The ink had barely dried on David Ellison\u2019s $8bn deal to acquire Paramount before he set his eyes on another legendary Hollywood studio: Warner Bros.<\/p>\n
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\u2019s richest man<\/a>, to buy Warner Bros Discovery.<\/p>\n This comes just weeks after Ellison\u2019s acquisition of Paramount from Shari Redstone closed on August 7 \u2014 a hard-won deal that followed battles with angry shareholders and a probe by the Federal Communications Commission.\u00a0<\/p>\n 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. <\/p>\n But Ellison has told colleagues that he can modernise both companies\u2019 linear television<\/a>, premium cable and film production by integrating them on a single technology stack. That would save money and improve the customer experience.\u00a0\u00a0<\/p>\n A deal to buy Warner<\/a> would add some of the biggest names in film and TV to Ellison\u2019s budding empire, including the Warner Bros Motion Picture Group, HBO, DC Studios and CNN. It would also catapult Ellison to Hollywood\u2019s highest echelon.<\/p>\n \u201cIf you own Paramount and Warner Bros, you\u2019re definitely a mogul,\u201d said Laurent Yoon, an analyst at Bernstein. \u201cThis is a once-in-a-lifetime opportunity. He\u2019s putting his foot down and saying: \u2018this is my turf\u2019.\u201d\u00a0<\/p>\n If Ellison\u2019s plan is realised, it would be a rejection of the strategy pursued by Warner Bros chief David Zaslav and Comcast\u2019s 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\u2019s is slated for 2026. Warner Bros declined to comment.\u00a0<\/p>\n Ellison would pre-empt the Warner spin-off of the cable business and instead use it to feed content \u2014 which includes valuable sports rights on TNT and news from CNN \u2014 to Paramount\u2019s 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\u2019s streaming services.<\/p>\n \u201cThe potential combination of Paramount+ and HBO Max would create an extremely formidable competitor in streaming,\u201d said Jessica Reif Ehrlich, an analyst at Bank of America, in a research note. However, she said \u201cintegration and restructuring would likely take years to implement\u201d if a deal were realised.<\/p>\n The Ellisons\u2019 financing power is being augmented by Gerry Cardinale of RedBird Capital, who in addition to providing capital helped engineer Skydance\u2019s purchase of Paramount. Cardinale is also playing a central role in forming a potential bid for Warner.<\/p>\n 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<\/em> and instalments of the Mission Impossible<\/em> series. He also launched an animation business and hired John Lasseter, the founder of Pixar, to run it.\u00a0<\/p>\n It comes as Zaslav, who has overseen painful cost-cutting measures at Warner, has hailed the company\u2019s comeback. Warner has had an exceptional year at the box office, with breakout hits including A Minecraft Movie<\/em>, Sinners<\/em>, Weapons, F1: The Movie <\/em>and Superman<\/em>.\u00a0\u00a0<\/p>\n \u201cZaslav knows the company will be more valuable next year. He\u2019s feeling extremely good,\u201d said Yoon. \u201c[Ellison] may want to do the deal preemptively.\u201d<\/p>\n There has been talk in Hollywood about big consolidation in the industry since the streaming bubble burst in 2022<\/a>, but studios have mostly focused on incremental moves such as cutting costs, creating \u201cbundling\u201d deals and adding advertising to streaming services.\u00a0\u00a0<\/p>\n 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.\u00a0\u00a0<\/p>\n 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.\u00a0<\/p>\n John Malone, a Warner shareholder and adviser to the board as chair emeritus, told the Financial Times in an interview<\/a> last month that he saw consolidation between studios as inevitable. <\/p>\n \u201cThere 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,\u201d he said.<\/p>\n 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.\u00a0<\/p>\n