Middle Eastern money raised questions about Paramount’s WBD bid — but that’s not why Netflix won

• Warner Bros. Discovery is telling shareholders to reject an offer from Paramount and to stick with Netflix.
• The fact that the Paramount proposal included $24 billion from Gulf states complicated the deal.
• But that's not why WBD rejected Paramount.

Larry and David Ellison, who own Paramount, want to use $24 billion in Middle Eastern money to finance their bid for Warner Bros. Discovery. Is that a problem for WBD?

You might think so — especially since $10 billion of that came from the Saudi government. That's the same government that US intelligence said killed a Washington Post journalist in 2018. The kind of partner you might think a major American media conglomerate would want to keep at arm's length.

But that's not a problem WBD raises in its newest communication to shareholders, where it urges them to take the deal offered by Netflix instead.

What actually worries WBD about the Ellisons' bid isn't the Ellisons' particular partners. It's that the Ellisons had partners.

In a regulatory filing that tells the backstory of the proposed WBD sale, WBD execs and their reps repeatedly told the Ellisons they wanted a firm commitment that Larry Ellison — currently the world's 5th-richest man, with an estimated net worth of $243 billion — would guarantee the deal himself.

Instead, WBD argues, the Ellisons never gave them the assurances they wanted.

The filing does bring up the fact that money from Middle Eastern sovereign wealth funds would likely complicate regulatory issues for a proposed Ellison/Paramount deal. (Ditto for a proposed $1 billion investment from China's Tencent, which the Ellisons later took out of their proposal.) But those are presented as technical hurdles. Not moral or patriotic dealbreakers.

And they're just part of a laundry list of complaints WBD makes about the Ellisons. Among them: A December 2 tweet from New York Post reporter Charlie Gasparino, which WBD said violated a confidentiality agreement Paramount had signed.

And when it comes to the main pitch WBD is making to investors, all of that stuff disappears. It just boils down to "we did our homework, and the Netflix deal is better."

That's not shocking: If you're a WBD investor, you are (supposedly) only interested in getting the maximum value for shares. And WBD's filing argues that Netflix is the one that can pay the most.

Now we're waiting to see what the Ellisons do next: Many observers believe they'll return with yet another, higher bid. Will this one have Gulf money, too?