NEW YORK — Paramount launched a hostile takeover bid on Monday. Warner Bros. Discoverystarting a potentially bloody battle with competitor Netflix buying the company behind HBO, CNN and the iconic movie studio, and the opportunity to change much of the nation's entertainment landscape.
Coming just days after Warner execs agreed to Netflix $72 billion purchaseParamount's proposal aims to go over the heads of those leaders by going directly to Warner shareholders with a request for more money – $74.4 billion – and a plan to buy all of Warner's business, including the cable business that Netflix doesn't want.
Paramount said his decision to become hostile This comes after the company made several previous offers that Warner management “never engaged constructively with” following the company's October announcement that it was open to a sale.
In its message to shareholders, Paramount noted that its proposal also contained more money than Netflix's — $18 billion more — and said it was more likely to pass muster from President Donald Trump's administration, a major concern given his habit of interfering in American business decisions.
Trump said over the weekend that the Netflix-Warner deal “could be a problem” because of the size of the combined market share and that he plans to review the deal personally.
For its part, Netflix says it is confident Warner will reject Paramount's offer and that regulators and Trump will support its deal, citing numerous conversations co-CEO Ted Sarandos has had with it about the streaming company's expansion and hiring.
“I think the president's interests in this are the same as ours, which is to create and protect jobs,” Sarandos said Monday at an investor conference.
The fight over Warner has sparked strong reactions in Washington, with politicians from both major parties weighing the possible impact on streaming prices, movie theater occupancy, and diversity in entertainment choices and political views.
Paramount, which is run by David Ellison, whose family has close ties to Trump, said it submitted six offers to Warner in the 12 weeks before the latest offer.
“We believe our offering will make Hollywood stronger in the best interests of the creative community, consumers and the film industry,” Paramount's CEO said in a statement. Ellison added that his deal will lead to more competition in the industry, rather than less, and more films in theaters.
A regulatory filing Monday outlined another possible advantage for Paramount to defeat Trump: An investment firm run by Trump's son-in-law Jared Kushner would also invest in the deal.
The project will also involve funds controlled by the governments of three unnamed Gulf countries, commonly known as Saudi Arabia, Abu Dhabi and Qatar. The Trump family company has struck deals this year to build buildings and resorts bearing his name in Saudi Arabia and Qatar, in the first case with a company closely linked to the government and in the second with the government foundation itself.
Also, perhaps, recent changes in Paramount's favor speak in favor of CBS News since purchasing news and commentary site The Free Press in October. The site's founder, Bari Weiss, who had a reputation as an anti-woke culture activist, was then named editor-in-chief, meaning Ellison was intent on shaking up the legendary network of Walter Cronkite, Dan Rather and 60 Minutes, which many conservatives had long seen as the epitome of the liberal media establishment.
However, Trump is a suspicious individual given his tendency to make decisions based on intuition and personal mood.
On Monday, he criticized Paramount for allowing “60 Minutes” to interview his ally-turned-enemy Rep. Marjorie Taylor Greene, writing on social media that “THEY ARE NOT BETTER THAN THE OLD OWNER.”
Drama around control Warner began Friday when Netflix made a surprise announcement that it had struck a deal with its management to buy the Hollywood giant behind “Harry Potter.” HBO Max And DC Studios.
The cash and stock offer was valued at $27.75 per Warner share, bringing the total enterprise value to $82.7 billion, including the debt that will be assumed in the deal. In contrast, Paramount's offer is $30 per Warner share and is worth $108 billion, including assumed debt. Paramount's offer expires on January 8 unless extended.
But it's difficult to compare the two deals because they're buying different things. Netflix's proposal, if it goes through, would close only after Warner finalizes its previously announced agreement. separation of cable operations. The deal, which is unlikely to be finalized for at least a year, does not include networks such as CNN and Discovery.
The federal government has the power to void any major media deals if it has antitrust concerns, but such matters are typically left to Justice Department experts. In his decision to take personal part, Trump decided, as with other government regulations, to break sharply with precedent.
That worries Usha Haley, an international business strategist at Wichita State University, who noted that Ellison is the son of longtime Trump supporter Larry Ellison, the second richest man in the world.
“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.”
But others are unsure how big a role Trump will play.
John Mayo, an antitrust expert at Georgetown University, said scrutiny would be significant no matter which proposal is approved by shareholders and submitted to the Justice Department, and that he expects experts will not involve party affiliation in their decisions, despite the political atmosphere.
“It may at least affect the rhetoric that is being heard in the press,” he said, “though I doubt it will affect the analysis that is being done at the Department of Justice.”
Paramount shares rose 9% on Monday, Netflix shares fell 3.4% and Warner Bros. shares. closed down 4.4%.
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Associated Press writers Matt Sedensky, David Bauder and Charles Sheehan in New York and Michael Liedtke in San Francisco contributed to this report.
