Paramount’s Updated Bid for Warner Bros. 12/22/25

0:00Bring in show music please. This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, sixth time is the term, Paramount Skydance has amended its latest offer for Warner Brothers Discovery. Key investor and strategic partner Jerry Cardinal of Redbird just minutes after the news broke. The big concern was that Larry Ellison and his family is not money good for this transaction. And so we've come in and said that, OK, Larry will give a personal guarantee on the equity financing for this transaction,$41 billion. Then changes afoot in the U.S. health care system. Former FDA Commissioner Dr.

0:46Scott Gottlieb on vaccine schedules and on drug pricing in 2026. Going forward, you're going to see prices in the U.S. on new launches probably come down. Prices ex-U.S. go up. Plus, the U.S. pursuing another oil tanker off the coast of Venezuela, and President Trump's top economic advisor Kevin Hassett weighing in on the Supreme Court's tariff ruling. There are other mechanisms with which the White House has the ability to implement tariffs they can. What we're talking about is how these were implemented this time. It's Monday, December 22, 2025. It almost is like, oh. Squawk Pod begins right now.

1:28Stand by Joe in three, two, one. Here's Mike. Oh, I like that new CNBC logo. I guess I missed that last week. Good morning and welcome to Squawk Box here on CNBC. I'm Joe Kernan. Said in the prompt, I was Andrew Ross Sorkin. I quickly picked up on that. I know that I am not because I don't have a jacket on. Becky is off today. U.S. officials tell NBC News the Coast Guard is pursuing a sanctioned ship in international waters off the coast of Venezuela. If it's caught, it'll be the third vessel that the U.S. has intercepted in the Caribbean. On Saturday, an operation stopped a ship that the White House said was carrying sanctioned oil.

2:13And last week, President Trump ordered a blockade of sanctioned oil tankers entering and leaving Venezuela. the U.S. seized a ship called the Skipper earlier this month off the coast of Venezuela. And I'm back, Andrew, and I was going to my lead in being back here. Yeah. Let's see, I was gone for, I think, eight or nine days. Four of those days I was driving. And a couple of times it was more than 10 hours per day because I went down south. So my lead to you is that gas is$2.50 a gallon everywhere I filled going down south. So I think South Carolina averaging$2.50 or so. But that was notable to me.

2:59I don't know what happens as far as affordability goes. But gasoline is cheap right now. If you are traveling, it's a lot cheaper to be able to travel. And you can still get some great food at a lot of the gasoline stations because you go into a Flying J's or a Pilot. Well, I don't know if you've done that recently. You travel a little, don't you? You've got to look for charging stations, though, which is a pain in the ass trying to find those things. I do not have to look for charging stations. Not yet. I just have to look for McDonald's. I have to look for McDonald's. Did you really? Because we do.

3:37That's not hard to find if you're in the right. It is unbelievable how many Mickey D's there are around. The French fries, the French fries. They're awesome. And if you can't find a McDonald's easily, suddenly you see in the distance. Those golden arches and it almost is like if you if you've been looking for one. Right. And then it appears. And there they are. What a great what a great logo. Well, how are you? Welcome. Have you been have you been getting along? OK, I haven't I haven't watched that. I like the new logo. When did we get when we missed you? We got a new logo. You can see the logos everywhere.

4:21We got one behind me right now. I mean, they're everywhere. We got the new logo last Monday. And I'm digging the new logo because I feel like it's it's forward looking. It's sort of about where we're all going. The new Versant spinoff is happening. Also backward looking because it looks like very similar. It harkens back to before we had the Peacock, you know, back in the, God, when was that? I guess back in the 90s, back in the 90s. It had a, I still have shirts, believe it or not, with some of those logos on it. But so it's forward looking and backward looking. It's nice. Well, you've got I'm looking only forward.

5:03I'm only looking forward as my is my hope. Always. But you can't look forward. You can't. You got to remember the past to approach the future in a good way, I think. As long as we're not relitigating the past. But, yes, I what are we going to do on this show then? whenever you bring up... What if you bring up statism or I'm going to bring up everything Biden did and you're going to bring up everything that Trump's doing. I've seen you doing it on every network available to mankind. Right? We're like China. Didn't you say we're like China now or something? What did you say? You've never seen anything like this?

