Paramount Explores Elon Musk Equity Stake in Warner Bros. Discovery Merger

Paramount executives have discussed bringing Elon Musk on as an equity investor in the company’s planned $110 billion merger with Warner Bros. Discovery, according to a Semaform report. The size of any potential investment remains undetermined, and a Paramount spokesperson declined to comment. Musk did not respond to a request for comment.

The talks come as David Ellison, the son of Oracle co-founder Larry Ellison, works to secure financing before the merger closes. Larry Ellison has personally guaranteed more than $40 billion of the equity financing backing the acquisition. An investment from Musk would help ease that financial burden and diversify Paramount’s investor base, according to the report.

The relationship between the two businessmen runs deep. Larry Ellison invested in Tesla in 2018 and served on its board of directors until stepping down in August 2022. He also committed $1 billion to Musk’s $44 billion acquisition of X, formerly Twitter, in 2022.

The prospect of Musk taking a stake has rattled staff at CNN, which is owned by Warner Bros. Discovery. Employees are already bracing for layoffs and uncertainty about leadership once David Ellison takes control. “Amazing it comes out now of course,” one CNN source told Semaform, pointing to the awkward timing for California Gov. Gavin Newsom, who supported the merger to keep Paramount jobs in the state. “Not good for Gavin!” Another source said: “It’s really scary given what he did at X and DOGE.”

At CBS News, David Ellison installed Bari Weiss as editor-in-chief after his company Skydance acquired Paramount. She has drawn criticism for firing longtime “60 Minutes” correspondents and for her oversight of the newsroom’s coverage, according to Semaform.

The merger recently cleared its final major regulatory hurdle. Paramount reached a settlement with California Attorney General Rob Bonta over his antitrust lawsuit. NDTV Profit reported that the agreement involved 12 state attorneys general, removing the legal block days before Paramount would have begun paying a $7 million daily “ticking fee” from October 1.

Under the settlement, Paramount agreed to spend an additional $1.5 billion on domestic production over five years. The company must release 30 films in theaters annually, rising to 32 after two years, including at least 20 wide releases and four independent films. If Paramount misses any of those targets, it must sell Miramax Studios and pay $30 million for each film it comes up short. The settlement also requires Paramount to negotiate cable deals separately and commits it to raising domestic production from 5% of all films to 20% or even 30% if Congress passes certain tax credits. The agreement created a News Editorial Independence Board for CBS News and CNN, though its powers have not been spelled out. Layoffs were not addressed.

TheWrap reported that the merger’s $47 billion in equity financing includes contributions from three Middle Eastern sovereign wealth funds and the LionTree Investment Fund, which will have no board seats or governance rights. Foreign investors will own 49.5% of the non-voting equity, with the Saudi Public Investment Fund taking a 15.1% stake, the United Arab Emirates’ L’imad Holding Company a 12.8% stake, and the Qatar Investment Authority a 10.6% stake. The FCC has given advance approval for these investors to hold up to 20% each of indirect equity in the future. The remaining foreign equity includes passive limited partner investors in RedBird Capital Partners funds (5.8%) and foreign-based holders of Class B stock (5.2%). Debt financing of $54 billion is committed from Bank of America, Citigroup and Apollo.

If completed, David Ellison will control HBO Max, Paramount+, HBO, CBS, CNN and thousands of film titles, making him one of the most powerful figures in American entertainment. Semaform reported that an investment from Musk would be a significant vote of confidence from a businessman with a devoted retail investor following. “A check from Musk or other big financial backers would also give Paramount a more diversified investor base, and reduce Larry Ellison’s financial burden,” Semaform business reporter Rohan Goswami said.

The potential involvement of Musk, who led the Department of Government Efficiency under the Trump administration, could have political implications. “The possibility of him having even partial ownership in CNN and CBS would likely raise alarm bells in Washington, even though it is unlikely Musk would have formal input over the company’s operations,” Goswami wrote in Semaform.