Paramount Skydance launches rival bid for Warner Bros Discovery

Paramount Skydance has made another bid to buy Warner Bros Discovery, seeking to beat Netflix's rival plan to buy the company's studio and streaming networks.

Paramount, which is backed by the billionaire Ellison family, said it is making a direct offer to shareholders at $30 a share to buy all of Warner Bros., including its traditional television networks.

The company said its proposal is a “superior alternative” to Netflix's, providing shareholders with more cash and a better chance of regulatory approval.

President Donald Trump said 'There could be a problem' with buying Netflixpointing to competition concerns given the size of the companies.

The hostile bid from Paramount, a smaller player than Netflix known for brands including CBS News, Nickelodeon and Mission Impossible, is the latest twist in a saga that began months ago when Paramount began making offers to buy Warner Bros.

This ultimately prompted Warner Bros, owner of HBO and classics from Looney Tunes to Harry Potter, to formally open the bidding process.

Warner Bros named Netflix the winner of that auction on Friday, announcing a deal that valued its studio and streaming networks including HBO at about $83 billion, including its debt.

It said the sale follows the planned spin-off of other parts of Warner Brothers' business, including CNN, into an independent company.

Paramount's offer values ​​the entire company at $108.4 billion, which it says is a better deal.

In the CNBC interview, Mr. Ellison also touted the benefits of his plan for the media industry, arguing that Netflix's takeover of Warner Brothers Discovery would give one firm too much power over actors and other industry players.

“It's a terrible deal for Hollywood,” he said.

Mr. Ellison said he had “great conversations” with Mr. Trump about the deal and believed the president cared about competition.

Any takeover is expected to face scrutiny from competition regulators in the US and Europe.

Analysts say Netflix's plan is likely to raise concerns about dominance in streaming, while Paramount's proposal will prompt a review of the impact on advertisers and local TV distributors, given the combined company's power over sports and children's networks.

Many on Wall Street viewed Paramount as a strong backer of Warner Bros., in part because the relationship between David and Larry Ellison, who is a Republican megadonor, and Trump was expected to help facilitate the process.

Trump's son-in-law Jared Kushner is among the financial partners Paramount is working with on the deal, according to filings with the Securities and Exchange Commission.

Paramount's plan to buy all of Warner Bros was also seen as a chance to achieve both scale and potential cost savings, which would put the traditional television networks owned by both companies in a better position.

Mr. Ellison said he believed Warner Bros.' plan to spin off the traditional networks into an independent company would set them up for failure and ultimately prove to be a mistake for shareholders.

“I think [its shares are] will cost a lot less than what people claim,” he said.

Shares of Warner Bros jumped more than 6% in opening trading Monday, while shares of Paramount also rose.

However, Netflix shares fell more than 3%.

Netflix is ​​the largest streaming company in the world with over 300 million subscribers. The company said Friday it believes the takeover will help revitalize its business and said it was confident it would receive regulatory approval.

Analysts said the move was also defensive, aimed at preventing rivals from snatching up content that Warner Bros has owned for decades and becoming more viable competitors.

More than 70% of HBO Max subscribers in the U.S. also have Netflix, according to analysts at Raymond James, who said in a report Friday that they expect further twists in the acquisition story.

Ben Barringer, head of technology research at Quilter Cheviot, said he believes the deal makes more sense for Paramount than Netflix, calling it simply a “nice acquisition” for the streamer.

“Ultimately, Paramount needs this deal more than Netflix does,” he said. “Paramount remains a legacy entertainment provider that lacks the scale needed in the modern era.”