Paramount has launched a $108 billion hostile bid to buy Warner Bros. Discovery, partnering with a Middle East sovereign wealth fund and Donald Trump’s son-in-law Jared Kushner in a bid to derail Netflix’s agreed deal.
The all-cash offer for the entire WBD, including the studios, streaming and cable businesses, values the media conglomerate at $30 a share. Paramount said it was offering $18 billion more in cash, with Chief Executive David Ellison criticizing Netflix’s “lousy offer.”
Paramount said the Ellison family and RedBird Capital have committed to support the entire $40.7 billion of equity capital required for the deal, adding that financing will come from Saudi Arabia, Abu Dhabi and Qatar sovereign wealth funds, as well as Kushner’s Affinity Partners.
After a three-month auction process, which was triggered by Paramount’s initial bid for WBD, Netflix last week struck an $82.7 billion deal to buy the media giant’s studio assets. harry potter and the DC Comics franchise, and its HBO Max streaming service.
WBD said on Monday that its board would “carefully review and consider Paramount Skydance’s offer”, but said it was “not modifying its recommendation regarding the agreement with Netflix”.
WBD shares rose 4.4 percent on Monday, while Paramount jumped 9 percent. Netflix shares fell 3.4 percent.
The Netflix deal, which would reshape Hollywood by placing a technology company at the helm of one of the most famous studios, had drawn the ire of powerful unions and the attention of the US president, who said on Sunday he would join a review of the transaction.
The deal valued WBD’s studio and streaming assets at $27.75 a share, and did not include cable properties like Discovery and CNN, which it plans to spin off next year.
The Netflix deal would see the cable business transferred to existing WBD shareholders and could be valued at $4 a share, according to analysts’ estimates. Paramount’s offer values the cable assets at $1 per share.
Paramount is trying to win over WBD shareholders by raising doubts about Netflix’s ability to win antitrust clearance. The streaming company said it would need 12 to 18 months to gain regulatory consent, which Paramount called an “unrealistic assumption” on Monday.
The strength of rival bids will depend on how WBD shareholders perceive the antitrust risks from each proposal, the potential value of its cable assets, and the benefits of owning Netflix stock. WBD shareholders have until January 8 to vote on Paramount’s tender offer but the deadline could be extended.
Ellison, the son of billionaire Oracle founder Larry Ellison, said Monday that if Netflix was allowed to buy WBD, “there would be no more competition in Hollywood.” He said in an interview on CNBC that Trump would support the most competitive deal.
“I know the companies very well. I know what they’re doing, but I have to look. I have to see what percentage of the market they have,” the president said Monday.
He said, “None of them are particularly good friends of mine. I want to do what’s right, it’s very important to do what’s right.”
Paramount said the Middle East fund and Kushner’s group have agreed to give up governance rights, including board seats, and therefore the deal should not be reviewed on national security grounds because of their involvement. Paramount said Bank of America, Citigroup and Apollo had provided loan commitments of $54 billion.
Despite submitting six proposals in 12 weeks, Paramount argued that WBD “never meaningfully engaged” with its proposals. It added, “Paramount has now taken its proposal directly to WBD shareholders and its board of directors to ensure they have the opportunity to pursue this clearly superior alternative.”
People close to the negotiations said Netflix would continue to pursue its own deal for the studio and streaming portions of WBD.
Netflix Chief Executive Ted Sarandos on Monday called the Paramount counter-offer “wholly expected.”
“We are very confident that we will achieve this and get it done,” he told an investor conference hosted by UBS.
Sarandos also addressed Hollywood’s concerns that Netflix, which has prioritized streaming original films rather than distributing them in theaters, would reduce the number of Warner Bros. films released for the big screen. If Netflix had bought WBD earlier, it would have distributed all the hit movies released this year in theaters A minecraft movie, superman And WeaponHe said.
“We didn’t buy this company to destroy that value,” he said.
If WBD breaks the deal with Netflix, it could have to pay the streamer a break fee of $2.8 billion.
A person familiar with the matter said Paramount’s offer was similar to its final pitch during last week’s auction. WBD did not respond to that viewpoint, this person said.
WBD’s board late Thursday chose Netflix on the grounds that the movie-streaming giant’s bid provided more certainty and was best suited to the company’s demands.
“The board’s priority over valuation was to choose a bidder who could sign quickly, withstand regulatory scrutiny and close on the required terms,” said a person close to the company.
Additional reporting by Arash Massoudi in London, Christopher Grimes in Los Angeles, Alexandra White in New York and James Politi in Washington
