery, CEO David Ellison said there are no “must-have” acquisitions for the media conglomerate, noting that the company can “build to get to where we want to go.”
“It’s important to know that there’s no must-haves for us — we really look at this as buy versus build, and we absolutely have the ability to build to get to where we want to go,” Ellison said on Monday’s earnings call. “We believe we can achieve our goals with our creative content engines. We believe we can achieve our streaming goals and that we can drive enterprise efficiency … and create value and longterm free cash-flow generation all through … building.”
Ellison added that Paramount approaches M&A based on each opportunity’s potential to accelerate the company’s core three principle values, as well as maximize value for shareholder. “We’re fortunate that we have the balance sheet to be able to be opportunistic when we think that M&A will accelerate our goals, but we’re also longterm disciplined owner operators.”
“If there are assets in the company that aren’t critical and aren’t essential to our North Star priorities, then we’ll look at them case-by-case and make decisions,” Paramount president Jeff Shell said on the earnings call, noting that Paramount might begin “periodically … invest[ing] smaller assets” while divesting smaller assets that don’t align with the companies priorities. “We have enough to do and invest in without investing in things that are not core to what’s going to get us to global streaming scale.”
Shell also noted that Paramount will not be spinning off its cable assets like NBCUniversal did with Versant.
The latest comments come as the media giant has submitted three separate bids to acquire all of Warner Bros. Discovery, which ranged between $19 and $23.50 per share and were rejected for being too low.
Ellison has argued that Paramount would be the “best partner” for WBD, adding that other potential acquirers would need to overcome “significant (perhaps insurmountable) hurdles given their dominant market positions.”
In an Oct. 13 letter to WBD’s board, Paramount argued that the value to shareholders in a breakup would be less than $15 per share, or roughly $18 to $20 per share, including a “robust, yet highly uncertain M&A premium for Warner Bros.,” an individual familiar with the matter confirmed to TheWrap.
In order to sweeten the bid, Ellison even offered Warner CEO David Zaslav a co-CEO and co-chairman title, as well as increasing the portion of the bid paid in cash to shareholders from 60% to 80% and increasing the breakup fee from $2 billion to $2.1 billion.
CNBC reported that Paramount is also considering taking a tender offer directly to WBD shareholders and formalizing a hostile bid for the company. Per a company filing, a threshold of just 20% of WBD shareholders who have held the stock for at least a year are needed in order to call a special meeting to vote on fending off a hostile takeover bid.
If successful in acquiring WBD, TheWrap previously reported that Ellison would look to merge HBO Max and Paramount+ into a “super platform” under one scenario being considered. The theatrical model is also at the core of his vision and a combined company would look to target an output of 30 films per year as part of its commitment to that model.
In addition to Paramount, Netflix and Comcast are exploring potential bids for Warner’s studio and streaming assets, which are set to split from the linear networks business in April. Experts who spoke to TheWrap also aren’t ruling out Amazon as a potential suitor as the tech giant looks to continue scaling Prime Video and its advertising business.
