Paramount abandons Warner Bros. merger after months of talks

(Bloomberg) — Paramount Worldwide Inc. had been in talks for months to merge with Warner Bros. Discovery Inc. but gave up after receiving no concrete offer, a regulatory filing showed.

Documents filed Monday detail CBS and MTV owner Paramount’s efforts to find a buyer or partner before agreeing in July to partner with David Ellison Ellison’s independent film and television company Skydance Media merged. Paramount is in talks with at least 12 alternative bidders, referred to in the filing as Sides A through Side L.

Warner Bros. is the party, according to people familiar with the matter. Discussions between the two companies and their advisers began when then-Paramount CEO Bob Bakish and Warner Bros. CEO David Zaslav first met to discuss the deal in December .

By the end of February, a special committee of Paramount’s board of directors decided to no longer share financial information with Warner Bros. given the company’s failure to come up with a concrete merger proposal, documents show.

Documents show Zaslav called Bakish again on February 28 and said he was still interested in making a deal. But conversations with National Entertainment, the Redstone family holding company that controls Paramount, indicated Warner Bros. would have to pay them in cash and that the valuation would make a deal between them “challenging,” the filing said. .

Zaslav was still talking to Paramount representatives in April, saying he believed there were benefits to the merger but would not include any cash consideration for shareholders.

The decision to sell Paramount can be traced to the company reporting weaker-than-expected financial results in May 2023, documents show. The board voted to cut the dividend, slashing annual cash flow to National Amusements from more than $60 million to about $13 million and prompting its controlling shareholder to weigh its options.

Over the next few months, Paramount held discussions with Comcast Corp., media mogul Byron Allen and Apollo Global Management, among others. Paramount, Warner Bros., Comcast and Allen declined to comment. Apollo did not immediately respond to a request for comment.

People familiar with the matter said the second party in the document is Comcast. Its CEO, Brian Roberts, met with Paramount in January. He said he doesn’t want to buy the entire company, but may be interested in licensing Paramount content.

A month later, Roberts returned and said he wanted to explore a joint venture between the streaming service, his company Peacock and Paramount as long as Comcast had majority control.

The board also discussed an offer from Allen (known as Party D). Members discussed the lack of details about his financing and observed that he had previously bid for Paramount assets. They had the law firm send Allen a nondisclosure agreement giving him access to confidential data and documents, but he never signed it.

Paramount’s board also questioned the commitment shown by Apollo, referred to as Party C in the filing. On March 6, Apollo acquired Paramount’s movie business and some of its television studios at a valuation of $11 billion. On March 31, the private equity firm offered to acquire all shares of Paramount, but did not give a specific share price.

At an April 1 meeting, Paramount board members and its advisers said they were surprised that Apollo continued to “describe the proposed transaction in a very preliminary manner and with a lack of specific details that suggested a lack of urgency.” They said this was despite the sale process receiving widespread media attention.

Meanwhile, Skydance, with the support of Ellison’s father, Oracle co-founder Larry Ellison, continues to press Paramount to enter into exclusive negotiations with them. On April 3, Paramount agreed to their demands and began negotiations that led to an agreement.

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

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