American media billionaire John Malone predicts $10 billion Musk-Ellison deal for Skydance

American billionaire John Malone, the cable television pioneer who built Liberty Media, said he expects Elon Musk's SpaceX to strike a global content deal with Skydance Corp. and invest as much as $10 billion in the media company the Ellison family formed by buying Warner Bros. Discovery.

"I predict, big prediction, that you'll see a global output deal for Skydance with SpaceX," Malone said on Wednesday at the Paley International Council Summit in New York, where he was interviewed by Liberty Global Chief Executive Officer Mike Fries. "I think there's a deal coming there."

Malone, 85, put the possible investment at $8 billion to $10 billion and said it would help Skydance reduce the debt it took on to finance the takeover. He did not say that talks were under way.

"I would not doubt for a minute that before very long you're gonna see an announcement," he said.

Musk and the Ellisons

Malone based his forecast on the ties between Musk and Oracle Corp. co-founder Larry Ellison, the father of Skydance Chairman and Chief Executive Officer David Ellison. He said the two billionaires "are very intertwined."

"Who helped Elon finance Twitter when he bought it? Larry Ellison," Malone said. "How did Larry Ellison come up with some of the money to put into the creation of Skydance? Tesla stock."

Larry Ellison put $1 billion into Musk's $44 billion purchase of Twitter in 2022. The platform, now called X, was later folded into Musk's artificial intelligence company xAI, which SpaceX bought in February. Ellison also sat on Tesla's board from December 2018 to 2022 and has called the carmaker his second-largest investment after Oracle.

Securities filings show that Ellison pledged Tesla and SpaceX shares, along with stock in the old Paramount Skydance, as loan collateral this year while his son raised money for the Warner Bros. deal. He also personally guaranteed more than $40 billion of the equity financing.

Musk's name has come up since September as a possible investor in Skydance, as David Ellison looks for outside money to strengthen the company's balance sheet. A formal deal between SpaceX and Skydance would go further, tying Hollywood films and television to Starlink, the satellite internet service that SpaceX is expanding with large purchases of wireless spectrum.

A heavily indebted new media group

Skydance completed its purchase of Warner Bros. Discovery on Oct. 6, two weeks before Malone spoke. The deal put Warner Bros., HBO, CNN and TNT under the same roof as Paramount Pictures, CBS and the Paramount+ streaming service. Warner Bros. Discovery shareholders received about $31.02 a share in cash.

The takeover was funded with $47 billion of new equity sold at $12 a share and tens of billions of dollars in debt arranged by Bank of America, Citigroup and Apollo Global Management. Skydance, which trades on the New York Stock Exchange under the ticker SKYD, aims to cut its net debt to three times earnings by the end of 2029 and is targeting at least $6 billion in annual cost savings within three years. The Ellison family and RedBird Capital Partners control all of the company's voting Class A shares.

Malone knows the assets well. He was the main backer of the 2022 merger of WarnerMedia and Discovery that created Warner Bros. Discovery under David Zaslav, and he once sat on the company's board.

At the summit, he urged David Ellison to keep the creative talent behind HBO and Warner Bros. and to move the shrinking cable TV business toward streaming. He warned that YouTube is "running away with the gold ring when it comes to media," and said the Ellisons will need to combine social media, premium entertainment and streaming to compete with it.