Paramount Launches $108B Counter Bid to Win Warner Bros
Synopsis
Paramount Skydance launched $108.4 billion hostile bid for Warner Bros Discovery on Monday to outbid Netflix's $72 billion deal. Paramount's $30-per-share cash offer includes financing from Jared Kushner's Affinity Partners and Middle Eastern government funds backed by the Ellison family. Gives shareholders $18 billion more cash than Netflix. Warner Bros board reviewing offer but not changing Netflix recommendation. Paramount's bid includes cable TV properties while Netflix's bid is limited to film studios, HBO and streaming. Shares of Paramount up 8%, Warner Bros rose 3%, Netflix fell 4.7%. Paramount claims Warner Bros predetermined Netflix as the winner.
Paramount Skydance made a hostile $108.4 billion bid for Warner Bros Discovery on Monday in a last-ditch effort to outbid Netflix and create a media powerhouse that would challenge the streaming giant's dominance. Netflix won a bidding war on Friday, winning a $72 billion equity deal for Warner Bros Discovery's TV, film studios and streaming assets. Yet a latest attempt by Paramount means that the fight for Warner Bros and its prized HBO and DC Comics assets will drag on.
Warner Bros Board Reviews New Offer
The Warner Bros Discovery board of directors said it would review Paramount's offer on Monday afternoon. But the board is not changing its recommendation with respect to Netflix. It told the company to take no action at this time regarding the Paramount Skydance proposal.
Paramount's $30-per-share cash offer includes financing from Affinity Partners, the investment firm run by Jared Kushner, U.S. President Donald Trump's son-in-law, as well as several Middle Eastern government-run investment funds. The Ellison family, including Larry Ellison, the world's second-richest person and the father of Paramount head David Ellison, who is close to the White House, is supporting the deal.
The studio says its bid for the whole of Warner Bros Discovery beats Netflix's offer, with $18 billion more cash for shareholders and an easier path to regulatory approval. Paramount also argued that a Paramount-Warner Bros combination would serve the interests of the creative community, movie theatres, and consumers best because they would benefit from better competition. We believe our offer will create a stronger Hollywood, Paramount CEO David Ellison said in a statement.
What Each Bid Includes
Paramount's bid includes Warner Bros Discovery's cable television properties. Netflix is limited to the Warner Bros film and television studios, HBO and the HBO Max streaming service. Analysts pointed out that Paramount's offer has its own antitrust scrutiny as a consolidation of two major television operators. Democratic senators last month warned of such a transaction; one company would be in control of almost everything Americans watch on TV.
The combined studio would have more market share than the current leader, Walt Disney Co,. adding to the fears of consolidation that have hit the industry particularly hard in recent years. The offer is a 139% premium over the company's undisturbed stock price. It surpasses Netflix's $27.75 offer that mixes cash and stock.
Who's Backing Paramount's Offer
Warner Bros Discovery and Netflix did not immediately return requests for comment about the terms of Paramount's deal. In a regulatory filing, Paramount noted that the Ellison family, which owns it, in concert with private equity firm RedBird Capital, had agreed to backstop $40.7 billion in equity capital. The offer is also financed by Kushner's Affinity Partners, the Saudi and Qatari sovereign wealth funds and L'imad Holding Co, which is owned by the government of Abu Dhabi.
The Netflix offer came with a $5.8 billion breakup fee and was likely to face intense antitrust scrutiny. U.S. President Donald Trump questioned the offer over the weekend. The bid has already been sharply criticised by lawmakers from both parties and Hollywood unions. They fear it could lead to layoffs and higher prices for consumers.
While it is perhaps a sad commentary on the U.S. that Paramount thinks its closeness to the occupant of the Oval Office will help it seal the deal, it is merely doing what it can to steal a march on its rival, said Chris Beauchamp, chief market analyst at UK-based IG Group.
Paramount Claims Unfair Process
In its appeal to shareholders, Paramount said it submitted six proposals over 12 weeks. But Warner Bros never engaged meaningfully with these proposals. The Warner Bros Discovery acquisition is far from over, said eMarketer senior analyst Ross Benes. Paramount will appeal to shareholders, regulators and politicians to try to stop Netflix. The battle could become protracted.
The combination of Paramount+ with Warner Bros HBO Max, Paramount has argued, would position it for growth to create a meaningful competitor to Netflix, Amazon Prime Video, or Walt Disney's Disney+. The company said it sent a letter to Warner Bros questioning the sale process. According to them, the company has abandoned a fair bidding process and has predetermined Netflix as the winner.
For more news about mergers in the entertainment industry and updates on bidding wars, check out Inspirepreneur Magazine. Get the inside story on Hollywood's biggest deals.
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
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