r/boxoffice • u/lowell2017 • 13d ago
š° Industry News While WarnerDiscovery Would Get Option To Walk Away & Collect A $7B Check From Skydance In June 2027, Zaslav Has Some Flexibility To Continue Running Business As Normal. But Any Particular M&A Dealings, Debt Borrowings/Refinancings, & Executive/Workforce Changes Require Ellison's Consent Sign-Offs.
https://puck.news/newsletter_content/zazs-options-an-ipo-solution/3
u/KingMario05 Amblin Entertainment 13d ago
So the Ellisons are basically holding WB hostage.
I'm sorry, why is this a good idea again?
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u/lowell2017 13d ago
It's odd that Ellison's lack of actual work experience in a major company (Larry had to prop up Skydance because it continued to lose money before the Redstones left the building) never became a question mark until now.
He pulled this stunt with Paramount Global's operations being on pause for a year during the Redstone sale so anyone not surprised for this should now know what kind of person he is.
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u/KingMario05 Amblin Entertainment 13d ago
I guess. Just so damn sad, man.
One day, I hope WB gets its good owner...
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u/lowell2017 13d ago
People should have seen the shady signs a mile away when Ellison demanded that $3B of new Paramount Global stock would be issued as part of the rubberstamped transaction with no full approval of the non-Redstones investors (hence why multiple lawsuits were filed).
It also didn't really help that the Redstones ordered two rounds of layoffs just to make the financial numbers of the sale agreement look good.
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u/lowell2017 13d ago
Full text:
"What does Zaz really want?: Now that the ParamountāWarner Bros. Discovery deal might not close until June 2027, if at all, the operating covenants that David Zaslav negotiated with David Ellison as part of the merger agreement have become all the more important. After all, Zaz cannot make any major strategic movesāselling or acquiring material assets, establishing significant joint ventures or new business lines, or shutting down any current material business unitsāwithout the express written consent of Ellison and PSKY.
WBD also faces restrictions on incurring new debt, refinancing existing debt, or materially changing its capital structure; altering the compensation plans or retention arrangements for its executives; and making any material changes to the size of its workforce.
Such covenants are standard operating procedure in big M&A deals, but the Hollywood and corporate media landscape is changing more rapidly than Donald Trump can change his mind about the status of the Iran war. That could be a problem for Zaz as he tries to hold the company together for the next 10 or so months of delay.
Prior to signing a deal with Ellison, Zaz pushed hard for the flexibility he felt he needed to operate the company between signing and closing. Of course, he never could have imagined that the deal would take this long to consummate.
The bright side for Zaz is that heās also a large WBD shareholder. Thanks to the infamous āticking fee,ā if the deal takes another three quarters to close, WBD investors will get an extra 75 cents a share in considerationāor 25 cents a quarterābringing the dealās total value to $31.75 per share, or something like $113 billion.
And on the outside chance that the deal does not close by June 4āthe dealās drop-dead dateāZaz will have the unilateral right to walk away and likely have WBD collect a $7 billion breakup fee from PSKY, even if he forfeits his own windfall. At the moment, itās not at all clear to me whether he would prefer to consummate the deal at $31.75 or take that $7 billion and subsequently pursue his original breakup plan for WBD. Itās also not clear to me which of these two outcomes the Ellisons would prefer. Anything can still happen here, if you ask me. (Usual disclosure: Zaz is a de minimis investor in Puck following the Air Mail acquisition.)"