5:47We're like China? You're following me now on Twitter. which I like. I appreciate that. No, I made a comment last week. I'm sure somebody else forwarded to you. Yes, I know you can bring yourself to watch what I say on Twitter. Right. No, the comment I had made was just about how we have moved into some kind of form of almost like a state-sponsored capitalism kind of program. I had a lot of thoughts on that. We can talk about it. Democrats normally love socialism, except when it's seen to be coming from a Republican. And Republicans hate socialism unless the Republican president is. So the hypocrisy is still there.

6:34The only thing I would say is that looking at the way the Biden administration handled the statism with, you know, mandatory child care, mandatory DEI hiring, caps. a mandatory transition to energy. All those things are bad for companies. I think that Trump, and I'm not saying it's good that the government's so involved, but at least Trump is more of a partnership to try to help capitalism instead of trying to get in the way every step of the way. I like this brand of statism more. I know you do. I know you do. The only point that I was trying to make was maybe a broader point, which is that in China, for example, every business decision to some degree is, it's not necessarily that it's funneled through President Xi, but the CEOs of every company are thinking about Xi and are thinking about sort of the regulatory framework and what the president wants and whether it will be approved of or not approved of or be looked upon favorably or not looked upon favorably or that they're, all of those things.

7:44And that that whatever that is, that sort of in the head that every major business leader is thinking about. And they they do that now of of this president in this White House. Right. That that is it. That is different. I don't think under previous presidents and now I'm even thinking of Democrats. Right. That they thought so much about what the president wanted in any given moment. Because the president was putting up obstacles to growth for corporations. Maybe if we do it that way, we can get the 5 % or 6 % GDP like China has done so typically. In fact, that's what we're going to get next year.

8:27I don't know whether you saw that, but that's what the president's press secretary says. I think it's actually slightly different. I think that the rationale for that is more out of fear, which I think is different than before, which is to say, I think a lot of what took place with the law firms earlier in the year and the universities and the, you know, ABC and Disney and all the different sort of corporate, the intel. I think all of that is what makes business leaders today think about sort of being in the favor or out of the favor of the president in a way that they didn't before. And I don't think they thought about that in the context of previous presidents at this level.

9:06Oh, my God. I think you'd agree with that. Try to get a permit for a pipeline if you don't think people were fearful of things. Oh, sure. Oh, I think people always wanted to get a permit. But I think not in the same way. I think it's a different, philosophically it's different. There's a, it's not, yes, people always wanted to get a permit to get a pipeline. But it's well-intentioned. If you're not going to build things here and try and help make America great again, then you need to be fearful. It's a different way instead of actually putting up impediments to corporations because they're greedy profit mongers that get taxed.

9:46It's a whole different rationale. I think it's a whole different rationale. And I like this, as I said, I like this much better. I know you like this better. I know. And maybe it will. But it's not perfect because I don't like I don't like trying to prop up losing companies. But at least we got I'd rather have a stake in it than just give it to them if they have child care and hire union workers. I mean, that's that's even. And you don't think that the social media companies were afraid of the Biden administration if they were to print something about the laptop. You don't think they were afraid of companies.

10:17They were going to say something about about the vaccines or the lab origins. They were petrified. Yes, but I think in a different way. In a bad way instead of a good way. We're going to agree to disagree. President Trump's top economic advisor saying he doesn't think the Supreme Court is going to call for widespread refunds, even if justices rule against the president's tariff regime. Speaking on CBS's Face the Nation, National Economic Council Director Kevin Hassett saying that refunding tariffs would create an administrative problem. The people who pay the tariff, if there is a refund, the people who actually paid.

10:55for the good, the importer in most cases, they're the ones who'd be the first line of defense for refunding the tariff. But I really, really don't think that's going to happen to be very complicated. And then that person would be responsible for allocating the tariff refund to the appropriate folks. Now, the Supreme Court could rule on the president's tariffs as soon as next month. There had been an expectation, Joe, that we might have even gotten a decision. Some people were talking about last week. Some people talked about this week. I think at this point, the census, it's off the table pre-Christmas, but perhaps we'll hear something in early January.

