Behind the Warner Bros. Discovery-Paramount deal that never was

• David Ellison, Larry Ellison's son, is set to take over Paramount. Not David Zaslav, the CEO of Warner Bros. Discovery.
• Zaslav wanted a deal to happen. He spent months talking to Paramount about it, according to a new SEC filing.

David Zaslav wanted to run Paramount. David Ellison is getting it instead.

If you have been following the long and twisted story about the future of Paramount, you already know this. While Ellison, backed by his father Larry, is set to take over the company at some point next year, lots of other would-be acquirers and merger-ers kicked the tires on Paramount, and/or told people they wanted to do so. And Zaslav, the head of Warner Bros. Discovery, had floated a combination as far back as December 2023, days after Ellison's initial interest had become public.

What wasn't well-known: Zaslav spent months hanging around the basket, hoping that he could somehow land a Paramount deal.

Zaslav's interest is spelled out in a new regulatory filing from Paramount laying out details of the company it intends to become, which includes backstory of how the deal came together. And it notes that Zaslav was still floating the idea of a WBD/Paramount combo in April 2024 — long after Wall Street had soured on a tie-up, and months after their talks were reportedly dead.

But, crucially, the Paramount filing says that while Zaslav kept saying he was interested in a deal, his actions indicated otherwise. He never offered Paramount, and owner Shari Redstone, an actual bid. And when he did talk about a bid, he made it clear he didn't want to use cash to make it work — something that Redstone had made it clear she wanted. (I've asked WBD for comment.)

Per Paramount's filing, Zaslav first talked to Paramount CEO Bob Bakish about a deal on December 19, 2023, and then followed up in January, when Paramount was already considering an Ellison deal. Over the next few months, the two companies "engaged in discussions and mutual due diligence" about each other, Paramount says.

The upside of a deal, per Paramount: There would be "significant synergy potential" between the two companies. A big downside: Both companies have a lot of debt, and both have lots of basic cable networks that look increasingly doomed (later that summer, both companies would formally acknowledge that reality to Wall Street via $15 billion in writedowns.)

But WBD never offered an actual bid. This appears to have irked the Paramount board, which noted on February 21 that WBD "had not submitted a transaction proposal to date despite the exchange of confidential information and ongoing discussions between the parties and their advisors over the prior two months." Until that changed, board members said, they were going to stop giving WBD information about Paramount.

A week later, Paramount says, Zaslav talked to Bakish and told him he'd still love to make a deal. But not so much that he was going to accept Shari Redstone's terms, which involved her getting billions of dollars in cash for her ownership stake in the company.

This didn't seem encouraging. By March, Paramount's board, executives, bankers, and lawyers were all expressing "skepticism regarding [WBD's] intentions with respect to ongoing discussions including in light of [WBD's] continued failure to submit a transaction proposal." Then Paramount's bankers went back to Zaslav and his bankers, and told them, essentially, to figure out what they wanted to do, for real.

Nothing happened. WBD "never submitted a proposal in respect of a business combination transaction with Paramount, despite consistent interaction over the past few months at the management and financial advisor level."

And that was basically that. Except for one last half-hearted attempt from Zaslav in April, when he told a Paramount banker that WBD and Paramount really would be good together. As long as he didn't have to write any checks to make it happen: "The CEO of [WBD] also stated that any transaction between Paramount and [WBD] would not include any cash consideration."

So here we are today, nearly a year after WBD and Paramount first discussed a deal. Does that mean WBD and Paramount are never (ever, ever, ever) going to get together?

Who knows? The only thing that's truly changed since the two companies have talked is that one set of billionaire Paramount owners (the Redstones) is set to get replaced by even wealthier billionaire owners (the Ellisons). And meanwhile Wall Street continues to be glum about each company's prospects — and about the prospects of their industry, period. Maybe a new version of the old deal will be more compelling down the road.