00:00Paramount Skydance has sweetened its offer for Warner Brothers today. Larry Ellison agreeing to personally guarantee $40 billion in equity financing for the proposed $108 billion takeover offer for Warner Brothers. So let's bring in Bloomberg Tech co-host Carolyn Hyde now for more on this story. So Carolyn this is getting really interesting. What I'm curious about is how long can this continue on given that shareholders aren't voting until the middle of next year. I mean this is such a Hollywood
00:29drama and we're living in it blow by blow. Now we're going to get real nitty gritty details of basically Larry Ellison's wealth of the trust. He says it's going to be irrevocable. I will not be able to start selling off bits of my assets. Largely that's in part backed by equity shares of Oracle in and of itself which is a share of the price that's been under pressure of late. But basically he's committing because that was the vulnerability of their offer. Remember there is more on the table coming from Paramount in terms of financial money than there is coming from Netflix but Netflix doesn't want the whole shebang.
00:59It doesn't want CNN. It doesn't want the cable networks. It just wants the streaming in the studios. And so from their part all along we've seen Warner Brothers say Netflix's offer is better but also because the clarity of the financing. The clarity of the financing was pretty clear from Netflix. Now they're also managing to piece together what long-term financing looks like. They have bridge loans in place. BNP Paribas, HSBC, some of the banks around that. Now they've already got a revolving credit facility in place for $5 billion.
01:29They're looking back to syndicate about $34 billion worth. You then look over to what Paramount's been doing and they've basically been saying my dad's really rich and he's going to be able to afford this.
01:38But then they were like but what are the details of his wealth and how set in stone is that? Oh and why have you been leaning on maybe 10 cent at one point? Remember Middle Eastern investors? At one point it was even Jared Kushner as well who's then since dropped out.
01:51So all of this was just more anxiety around the real financing power of Paramount's Skydance. And now with this they're trying to say look we are good for it. Up to $40 billion worth. It's going to be guaranteed by Larry Ellis himself. One of the wealthiest people in the world.
02:04But also they're saying if this deal doesn't get done we'll give you even more money. $5.8 billion if it gets cancelled.
02:10So but other than upping essentially the breakup fee and matching the breakup fee that Netflix has already offered they haven't increased the payout to shareholders. So that's still to come right? Sweetening the bid.
02:23Exactly. And I think that's what many have felt is that it's been it all comes down to how much do they value the cable networks at and seemingly a different price than what David Zaslav thinks he could get if he spins them off.
02:34And so all of this comes down to whether or not they're going to up the actual amount. We've heard time and time again on the tech show people coming in going don't underestimate the competitive nature of the Ellisons and the willingness they will do to actually bring more money to the table.
02:46Maybe this Bonnie is the answer to your question. How long does this run? Maybe we do start to get an even more sweetened deal.
02:51But as you say they are extending the tender offer as well out to January 21st which is a little bit longer than they had. They're going direct to shareholders here.
02:58So it's up to the shareholders to decide how much value do I put on these cable networks?
03:02Yeah. Now it doesn't matter what's getting taken. So if Netflix doesn't want part of it but you know Paramount will take that. Does that have to factor in as well?
03:13I guess it does from a regulator's perspective as well. I mean also the key issue for many is the relationship the Ellisons have for the administration.
03:21And some of the reporting out there has been that it's not been unknown that perhaps the administration would like a new owner for CNN and the like.
03:28So maybe they do want to see Paramount Skydance take out that sort of part of the business.
03:32But more broadly I think that when it comes down to monetary value clearly David Zaslav thinks that there's more money to be got from these cable networks.
03:40Remember for Paramount the cable networks are actually basically where a lot of the profit was for the business to begin with.
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