Paramount Seeks Gulf-Backed $24B for Warner Bros. Discovery Deal

To assist with the purchase of Warner Bros. Discovery, Paramount, which won a bidding war against Netflix, is in talks to secure equity commitments totaling nearly $24 billion from three sovereign wealth funds led by Saudi Arabia, according to The Wall Street Journal. 

According to the Journal, the Saudi Arabian Public Investment Fund has agreed to provide $10 billion to Paramount, which David Ellison runs.

Furthermore, the Journal said that people familiar with the matter expect the deals with investors, including Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co., to be signed on Monday.

Details of the Warner Bros. Discovery Acquisition

The deal to acquire Warner Bros. Discovery was for $81 billion and will include properties such as CNN, HBO, and Harry Potter. The deal is awaiting regulatory approval in Europe, and, per the Journal, Paramount has told employees it could close as early as July. 

We've started hearing about some of the plans for WBD under Paramount, including an HBO Max-Paramount+ merger. That would be about 200 million total subscribers. 

Should this deal go through, WBD's David Zaslav could earn upward of $800 million. 

Financing Structure and Investor Involvement

These commitments will help offset the cost of the Ellisons and RedBird Capital Partners, who are also backing the deal. The Journal also reported that Paramount said that "any equity syndication wouldn’t affect the transaction closing because the Ellison family would cover the entire amount if needed."

This deal won't give any of the Saudi-backed investors voting power and shouldn't trigger a review by the Committee on Foreign Investment in the U.S. because the entity will own less than 25%.

Initially, Paramount's proposal included backing from Tencent, a Chinese company, and Affinity Partners, a private equity firm founded by President Donald Trump's son-in-law, Jared Kushner. 

Affinity Partners later backed out of the deal, and Tencent is no longer involved. 

Additionally, Paramount received $54 billion in debt commitments from Bank of America, Citigroup, and the private equity firm Apollo Global Management, the Journal reports. 

At the time of this writing, no official deal(s) have been signed.