Paramount Skydance on Monday announced a US$108.4 billion hostile bid for Warner Bros. Discovery, scuttling a deal with Netflix in its latest attempt to create a media powerhouse that would challenge the streaming giant's dominance.
Netflix appeared to emerge victorious Friday from a week-long bidding war with Paramount and Comcast, securing a US$72 billion deal for Warner Bros.' television, film studios and streaming assets. Discovery. But Paramount's latest effort means the battle for Warner Bros. and its valuable holdings of HBO and DC Comics won't run out quickly.
Warner Bros Discovery's board of directors said Monday afternoon that it would consider Paramount's offer but would not change its recommendations for Netflix. He advised the company to “take no action at this time” regarding Paramount's Skydance bid.
Speaking at a conference in New York on Monday afternoon, Netflix co-CEO Ted Sarandos described Paramount's offer as “highly expected.” After detailing the benefits of his company's deal to shareholders and consumers, he said Netflix remains “very confident that we will see this through.”
Unlike Netflix, Paramount is also offering to buy Warner Bros.' cable television assets. This is the same offer that Warner Brothers previously rejected in favor of Netflix's. Paramount executives said their offer was worth about US$18 billion more than Netflix's competing offer, which they said was based on an “illusory implied valuation” of those cable assets.
“We believe our offering will make Hollywood stronger,” Paramount CEO David Ellison said in a statement. “We believe that as a result of our proposed transaction, they will benefit from increased competition, increased content spending and film production, and more films in theaters.”
Citing sources familiar, Reuters has already reported that Paramount on Thursday raised its offer to US$30 per share for the entire company, but that the Warner Bros. board of directors. expressed concerns about funding.
Paramount's filing says the Ellison family, which owns Paramount, along with private equity firm RedBird, has agreed to support $40.7 billion in equity capital.
The offering also includes financing from Affinity Partners, which is run by U.S. President Donald Trump's son-in-law Jared Kushner, as well as other financing coming from the sovereign wealth funds of Saudi Arabia and Qatar and L'imad Holding Co., owned by the Abu Dhabi government.
Antitrust issues
Netflix's proposal includes a breakup fee of US$5.8 billion and is likely to be subject to strict antitrust scrutiny.
US President Trump told reporters on Sunday evening before an event at the Kennedy Center in Washington, D.C. that the Netflix-Warner Bros. combination. may raise market share concerns among regulators. The proposal has already drawn sharp criticism from bipartisan lawmakers and Hollywood unions over concerns it could lead to job losses as well as higher prices for consumers.
However, analysts note that Paramount's offer comes with its own risks, including the additional debt required to pull off the deal. In addition, the acquisition will trigger its own antitrust scrutiny, as the consolidation of the two largest television operators will lead to increased antitrust criticism. Last month, Democratic senators warned that such a deal would result in “one company controlling almost everything Americans watch on television.”
Netflix has agreed to buy Warner Bros.' TV and film studios. Discovery, as well as its streaming division, for US$72 billion. If the deal wins regulatory approval, it will change the media landscape, with some film companies expressing concern for their future.
The combined studio would also have a larger market share than current leader Walt Disney and add to consolidation concerns that have hit the industry hard in recent years.
Paramount argued that it would be a champion of Hollywood and its talent, would continue to release films in theaters, and that its path to regulatory approval would be faster than Netflix's.
What is a hostile takeover?
Paramount's offer was unusual. After Netflix and Warner Bros. jointly announced their deal on Friday, Paramount publicly disclosed information about its own proposal, an ultimate business maneuver commonly known as a hostile takeover bid.
Such a move usually involves the unwanted buyer acting against the express wishes of the company it intends to buy. Elon Musk took this step when he paid US offers to buy Twitter for $43 billion (now X). As with Paramount's offer, this deal was done against the apparent agenda of Twitter's board of directors.
By presenting its proposal 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 offers within 12 weeks, but Warner Bros. “never engaged meaningfully” with these proposals. The $30 cash offer represents a 139 percent premium to the company's unchanged share price and beats Netflix's $27.75 offer, which combines cash and stock.
“The acquisition of Warner Bros. Discovery is far from finished,” said eMarketer senior analyst Ross Benesch. “Netflix is at the helm, but there will be twists and turns before the finish line. Paramount will ask shareholders, regulators and politicians to try to push Netflix into a corner. The battle may drag on.”
Paramount CEO Ellison defends proposal
Paramount has opposed the merger of its Paramount+ streaming service with Warner Bros. HBO Max will give it growth and create a meaningful competitor to Netflix, Amazon Prime Video or Walt Disney's Disney+ by offering consumers more choice.
He sent a letter to Warner Bros. questioning the sale process and arguing that the company abandoned a fair bidding process and predetermined Netflix as the winner.
This follows reports that Warner Bros. Executives called the Netflix deal a “shocking failure” and disapproved of Paramount's proposal.
In an interview with CNBC on Monday, Paramount CEO David Ellison said there was an “inherent bias” against his company in the bidding.
Some analysts and industry experts consider Paramount the best candidate to be acquired by Warner Bros. Discovery, given Ellison's deep pockets, who are backed by his father, Oracle co-founder Larry Ellison, one of the richest men in the world and a man with close ties to the White House.
Usha Haley, a Wichita State University professor who specializes in international business strategy, said Paramount's ties to Trump are notable.
“He said he would be involved in the decision. We have to take his words at face value,” Haley said of Trump. “For him, it’s just more control over the media.”
Proposal for acquisition of Warner Bros. follows Paramount's October purchase of news and commentary site Free Press. Paramount then named site founder Bari Weiss editor-in-chief of CBS News, saying the company believes the country is hungry for news that is balanced and fact-based.
It also follows from this US$8 billion Paramount-Skydance mergerapproved by the Federal Communications Commission in July. The approval process comes after months of turmoil surrounding Trump's legal battle with the United States. 60 minutesthe crown jewel of the Paramount-owned CBS broadcast network.
Earlier in July, Paramount agreed to pay the president $16 million in compensation. Critics of the agreement blasted it as a veiled bribe to appease Trump amid growing concerns about editorial independence in general.
Bloomberg News reported that Trump met with Sarandos in mid-November and said the Warner Bros. executive. must sell the company to the highest bidder. In an interview with CNBC on Monday, Ellison said he had “great conversations” with Trump but did not characterize the discussions.
Seeking to allay antitrust concerns, Sarandos said the deal would enhance value for consumers, shareholders and talent, saying Netflix had “very confidence” in the regulatory process.
