The ink had barely dried on David Ellison’s $8bn deal to acquire Paramount before he set his eyes on another legendary Hollywood studio: Warner Bros.
Ellison, the 42-year-old founder of Skydance, is working on a bid backed by his father Larry Ellison, the founder of Oracle and briefly the world’s richest man, to buy Warner Bros Discovery.
This comes just weeks after Ellison’s acquisition of Paramount from Shari Redstone closed on August 7 — a hard-won deal that followed battles with angry shareholders and a probe by the Federal Communications Commission.
Paramount and Warner Bros, two companies founded in the silent film era that became giants during the cable TV boom, have lacked the scale to compete head-to-head with Netflix in the streaming era.
But Ellison has told colleagues that he can modernise both companies’ linear television, premium cable and film production by integrating them on a single technology stack. That would save money and improve the customer experience.
A deal to buy Warner would add some of the biggest names in film and TV to Ellison’s budding empire, including the Warner Bros Motion Picture Group, HBO, DC Studios and CNN. It would also catapult Ellison to Hollywood’s highest echelon.
“If you own Paramount and Warner Bros, you’re definitely a mogul,” said Laurent Yoon, an analyst at Bernstein. “This is a once-in-a-lifetime opportunity. He’s putting his foot down and saying: ‘this is my turf’.”
If Ellison’s plan is realised, it would be a rejection of the strategy pursued by Warner Bros chief David Zaslav and Comcast’s Brian Roberts, who want to spin off their cable TV units after years of secular decline due to cord-cutting. The Comcast cable spin-off, called Versant, is expected by the end of the year. Warner’s is slated for 2026. Warner Bros declined to comment.
Ellison would pre-empt the Warner spin-off of the cable business and instead use it to feed content — which includes valuable sports rights on TNT and news from CNN — to Paramount’s streaming offerings. The approach would be similar to the strategy employed by Disney chief Bob Iger, who has said the traditional TV assets still generated cash and provided programming to Hulu, one of the company’s streaming services.
“The potential combination of Paramount+ and HBO Max would create an extremely formidable competitor in streaming,” said Jessica Reif Ehrlich, an analyst at Bank of America, in a research note. However, she said “integration and restructuring would likely take years to implement” if a deal were realised.
The Ellisons’ financing power is being augmented by Gerry Cardinale of RedBird Capital, who in addition to providing capital helped engineer Skydance’s purchase of Paramount. Cardinale is also playing a central role in forming a potential bid for Warner.
The move reveals an aggressive side to the younger Ellison, a movie fanatic who founded Skydance 15 years ago and co-produced blockbusters including Top Gun: Maverick and instalments of the Mission Impossible series. He also launched an animation business and hired John Lasseter, the founder of Pixar, to run it.
It comes as Zaslav, who has overseen painful cost-cutting measures at Warner, has hailed the company’s comeback. Warner has had an exceptional year at the box office, with breakout hits including A Minecraft Movie, Sinners, Weapons, F1: The Movie and Superman.
“Zaslav knows the company will be more valuable next year. He’s feeling extremely good,” said Yoon. “[Ellison] may want to do the deal preemptively.”
There has been talk in Hollywood about big consolidation in the industry since the streaming bubble burst in 2022, but studios have mostly focused on incremental moves such as cutting costs, creating “bundling” deals and adding advertising to streaming services.
Now Ellison and Paramount could be close to firing the first shot. A Paramount move on Warner could put the studio in play, attracting other potential suitors such as Apple, Comcast, Amazon or even Netflix.
Warner Bros has been associated with two of the worst deals of the 21st Century: AOL-Time Warner in 2000 and an acquisition by AT&T in 2018. The attraction in both cases was its world-class assets, which included the film studio that produced the Harry Potter films, along with HBO, DC studios and CNN.
John Malone, a Warner shareholder and adviser to the board as chair emeritus, told the Financial Times in an interview last month that he saw consolidation between studios as inevitable.
“There has to be consolidation in the streaming world, particularly as it relates to the old media companies and their efforts [to get] some scale relative to the big tech guys who have decided to get in the business,” he said.
In a different political environment, a Paramount-Warner Bros merger proposal would raise significant antitrust issues. Combining CBS News and CNN under the same corporate roof would have tested the boundaries of media consolidation in previous administrations.
However, the Trump administration may see greater leeway to a potential combination, said people close to the regulatory agencies. Lawyers said the Trump administration would probably focus less on structural overlap and more on whether Paramount committed itself to keeping CNN politically neutral.
That approach could ease approval risk if the Ellison group was seen as a stabilising owner rather than a partisan actor, said a former competition official.
Ellison recently appointed Kenneth Weinstein — who led a conservative think-tank and has advised President Donald Trump — as ombudsman of CBS News. And he has held talks with Bari Weiss, founder of the “anti-woke” media site The Free Press, about a potential deal that would give her a prominent role in the news operation.
The prospect of a deal has film and TV executives buzzing, with one saying it has “released the animal spirits” after a downbeat period in the business. A studio boss, who declined to be named, said that a Paramount-Warner merger would pose the first big challenge to Netflix by bringing together a large streaming platform with a vast library of valuable exclusive content.
“They have had a free ride for too long,” he said of Netflix.
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