11:28So many things along those lines, Andrew, that I saw. And is the deficit really down$600 billion? That's interesting to watch. I don't know what, are they massaging the Supreme Court? When that came out, initially it looked like the Supreme Court was skeptical of the tariffs, But then again, there were some questions that were like, if you can put a trade embargo on a country, you can't put a 10 percent tariff on a country. There were questions about that as well, which which was was interesting. Something else I was thinking about that happened. I don't know. We live in a on the tariff front.

12:08I think the question is, I think it's possible the Supreme Court can strike down parts of this on the view that you can't do it just across the board. I mean, I think that's going to be that's part of the issue. But maybe you do it prospectively, meaning prospectively so that you're not getting into the refund issue is a real issue. That would re-scramble the economy. It would create all sorts of new uncertainty. So maybe if you were to if you decided for whatever reason that you didn't think the president had the full rights to do what he did in the way that he did it. And that's the issue. It's not.

12:40You're right. There are other and the president's talked about it and the Treasury secretary's talked about it. there are other mechanisms with which the White House has the ability to implement tariffs they can. What we're talking about is how these were implemented this time. Investor Bill Ackman, one in the center, not me, wants to help Elon Musk, or suggesting maybe that he could help SpaceX take SpaceX public in weekend post. On X, Ackman suggested that Musk merge SpaceX with a special type of acquisition company that Ackman's firm created. And under the plan, Ackman said that Tesla shareholders could receive so-called SPARS, those are special purpose acquisition rights, so that they could participate in SpaceX's IPO down the road.

13:29According to Ackman, this would reward loyal Tesla shareholders with the opportunity to invest in SpaceX or with cash for their SPARS, while totally democratizing the IPO process. Reports have said that SpaceX is gearing up for a possible IPO next year. Ackman also floated the idea of certain investors in the transaction receiving rights to be able to participate in a future IPO of Musk's AI company, XAI. Andrew. What do you think of that, Joe? I'm not sure. I'm not, I mean, just with what I read, sounds good. I guess, to have a chance to participate if you're loyal. I don't know. We can't do it.

14:16It would be really interesting to see what would happen. Yeah. I don't know. I don't know. I think there'd be a lot of people who'd be interested, though. Next on Squawk Pod, the latest in the battle for Warner Brothers' discovery. Paramount has updated its offering for the legacy assets, attempting to outbid Netflix. Netflix. Key investor and strategic partner Jerry Cardinal of Redbird Capital took to our airwaves to make his case. When you get off the set, are you expecting to get a phone call from somebody from the board of Warner Brothers? It doesn't matter. We've gone directly to the shareholders.

14:51It would be great, but we've also gone directly to the shareholders, and thank God there's rule of law in this country. Cardinal warns there won't be a seventh bid unless the sixth one has been vetted. Like we've done through the six bids that we've made, we are being responsive to what their concerns are.

15:14This is Squawk Pod today with Joe Kernan and Andrew Ross-Sorkin. We do have some breaking news that we need to tell you about. Literally crossing the tape as we speak, Paramount Skydance amending its$30 per share all cash offer for Warner Brothers Discovery in response to WBD's concerns about the bid. Paramount is still offering to buy 100 % of the outstanding shares of WBD and assume all of the assets and liabilities. The per share offer price is not changing. It does not appear to be. But Paramount says in response to a Warner Brothers filing and comments made by WBD's principals and advisors in some television appearances, including right here on Squawk Box, that it's now going to amend its offer in six different ways.

16:02And I want to walk you through what they're saying here, because it's really quite interesting what they're going to do here. The first, Larry Ellison is now going to provide an irrevocable personal guarantee of$40.4 billion of the equity financing for the offer and any damage claims against Paramount. You may remember that was a big issue that the board of Warner Brothers has talked about, saying it was in this revocable trust. So Ellison now saying he will not revoke the Ellison Family Trust or adversely transfer its assets during the transaction. The other pieces of this, Paramount now saying it's publishing records confirming the Ellison Family Trust owns approximately 1.16 billion shares of Oracle Common stock and that all material liabilities of the Ellison Family Trust are publicly disclosed.

