Warner Bros signs $US110 billion deal with Paramount
Warner Bros Discovery has agreed to be acquired by Paramount Skydance in a US$110bn ($155bn) deal signed at Saturday AEDT, according to an audio clip produced by the company reviewed by Reuters.
“Netflix had the legal right to match the PSKY offer,” said Bruce Campbell, chief revenue and strategy officer at Warner Bros. “As you all know, they ultimately decided not to do so. This then resulted in a deal being signed with PSKY as of this morning. “So that’s where it all stands.”
Paramount and Warner Bros. did not immediately respond to requests for comment.
The deal caps a bidding war after Netflix refused to match Paramount’s latest offer of $31 per share, which was widely seen as superior to Warner Bros.’ $27.75 per share deal for the streaming pioneer’s studio and streaming assets.
Paramount shares rose 24 percent while Netflix rose 13 percent as investors welcomed the Warner Bros. decision to withdraw from the race.
Paramount is expected to easily win European Union antitrust approval, while the necessary investments will likely be minimal, Reuters reported, citing sources.
But the merger has come under scrutiny from California State Attorney General Rob Bonta, who said the state was investigating the Paramount deal and would be “vigorous” in its review.
The deal, which also includes nearly $29 billion in debt, is among Hollywood’s biggest media shake-ups and will create one of the world’s biggest movie studios and allow Paramount to tap into Warner’s trove of intellectual property, including franchises such as Fantastic Beasts and The Matrix.
This would also allow Paramount to strengthen its streaming efforts with a potential combination of HBO Max and Paramount+, allowing it to gain market share and compete with market leader Netflix.
Paramount has been after Warner Bros. since late last year, when it launched a hostile campaign to lure the company away from the streaming giant by steadily increasing its bid.
The company, led by David Ellison, son of billionaire Larry Ellison, has drawn Warner’s board back to the bargaining table, raising the possibility of a better cash offer.
In its revised proposal, Paramount increased the termination fee it would pay if the deal fails to gain regulatory approval from US$5.8 billion to US$7 billion.
Paramount has paid the $2.8 billion termination fee that Warner Bros. owes Netflix, the streaming giant said in a regulatory filing.
Activist investor Ancora Holdings, which owns a small stake in Warner Bros., has also increased pressure on HBO’s owner to become more involved with Paramount.
Politicians on both sides of the political aisle have expressed concerns that any deal to acquire Warner Bros. could lead to fewer choices and higher prices for consumers.
Cinema operators also worry that merging major Hollywood studios could cost jobs and reduce the number of movies released in theaters.
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