Leaked Audio: Warner Bros. Discovery CEO David Zaslav Tells Employees Paramount Deal Felt 'Whiplash-y'

Warner Bros. Discovery's CEO pitched employees on its impending Paramount Skydance deal, after spending the last few months arguing against it in favor of the now-nixed Netflix deal.

via: The Mirror

Warner Bros. Discovery's CEO, David Zaslav, was heard describing the rapid transition to a merger with Paramount Skydance as "whiplash-y" in a leaked audio clip.

The 66-year-old media executive made the comments during a town hall on Friday, following a sudden reversal in which WBD's board deemed Paramount's latest offer to buy the entire company for $31 per share was superior to the agreement it had previously struck with Netflix. Warner gave Netflix four business days to come up with a counteroffer - but Netflix instead responded less than two hours later, declining to raise its proposal. It said the new price it would have to pay made the deal "no longer financially attractive."

Zaslav admitted on a call with employees - a recording of which was obtained by Business Insider - that the switch from Netflix to Paramount "all happened very quickly" and that the leadership team is still "getting our bearings." He commented, "It feels a little whiplash-y."

He argued that teaming up with Paramount is essential for WBD's survival in a market where competitors are becoming large enough to "run us over." The CEO said, "I think together, we can be a great company. We're getting bigger, and we're getting stronger."

"If Warner Bros. is going to survive, then we needed to be bigger, and we needed to be global," Zaslav said. The CEO noted the merger could take six to 18 months to close - if it closes at all - due to intense antitrust scrutiny.

If regulators block the deal, WBD is reportedly entitled to a $7 billion reverse termination fee from Paramount, he said. On Thursday, Netflix announced it would step back from its offer to buy Warner Bros. Discovery's studio and streaming business, in a stunning move that effectively puts Paramount in a position to take over its storied Hollywood rival.

Netflix co-CEOs Ted Sarandos and Greg Peters said in a joint statement on February 26, "We believe we would have been strong stewards of Warner Bros.′ iconic brands. But this transaction was always a 'nice to have' at the right price, not a 'must have' at any price."

A Paramount buyout of Warner Bros. Discovery would reshape Hollywood and the wider media landscape. And unlike Netflix - which was only eyeing Warner's studio and streaming business - Paramount wants the entire company. That means HBO Max, cult-favorite titles like Harry Potter and even CNN could soon find themselves under the same roof as Paramount's CBS, Top Gun and the Paramount+ streaming service.

The prospect of such a combination, which will still need the green light from both Warner shareholders and regulators, poses both antitrust concerns and questions of political influence. Netflix's decision to walk away on Thursday marks the latest development in a months-long, messy corporate battle over Warner’s future. Sarandos and Peters thanked Warner's leadership despite the final outcome.

Warner had repeatedly backed the deal it struck with Netflix since December right up until Thursday evening, when its board continued to recommend Netflix even while calling Paramount's bid valued at about $111 billion including debt "superior." Netflix had previously put a $27.75 per share offer on the table for Warner's studio and streaming business, totaling nearly $83 billion including debt.

In a statement Thursday night, Zaslav said Netflix executives had been "extraordinary partners" and that he wished them "well in the future." Warner's board hasn't officially adopted Paramount's merger agreement yet, but once it does, Zaslav said it "will create tremendous value." He added that the company was "excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery."