David Ellison's hunt for WBD made David Zaslav richer — and it may not be over

This isn't precisely what David Ellison had planned successful September.

Just a fewer months ago, the Paramount Skydance CEO sent a missive to the Warner Bros. Discovery committee of directors arguing a operation of the 2 media and amusement companies made sense. That missive was the archetypal of respective that offered progressively higher prices to get the institution on with arguments of wherefore the assets were amended together.

Paramount's involvement spurred a formal merchantability process — bringing Comcast and Netflix into the premix — which yet doubled the worth of Warner Bros. Discovery shares and culminated, astatine slightest for the moment, successful Paramount losing retired successful the bidding warfare it started.

On Friday, Netflix announced a deal to get HBO Max and the famed Warner Bros. movie workplace for $27.75 per share, oregon an equity worth of $72 billion. WBD volition determination guardant with a program to abstracted retired its pay-TV networks, specified arsenic CNN and TNT Sports, earlier the woody closes.

Instead of supercharging Paramount, conscionable months aft gaining power of the institution done a merger with Skydance, Ellison efficaciously handed a prized jewel of the media and amusement manufacture to its astir ascendant player, strengthening Netflix's scope and stripping Paramount and Comcast's NBCUniversal of an evident merger target.

"It wasn't for merchantability before, and they surely hadn't cleaned up the assets oregon separated the assets successful the mode they person close now," said Netflix co-CEO Ted Sarandos successful a league telephone Friday greeting aft announcing the deal. "I deliberation that benignant of goes to the 'why now.'"

Ellison jump-started a process that has made a batch of wealth for Warner Bros. Discovery CEO David Zaslav, WBD's enforcement squad and its shareholders.

Zaslav presently owns much than 4.2 cardinal shares of Warner Bros. Discovery, with different 6.2 cardinal shares that would beryllium delivered to him successful the aboriginal via antecedently granted banal awards, according to Equilar. Zaslav besides has a assistance of astir 20.9 cardinal options with an workout terms of $10.16, Equilar found.

Based connected the Netflix-WBD transaction terms of $27.75 per share, each of that adds up to much than $554 cardinal for the WBD CEO.

Factoring successful different 4 cardinal shares that Zaslav is acceptable to person successful January, according to a idiosyncratic adjacent to the concern who declined to beryllium named speaking astir the executive's holdings, the existent full is person to $660 million.

For shareholders, the merchantability process has brought a akin windfall. Warner Bros. Discovery banal closed astatine $12.54 connected Sept. 10, the time earlier The Wall Street Journal reported Paramount was preparing a bid for the company.

On Friday morning, Warner Bros. Discovery shares were up astir 3% to much than $25 apiece. That's much than treble Warner Bros. Discovery's unaffected merchantability process terms and a instrumentality to 2022 levels erstwhile WarnerMedia and Discovery archetypal merged.

That's vindication for Zaslav, who has spent astir 4 years coming nether occurrence from Hollywood and investors for failing to present for shareholders. With Friday's announcement, he's efficaciously pulled triumph from the jaws of defeat.

And still, Paramount is apt not done with its pursuit of buying each of Warner Bros. Discovery.

Ellison has wasted nary time astatine the helm of Paramount Skydance, transforming the institution done deals and acquisitions.

Since the merger closed successful August, Paramount has brought connected C-suite executives and high-profile Hollywood endowment specified arsenic the Duffer Brothers. It secured the rights to make a live-action diagnostic movie based connected Activision's Call of Duty video crippled franchise and struck a $7.7 cardinal woody for UFC rights.

Ellison's hunt for Warner Bros. Discovery was his biggest endeavor since taking power of the company.

Paramount's lawyers sent a missive to Warner Bros. Discovery this week, archetypal reported by CNBC, claiming the merchantability process had been rigged successful Netflix's direction. Paramount has accused Warner Bros. Discovery of failing to decently see its connection of $30, all-cash, and alternatively selling to Netflix arsenic a predetermined outcome.

Netflix made an archetypal bid for WBD's workplace and streaming assets of $27 a share, according to a idiosyncratic acquainted with the matter. That trumped Paramount's connection astatine the clip and turned the trajectory of the income talks successful Netflix's direction, said the person, who asked not to beryllium named due to the fact that the discussions were private.

Paramount was the lone bidder funny successful acquiring each of WBD's assets — the movie studio, streaming work and TV networks. It has maintained that its connection is superior.

Paramount's executives and advisors valued the Discovery Global networks portfolio astatine adjacent to $2 a share, based connected its predicted trading aggregate and estimated leverage ratio, according to radical acquainted with the matter, who asked not to beryllium named due to the fact that the discussions were private. Discovery Global would see the CNN, TNT Sports and Discovery channels.

Warner Bros. Discovery believes Discovery Global could person a worth of $3 per stock oregon much if it trades good successful the nationalist markets, according to different radical with nonstop cognition of the matter.

Paramount has besides argued determination are taxation efficiencies for shareholders successful acquiring the full institution alternatively than buying lone a information of it, and that Netflix's bid comes with steeper regulatory risk. The Trump administration's presumption of the projected operation is 1 of "heavy skepticism," CNBC reported Friday.

Paramount offered a break-up interest of $5 cardinal if the projected woody didn't get regulatory approval, according to the radical familiar.

Netflix's bid included a $5.8 cardinal break-up interest successful lawsuit the woody doesn't get regulatory approval, according to a Securities and Exchange Commission filing Friday.

Paramount is present weighing its options astir whether to spell consecutive to shareholders with 1 much improved bid — possibly adjacent higher than the $30-per-share, all-cash connection it submitted to WBD this week.

If it does, Netflix would person a accidental to lucifer that bid. The extremity effect would mean adjacent much wealth for WBD shareholders — and much wealth for Zaslav.

— CNBC's Nick Wells contributed to this report.

Disclosure: Comcast is the genitor institution of NBCUniversal, which owns CNBC. Versant would go the caller genitor institution of CNBC upon Comcast’s planned spinoff of Versant.