Battle of the Davids: The future of Hollywood is playing out before our eyes

By Brian Stelter, CNN

(CNN) — The future of Hollywood depends in part on a battle between two Davids: Zaslav, who has agreed to sell Warner Bros. and HBO to Netflix; and Ellison, who has opposed the sale and launched a hostile takeover bid.

Now both men are plotting their next steps, while their allies engage in corporate trash talk, hoping to influence the eventual outcome of a once-in-a-generation movie studio sale.

Here’s a sense of how heated it’s getting: A person on Zaslav’s side likened Ellison’s recent behavior to a “temper tantrum.” A person on Ellison’s side said Zaslav and Netflix don’t know what’s hit them yet.

Still, despite all the bravado, the feud could end as abruptly as it began — if the price is right.

Media analysts expect Paramount will “sweeten,” or raise, its bid for Warner in the coming days, putting even more pressure on Zaslav and Netflix co-CEO Ted Sarandos.

Ellison, 42, is the protagonist in this story, applying screenwriting lingo to a real-life Hollywood drama. He has been moving fast as the new CEO of Paramount Skydance, a role he claimed after merging his much smaller production company, Skydance, with the storied Paramount earlier this year.

Some of the media veterans who’ve clashed with Ellison this year have dubbed him arrogant — while his defenders say he is rightly confident.

He met with Zaslav, 65, at Zaslav’s Beverly Hills home on Sept. 14 and offered $19 per share for all of Warner Bros. Discovery, which had been trading around $12 before talk of a Paramount offer surfaced.

One week later, Zaslav responded in a letter, saying thanks but no thanks, indicating that Warner Bros. Discovery (or WBD for short) would continue to pursue its plan to split into two separately traded halves.

Through the split, CNN and other channels would become part of Discovery Global, while the Warner Bros. studio, HBO Max streaming service and other assets would become known as Warner Bros.

Everyone involved knew that Paramount would knock on WBD’s door again. That next knock came on Sept. 30, with a $22-per-share offer, and a proposal that Zaslav could serve as co-CEO and co-chairman of the board of directors for the combined company.

This was, at least in part, a play to Zaslav’s ego, as Ellison perceived that the WBD CEO was reluctant to give up his media mogul perch.

The age gap between the two men is impossible to ignore, since for Zaslav, Ellison is at a “you could be my son” age.

Power, politics and pressure

Ellison’s real dad, Larry, 81, is the largest shareholder in Paramount, and he has been intimately involved since his Oracle fortune has helped bankroll his family’s media industry expansion.

Larry Ellison’s close relationship with President Trump has also been cited as a critical advantage in any regulatory review processes.

However, during the secret bidding process, Paramount’s posturing about its mutually beneficial relationship with the Trump administration rubbed some people the wrong way, according to a person involved in the talks.

By early October, it was apparent to Paramount’s board that WBD was slow-walking the process. A timeline released by Paramount to support its hostile takeover bid shows that WBD ignored its suitors’ requests to respond expeditiously to improved bids.

There were a total of six proposals over 12 weeks, according to Paramount’s SEC filing.

More bankers and lawyers got involved after WBD formally put itself up for sale in mid-October, prompting interest from Netflix and Comcast in the Warner Bros and HBO assets. Paramount remained the only bidder seeking to buy all of WBD, including CNN.

Perhaps playing hard-to-get in an effort to win a greater valuation, Zaslav remained rather distant, at least from Paramount’s perspective.

When Zaslav received an award at the Simon Wiesenthal Center’s Humanitarian Award Dinner on Oct. 31, Ellison was there. But the two men “did not break bread nor gab,” Deadline reporter Dominic Patten wrote afterward. Though “separated by just a few tables, the two Davids seemed more set on ignoring each other.”

Sarandos, on the other hand, was talking to everyone, and Zaslav gave him a shoutout from the stage, saying the Netflix boss is “one of the good guys.” Ellison’s presence went unrecognized.

By mid-November, Paramount had moved up to $25.50 per share. Zaslav and both David and Larry Ellison met face to face on Nov. 24 for dinner and discussed Paramount’s quest to achieve real scale in the media marketplace, as well as Zaslav’s potential role in the company, according to Paramount’s account.

It’s unclear exactly when Ellison came to the conclusion that WBD was favoring Netflix. But things came to a head last week when WBD asked for second-round bids from all the players involved.

Paramount went up to $26.50 per share and said in a revised proposal, “It is our sincere intention to embrace a ‘best-of-both’ approach to the combined company’s talent.” Lawyers representing Paramount also composed a lengthy letter assailing Netflix and Comcast’s offers.

Two days later, on Dec. 3, Zaslav spoke with Ellison by phone and shared the WBD board’s concerns about Paramount’s latest bid. Zaslav said he was calling the other bidders, as well.

When things went south

This is arguably when the auction began to turn hostile. Paramount lawyers wrote a letter ostensibly to the WBD board, which was seemingly also meant for the outside world to read. Dated Dec. 3, it said that WBD “appears to have abandoned the semblance and reality of a fair transaction process, thereby abdicating its duties to stockholders,” by favoring Netflix.

The letter also took aim at Zaslav directly — but Ellison tried to stay in direct communication, texting the other David on the morning of Dec. 4, saying, “I heard you on all your concerns and believe we have addressed them in our new proposal.”

That final bid was for $30 per share, according to Paramount. But the WBD board went with Netflix’s $27.75-per-share offer instead, in part because Netflix did not include the Discovery Global assets, which would be valued separately.

Sensing that WBD might be close to a signed deal with Netflix, Ellison texted Zaslav later on Dec. 4, noting that “we did not include ‘best and final’ in our bid,” meaning Paramount was still willing to offer a higher price.

Paramount’s legal letters were evidently the “noise” that Ellison referenced in his text. “Please know despite the noise of the last 24 hours,” he wrote, “I have nothing but respect and admiration for you and the company. It would be the honor of a lifetime to be your partner and to be the owner of these iconic assets.”

Paramount says Zaslav did not respond. Hours later, on Friday morning, Netflix announced a deal to acquire WBD’s studio and streaming assets.

And then on Monday morning, the battle of the Davids took its most dramatic turn yet.

Ellison announced his hostile bid and sat for an in-depth interview on CNBC as the stock market opened. He said he perceived WBD had an “inherent bias” against Paramount.

“We put the company in play,” Ellison pointed out, by making the first bid back in September. He commented that “We don’t think” it “was particularly taken well” by Zaslav’s camp.

“No,” Faber said, “I think that actually starts you off on a potentially bad foot when you’re making an unsolicited bid for a company.”

“But look at what we did with our last offer,” Ellison said. “We literally submitted $30 a share in cash,” meeting what were thought to be WBD’s expectations.

We “never got a phone call” back, Ellison said. “And that’s why we’re here today.”

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