Warner Bros. Fifth-Largest Shareholder Labels Ellison’s $40B Guarantee as ‘Not Sufficient’ for Paramount’s Revised Bid

Warner Bros. Discovery (WBD) stock hovered near $28.82 on Tuesday after Harris Associates, the company’s fifth-largest shareholder, characterized Paramount Skydance’s (PSKY) revised takeover bid as “necessary but not sufficient.”

Despite a massive $40.4 billion personal guarantee from Oracle (ORCL) co-founder Larry Ellison, major investors remain divided between Paramount’s all-cash offer for the entire company and Netflix’s (NFLX) $82.7 billion deal for just the studio and streaming assets. With Harris Associates controlling a 3.9% stake worth approximately $2.76 billion, their “Moderate Buy” stance is now contingent on Paramount providing a “clearly superior financial consideration” to break the current deadlock.

Larry Ellison Backstops the $40B Equity Gap

In a dramatic escalation of the bidding war, Larry Ellison has issued an “irrevocable personal guarantee” to cover $40.4 billion in equity financing for his son David Ellison’s hostile bid. This move specifically targets the Warner board’s previous criticism that the financing was “illusory” and relied on a revocable trust.

By putting roughly one-sixth of his $250 billion net worth on the line, the elder Ellison aims to neutralize concerns over deal certainty. Furthermore, Paramount has increased its regulatory breakup fee to $5.8 billion, matching the penalty Netflix would pay if their transaction is blocked by antitrust authorities.

Netflix Studio Deal Battles Paramount’s All-Cash Tender

The battle for Warner Bros. Discovery has created two distinct paths for shareholders: a total company sale or a strategic split. Netflix has signed a deal to acquire the “crown jewels”—including HBO, Warner Bros. Studios, and DC Comics—for roughly $27.75 per share, while spinning off the cable networks into a separate entity called Discovery Global.

Conversely, Paramount Skydance is bypassing the board with a hostile $30 per share all-cash tender for the entire conglomerate. While Paramount’s headline price is higher, some investors worry about the long-term value of the “stub equity” in the cable business that Netflix is leaving behind.

Portfolio managers like Alex Fitch of Harris Associates are currently viewing the two deals as a “toss-up,” suggesting that the current $30 offer may not be the final ceiling. Market analysts have already floated the possibility of Paramount raising its bid to $33 per share to secure a 90% tender threshold.

Key Takeaway

The bottom line is that this has turned into a “Trust vs. Value” showdown. Larry Ellison’s guarantee proved that Paramount has the “Trust,” but Harris Associates’ comments prove the market still wants more “Value.” If Paramount doesn’t nudge its $30 offer toward the $33 mark soon, the board-approved certainty of the Netflix deal might still carry the day despite the lower per-share price.

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