Have you ever tried to buy something so badly that you ended up making the seller twice as rich while walking away empty-handed?
That, in a nutshell, is what just happened to David Ellison.
Back in September, the newly-minted boss of the combined Paramount-Skydance empire decided the fastest way to become a true media heavyweight was to swallow Warner Bros Discovery whole. He sent letters, raised his offer repeatedly, and essentially rang the dinner bell for every big player in Hollywood. What followed was one of the wildest auction processes we’ve seen in years – and when the dust settled on Friday morning, Netflix walked away with the crown jewels while Ellison had exactly nothing to show for it except a significantly richer rival in David Zaslav.
The Deal That Wasn’t Supposed to Happen
Let’s be honest – Warner Bros Discovery was never really “for sale” in the classic sense until Ellison forced the issue.
Sure, the company had been struggling. The stock had been languishing in the low teens for years, cable networks were bleeding subscribers, and the balance sheet still carried baggage from the 2022 merger. But Zaslav and the board were playing the long game: separate the declining linear networks, clean up the assets, and eventually position the studio and streaming business for better days.
Then came Ellison’s letters. First one, then another with a higher price, then another. Each one arguing that Paramount was the perfect home for all of WBD – studios, HBO Max, CNN, TNT Sports, the whole package. The offers were serious enough that the WBD board couldn’t ignore them. Suddenly a formal process was underway.
And once the process started? Well, that’s when things got really interesting.
From Quiet Cleanup to Full-Blown Auction
The moment WBD acknowledged they were in discussions, the vultures circled.
Comcast poked around. Netflix got very interested – but only in the good parts. They wanted the Warner Bros film studio and HBO Max. The cable networks? Thanks but no thanks. Suddenly Ellison’s vision of keeping everything together looked increasingly lonely.
I’ve watched a lot of media deals over the years, and this one had all the drama of a prestige limited series. You had the ambitious young heir trying to make his mark, the embattled veteran CEO who’d been written off by half of Hollywood, and the streaming giant waiting patiently to pick off exactly what it wanted.
“It wasn’t for sale before, and they certainly hadn’t cleaned up the assets or separated the assets in the way they have right now. I think that kind of goes to the ‘why now.’”
– Netflix co-CEO Ted Sarandos, Friday morning conference call
Sarandos wasn’t wrong. Ellison’s pursuit forced WBD to do exactly what they’d been planning anyway – but on an accelerated timeline and under massive spotlight. The linear networks are being prepared for separation. The studio and streaming assets got polished up nicely for potential buyers.
And the price discovery? Spectacular.
The Math That Made Zaslav Smile
Let’s talk numbers, because they’re honestly kind of staggering.
On September 10th – the day before news broke of Paramount’s interest – WBD closed at $12.54. By Friday morning after the Netflix announcement, shares were changing hands above $25. That’s not just a double. For early 2022 merger believers, it’s a return to levels they haven’t seen since the deal actually closed.
For David Zaslav personally? The windfall is eye-watering.
- Over 4.2 million shares owned outright
- Another 6.2 million coming via stock awards
- Nearly 21 million options with a strike price around $10
At $27.75 per share – the Netflix deal price – that’s more than half a billion dollars in paper gains for the CEO who’d spent years being roasted by investors and the Hollywood creative community alike.
Sometimes the universe really does have a sense of humor.
What Netflix Actually Bought
The deal announced Friday gives Netflix control of:
- The legendary Warner Bros film studio (think Harry Potter, DC Comics, the entire classic library)
- HBO Max and all its original programming
- One of the most valuable content libraries in entertainment history
They’re paying $72 billion in equity value for assets that, just months ago, the market was valuing at roughly half that when bundled with declining cable networks.
Perhaps the most interesting aspect? Netflix didn’t overpay by traditional metrics. They paid a reasonable multiple for premium content assets while avoiding all the linear TV baggage. It’s actually a remarkably clean transaction for them.
Paramount’s Not-So-Secret Weapon
Here’s where it gets really spicy: the story might not be over.
