Warner Bros fight heats up with Paramount hostile bid
Paramount Skydance has launched a US$108.4 billion ($163.4 billion) hostile bid for Warner Bros Discovery in a last-ditch effort to outbid Netflix and create a media powerhouse to challenge the streaming giant’s dominance.
Netflix emerged victorious from a weeks-long bidding war with Paramount and Comcast on Friday, securing a US$72 billion ($109 billion) equity deal for Warner Bros Discovery’s television, film studios and streaming assets.
But Paramount’s latest venture is Warner Bros. and it means the race for his prized HBO and DC Comics assets won’t be settled anytime soon.
Warner Bros. Discovery’s board of directors said Monday afternoon that it would review Paramount’s offer but would not change its recommendation for Netflix. The company was advised to “take no action at this time” regarding the Paramount Skydance bid.
Paramount’s cash offer of US$30 ($45) per share includes financing from Affinity Partners, the investment firm run by US President Donald Trump’s son-in-law Jared Kushner, and several Middle Eastern government-run investment funds, and is backed by the Ellison family.
Larry Ellison, the second richest person in the world, is the father of Paramount chairman David Ellison and has close ties to the White House.
The studio argues its bid for all of Warner Bros Discovery is superior to Netflix’s, giving shareholders US$18 billion ($27 billion) more cash and an easier path to regulatory approval.
Paramount-Warner Bros. will be among the largest media deals in history. It was stated that the combination will be in the interest of the creative community, movie theaters and consumers who will benefit from increased competition.
“We believe our offering will create a stronger Hollywood,” Paramount CEO David Ellison said in a statement.
Separately, he said Paramount’s offer offers “higher headline value, increased certainty in that value, greater regulatory certainty, and a pro-Hollywood, pro-consumer, and pro-competition future.”
Paramount’s bid includes cable television properties from Warner Bros. Discovery; Netflix’s offering is limited to the Warner Bros film and television studios, HBO and the HBO Max streaming service.
Paramount’s bid brings its own antitrust scrutiny as a combination of two major television operators, analysts said.
Last month, Democratic senators warned that such a transaction would result in “a single company controlling nearly everything Americans watch on television.”
The combined studio would also have a larger market share than current leader Disney, raising consolidation fears that have hit the industry in recent years.
The offer represents a 139 per cent premium to the company’s valuation before takeover talks began and beats Netflix’s US$27.75 ($A41.83) offer, which combined cash and stock.
Netflix co-CEO Ted Sarandos said at the UBS conference that Paramount’s hostile bid for Warner Bros. was “fully expected” but that he was confident it would complete the deal.
“In the proposal that Paramount was talking about today, the Ellisons were talking about US$6 billion ($A9 billion) of synergies,” Sarandos said.
“Where do you think the synergy comes from? We’re cutting jobs? So we’re not cutting jobs. We’re creating jobs.”
In a regulatory filing, Paramount said the Ellison family, which owns Paramount, agreed to back US$40.7 billion ($61.3 billion) in equity capital along with private equity firm RedBird Capital.
The bid also includes financing from Kushner’s Affinity Partners, Saudi and Qatar sovereign wealth funds and Abu Dhabi government-owned L’imad Holding Co.
“A Paramount Skydance-Warner Bros. merger would be a five-alarm antitrust fire and exactly what our antitrust laws were written to prevent,” said U.S. Senator Elizabeth Warren.
The hostile proposal “is backed by Trump’s friends… raises serious questions about influence peddling, political cronyism and national security risks.”
Trump said none of the bidding parties were “my friends” and that he wanted to “do the right thing.” He added that he had not spoken to Kushner about the Paramount offer.
Netflix’s proposal has faced harsh criticism from bipartisan lawmakers and Hollywood unions over concerns it could lead to layoffs as well as higher prices for consumers.
“While it is perhaps a sad commentary on the United States that Paramount thinks its proximity to the Oval Office occupant will help it seal the deal, it is simply doing its best to get a leg up on its rival,” said Chris Beauchamp, chief market analyst at U.K.-based IG Group.
with AP
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