Paramount launched a hostile bid Monday for Warner Bros. Discovery worth an estimated $74.4 billion, which it will take directly to shareholders in a challenge to Netflix, which reached a $82.7 billion takeover deal with the company last week.
Describing the Netflix offer as inferior, Paramount CEO David Ellison announced an offer of $30 per share in cash, which sets the stage for a battle of corporate titans with the sort of Hollywood intrigue usually seen in scripts.
“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company,” Ellison said in a statement. “Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
Paramount officials also suggested the company’s proposal would have an easier path to regulatory approval, saying it “enhances competition and is pro-consumer.” The company insisted that its offer runs counter to Netflix’s “anticompetitive” proposal, “which would entrench its monopoly with a 43% share” of global streaming service subscribers, leading to higher prices for subscribers and lower pay for content creators.
Netflix and Warner Bros. announced their proposed $72 billion takeover agreement on Friday, a deal that would include Warner’s film and television studios and the HBO and HBO Max brands.
Netflix has more than 300 million subscribers worldwide. With HBO Max folded in, that number would jump past 420 million, giving the company a subscriber base unmatched by any other premium streaming service.
“Our mission has always been to entertain the world,” Ted Sarandos, co-CEO of Netflix, said in a statement.
“By combining Warner Bros. incredible library of shows and movies from timeless classics like `Casablanca’ and `Citizen Kane’ to modern favorites like `Harry Potter’ and `Friends’ with our culture-defining titles like `Stranger Things,’ `KPop Demon Hunters’ and `Squid Game,’ we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling.”
When completed, the deal will make Netflix a Hollywood juggernaut bigger than The Walt Disney Co.
Netflix is offering about $27.75 per Warner Bros. Discovery share in a cash-and-stock deal and will take on more than $10 billion in company debt, putting the transaction’s value at $82.7 billion.
The Netflix proposal was met with criticism from some key Hollywood unions, including the Directors Guild of America and Writers Guild of America, which expressed dismay about possible loss of jobs and reduction in wages.
President Donald Trump also cast a shadow over the Netflix proposal on Sunday, telling reporters the deal “could be a problem” given the size of the resulting company. He said a Netflix takeover would create a firm with a “big market share.”
“There’s no question about it, it could be a problem,” Trump said, adding that he will “be involved in that decision” about granting regulatory approval to the deal.
Trump praised the work of Netflix CEO Ted Sarandos, but the president also has a close relationship with Ellison. The Paramount takeover is also being backed by Trump’s son-in-law, Jared Kushner.
Sarandos, speaking at a conference in New York on Monday, said Paramount’s hostile bid “was entirely expected.”
“We have a deal done, and we are … happy with the deal,” Sarandos said.
He said the deal would be a boon for shareholders and consumers, calling it a “great way to create and protect jobs in the entertainment industry. We’re super confident we’re going to get it across the line.”