Paramount CEO David Ellison sent a letter to Warner Bros. Discovery shareholders Wednesday, making his case in support of Paramount’s bid to purchase the company, calling it a superior proposal than a previously announced purchase agreement reached with Netflix.
“Paramount began pursuing Warner Bros. Discovery because we, along with our partner RedBird Capital, believe we are the best stewards not only to build long-term value for the asset but also delight audiences and help cultivate a more vibrant creative community,” Ellison wrote. “We funded, founded and then merged Skydance with Paramount and know the sacrifices and investment it takes to capitalize and grow a media business. I am passionate and dedicated to this pursuit, committed to putting my own money in, and that is why I am writing to you today.”
Ellison wrote that Paramount’s $74.4 billion offer “delivers superior value and a faster, more certain path to completion than the transaction announced with Netflix.” He called Paramount’s offer “financially superior” to the $82.7 billion Netflix proposal, “which provides WBD shareholders with lower value, less cash and significantly less certainty.”
He also insisted that the Netflix proposal faces “severe regulatory uncertainty” due to the ultimate size and market share of the resulting company.
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 Paramount proposal is a $30-per-share all-cash tender offer.
The Netflix proposal has been 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.”
But Ellison insisted in his letter Wednesday that Paramount’s offer will yield superior results for shareholders.
“Our proposal represents a compelling opportunity for WBD shareholders,” he wrote. “We are committed to seeing this transaction through. Since Monday, we have had the opportunity to speak with a number of WBD shareholders who have expressed confusion and disappointment at the process that WBD conducted, which appears to have prioritized a deal with Netflix over shareholder value maximization.
“… We urge you to register your view with the WBD board that you deem Paramount’s offer to be superior by tendering your shares today.”