Latest Market Selloff may Impact the Deal
the staff of the Ridgewood blog
Ridgewood NJ, the media world is on edge, anticipating a massive corporate shakeup centered on Warner Bros. Discovery (WBD). But the sheer volatility of the deal’s primary backers, the Ellison family, has introduced a dramatic wild card: the plunging value of Oracle stock.
With bids for the $90 billion media giant reportedly due last week—and Netflix and Comcast in the mix—all eyes are on whether the Ellisons’ appetite for risk has soured after a catastrophic six weeks for Oracle.
Oracle’s AI Rollercoaster: A $149 Billion Loss
Just before news of the Ellison family’s interest in WBD broke, Larry Ellison’s wealth had skyrocketed. Oracle shares had rocketed 36% on the back of monumental cloud deals, primarily with OpenAI. This brief high valued Ellison’s 41% stake at an extra $100 billion—easily enough to finance the WBD takeover.
The Crash: However, the AI bubble jitters centered on Oracle have caused the stock to plummet 39% from its high of $327 to just below $200.
This sharp decline has cost Larry Ellison approximately $149 billion in personal net worth.
leverage: The Risk Behind the WBD Bid
Ellison’s financial position is particularly sensitive to these swings because a substantial portion of his wealth is leveraged. A recent securities filing showed that Ellison has pledged about 30% of his Oracle stake—worth roughly $69 billion—as collateral for personal loans taken out to fund “outside personal business ventures.”
Larry Ellison and his son, David, are plotting the WBD takeover through the company they now control, Paramount Skydance. Given that Ellison backed his son’s purchase of Paramount this past summer, he may have used his Oracle shares to secure that loan.
The dramatic $149 billion reversal makes it highly likely that the Ellisons will be “less willing to overpay” for WBD than they might have been during the peak of Oracle’s stock surge.
The WBD Bidding War: Zaslav’s Exit Strategy
The bidding war for WBD is reaching a head, but the outcome is far from certain:
-
Ellison’s Paramount Skydance is reportedly aiming to buy the entire company.
-
Netflix and Comcast are also rumored bidders, likely aiming for pieces of the sprawling media empire.
CEO David Zaslav’s Position: WBD CEO David Zaslav may prefer selling off parts of the business or proceeding with previous plans to separate the studio/streaming operations from the traditional (and shrinking) TV channel business. These options would likely keep Zaslav employed.
However, the WBD board must act in the interest of all shareholders, meaning the Ellisons’ full-company bid cannot be dismissed, especially if it represents the highest value.
Regulatory Advantage
A final, crucial factor favoring the Ellisons’ bid is regulatory approval. Due to Larry Ellison’s closeness to President Donald Trump, the Ellisons’ takeover may face an easier path through federal regulatory hurdles compared to rivals like Comcast.
Ultimately, buying all of WBD—a company where half of the business is “slowly evaporating”—is a significant financial risk, especially so soon after acquiring Paramount and amid enormous risk associated with Oracle’s cloud expansion. The question remains: Will the Ellisons’ deep pockets and high risk tolerance overcome their recent financial setbacks?
Take the Wall Street Walking Tour https://www.facebook.com/unofficialwallstreet
#WallStreetTours,#FinancialDistrictExploration, #ExploreWallStreet, #FinancialHistoryTour, #StockMarketExperience, #FinancialDistrictDiscovery, #NYCFinanceTour,#WallStreetAdventure
