Paramount Dropped the Warner Bros. Merger After Months of Negotiations

According to a regulatory filing, Paramount Global discussed a merger with Warner Bros. Discovery Inc. for months before abandoning the talks when no firm offer was made.

According to the paperwork filed Monday, Paramount, the business that owns CBS and MTV, searched for a partner or buyer before consenting to a merger with David Ellison's independent film and television company, Skydance Media, in July. At least 12 alternative bidders, parties A through L in the file, had discussions with Paramount.

Those familiar with the conversations said Warner Bros. was Party A. The two businesses, together with their advisors, started talking about a merger when Warner Bros. CEO David Zaslav and Paramount's then-CEO Bob Bakish met in December.

The statement states that by the end of February, Paramount's board's special committee had determined that it would no longer provide Warner Bros. with financial data because the latter had not submitted a concrete merger proposal.

According to the lawsuit, Zaslav told Bakish he was still interested in a deal when they spoke again on February 28. However, the document states that discussions with National Amusements Inc., the Redstone family holding firm that owns Paramount, indicated that Warner Bros. would need to pay them in cash and at a price that would make a deal between them "difficult."

In April, Zaslav was still speaking with Paramount officials, stating that while he believed a combination had potential, there would be no monetary compensation for shareholders.

According to the filing, Paramount's May 2023 financial results were below expectations, which led to the decision to sell the company.

The majority owner of National Amusements had to consider its alternatives after the board decided to reduce the dividend, which reduced the company's yearly cash flow from over $60 million to roughly $13 million.

In the months that followed, Paramount had conversations with a number of companies, including Apollo Global Management Inc., media tycoon Byron Allen, and Comcast Corp. Comcast, Allen, Warner Bros., and Paramount all declined to comment. A request for comment from Apollo was not immediately answered.

The people claim that Comcast is Party B in the filing. In January, Brian Roberts, the company's CEO, met with Paramount. He stated that while he was not interested in purchasing the entire business, he might be open to licensing Paramount content.

A month later, Roberts returned and stated that, if Comcast maintained majority ownership, he wished to investigate a joint venture combining their streaming services, his company's Peacock and Paramount.

Allen's bid, designated as Party D, was also examined by the board. The members noted that he had previously placed bids on Paramount properties and talked about the absence of details on his funding. Allen never signed the nondisclosure agreement that their law firm sent him, despite it granting him access to private information and records.

The dedication shown by Apollo, who was listed in the filing as Party C, was also questioned by Paramount's board. On March 6, Apollo made a $11 billion bid for Paramount's film division and several of its TV studios. The private equity group made an offer to buy all of Paramount on March 31 but did not specify a share price.

Apollo's continuous description of the planned acquisition "in a very preliminary manner and that the lack of specific detail suggested a lack of urgency" startled Paramount board members and their counsel during a meeting on April 1. They claimed that this was true even though the sale process was receiving a lot of media attention.

In the meantime, Skydance persisted in pressuring Paramount to engage in exclusive negotiations with them, supported by Ellison's father, Larry Ellison, a co-founder of Oracle Corp. Paramount gave them that on April 3 and started the talks that resulted in an agreement.