The subterranean conference center of the UBS building, tucked away near Madison Square Park, is usually a place of quiet deliberation. However, on a frigid morning in late December, it served as a makeshift command center for one of the most aggressive corporate plays in Hollywood history. David Ellison, the CEO of Paramount, sat at the center of this “war room,” meticulously dressed in a blue blazer and cream slacks, hosting a marathon of meetings with the titans of Wall Street.
Ellison’s objective was singular: to derail a pre-existing agreement between Warner Bros. Discovery (WBD) and Netflix. Only days prior, Netflix had inked a deal to acquire WBD, but Ellison is betting that he can convince shareholders that a Paramount-WBD merger is the only path to survival in a world where traditional media is being systematically dismantled by technology.
From Strategy Meetings to Open Warfare
What began as a quiet campaign for investor support has rapidly evolved into a full-scale corporate offensive. On January 12, Paramount took the dramatic step of suing Warner Bros. Discovery. The lawsuit is a tactical strike designed to force the WBD board of directors to “show their work.” By bringing the board’s internal deliberations to light, Paramount hopes to prove that the Netflix offer was not in the best interest of shareholders and that Ellison’s counter-proposal deserves a fair hearing.
Beyond the courtroom, Ellison has prepared a second front: a proxy fight. This is a rare and expensive maneuver where an outside entity attempts to persuade a company’s shareholders to use their proxy votes to install a new board of directors. If the current WBD leadership continues to ignore Paramount’s overtures, Ellison intends to nominate his own slate of directors who would be more amenable to his vision for the company.
The Shifting Loyalties of Wall Street
The industry is watching closely to see if Ellison can actually pull off this heist. Mario Gabelli, a legendary investment manager and a significant WBD shareholder, has signaled that he is more than willing to entertain the Paramount bid. Gabelli’s reasoning is pragmatic; he values the cash components and the timing of the Paramount offer over the more complex structure of the Netflix deal.
“At least I can send a signal that I like cash and the timing of the Paramount deal,” Gabelli noted, indicating that he intends to tender about 90 percent of the WBD shares he manages to Ellison’s camp.
This level of support from institutional investors puts immense pressure on WBD leadership. If high-profile shareholders start defecting to the Paramount camp, the Netflix deal could collapse before it ever reaches a vote.
Netflix and the “All-Cash” Countermove
Netflix is not sitting idly by as Ellison attempts to dismantle their prize. Analysts suggest that the streaming giant is already preparing to simplify its bid in response to the growing dissatisfaction among WBD investors. One potential move would be for Netflix to shift to an all-cash offer.
An all-cash deal would effectively box Paramount in, as it would remove the ambiguity of stock valuations and force Ellison to significantly reraise his own bid. The window for WBD to set its annual meeting is fast approaching, and every day of silence from the WBD board makes a proxy campaign more likely. As one source close to Ellison put it, the industry is being “technologically disintermediated,” and in this new landscape, only the biggest and most aggressive players will survive.
Whether Ellison is a “man on a mission” or a dreamer chasing a fading empire remains to be seen, but for now, the war for the future of entertainment is being fought in the basements and boardrooms of New York City.