Potential $9.8 Billion Liability for Larry Ellison If Paramount-Warner Bros. Deal Falls Apart

Paramount Skydance Corp., led by David Ellison, has agreed to pay Warner Bros. Discovery shareholders a $7 billion termination fee if the proposed acquisition collapses because of regulatory challenges. In addition, Paramount paid $2.8 billion to Netflix in February to persuade the streaming service to drop its own bid for Warner Bros. If the merger does not close, Larry Ellison and a family trust would reimburse Paramount for both amounts, for a total exposure of $9.8 billion. The repayment would be made by purchasing new Class B shares of Paramount at $16.02 each, while the company’s stock is currently trading around $8 per share.

Bloomberg

The deal, announced earlier this year, includes a broader equity commitment of $46.7 billion from the Ellisons, RedBird Capital Partners, and three Middle-Eastern sovereign-wealth funds, contingent on the acquisition’s completion. Paramount would also incur “ticking” fees of roughly $650 million each quarter starting later this month, payable to Warner Bros. shareholders; these fees would be covered by the Ellison-backed equity package if the transaction succeeds, but would disappear if the deal collapses. Paramount, already carrying substantial debt, is not required to raise additional borrowings to fund the termination fees.

Bloomberg

A spokesperson for Larry Ellison declined to comment when approached for a statement.

Bloomberg

The liability underscores the high financial stakes for the Ellison family, whose wealth is tied to Oracle Corp. Oracle shares have fallen this year amid concerns over data-center spending and the impact of artificial intelligence on its traditional software business. The Bloomberg Billionaires Index reports that Ellison’s fortune has shrunk by 31 percent this year, bringing his net worth to $163 billion. A collapse of the Paramount-Warner Bros. deal would therefore impose a sizable cash outlay on the Ellisons, potentially affecting their capacity to support other investments and the broader financing structure of the merger.

Bloomberg