Larry Ellison Backstops Paramount WBD Bid With 40.4 Billion Guarantee

Ellison’s guarantee raises the stakes in Paramount’s WBD fight

Ellison Backstops Paramount WBD Bid With 40.4 Billion Guarantee, a decisive escalation in a takeover contest that is now forcing investors to weigh financing certainty against regulatory risk. Paramount’s revised approach centers on a personal commitment by Larry Ellison to stand behind 40.4 billion of equity financing and related exposure, a move aimed at neutralizing objections that the bid’s funding could be pulled or weakened midstream.

The update lands as Warner Bros Discovery shareholders face competing paths for the company’s studio, streaming, and cable assets. It also shifts the negotiation dynamics by adding a clearer financial backstop at a moment when boards, lenders, and arbitrage funds are calibrating how credible each bidder’s closing path really is.

What changed in the offer and why it matters

Paramount’s bid terms keep the headline price intact while tightening the parts that typically decide hostile outcomes: certainty of funds, penalties if regulators block the deal, and flexibility during the interim period. The offer remains an all-cash $30 per share proposal, a structure designed to appeal to shareholders who prefer price clarity over longer-duration equity exposure.

The new element is the personal underwriting. By putting his own balance sheet behind the transaction, Ellison is attempting to remove a key discount that had been applied to the offer, namely the concern that the buyer’s financing depended on a family trust structure viewed as easier to unwind than a direct guarantee. For Tredu readers watching the chessboard, the effect is straightforward: the bid now looks harder to dismiss on funding grounds, even if it still faces steep policy and antitrust hurdles.

The trust lock-up and other protections

Alongside the guarantee, the revised package includes commitments intended to prevent last-minute changes to the financing stack. One such pledge is that assets linked to the Ellison Family Trust would not be revoked or shifted out during the transaction period, addressing fears that the bidder could reconfigure backing while a tender offer is underway.

Paramount also lifted its regulatory reverse termination fee to $5.8 billion, raising the cost of failure if the deal is blocked on competition grounds. That figure is designed to match protections embedded in the competing transaction framework and to reassure investors that Paramount is prepared to pay a meaningful price if approvals prove unattainable.

The amended terms also provide more operational leeway for Warner Bros Discovery during the tender period, including additional flexibility around debt refinancing and interim decision-making, a practical point that matters for a company managing large maturities, content spending obligations, and cash flow expectations.

The rival Netflix path and the choice in front of shareholders

The competing outcome is a cash-and-stock deal that Warner Bros Discovery has been pursuing with Netflix, structured around separating the company’s higher-growth studio and streaming operations from its legacy cable networks. In broad terms, that approach is positioned as a quicker strategic fit for streaming scale and distribution, while reducing exposure to the declining linear bundle by isolating cable assets.

Paramount’s pitch is different: it argues for a combined studio-and-streaming powerhouse anchored by two legacy Hollywood libraries, with synergies across production, distribution, and advertising. The tradeoff is that a Paramount-Warner combination likely draws more intense scrutiny due to the breadth of overlapping media operations, from film and TV production to cable networks and sports rights.

For shareholders, the question is not only which bid is richer on paper, but which can realistically close without years of litigation, divestiture demands, or shifting political winds.

Market reaction and why timing is critical

Stocks tied to the three-way contest moved quickly after the revised terms were disclosed, reflecting the market’s tendency to price deal probability more than deal narrative. Warner Bros Discovery shares rose toward the tender price, while Paramount-linked shares climbed as investors reassessed the credibility of the hostile bid. Netflix shares slipped modestly as traders priced incremental competition and financing complexity into its path.

Paramount also extended the January 21 tender deadline, giving shareholders more time to evaluate the updated financing package and giving the bidder a longer runway to pressure the target board. Tender timing matters in hostile situations because a prolonged window can either build momentum, as activists and arbitrage funds line up, or backfire if regulators and politicians signal early resistance.

The financing question, simplified

At the center of this saga is not only price, but the mechanics of closing. Warner Bros Discovery’s board had criticized Paramount’s earlier structure as insufficiently anchored, a view that can influence how institutional investors interpret risk-adjusted value. The Larry Ellison personal guarantee is meant to compress that gap by providing a more direct answer to the question, “If something goes wrong, who pays?”

Paramount’s revised posture also aims to reduce the perception that financing rests on commitments that can be revised, delayed, or renegotiated. In a hostile context, where the target board is not cooperating, buyers typically need cleaner certainty because they cannot rely on the target to solve problems during the final mile.

Regulatory scrutiny and the real endgame

Even if shareholders swing behind the revised offer, regulatory scrutiny is likely to be decisive. A merger that combines major studios and large television portfolios would attract competition review across multiple jurisdictions. A Netflix-Warner tie-up also faces scrutiny, though the arguments differ: streaming dominance, bundling power, and content distribution leverage.

Investors should expect a long calendar. Any final deal could extend well into 2026 as agencies examine market definitions, advertising and carriage impacts, consumer pricing, and the influence of combined content libraries. Political attention adds another layer, as lawmakers have shown growing willingness to weigh in on large media consolidation, especially when news, sports rights, and national cultural influence are involved.

What to watch next

Near-term, watch for three signals. First, whether major Warner Bros Discovery shareholders publicly shift stance now that the 40.4B guarantee addresses the central financing objection. Second, whether the target board engages or continues urging rejection while emphasizing the relative speed and structure of the rival option. Third, whether regulators or political figures make early statements that shape expectations around remedies or outright opposition.

If the updated terms draw meaningful shareholder support, Paramount’s hostile posture becomes harder to ignore. If not, the market may revert to treating the Netflix track as the higher-probability outcome, even if Paramount’s all-cash appeal remains a benchmark for valuation.