The 6 biggest reveals from WBD's filing on why it rejected Paramount

• Warner Bros. Discovery has urged shareholders to reject Paramount's offer in favor of Netflix's bid.
• A new filing gives inside details of the bidding war, including Larry Ellison's involvement.
• We break down the top six takeaways from the filing about the messy and dramatic bidding process.

Warner Bros. Discovery didn't just reject Paramount again on Wednesday. It also pulled back the curtain on what the bidding war was like behind the scenes.

WBD advised shareholders to dismiss Paramount's $30-per-share offer for the company and stick with Netflix's bid of $27.75 per share (for only its studios and streaming business). In a filing, WBD's board called Paramount's latest bid inadequate, with significant risks and costs imposed on shareholders compared to Netflix's bid, which it said offered superior value and more certainty.

Some of the information in the filing has already been made public, but it revealed some juicy bits that haven't been reported.

Here are the top six takeaways:

1. David Ellison pulled the dad card early on

Right after WBD rejected one of multiple secret bids in September, David Ellison called Warner Bros. CEO David Zaslav to request that Zaslav meet with Larry Ellison. The conventional wisdom was that the Oracle cofounder's billions would prevail. In the end, that didn't happen. WBD expressed concern that the bid relied on a revocable trust, whose assets or liabilities were subject to change.

2. A zealous Paramount pulled out all the stops to woo Zaslav

We already knew Zaslav stood to make over $500 million from a Paramount deal, based mainly on his shares that would vest immediately after it closed ($567,712,631, to be exact, according to the filing). Zaslav told the WBD board that the Ellisons had "indicated to him that" if a deal went through, he would "receive a compensation package worth several hundred million dollars," per the filing. Zaslav responded that it "would be inappropriate to discuss any such arrangements at that time," he told the board.

Paramount also offered Zaslav the position of co-CEO and co-chairman of the combined company, a role Netflix didn't offer, the filing said.

That runs contrary to the narrative put forth in a letter Paramount's attorneys at Quinn Emanuel sent to WBD, stating they suspected the process was biased in favor of Netflix due to WBD leadership's expectations that there could be roles for them at the new company. Paramount's legal and financial advisors didn't know about the "December 3 Quinn Emanuel" letter and, in their view, the letter should not have been sent, was "not helpful," and was a "mistake," the filing says.

3. WBD had not one but two companies interested in its declining cable assets

The filing revealed the presence of a fourth, previously unknown bidder in the process, "Company C," which proposed acquiring Warner Bros.' cable channels and 20% of its streaming and studio businesses for $25 billion in cash.

Multiple outlets reported that Company C was Starz. Business Insider was unable to independently confirm that. Starz declined to comment.

WBD determined that the Company C bid was "not actionable" and continued to work with Netflix, Paramount, and "Company A" (clearly Comcast).

4. Banking is a good business

Some of Wall Street's marquee names — Allen & Co., J.P. Morgan, and Evercore — are set to make a total of $225 million in connection with WBD's sale to Netflix or Paramount, if a deal goes through, according to the filing.

The good times are poised to continue: Media and telecoms M&A deal value rose 61% in the past year, excluding the announced WBD sale, and the momentum should keep going in the years ahead, helped by investor appetite for valuable IP, according to PwC.

5. The Middle East money wasn't a dealbreaker

The Ellisons wanted to use $24 billion from Middle Eastern sources to fund their bid. That would seem to raise a whole host of concerns, not the least of which is that they'd be buying CNN and some of that money would come from Saudi Arabia's government, which US intelligence said killed a Washington Post journalist in 2018.

However, as Business Insider's Peter Kafka wrote, the issues WBD says the foreign money raised were "presented as technical hurdles" and "not moral or patriotic dealbreakers."

6. So much for regulatory concerns

A big question around the dueling bids was which company would have a better chance of surviving regulatory scrutiny.

Both Paramount and Netflix made their cases, arguing that they'd sail through the process, while the other bidder would encounter issues.

Paramount said a Netflix-Warner Bros. deal would harm consumers and Hollywood talent. Netflix is by far the largest paid subscription streamer, and it would become even stronger with the addition of WBD's studio assets, including HBO and the well-stocked Warner Bros. library. Netflix, for its part, has argued that a combination of Paramount and WBD would actually be larger than its own proposed new entity, as measured by total US TV viewing time.

None of this seemed to be a chief concern for the WBD board, though.

"The WBD Board further took into account advice of WBD's regulatory advisors that regulatory risk was not a material differentiating factor between" the Paramount and Netflix proposals, the filing said.

The wild card is Trump, though, who has close ties to the Ellisons but hasn't come down firmly on either side publicly.