Paramount Gave Up on Warner Bros. Merger After Months of Talks

(Bloomberg) — Paramount Global talked to Warner Bros. Discovery Inc. about a merger for months before giving up when no concrete offer was received, a regulatory filing shows.

The document filed Monday details the efforts that Paramount, the owner of CBS and MTV, made to find a buyer or partner before agreeing in July to a merger with Skydance Media, an independent film and TV company founded by David Ellison. Paramount held talks with at least 12 alternative bidders, identified in the filing as parties A through L. 

Warner Bros. was Party A, according to people familiar with the discussions. Paramount’s then-Chief Executive Officer Bob Bakish and Warner Bros. CEO David Zaslav first met in December to discuss a deal, and the two companies and their advisers began discussions.

By late February, according to the filing, the special committee of Paramount’s board decided it would no longer share financial information with Warner Bros. given that the company had failed to make a specific merger proposal.

Zaslav spoke to Bakish again on Feb. 28, the filing shows, and said he was still interested in a deal. But conversations with National Amusements Inc., the Redstone family holding company that controls Paramount, suggested Warner Bros. would have to pay them in cash and at a valuation that would make a transaction between them “challenging,” according to the filing.

Zaslav was still talking to Paramount representatives in April, saying he thought there was merit to a combination, but that it wouldn’t include any cash consideration for shareholders.

The decision to sell Paramount can be traced back to lower-than-expected financial results the company reported in May 2023, according to the filing. The board voted to slash the dividend, cutting the cash flowing annually to National Amusements to about $13 million from more than $60 million and leading its controlling stockholder to weigh its options.

In the months that followed, Paramount held discussions with Comcast Corp., media mogul Byron Allen and Apollo Global Management Inc., among others. Paramount, Warner Bros., Comcast and Allen declined to comment. Apollo didn’t immediately respond to a request for comment.

Party B in the filing is Comcast, according to the people. Its chief executive officer, Brian Roberts, met with Paramount in January. He said he didn’t want to buy the whole company, but might be interested in licensing Paramount content. 

A month later, Roberts was back saying he wanted to explore a joint venture between their streaming services, his company’s Peacock and Paramount , so long as Comcast would have majority control.

The board also discussed an offer from Allen, identified as Party D. The members discussed the lack of specifics about his financing and observed that he had bid on Paramount assets before. They had their law firm send Allen a nondisclosure agreement that would allow him to access confidential data and documents, but he never signed it.

Paramount’s board also questioned the commitment demonstrated by Apollo, identified in the filing as Party C. Apollo bid for Paramount’s film business and certain of its TV studios on March 6 at an $11 billion valuation. On March 31, the private equity firm proposed an acquisition of all of Paramount, but didn’t offer a specific share price.

In an April 1 meeting, Paramount board members and their advisers said they were surprised that Apollo continued to describe the proposed transaction “in a very preliminary manner and that the lack of specific detail suggested a lack of urgency.” That was despite all the attention the sale process was getting in the media, they said.

Meanwhile, Skydance, backed by Ellison’s father, Oracle Corp. co-founder Larry Ellison, continued to press Paramount to enter talks exclusively with them. On April 3, Paramount granted them that and began negotiations that ultimately led to a deal.

–With assistance from Hannah Miller and Michelle F. Davis.

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