MICHEL MARTIN, HOST:
There is a new twist in the saga of the movie and cable giant Warner Brothers Discovery. Its board is unanimously urging shareholders to reject a $108 billion takeover bid from Paramount. Instead, the board is standing by an agreement struck with Netflix to acquire its Hollywood studios and its streaming service HBO. NPR's David Folkenflik has been covering the Warner Brothers sale, and he's with us now to tell us more about this latest development. David, good morning.
DAVID FOLKENFLIK, BYLINE: Good morning, Michel.
MARTIN: So what does Warner Brothers Discovery's board say in explaining its decision?
FOLKENFLIK: Well, so this is an offer from the Ellison family and Paramount that, as you say, would seem to value this at $108 billion. Warner Brothers Discovery's board was unanimous in this, and they're questioning whether that $108 billion is solid. The Ellisons took on and Paramount took on a lot of money from Middle Eastern funds to do this - many tens of billions of dollars - and they're questioning what they're calling the Ellison family's backstop. The Ellisons say, hey, look, we're good for it. We're putting in $40 billion. You know, it's part of our family trust, so you know you have it. And Warner Brothers is saying, we can't see into that trust, and it's also revocable, which means the terms of it are changeable. So we don't have insight into that trust. You guys are taking a ton of money from Abu Dhabi, from the sovereign wealth fund of Qatar, from the Saudi Arabian sovereign wealth fund. It suggests to us that the financing is a lot creakier. We know Netflix is good for this money.
MARTIN: So let's drill down a bit more on the Ellisons here. It was a - it's a hostile takeover bid - right? - because they'd already accepted the Netflix offer. So tell us a little bit more about them, who their - and what their motivation was.
FOLKENFLIK: Yeah. They've made offer after offer after offer this year. Larry Ellison is the co-founder of Oracle. He is one of a handful of the wealthiest people walking the planet at the moment. His son, David, was the head of Skydance Media, still is, but with his father's financing was able to take over Paramount. Let's, you know, think about what Paramount is. That's CBS. That's Paramount Pictures. That's Paramount+ streaming. They wanted to combine that with the Warner Brothers Discovery assets. That is Warner Brothers Studios, HBO, the - all the Warner Brothers film's intellectual property catalog going back, but also all of their cable channels, notably CNN, which they wanted to merge in some ways with the newsroom of CBS News, Discovery, you know, TBS, TNT and a whole bunch of others.
The Ellisons' playing card is that they're close to President Trump. And Trump has made clear that he intends to have a say in a lot of corporate goings-on, but particularly in this deal. He's taken a strong interest because of CNN. The Ellisons say, look, you know, Larry Ellison has been a major backer of the president. David Ellison has struck up an alliance as well. Privately, they're saying, we'll be able to get through antitrust concerns a heck of a lot quicker than the folks over at Netflix. Either deal would involve an extraordinary consolidation of assets.
MARTIN: And interestingly, President Trump's son-in-law, Jared Kushner, was to be one of the investors in Paramount's bid, but he backed out yesterday.
FOLKENFLIK: Yeah, he did. You know, one of the interesting elements of this is it appears to have been in anticipation of this announcement by Warner Brothers rejecting it. But Kushner's involvement, the son-in-law of the sitting president who said he's going to play a role in all this - that really seemed to be a complicating factor for a lot of people trying to evaluate the bid on its own merits. He also only had a couple of hundred million dollars invested in this $108 billion deal, wasn't a major financial backer in there.
MARTIN: OK. Very briefly, what happens next in the battle over Warner Brothers Discovery?
FOLKENFLIK: Well, at some point, there should be a shareholders' vote. After all, the board is trying to make a recommendation. It's not clear exactly when that'll happen. The Paramount bid is supposed to lapse in early January. But let's not forget both Netflix and the Ellisons have a ton of money. If they want to, they sure could sweeten this deal. I suspect this isn't the last chapter in the story of how this plays out.
MARTIN: That is NPR media correspondent David Folkenflik. David, thank you.
FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.
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