16:57That was also an important point because WBD's board had had some questions about how much money was actually in these trusts. Then Paramount now saying it's revised its agreement offers improved flexibility to WBD on debt refinancing transactions, representing an interim operating covenant. So that's another piece of this. And then Paramount also saying it plans to increase its regulatory reverse termination fee. So that fee now going to go from$5 billion to$5.8 billion. That effectively matches the fee that Netflix would pay if, in fact, the government or regulators were to block the deal. Lastly, the offer is now conditioned on WBD continuing to own 100 percent of its global networks businesses.

17:46And that is important because it touches upon what's going to happen if, in fact, Warner would try to spin something out early. Jerry Cardinell is here. He's the founder and managing partner at Redbird Capital Partners, of course, a partner in Paramount Skydance. Jerry, it's great to see you this morning. And thank you for coming in to talk to us about these changes in the offer. As we mentioned, the price tag not changing, but some important details are, including perhaps most importantly, the backing of Larry Ellison and him now making this a personal guarantee as opposed to a revocable trust.

18:25Tell us about your thinking about the various parameters and different things in this new amended offer. Well, look, you make a really good point. We've been trying to get our offer vetted since we submitted it December 4th. And, you know, this is a pretty simple thing. It's about shareholder value and it's about certainty. In fact, when we talk to Warner Brothers shareholders, they point out two things. One, why is this so hard? It seems pretty straightforward. And two, why would they go exclusive with Netflix so quickly when you see these two offers lined up next to each other? We still have not been able to talk about shareholder value here.

19:04We're talking about all these other things. And so what we've done in this amended filing is we've cleared the brush. on all the obfuscation around the offer. And the big one that has been percolating, by the way, we only found this stuff out in their 14D9 filing this past week. And so like we've done through the six bids that we've made, we are being responsive to what their concerns are. The big concern was that Larry Ellison and his family is not money good for this transaction. And so we've come in and said that, okay, Larry will give a personal guarantee on the equity financing for this transaction,$41 billion.

19:46What we did when they asked us between our fifth bid and our sixth bid, they asked us to backstop. And so the Ellison family and Redbird backstopped it. And we did it through the Ellison family trust. The Ellison family trust, which has been around for close to 40 years and has been the counterparty in tens of thousands of transactions, including the Paramount Skydance deal. That is where all the assets resides. That's where, and it's got$250 billion of assets in there anchored by 1.2 billion shares of Oracle. That's over six times coverage of the 40 billion in equity that we're backstopping. But that seems to be the sort of red herring that is out there and preventing our offer from getting vetted and taken seriously.

20:32So we took it off the table. It is now off the table. All right. The second thing Just before you go there, one question on that front. Had they not told you? Are you suggesting prior they had never raised this as an issue in terms of the revocable trust and the guarantees? We are still waiting to get a response on our December 4th offer. Full stop. We found out about these things in the 14D9 filing. And so that is why we went to shareholders. You know, the shareholders own this company. And so we went to them directly because it's clear when you look at our offer and you look at Netflix's offer, our offer, just to reset the table,$30, all cash, 100 % of the company, and a clear path through regulatory.

21:17The Netflix offer is you need 3D glasses to understand it. It's got Netflix stock, which is blown through the bottom of the collar. And it also has another currency, another stock that is to be issued. That is the stock of the spin-out company. and you know and and i think the the chairman of the warner board came on one of your shows last week saying that that is three to five dollars a share i'm a math guy all the people on our side are math guys that's not three to five dollars a share it's a dollar a share when you look at what they've levered it with 15 billion dollars of leverage on tbs tnt cnn uh and uh you know the only independent variable there is what does it trade for for it to trade at three dollars a share you'd have to assume a six times multiple, right?

22:03We're assuming, we're giving them the benefit of the doubt and assuming the same multiple that your versant is trading at, which is four and a half times. At four and a half times, the math is the math. The EBITDA is the EBITDA. The leverage is the leverage. It's a dollar a share. Gary, our versant needs, should be trading at six. I'm sorry. Well, I, you know. No, I'm kidding. We can debate on that. Sorry, yeah, sorry. Sorry to interrupt. That's all right. But the thing on the stub that's really interesting is everybody, We can't even talk about these. We have not been able to talk about these issues.

