Becky Quick (Anchor) 00:00.630
our next guest has been advising warner brothers discovery in this contentious media deal roger altman is the founder and senior chairman of evercore and obviously a friend of the show too and roger it's good to see you this morning thanks
Roger Altman (Founder and Senior Chairman) 00:11.950
for having me so
Andrew Ross Sorkin (Anchor) 00:12.870
talk us through this we yesterday heard from sam di piazza at the board of warner brothers about what he thought what the board went through when they were thinking about this but as somebody who has seen a lot of different offers what makes you think that the netflix deal is
Andrew Ross Sorkin (Anchor) 00:27.870
better than what you're hearing from paramount 's guidance let
Roger Altman (Founder and Senior Chairman) 00:30.550
me start off by just saying one word about the process that the warner brothers board has used you know as you know they've received six separate offers from paramount sky in addition of course to the the process involving netflix and other companies and i've done this a long
Roger Altman (Founder and Senior Chairman) 00:47.910
time and i when i was one one of my kids was younger she once said you know dad what dad does is talk on the phone and go to board meetings so i've seen a lot of them and the process here was as fiduciary driven and as clean and thorough and independent as anybody could ever
Roger Altman (Founder and Senior Chairman) 01:07.470
want are
Becky Quick (Anchor) 01:07.790
you saying that because you anticipate that there will be shareholders no i'm saying that because
Roger Altman (Founder and Senior Chairman) 01:11.630
peace guy has criticized the process yeah so that's number one number two the the i'll call him peace guy the peace guy offer is on a risk adjusted basis is not higher and here's why peace guy has a fifteen billion dollar market cap and it's a weak company it doesn't have any
Roger Altman (Founder and Senior Chairman) 01:35.150
real free cash flow and it's trying to do a hundred and eight billion dollar acquisition so it's it's effectively an extreme LBO now if you're the target of an extreme LBO you're the company that the offeror is trying to buy what's your number one question do they have the
Roger Altman (Founder and Senior Chairman) 01:55.670
financing and and can i count on the financing being there and the answer in this question in this instance is no which is why i say the risk adjusted value of the offer is not higher what
Becky Quick (Anchor) 02:08.990
makes you say no no because
Roger Altman (Founder and Senior Chairman) 02:12.230
they need about forty billion of equity to achieve the total debt and financing package necessary to do the deal and despite repeated and i mean repeated efforts on the part of warner brothers discovery to get clarity and assurance on the so-called ellison backstop we have not
Roger Altman (Founder and Senior Chairman) 02:41.390
received that
Becky Quick (Anchor) 02:42.790
and the concern with that is that it's the revocable trust the ellison revocable trust and the board 's concern is that at any point larry ellison could take the shame
Roger Altman (Founder and Senior Chairman) 02:54.110
think of the what what the word revocable beans the word revocable means that the day after the merger agreement or any day after that you can take assets out you can leverage it up you can completely change it and so so there's no assurance that the necessary equity would be
Roger Altman (Founder and Senior Chairman) 03:11.480
there in addition we don't know the composition of the trust we've not been given information about the assets and the liabilities i trust so so roger
Andrew Ross Sorkin (Anchor) 03:19.560
and you've asked for this repeatedly yes so the question is
Roger Altman (Founder and Senior Chairman) 03:22.560
if they came
Andrew Ross Sorkin (Anchor) 03:23.120
back to you and said now given the you're out here on television saying this and others have obviously said this from the companies if they came back and said we're going to put the money in an escrow account that's just going to sit over here or whatever would that change
Andrew Ross Sorkin (Anchor) 03:39.430
fundamentally change the calculus or are there other issues and items well that you're considered it's always a matter of as you well know of the fine print
Roger Altman (Founder and Senior Chairman) 03:48.990
right is it really legally binding now look in twitter which yes it was a smaller deal but it wasn't that small elon musk contractually guaranteed the equity i will put up the equity i may syndicate it down later which you did some of it but i contractually commit to it we've
Roger Altman (Founder and Senior Chairman) 04:08.470
repeatedly asked for something equivalent on that and you have a comment so why