The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Jennifer Saba

NEW YORK, Dec 8 (Reuters Breakingviews) - Paramount Skydance PSKY.O boss David Ellison is going to the mattresses. The studio behind “The Godfather” bypassed Warner Bros Discovery’s WBD.O board to appeal directly to his rival's shareholders with a $108 billion takeover bid. It not only dangles more cash than Netflix NFLX.O, but contains other sweeteners that make it an offer hard to refuse.

Like Michael Corleone, Ellison is insulted and angry. Paramount says it approached WBD’s directors six times with various proposals to buy the entire media conglomerate, but was not given a fair shake. Instead, he accuses his target of playing favorites with the streaming titan co-led by Ted Sarandos and Greg Peters, which struck a deal on Friday to buy WBD's rival service HBO and the company's storied studio for $83 billion in cash and stock.

By seeking to acquire all of WBD, Ellison's $30-a-share tender offer is alluringly simpler. With Netflix, WBD investors will be left with a rump of heavily indebted cable networks, including CNN and HGTV, due to be carved out and separately listed. Paramount's bid effectively values that business at about $25 billion, or 5 times 2027 estimated EBITDA, using forecasts gathered by Visible Alpha. It's a discount to the 9 times multiple that stronger competitor Fox FOXA.O commands.

The political picture and approval process are hard to gauge, but seem to favor Paramount, too. Donald Trump said on Sunday he would be involved in the process of approving the WBD deal. Ellison and his billionaire father, Larry, are close with the U.S. president. Netflix agreed to pay WBD a hefty $5.8 billion fee if its deal collapses, a nod to the significant regulatory risk. There also will probably be more opposition to the combination throughout Hollywood.

Another wildcard is the Middle Eastern money in Paramount's bid. Saudi, Qatari and other sovereign wealth funds are ponying up some $24 billion for a non-voting stake. Such financing could get messy, considering Paramount's ownership of CBS, a U.S. broadcaster subject to foreign ownership restrictions, but Paramount says the lack of governance rights means it will fall outside jurisdiction of the Committee on Foreign Investment in the United States.

Backing from a buyout shop run by Trump's son-in-law Jared Kushner could help smooth things over in an increasingly transactional Washington, D.C., anyway. All things considered, WBD shareholders would be better off leaving the Netflix gun and taking Paramount's cannoli.

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CONTEXT NEWS

Hollywood conglomerate Paramount said on December 8 that it had initiated a $30-a-share all-cash tender offer to buy the entirety of rival Warner Bros Discovery, arguing that it is a better deal for the company’s shareholders than a sale of the film studio and HBO streaming service to Netflix that the board agreed to on December 5.

Under the terms of its $108 billion offer, including debt, Paramount would also acquire WBD’s portfolio of cable networks. They are due to be carved out as a separately listed company in the Netflix deal.

In bypassing the board and going directly to WBD shareholders, Paramount said it submitted six proposals over 12 weeks, but that WBD “never engaged meaningfully.” The hostile bid is set to expire on January 8.

Centerview Partners and RedBird Advisors are the lead advisers to Paramount, with BofA, Citi and M. Klein also providing advice. Allen & Co, JPMorgan and Evercore are advising WBD.

(Editing by Jeffrey Goldfarb; Production by Maya Nandhini, Pranav Kiran)

((For previous columns by the author, Reuters customers can click on SABA/jennifer.saba@thomsonreuters.com))