00:00The Ellisons and their partners could end up responsible for almost $10 billion in costs.
00:04And that sum is made up of Paramount paying Warner Brothers a $7 billion termination fee
00:09if the deal falls apart due to regulatory issues.
00:12And the $2.8 billion that Paramount already forked over to Netflix in February
00:16on Warner's behalf to get Netflix to abandon its takeover bid.
00:20What's new here is the specifics of who pays what.
00:24So Larry Ellison's son, David, runs Paramount.
00:26So it would be the father, Larry, and a family trust that would reimburse Paramount
00:30for both the $7 billion termination fee and the $2.8 billion Netflix fee.
00:34You ask how?
00:35Larry Ellison agreed that he would pay Paramount by buying newly issued Paramount shares
00:40at some $16 apiece, roughly double where the stock is trading today.
00:45Now, separate from that, Paramount will have to pay Warner Brothers the ticking fees
00:49of about $650 million a quarter starting in October.
00:52So if the deal collapses, the ticking fees go away and Paramount's $7 billion termination fee kicks in.
00:58If the deal does eventually close, those ticking fees will be covered by the Ellison's
01:03and their equity partners, Redbird Capital and three Middle Eastern sovereign wealth funds.
01:07Either way, Danny, delays make this deal more expensive and the Ellison's,
01:11they end up shouldering much of the added costs.
01:13Yes.
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