Paramount Skydance makes $108B US hostile bid for Warner Bros Discovery after Netflix move

Paramount Skydance on Monday launched a US$108.4 billion hostile bid for Warner Bros. Discovery, blocking a proposed US$72 billion equity deal with Netflix in a last-ditch effort to create a media powerhouse that would challenge the streaming giant’s dominance.

Warner Bros. Discovery’s board of directors said Monday afternoon that it will review Paramount’s offer, but is not revising its recommendation regarding Netflix. It advised the company to “take no action at this time” regarding the Paramount Skydance proposal.

Netflix co-CEO Ted Sarandos said that Paramount’s offer was “completely expected” and that the streaming giant is still “extremely confident” that its deal will go through.

Unlike Netflix, Paramount is also offering to buy Warner Bros.’s cable television assets. This is the same bid that Warner Bros. previously rejected in favor of Netflix’s offer. Paramount executives said their offer was about US$18 billion higher than Netflix’s competing bid, which they said was based on a “misguided potential valuation” of those cable properties.

antitrust concerns

The bid has already been sharply criticized by bipartisan lawmakers and Hollywood unions over concerns it could cut jobs and raise prices for consumers.

However, analysts say Paramount’s offer comes with its own risks, including additional debt needed to complete the transaction. The acquisition will also bring its own antitrust scrutiny as does the integration of two major television operators.

What is a hostile takeover bid?

Paramount’s offer was made in an unusual way. After Netflix and Warner Bros. jointly announced their deal on Friday, Paramount publicly disclosed information about its own offer — a move commonly known as a hostile takeover bid.

Such a move typically involves an unsolicited buyer acting against the express wishes of the company they wish to purchase. This is what Elon Musk did when he got paid $43 billion for Twitter (Now X). Similar to Paramount’s offer, that deal was made against the express plans of Twitter’s board of directors.

Paramount made its proposal directly to Warner Bros. shareholders in an attempt to sway them against the deal put forward by the company’s board of directors.

In its appeal, Paramount said it submitted six proposals over the course of 12 weeks, but Warner Bros. “never meaningfully acted” on these proposals.

quality vs quantity

Speaking to CBC News, Exclaim! The magazine’s film editor Rachel Ho said that the relative advantages – and considerable disadvantages – of any deal likely put Warner Bros. between a rock and a hard place.

The general view within the industry is that Paramount’s acquisition is somewhat less risky, he said. That said, Paramount is also a traditional movie house that has prioritized quality over quantity, unlike Netflix.

“Netflix is ​​a content farm in many ways,” he said. “They’re just looking to churn out as much as possible.”

This is further complicated by Sarandos’ opposition to theatrical exclusivity windows: the industry practice of keeping films in theaters only for a set amount of time before viewing them at home.

Although Sarandos has since tried Asuez fears Netflix will kill theatergoersHe has long described the exclusivity window as not consumer friendly. production group from European cinema trade body UNICTo Writers Guild of America and Directors Guild of America has said that Netflix’s acquisition could pose a risk to the future of film production.

Ho says Paramount is unlikely to scale back the theatrical release, but its proximity to the Trump administration raises other concerns. Paramount’s bid is partially backed by Oracle co-founder Larry Ellison, father of Paramount CEO David Ellison and one of the richest people in the world. The elder Ellison also has close ties to the White House.

Paramount’s bid follows its purchase of news and commentary website Free Press in October.

The site’s founder, Bari Weiss, known for fighting “woke” culture, was then installed as editor-in-chief of CBS News, another Paramount property.

Some observers took his appointment as a sign Ellison intended to shake up the prestigious network of Walter Cronkite, Dan Rather and others. 60 minuteswho has long been viewed by many conservatives as the personification of a liberal media establishment.

It also follows Paramount’s $8 billion US merger with SkydanceWhich was approved after months of turmoil surrounding US President Donald Trump’s legal battle 60 minutesAmid growing concerns over editorial independence, critics of that agreement described it as a veiled bribe to appease Trump,

Ho said, “It’s certainly a concern that not only Warner Bros. shareholders need to be concerned about, but I think we all need to be concerned about.”

Similarly, US Senator Elizabeth Warren, a Democrat, said that Paramount’s offer “supported by some of Trump’s friends… raises serious questions about influence-peddling, political bias and national security risks.”

One of the investors partially backing Paramount’s offering is Affinity Partners, which is run by Trump’s son-in-law Jared Kushner.

Trump said Monday that none of the bidding parties were his “friends” and that he had not spoken to Kushner about the Paramount bid.

How will this affect Canadians?

Entertainment lawyer Dave Stern told CBC News that whichever buyer is successful, the impact on the Canadian entertainment landscape is certain.

Given how long it would take for a Paramount or Netflix deal to get government approval, any potential changes on the consumer side are still possible in the future.

But it was given to Warner Bros. Several agreements with Canadian media holders – notably Bell Media’s multi-year dealwhich gives streaming platform Crave access to HBO content — something Stern says could ultimately change the streaming experience in Canada substantially.

If Paramount or Netflix suddenly got access to Warner Bros.’ The massive library of content, Stern says, would either incentivize Canadian streamers to pay to cancel those contracts, or simply allow those contracts to expire.

“There’s value content here. So do you really want to keep it on Crave for X years? Or do you want to pull it and merge your platforms?” Stern said. “Or keep it on your own platform, or have the freedom to do whatever you think is best for your market and your consumers.”

Estimating further, Stern says there’s a possibility this could help boost Canadian production. He said, if Canadian media companies get paid enough to have their contracts canceled along with losing access to American content, they may be encouraged to invest more in creating and licensing Canadian content to fill those gaps.

“Regardless of who completes this bid, whether it’s Paramount or Netflix, I think it will be absolutely positive for Canadians,” he said.