Larry Ellison Personally Guaranteed $40.4 Billion of His Son's Warner Bros. Discovery Deal. Now 12 States Have Sued to Block It, and Oracle Stock Has Fallen 34% This Month.
Larry Ellison's fortune, Oracle's stock, and Hollywood's biggest merger are now deeply intertwined -- and investors should understand why the outcome could matter far beyond the entertainment industry.
Overview
This is one of the most tangled stories in business right now. Oracle (NYSE: ORCL) founder Larry Ellison put an irrevocable $40.4 billion personal guarantee behind his son David's bid to buy Warner Bros. Discovery (NASDAQ: WBD). Now two forces are squeezing that bet at once: a wall of legal opposition, and a crash in the stock that underpins Ellison's fortune.
Larry Ellison. Image source: Oracle Corporation.
Ellison agreed to personally backstop $40.4 billion of the equity financing for Paramount Skydance's (NASDAQ: PSKY) roughly $110 billion offer for Warner Bros. Discovery, an extraordinary show of confidence in his son's media ambitions. But the deal has met fierce resistance. A coalition of 12 state attorneys general has sued to block the merger, arguing that combining two of Hollywood's top five studios would throttle competition in theatrical distribution and cable licensing, and leave consumers with higher prices and fewer films. It is the sharpest challenge yet to one of the largest media mergers in history.
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Originally published at www.fool.com.