Warner Bros favours Netflix offer over $108bn Paramount bid

Warner Bros Discovery has advised its shareholders to reject Paramount Skydance's $108.4bn (£80.75bn) takeover bid.

Paramount said its proposal was “outperforms” the $72 billion deal Warner Bros struck with Netflix for its film and streaming businesses.

But in a dramatic twist to the story of who would take control of one of Hollywood's oldest and most famous film studios, Warner Brother's board “unanimously” recommended rejecting the offer and agreed that a deal with Netflix was in the firm's best interests.

The media giant put itself up for sale in October after receiving “multiple” expressions of interest from potential buyers, including Paramount Skydance.

On December 5, Warner Bros Discovery announced that agreed to sell its film and streaming business to Netflix..

In a lengthy court filing, the board of Warner Bros Discovery said Paramount's proposal poses numerous and significant risks and strongly rejected the idea that the Ellison family – one of the wealthiest in America – is financially backing the proposal.

Paramount is backed by the billionaire Ellison family, which has close ties to the president.

Reflecting the current power in the entertainment industry, Warner Bros' board of directors says streaming giant Netflix's bid is well-financed and provides greater long-term benefits for shareholders.

Netflix welcomed Warner Bros.' recommendation. Ted Sarandos, co-CEO of Netflix, called the company's merger agreement “excellent” and “in the best interests of shareholders.”

In a letter to Warner Bros shareholders, Netflix reiterated its position that its proposal for Warner Bros includes a clearer financing structure and less regulatory risk.

Paramount could still come back with another offer, meaning the takeover saga plaguing Hollywood isn't over just yet.

There are significant differences between Netflix and Paramount's offerings.

Netflix wants to buy Warner Bros. and its streaming service HBO, which will also give it access to Warner Bros.' rich library of content. and secure access to these movies and shows for its subscribers.

But it doesn't need the media giant's pay-TV channels. If Warner Bros. will strike a deal with Netflix, which will allow Warner Bros to sell its television networks such as CNN and TNT into a separate company before the takeover is completed.

Paramount, on the other hand, wants to buy Warner Bros outright, which would mean acquiring competitors of its own television networks such as CBS, MTV and Showtime.

Regulators may raise questions about diminishing consumer choice as the entertainment industry continues to consolidate ownership.

A week after Netflix announced a deal to acquire Warner Bros. Paramount Skydance has launched a new offer for the entire company, including its television networks.

The Warner Bros takeover is expected to face criticism from competition regulators in the US and Europe.

New owner Warner Bros will gain a significant advantage in the highly competitive streaming market. It will have a huge library of movies and TV shows, including Harry Potter, MonsterVerse, Friends and the HBO Max streaming service.

Mike Proulx of research firm Forrester said the battle for control of Warner Bros will take several more months.

“What's unfolding now feels like a real, much more important episode of HBO's 'Succession,'” he said. “And if you think you know how this conspiracy will end, think again.”

Some in the film industry have criticized the plan to merge all or part of Warner Bros. with a rival. The Writers Guild of America East and West chapters called for the merger to be blocked, arguing it would lead to lower wages and job losses.

According to him, the amount of content for viewers will also be reduced.