Paramount’s bid for Warner includes Saudi money; Comcast wants to combine assets with NBCU

Paramount’s Warner Bros. is raising the stakes in its bid for Discovery, raising its bid for assets with backing from Middle East sovereign wealth funds, including Saudi Arabia, while rival Comcast has offered to create a new entertainment company.

Instead of offering cash, Comcast has proposed creating a separate entertainment company to combine NBCUniversal with HBO and Warner Bros. film and television studios, according to people familiar with the bid but not authorized to comment.

Such a combination would marry strong movie studios, deep libraries and midstream streaming services, including Warner’s HBO Max and NBCUniversal’s Peacock. It will give Universal’s theme parks a wealth of fan-favorite characters – including Batman, Harry Potter and Sheldon Cooper – to create new attractions.

Comcast, which will retain a controlling stake, is not interested in acquiring Warner’s basic cable channels.

Paramount, Comcast, Netflix and Warner Bros. Discovery representatives declined to comment, citing the confidential nature of the bid.

Comcast, Netflix and Paramount each submitted second-round offers to Warner’s bankers on Monday. Warner Bros. Discovery hopes to announce the winner of the auction this month.

Paramount, which is controlled by Oracle co-founder Larry Ellison and his family, has been pursuing the Warner Bros. discovery since September — a month after the billionaire family took the keys to Paramount from former owner Shari Redstone.

With its latest offer, Paramount hopes to stay competitive with a cash bid from streaming giant Netflix, which is interested in Warner Bros. Sustainable intellectual property and prestigious 110 acres of studio land in Burbank.

The amount of the bid was not clear Tuesday.

However, analysts say the various combinations could value Warner Bros. Discovery at nearly $70 billion — more than triple the company’s trading volume in early September.

Paramount is the only bidder interested in acquiring Warner’s portfolio of cable channels, which includes CNN, TNT, Food Network, Cartoon Network and TLC.

Paramount’s bid includes debt financing from Apollo Global Management and sovereign wealth funds from Saudi Arabia, Qatar and the United Arab Emirates, people familiar with the matter said. If Paramount wins the Warner auction, the Ellison family and Redbird Capital partners will retain majority control of the enlarged company.

Middle Eastern investors will have only a small stake, one of the people said.

Dole and Bloomberg previously reported on the involvement of Middle Eastern wealth funds in the Paramount bid. Bloomberg first reported on Comcast’s bid structure.

Each of the various transaction arrangements will face rigorous regulatory scrutiny.

President Trump considers Larry Ellison a friend, so Paramount’s proposed takeover of Warners may face a regular regulatory review process in the U.S. The president indicated that Ellison controls CBS – part of Paramount – and CNN, which is owned by Warner Bros. Discovery.

Paramount Pictures and Warner Bros. The merger will give the company around 30% of the domestic box office.

Still, foreign regulators may succeed in a deal Trump has been pushing hard not to mention involving Saudi investors in a major entertainment conglomerate that owns CNN, the world’s largest news organization.

Last month, technologist David Ellison, chairman and CEO of Paramount, was a guest at a White House dinner honoring Saudi Crown Prince Mohammed bin Salman.

The state dinner – seven years after bin Salman was deemed a disaster following the murder of journalist Jamal Khashoggi – underscored Washington’s increasingly warm relationship with the Saudi royal family.

But any deal would be subject to regulators in Europe and Asia.

Comcast will face a particularly tough regulatory path.

The Philadelphia company is controlled by cable mogul Brian Roberts, who has long resented Trump because his company owned the liberal-leaning news channel MS NOW, formerly known as MSNBC. Comcast is in the process of spinning off MS NOW and other cable channels into a new company called Versant.

Still, some observers believe Trump’s opposition will be enough to block the Justice Department’s approval of the Warner Bros. Comcast acquisition.

Netflix’s bid also raised antitrust concerns.

“If Netflix acquires Warner Bros., the streaming wars are effectively over,” Bank of America media analysts wrote in a report this week. “Netflix will become Hollywood’s undisputed global force even beyond its current top spot.”

The Los Gatos streaming pioneer has more than 300 million subscribers worldwide. Adding HBO Max will cost the company another $70 million, which will undercut competing services.

“Netflix currently has unequaled market power,” U.S. Rep. Darrell Issa (R-Vista) wrote in a letter to Eighty last month. General Pam Bondi, his department, will oversee the review of the deal.

“Adding both HBO Max subscribers and Warner Bros.’s original content rights would further elevate that position, reportedly pushing the combined entity past a 30 percent share of the streaming market: a threshold traditionally seen as potentially problematic under antitrust law,” Jesus wrote.