22:32And so no one talks about, on the Warner side, no one talks about the value of the stub. But here's the interesting thing. It doesn't stop at the value of the stub. If that is over levered, that spin out will not be able to happen. And if that is the case, then that$15 billion of debt is going to need to be reallocated over to studio and streaming. So just for the sake of argument, let's say, you know, Versin trades at 1.2, has 1.25 times leverage, trading at four and a half times, right? At$15 billion of debt, you know, this spin out is close to four times leverage. So let's say we take 5 billion of that debt out of the 15 and we move it over to studio and streaming.

23:11That still reduces it only to two and a half times leverage. That's still double what, you know, Versin has. But nevertheless, just illustratively, let's say we do that. What will end up happening is that that will squeeze the amount of cash that Warner Brothers shareholders get in studio and streaming. So what effectively will happen, if you move$5 billion of debt over from the spin co over to studio and streaming, Warner Brothers shareholders will be effectively exchanging$2 a share in cash for$2 a share in equity in the spin co, which is a declining asset. That's dead on arrival. That is a disaster.

23:49And that unwinds this entire deal. You don't have to do any of that extrapolation. You don't have to deal with two stocks, two currencies, one to be issued, let alone us before we get to the regulatory risk. Our regulatory risk is straightforward. Our deal creates competition. The Netflix deal kills competition. Netflix buys HBO Max. It's 420 million streaming subscribers. The next number two is Disney Hulu at 184. No wonder the constituents in the ecosystem, talent, content creators, theatrical exhibitors, are losing their minds on this because they see the pricing power that that will create, and hence they see what's coming, which is everybody in the value chain is going to get squeezed.

24:29That is not good for Hollywood. What is the rationale for Warner Brothers board and David Zaslov? Why? Why favor the Netflix deal? Honestly, does David want a job? He wants to run the studio? What is the reason? It's a great question, and it's the question that I get from Warner Brothers shareholders. No one knows other than, look, when we, you've got to remember, our first three offers here got the board to put the company up for sale. So I think we were always a little bit on our back foot because they were originally spinning the companies, breaking it up. And, you know, we came in and our offers were for 100 % of the company.

25:07And I think it just got them to put the company up for sale. So we were always a little bit on the back foot. But at the end of the day, Joe, you know, the shareholders own this company. The board doesn't own it. David Zaslav doesn't own this company. And this should be a lot. I wonder where the shareholders are right. This should be a lot more simple than it is. It's very simple. It's shareholder value and it's certainty of closing. You said the regulatory path is clear. Is that because of the president's relationship with the Ellisons? No, absolutely not. Look, we have a great relationship on both sides of the aisle.

25:36The relationship I focus on and that David Ellison focuses on is our relationship with the rules. And the rules here are pro-competition, pro-consumer. This deal, if we come together, Paramount Plus and HBO Max, you will create a three-horse race in streaming. The North Star on this entire investment is direct-to-consumer and streaming, and we will create a three-horse race. Netflix, our pro forma company, and Disney. That is great for the entire value chain. Can you figure out why Netflix wants it so badly in that it doesn't help with what the future competition for Netflix is? Look, I mean, you know, when I see the elements in the value chain, the talent and the content creators and the theatrical exhibitors, you know, all expressing these concerns.

26:21And yet some of them are afraid to raise their head above the parapet for fear of retribution. That suggests monopolist to me. Right. And so, you know, guys are in this position. Monopolies, they want to, you know, kill competition. And look, I mean, that's that's why we have these rules. That's why we have rule of law. That's why we're going direct to the shareholders. So I can't speak for any of that. All I can speak to is the facts, and the facts, it is absolutely clear. At a minimum, there needs to be a vetting of these two offers. There needs to be a discussion on value. There's never been a discussion on value.

26:52It's been about all this other stuff. What we did today in this announcement is we took all that other stuff off the table. And not only did we address the backstop and the personal guarantee, there was an issue around the revocable trust. And so Larry has also agreed to not revoke the trust during the pendency of this transaction. He's confirmed what the assets are in the trust, anchored by the 1.2 billion Oracle shares, as well as confirming no material liabilities. We've agreed that we will embrace further flexibility in terms of interim operations between signing and closing, including in discussions with their bondholders and their banks.