Paramount launches $108.4bn hostile bid for Warner Bros Discovery | Business

David Ellison’s Paramount Skydance is not giving up on its aggressive campaign to acquire Warner Bros. Discovery (WBD), launching a hostile bid for the entertainment company despite Friday’s announcement that it has agreed to buy Netflix’s studio and streaming operation.

Netflix’s bid for WBD’s famed Hollywood film studio and leading HBO cable network values ​​the company at $82.7 billion. But it did not agree to buy WBD’s traditional television assets, including the CNN news network and the Discovery Channel.

The all-cash tender offer that Paramount sent directly to shareholders Monday morning would apply to the entire company and puts a total enterprise value on WBD at $108.4 billion; This is a large premium to the stock price.

In presenting its case to shareholders, Paramount argued that its acquisition of the company provided significantly better value for shareholders and would be much more likely to survive regulatory scrutiny.

David Ellison and his father, billionaire tech mogul Larry Ellison, whose family backed the deal financially, are friendly with the Trump administration, having previously expressed support for Paramount’s purchase of WBD. Oracle founder Larry Ellison even had previous conversations with a senior Trump aide about what changes he might want to see at CNN.

Donald Trump praised recent changes since Paramount’s acquisition by the Ellisons, including the selection of heterodox writer Bari Weiss as editor-in-chief of CBS News. Paramount will also reportedly bring back the Rush Hour franchise for a fourth film at Trump’s request.

Shortly before the Ellisons received regulatory approval to take over Paramount, the firm agreed to pay $16 million to settle a lawsuit filed by Trump, who claimed a pre-election interview with 2024 Democratic presidential candidate Kamala Harris was mistakenly edited. Many legal experts had widely dismissed the case as “without merit” and unlikely to survive under the first amendment.

A regulatory filing on Monday revealed that the Ellisons’ bid for WBD was backed by outside funders, including Affinity Partners, an investment fund founded by Trump son-in-law Jared Kushner; Saudi Arabian Public Investment Fund; and Qatar Investment Authority.

In a statement, David Ellison called the Netflix deal “a shoddy offer that leaves shareholders with a mix of cash and stock, the future commercial value of Global Networks’ linear cable business is uncertain, and faces a difficult regulatory approval process.”

“WBD shareholders deserve the opportunity to consider our superior cash offer for their shares in the entire company,” he said. “Our IPO, on the same terms as we have privately offered to the board of directors of Warner Bros. Discovery, provides superior value and a more certain and faster path to completion.”

Ellison’s Paramount Skydance had already made several offers for WBD, which were rejected during the bidding process. The company said in a statement Monday that it was “concerned about the lack of presentation” to shareholders. [the] “the most challenging and superior procedure”.

Last week, Paramount’s lawyers sent a letter to WBD arguing that the company had not fully considered its offer. “It has become increasingly clear, through media reports and other means, that WBD has abandoned the appearance and reality of a fair transaction process, thereby abdicating its duties to shareholders and engaging in a myopic process with a predetermined outcome in favor of a single bidder,” they wrote.

Netflix’s acquisition of WBD’s studio and broadcast assets has provided some temporary relief for some employees at CNN who were worried about the potential merger between the network and CBS News, which is now run by Weiss.

“I definitely think this is the best outcome for CNN,” a senior network producer told the Guardian after the Netflix acquisition was announced, describing a “palpable sense of relief” at the network. But the person added: “There’s still a lot of concern about the Discovery Global spinoff and what happens next.”

In a memo to CNN employees on Friday, the network’s CEO Mark Thompson described the deal as a positive. “Many of you have asked me what today’s news means to us,” he wrote. “And the answer will enable us to continue executing on our strategy to secure a great future for CNN by successfully navigating our digital transition.”

Some employees at CBS News also feared a merger with CNN’s parent company that could lead to significant job losses. “The merger with CNN is the only thing that would really worry me about losing my job,” said one CBS News employee. (Paramount’s offer on Monday said the combination of the television networks would “significantly improve cash flow and increase efficiency, leading to a division more capable of handling structural downturns.”.)

Paramount’s offer to WBD on Monday could reignite those concerns for employees at both networks. If the Netflix deal moves forward, as planned, CNN will be spun off into a standalone company encompassing WBD’s traditional television networks, from Cartoon Network to TLC.

On a conference call with analysts, David Ellison did not answer a question about whether he would be interested in buying the television group on its own if a larger Netflix deal goes through.

On Sunday evening, before Paramount submitted its hostile bid, Trump said he would personally be involved in reviewing the Netflix-WBD transaction, which would have implications for competition given Netflix’s “massive market share.” But he also had kind words for Netflix co-chairman Ted Sarandos, who visited the White House recently.

However, many American politicians and entertainment unions, including US Senator Elizabeth Warren, have expressed strong reservations about the agreement.

Since no television licenses would be transferred in a potential acquisition, a purchase of WBD is unlikely to be subject to review by the Federal Communications Commission and its Trump-chosen chairman, Brendan Carr. But antitrust concerns about such a deal would be reviewed by the Justice Department.

“Paramount is very confident about quickly gaining regulatory approval for its proposed offering,” the company said in a statement Monday, “as it increases competition and is pro-consumer, while also creating a strong champion for creative talent and consumer choice.”

The Ellisons’ offer expires at 5pm on January 8 unless extended.

On the Monday call, David Ellison said there had been no response to the company’s offers for WBD. “We are here to fight for value for our shareholders and WBD shareholders,” he said. “This transaction is about building more, not cutting back…. Our offering is superior to Netflix’s in every way.”

While Trump was highly supportive of Ellison’s takeover of CBS News, on Monday morning he harshly criticized the network and his new administration for a 60 Minutes broadcast the night before in which former GOP House member Marjorie Taylor Greene told reporter Lesley Stahl that many Republican lawmakers were privately mocking Trump.

“But my real problem with the show wasn’t the low-IQ traitor; it was that Paramount, the new owner of 60 Minutes, would allow such a show to air,” Trump wrote on the Truth Social platform. “THEY ARE NO BETTER THAN THE OLD OWNERS WHO PAID ME Millions of Dollars for FAKE REPORTING ABOUT YOUR favorite President ME! Since their acquisition, 60 Minutes has literally gotten WORSE!”