Warner Bros. Discovery may have formally rejected Paramount’s latest offer to buy the whole company, but the WBD board has yet to fully reject Paramount as a buyer.
On Wednesday, shortly after the board announced its big, fat “pass” on David Ellison’s latest offer — and its intention to stick with the signed Netflix deal for Warner Bros.’ studios and streaming (and HBO) business — Warner Bros. Discovery board chair Samuel Di Piazza Jr. appeared on CNBC’s Squawk Box. Officially, Piazza was there so David Faber could grill him on the particulars of the decision to again reject Paramount. Unofficially, it provided an opportunity for Piazza to communicate his needs to Ellison without speaking with Ellison, a no-no with a signed agreement elsewhere.
Piazza acknowledged that Paramount “stepped up to the table” with Ellison personally guaranteeing the proposed financing, which was one of the big things the WBD board asked for, representing “a major change in their position.” But “ultimately,” Di Piazza pointed out, “he didn’t raise the price.” (In other words: “SHOW ME THE MONEY!” Jerry Maguire gif.)
Tom Cruise talks on a phone in a scene from the film ‘Jerry Maguire’, 1996.
TriStar/Getty Images
Di Piazza has another problem that only money can solve: a $2.8 billion break-contract fee that Warner Bros. Discovery would have to pay Netflix should it weasel out of their deal.
“In the large majority of cases, when an overbidder comes in, they take that break fee and pay it,” Di Piazza said. “From our perspective, they’ve got to put something on the table that is compelling and is superior.”
What Paramount primarily has to put on the table is huge stacks of cash — but it’s not the only thing.
Di Piazza also wants “certainty that [Paramount] will close” if the deal does go their way. Di Piazza stated that he sees paths for either option to pass regulatory hurdles, but currently views Netflix as the safer pick. At least he does so publicly.
With an inability to “do [Paramount’s] deal for them,” as Di Piazza put it, these regular, coded CNBC check-ins are about the best he can do.
“I think it’s going to become a habit,” Di Piazza told Faber.
Finally, Faber asked Di Piazza what he would say to those who claim Warner Bros. Discovery “just won’t do” a deal with Paramount, that “you don’t like them.”
“That’s nothing further from the truth. We have talked to them now since September. We’ve given them lots of input on what they needed to do to change,” Di Piazza responded. “At the last minute, they went to $30 (per share). And then it was after the last minute that they guaranteed it.”
“We would be very open to do a transaction with Paramount,” Di Piazza said.
WBD shareholders will have the final say when they vote on the deal(s) in late spring or early summer.