1) do you think there is deal risk here? The arb spread is pretty wide for a fully funded deal with no outs, a ticking fee, and a supposedly friendly DOJ/FTC/FCC. I’m almost tempted…
2) do you think anyone but the Ellisons actually puts $ into this thing? Stock is 40%+ below their backstop price. They are taking a $20B hickey on day one, why would anyone follow?
3) on a related note, they backstopped this at $16 when the stock was at $12 - do they not know how math works? Any theories as to why they decided to issue B(!) shares to themselves at a premium?
(3/3) On your final point regarding the backstop (I take it you are referring to the February 2026 issuance): I don't have a strong, definitive view on the exact mechanics of that decision. My gut instinct is that the institutional backers were desperately trying to portray strength to the broader market, likely hoping a premium backstop would keep the stock from completely tanking under the news of the issuance. But in reality, I don't pretend to know what PSKY management is or was thinking. Frankly, if management were acting entirely rationally, this wouldn't even be a public company in the first place! Haha
(1/3) Hey Anton, thanks for subscribing and for leaving such detailed questions—it is always great to hear from you!
Regarding your first point on deal risk: Yes, while I haven't specifically priced out the exact risk premium, I absolutely think there is a not-insignificant chance that this deal does not close. As I alluded to in the article, that risk goes up significantly depending on how much political and regulatory power the Democrats can regain between now and 2028.
Even if the deal does manage to close, I could easily see strong arguments being made for a forced breakup under a different regulatory administration. You are totally correct to note the wide arb spread—the market is flashing a clear signal that all is not well here.
(2/3) To your second question about who else actually puts money into this thing: I don't have strong views on the exact makeup of all the alternative funding sources right now. However, my broader take is that Paramount, as it is currently structured, isn't really about trying to make money. It is about power. It's about securing a seat at the table and wielding control over these incredibly influential (albeit declining) political and media brands.
Historically, media investing always brings out the billionaires and sovereign funds who are in it for the prestige and cultural influence, rather than just pure financial ROI, haha.
Great piece. 3 quick ones:
1) do you think there is deal risk here? The arb spread is pretty wide for a fully funded deal with no outs, a ticking fee, and a supposedly friendly DOJ/FTC/FCC. I’m almost tempted…
2) do you think anyone but the Ellisons actually puts $ into this thing? Stock is 40%+ below their backstop price. They are taking a $20B hickey on day one, why would anyone follow?
3) on a related note, they backstopped this at $16 when the stock was at $12 - do they not know how math works? Any theories as to why they decided to issue B(!) shares to themselves at a premium?
(3/3) On your final point regarding the backstop (I take it you are referring to the February 2026 issuance): I don't have a strong, definitive view on the exact mechanics of that decision. My gut instinct is that the institutional backers were desperately trying to portray strength to the broader market, likely hoping a premium backstop would keep the stock from completely tanking under the news of the issuance. But in reality, I don't pretend to know what PSKY management is or was thinking. Frankly, if management were acting entirely rationally, this wouldn't even be a public company in the first place! Haha
(1/3) Hey Anton, thanks for subscribing and for leaving such detailed questions—it is always great to hear from you!
Regarding your first point on deal risk: Yes, while I haven't specifically priced out the exact risk premium, I absolutely think there is a not-insignificant chance that this deal does not close. As I alluded to in the article, that risk goes up significantly depending on how much political and regulatory power the Democrats can regain between now and 2028.
Even if the deal does manage to close, I could easily see strong arguments being made for a forced breakup under a different regulatory administration. You are totally correct to note the wide arb spread—the market is flashing a clear signal that all is not well here.
(2/3) To your second question about who else actually puts money into this thing: I don't have strong views on the exact makeup of all the alternative funding sources right now. However, my broader take is that Paramount, as it is currently structured, isn't really about trying to make money. It is about power. It's about securing a seat at the table and wielding control over these incredibly influential (albeit declining) political and media brands.
Historically, media investing always brings out the billionaires and sovereign funds who are in it for the prestige and cultural influence, rather than just pure financial ROI, haha.
https://substack.com/@thedreydossier/note/c-247204685