Warner Bros CEO David Zaslav on Paramount offering ‘Big’ payout if company accepts merger at lower value: ‘It would be inappropriate to discuss…’

Warner Bros Discovery (WBD) recently rejected the hostile takeover bid by Paramount Skydance at $30 per share. In the meantime, the company has decided to proceed with the “superior” deal to sell Warner Bros Studios and the HBO Max service to Netflix. The same SEC filing also noted that the Ellisons offered WBD CEO David Zaslav a compensation package reportedly valued at “hundreds of millions of dollars” in exchange for his support in the merger. Yet, according to the filing, Zaslav just ended the negotiations by letting the WBD board know that “it was inappropriate to discuss any such arrangements at that time.”The disclosure reveals an aggressive four-month campaign run by Paramount CEO and Oracle founder Larry Ellison’s son, David Ellison, to acquire WBD. Following an initial $19-per-share offer in September, the Ellisons pressed their case by promising Zaslav a personal financial gain to facilitate the deal. Despite the aggressive push and the massive pay package offer, the WBD board remained unpersuaded, culminating in the formal rejection of the hostile bid on December 17.The contentious interactions were detailed in a timeline released by WBD, contrasting the hostile Paramount approach with the company's preferred path forward. WBD had previously announced its deal with Netflix on December 5. The filing serves as the official chronology of events explaining why the board views the $72 billion Netflix deal as the better value proposition for shareholders over Paramount’s $108 billion takeover attempt.

Netflix vs Paramount: Which deal will be more beneficial for Warner Bros CEO David Zaslav

Zaslav is positioned to gain hundreds of millions from his WBD stock holdings regardless of whether the company sells to Netflix or Paramount, with projections suggesting he could become a billionaire if either deal proceeds.For Paramount's hostile bid to succeed over the Netflix agreement, both WBD's board of directors and stockholders must approve it, unless Paramount secures at least 90% of outstanding WBD common stock in favour of the proposal.WBD's filing noted that Zaslav is “subject to a non-competition covenant and a non-solicitation of customers and employees covenant that are each applicable during the period of his employment and for a period of 24 months thereafter, unless Zaslav's employment is terminated without 'cause' or by Zaslav for 'good reason,' in which case the restricted period would be reduced to 12 months following such qualifying termination."According to WBD, Paramount CEO David Ellison first expressed official interest in acquiring the company during a September 14 meeting with Zaslav, following a September 11 Wall Street Journal report that sent WBD's share price soaring.At that initial meeting, Ellison proposed combining WBD and Paramount Skydance in a 60%-40% cash-stock transaction, offering $11.40 in cash and 0.404 shares of PSKY Class B common stock per WBD share, implying a value of approximately $19.00 per WBD share. The proposal "suggested that Zaslav could be the Chairman of the combined company's board, and that PSKY would also want other WBD directors to join the combined company's Board.”The WBD board rejected this initial proposal on September 22, citing significant undervaluation and concerns about Paramount's inflated share price and the Ellison family's voting control structure.Despite continued rejections, Paramount submitted progressively higher bids: $22/share on September 30, $23.50/share on October 13, $25.50/share on November 20, $26.50/share on December 1, and finally $30/share on December 4. Ellison also texted Zaslav about the final offer, writing, “It would be the honour of a lifetime to be your partner and to be the owner of these iconic assets," but received no response.