Paramount has been telling anyone who’ll listen that their all-cash $30 per share offer for the entire company was superior. They valued the soon-to-be-spun-off networks at about $2 per share. WBD thinks those networks could trade significantly higher. Both sides have a point – cable networks are dying, but some (CNN, TNT Sports) still throw off serious cash.
More importantly, Paramount has been arguing – loudly – that the sale process was flawed. That Netflix always had the inside track. That WBD never seriously engaged with their whole-company bid.
Whether that’s true or just sour grapes, one option remains on the table that would turn this drama up to eleven: taking the offer directly to shareholders.
The Nuclear Option
A hostile bid isn’t common in media – these deals live or die on regulatory approval, and hostile transactions make regulators nervous. But it’s not impossible.
Paramount could theoretically launch a tender offer directly to WBD shareholders at, say, $32 or $33 per share in cash. Netflix would then have the right to match. The end result? Either Netflix pays more (strengthening their position but at higher cost), or Paramount actually wins the entire company – networks and all.
Either way, WBD shareholders win bigger, and David Zaslav’s personal net worth climbs even higher.
It’s the ultimate irony: the harder Ellison fights to win, the richer his rival becomes.
Regulatory Wild Cards
Of course, none of this happens in a vacuum.
The Netflix deal comes with a $5.8 billion reverse break-up fee – meaning if regulators block it, Netflix pays WBD that amount. Paramount was reportedly offering $5 billion for the same protection on their whole-company deal.
The Trump administration’s antitrust approach remains something of a mystery, but early indications suggest heavy skepticism toward deals that further concentrate power among tech giants. Netflix adding HBO and Warner Bros would certainly qualify as increasing their already formidable content moat.
A whole-company Paramount deal might actually face less regulatory scrutiny – it’s more of a traditional media merger than tech consolidation. But good luck getting anyone in Washington to approve another massive media combination in 2025, regardless of who’s involved.
What This Means for Hollywood
Step back from the deal mechanics for a second and consider the bigger picture.
If the Netflix transaction closes, we’re looking at a fundamentally reshaped entertainment landscape:
- Netflix becomes the undisputed content king with an unmatched library
- Paramount and Comcast are left without their most obvious merger partner
- The remaining linear networks trade as pure-play cable companies (read: declining assets)
- Scale advantages tilt even more dramatically toward streaming pure-plays
Ellison’s aggressive pursuit of growth through acquisition – which made sense on paper – may have accidentally accelerated the very consolidation that leaves his company at a disadvantage.
In my experience watching these cycles, the media business has always been about having enough scale to negotiate with distributors and enough content to keep subscribers paying. Netflix just moved significantly ahead on both metrics.
The Human Element
Lost in all the financial engineering and regulatory chess is something more basic: this whole saga is deeply personal.
David Zaslav spent years being the villain in Hollywood conference rooms and investor calls. The merger arbitrage gap that never closed. The CNN struggles. The writer and actor strikes. The general sense that he’d lost the plot.
Friday’s announcement – whatever happens next – represents vindication on a massive scale.
Meanwhile, David Ellison – who grew up with every advantage, took control of Paramount with grand ambitions, and moved faster than anyone expected – finds himself in the uncomfortable position of having made his rival rich while strengthening his strongest competitor.
That’s gotta sting.
Where We Go From Here
As of Friday afternoon, multiple scenarios remain in play:
- Netflix closes their deal cleanly and becomes the new center of gravity in entertainment
- Paramount launches a hostile bid, forcing Netflix to either overpay or walk away
- Regulators block everything and we’re back to square one (though with WBD trading much higher)
- Some third-party dark horse emerges (unlikely at this point)
The one certainty? WBD shareholders – and especially David Zaslav – are significantly better off today than they were three months ago, directly because of the process David Ellison started.
In dealmaking, as in poker, sometimes the person who forces the action doesn’t end up with the pot.
Ellison came to the table with big ambitions and deep pockets. He leaves – at least for now – having made everyone else at the table rich while holding empty cards.
And the craziest part? He might still double down.
Because in Hollywood, the house always gets its cut – but sometimes the players get paid just for showing up.
