Paramount makes hostile USD108b bid for Warner Bros Discovery, countering Netflix deal
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The news: Paramount Skydance has made a hostile USD30-per-share all-cash offer for Warner Bros Discovery, taking its proposal directly to shareholders just days after Warner reached a USD72 billion cash-and-stock deal with Netflix.
The numbers: Paramount said its bid, worth USD108.4 billion, offers “superior value” and provides shareholders “USD18 billion more in cash than the Netflix consideration”.
The deal is backed by the Ellison family, RedBird Capital, and USD54 billion in debt commitments from Bank of America, Citi and Apollo, the company said in a statement.
Paramount wants to acquire all of Warner Bros Discovery, including its cable networks such as CNN, TNT and Discovery. Netflix’s deal excludes those assets, with Warner set to spin off its cable TV networks before completing the planned sale of its studios and streaming business.
If Warner walks away from the Netflix deal to accept another bid, it must pay Netflix USD2.8 billion. But if the deal falls through or fails to gain regulatory approval, Netflix has agreed to pay Warner USD5.8 billion.
Warner shareholders have until 8 January to tender their shares, unless extended.
The context: The offer comes after Paramount had made several takeover proposals since September but said Warner never seriously engaged. Despite Paramount’s higher cash offer, Warner chose Netflix’s bid, concluding it was worth more overall because shareholders would retain stakes in both companies following a planned spinoff.
Under that deal, Warner will spin off its cable TV networks, including CNN, TNT and Discovery, before selling the studio and streaming business to Netflix.
Paramount, which is bidding for the entire company, accused Warner of abandoning a fair process and showing bias in favour of Netflix. It has also argued that its all-cash bid is more likely to gain regulatory approval.
Meanwhile, US President Donald Trump and others have raised concerns about the Netflix deal increasing market concentration by combining the top two streaming platforms. When asked on Sunday, Trump said the Netflix deal “could be a problem” due to its potential to increase market share.
Paramount Skydance CEO David Ellison said on CNBC the Netflix deal would combine the No 1 and No 3 streaming platforms and called it “the death of the theatrical movie business in Hollywood”. He also accused Warner of failing to meaningfully engage despite multiple offers.
The sources: Warner Bros Discovery, Paramount Discovery, The Wall Street Journal , Bloomberg
