How did David Ellison fund a $110 billion merger and where did that money come from?

The deal closed at roughly $111 billion, paid in cash at $31 per share to Warner Bros. Discovery shareholders. That is an enormous sum for a company whose flagship prior asset, the original Skydance-Paramount merger, cost around $8 billion. So where did it actually come from?

The Ellison family backstop

The engine of the financing is Larry Ellison, the Oracle co-founder and David's father, who controls roughly 40% of Oracle shares and has been described by Forbes as the second person ever to cross $400 billion in net worth. The Ellison Family Trust provided a $45.7 billion equity backstop for the deal, and Larry personally issued an irrevocable guarantee covering $40.4 billion of the equity financing on top of that. An irrevocable guarantee means that if the equity falls short, he is on the hook personally, no walking it back.

Warner Bros. Discovery's board had initially rejected Paramount's bid, arguing that the equity backing was not solid enough. In a securities filing, Paramount Skydance said the elder Ellison had agreed to backstop the deal's financing to address concerns from Warner Bros. Discovery's board. The board had demanded exactly that, and once the personal guarantee was on paper, the bid could no longer be dismissed as undercapitalized.

The irony is that Oracle's share price fell sharply after that guarantee was made. The Ellison Family Trust holds about 1.16 billion Oracle shares, now worth roughly half their value when the guarantee was first issued. A guarantee made from a position of strength became a much weightier commitment as the stock declined.

Middle Eastern sovereign wealth funds

Paramount Skydance secured a $24 billion investment from three Middle Eastern countries to fund the acquisition. Of that, Saudi Arabia's Public Investment Fund supplied $10 billion, and the remaining $14 billion came from the state-controlled funds of Abu Dhabi and Qatar. A sovereign wealth fund is a government-owned investment pool, essentially a country's savings deployed into global assets. Those funds will indirectly own just under a 50% equity stake in the merged Paramount-WBD. That is a significant ownership position in what will become one of the largest media companies on earth.

Wall Street debt

The remaining financing came from $57.5 billion in debt arranged by Bank of America, Citi, and Apollo. Debt financing at this scale works the same way a mortgage does: the merged company borrows the money now, then pays it back over time from its revenues. The difference is that at $57.5 billion, the interest payments alone will be enormous, which is why analysts expect significant cost-cutting across both studios.

The political dimension

Both the purchase of Paramount and the deal to acquire Warner rely on the fortunes of Larry Ellison, a Donald Trump financial backer and adviser. That relationship has attracted scrutiny. The deal has been politically fraught in part because Larry is a longtime ally of President Donald Trump, and David Ellison has cultivated close ties to the Trump White House as he has pursued opportunities to turn Skydance into a global media giant. Critics, including a coalition of 12 state attorneys general who sued to block the deal, raised concerns about what that relationship means for editorial independence at CBS News and CNN now that both sit under the same roof.