Paramount blasts Netflix bid for Warner Bros. Discovery, ups ante with hostile takeover attempt

Paramount Skydance on mon launched a unfriendly call charles frederick worth $108.4 one million million US for Warner Bros. Discovery, throwing a wrench into the deal with Netflix in a last-ditch effort to create a media powerhouse that would challenge the dominance of the streaming giant.

Netflix had seemingly emerged victorious on Friday from a weeks-long bidding war with Paramount and Comcast, securing a $72-billion US equity deal for Warner Bros. Discovery's TV, film studios and streaming assets. But Paramount's latest attempt means the jockeying for Warner Bros. And its prized assets HBO and DC Comics will not come to a conclusion swiftly.

Unlike Netflix, Paramount is also offering to buy the cable television assets of Warner Bros. Paramount executives said their offer is worth about $18 billion US more than the competing bid from Netflix, which they said is based on an "illusory prospective valuation" of those cable assets.

Executives also argued that the combination of Paramount and Warner Bros. Would be in the best interests of the creative community, movie theatres and consumers, who would benefit from enhanced competition.

It is the same bid that Warner Brothers had previously rejected in favour of the offer from Netflix.

"We believe our offer will create a stronger Hollywood," Paramount CEO David Ellison said in a statement. "We believe they will benefit from the enhanced competition, higher content spend and theatrical release output, and a greater number of movies in theatres as a result of our proposed transaction."

Citing sources familiar, Reuters had already reported that Paramount had raised its offer to $30 US per share on Thursday for the entire company, but that the Warner Bros. Board had concerns about the financing.

In a regulatory filing, Paramount said the Ellison family, which owns Paramount, along with private equity firm RedBird, had agreed to backstop $40.7 billion US in equity capital.

The offer also includes financing from Affinity Partners, run by U.S. President Donald Trump's son-in-law, Jared Kushner, with other financing coming from the Saudi and Qatari sovereign wealth funds and L'imad Holding Co., owned by the government of Abu Dhabi.

Netflix's offer comes with a $5.8-billion US break-up fee and was likely to face strong anti-trust scrutiny.

President Trump told reporters on Sunday evening before an event at the Kennedy Center in Washington, D.C., that a Netflix-Warner Bros. Combination could raise market share concerns for regulators. The bid has already drawn sharp criticism from bipartisan lawmakers and Hollywood unions over concerns that it could lead to job cuts as well as higher prices for consumers.

However, analysts noted that Paramount's offer comes with its own risks, including additional debt needed to make the transaction work. As well, the acquisition would bring its own anti-trust scrutiny as a consolidation of two major television operators. Last month, Democratic senators warned that such a transaction would result in "one company controlling almost everything Americans watch on TV."

Could Netflix’s Warner Bros. Discovery deal kill movie theatres?

The combined studio would also have a greater market share than current leader Walt Disney Co., and add to fears of consolidation that have hit the industry hard in recent years.

Paramount maintained that it would be a champion of Hollywood and its talent, would remain committed to releasing movies in theatres and that its path to regulatory approval would be faster than Netflix's.

"Our proposal is superior to Netflix's in every dimension, higher headline value, increased certainty in that value, greater regulatory certainty, and a pro-Hollywood, pro-consumer and pro-competition future," said Ellison.

Paramount's offer was made in an unusual way. After Netflix and Warner Bros. Jointly announced their deal on Friday, Paramount publicly revealed information around their own offer — an end-run business manoeuvre commonly known as a hostile takeover bid.

Such a move usually involves an unsolicited buyer acting against the explicit wishes of the company they intend to buy. Elon Musk engaged in such a manoeuvre when he paid $43 billion US bid to acquire Twitter (now X). Similar to Paramount's offer, that deal was made against the apparent plans of Twitter's board of directors.

Pitching their proposition directly to Warner Bros. Shareholders, Paramount sought to sway them against the deal put forward by the company's board of directors.

In its appeal, Paramount said it submitted six proposals over the course of 12 weeks, but Warner Bros. "never engaged meaningfully" with these proposals. The $30 cash offer represents a 139 per cent premium over the company's undisturbed stock price, and bests Netflix's $27.75 offer, which mixes cash and stock. 

"The Warner Bros. Discovery acquisition is far from over. Netflix is in the driver's seat but there will be twists and turns before the finish line. Paramount will appeal to shareholders, regulators and politicians to try to stymie Netflix. The battle could become prolonged," said eMarketer senior analyst Ross Benes. 

Paramount has argued the combination of its Paramount+ streaming service with Warner Bros.' HBO Max would position it for growth, and create a meaningful competitor to Netflix, Amazon Prime Video or Walt Disney's Disney+ — offering consumers more choice.

It had sent a letter to Warner Bros., questioning the sale process and alleging the company has abandoned a fair bidding process and predetermined Netflix as the winner.

That followed reports that Warner Bros.' management called the Netflix deal a "slam dunk" while speaking negatively about Paramount's offer.

In an interview with CNBC on Monday, Paramount CEO David Ellison said there is an "inherent bias" against his company in the bidding.

"We will be the largest investor in this deal. We're literally sitting here today because we are fighting for our shareholders, and we're also fighting for the shareholders of Warner Bros. Discovery," Ellison said.

Some analysts and industry experts see Paramount as the best candidate for acquiring Warner Bros. Discovery, given Ellison's deep pockets — backed by his father, Oracle co-founder Larry Ellison, one of the world's richest people and someone with close ties to the White House.

Access to WBD's vast intellectual property trove would provide immediate credibility, audience reach and merchandising potential for its gaming ambitions, an area where Netflix is still building original content and brand recognition.

Bloomberg News has reported Trump met Sarandos in mid-November, telling the executive Warner Bros. Should sell to the highest bidder. In his CNBC interview on Monday, Ellison said he had "great conversations" with Trump, but did not characterize the discussions.

"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 U.K.-based IG Group.

Looking to allay anti-trust fears, Sarandos had said the deal would drive value for consumers, shareholders and talent, saying Netflix is "highly confident" in the regulatory process. 

Warner Bros. Discovery and Netflix did not immediately respond to requests for comments on Paramount's deal.

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