Warner Bros. asks investors to reject Paramount Skydance takeover bid
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Warner Bros. is asking shareholders to reject Paramount Skydance’s takeover bid, saying a rival bid from Netflix would be better for customers.
“We strongly believe that the joining of Netflix and Warner Bros. will provide consumers with greater choice and value, allow the creative community to reach even greater audiences with our combined distribution, and fuel our long-term growth,” Warner Bros. said Wednesday.
“We made this deal because their deep portfolio of iconic franchises, extensive library and strong studio capabilities will complement – not duplicate – our existing business.”
Paramount turned hostile on its bid last week and asked shareholders to reject the deal with Netflix backed by Warner Bros.’s board.
Paramount is offering $30 US per Warner share, compared with Netflix’s $27.75 US.
Paramount’s bid is not entirely fair. While Wednesday’s letter to shareholders means Paramount’s offer is not supported by Warner Bros.’s board, shareholders could still decide to give up their shares in favor of Paramount’s offer for the entire company — which also includes cable giants CNN and Discovery.
Unlike Paramount’s bid, Netflix’s offer does not include purchasing Warner Bros.’s cable operations. The acquisition by Netflix, if approved by regulators and shareholders, will close only after Warner completes the previously announced process of separating its cable operations.
Paramount on Wednesday reaffirmed its offer from last week and urged Warner Bros. Discovery shareholders to tell the company they prefer Paramount’s “better offer.”
“I am encouraged by the feedback we have received from WBD shareholders, who clearly understand the benefits of our proposal,” said David Ellison, Paramount CEO and Chairman. “We will continue to move forward to complete this transaction, which is in the best interests of WBD shareholders, consumers and the creative industries.”
Takeover bids face regulatory scrutiny
Paramount claims it made six separate bids, which were rejected by Warner leadership, before announcing its deal with Netflix on December 5. Only then did he make his proposal directly to Warner’s shareholders.
“The board reviewed Paramount Skydance’s most recent unsolicited tender proposal with the same care and discipline that it has applied throughout this process, including reviewing numerous prior proposals,” Warner Bros. said in its statement.
“The Board’s evaluation followed a thorough and consistent process and is based on its fiduciary duties.”
Apart from the green signal from shareholders, both takeover bids face tremendous regulatory scrutiny. Warner’s change in ownership would drastically alter the entertainment and media industry – impacting film production, consumer streaming platforms and, in the case of Paramount, the news landscape.
Critics of the Netflix deal say combining the streaming giant with Warner’s HBO Max would give it overwhelming market dominance, while the Paramount+ streaming service is much smaller.
“This is something we’ve heard for a long time — including since we started the streaming business,” Warner Bros. said in a securities filing Wednesday. “Our stance then and now is the same – we see this as a victory for the entertainment industry, not the end of it.”
Paramount Skydance made a US$108 billion hostile takeover bid for Warner Bros. Discovery just days after Netflix announced it had struck a US$72 billion deal with the legacy studio. This is a step to which even US President Donald Trump is objecting.
The bids from both Netflix and Paramount have raised concerns about what they could mean for film and TV production. While Netflix has agreed to maintain Paramount’s contractual obligations for theatrical release, critics have pointed to its past business model and reliance on online releases. Yet Paramount and Warner Bros. are two of the “big five” legacy studios remaining in Hollywood today.
Paramount’s attempt to buy Warner’s cable networks and news business would also bring CBS and CNN under one roof. In addition to further accelerating media consolidation, it could raise questions about changes in editorial control – as seen at CBS News in the wake of and following Skydance’s $8 billion US purchase of Paramount, which it completed in August.
US President Donald Trump has already been vocal about his future involvement in the deal, signaling that politics will play a role in regulatory approval.
Trump previously said the Netflix deal “could be a problem” because of the potential for outside control of the market. The Republican president also has close ties to Oracle’s billionaire founder Larry Ellison, father of Paramount’s CEO, whose family trust is also heavily backing the company’s bid to buy Warner.
Affinity Partners, the investment firm run by Trump’s son-in-law Jared Kushner, had previously said it would also invest in the Paramount deal. But on Tuesday the company announced it would withdraw from the bidding.
Yet, Trump also has a tendency to make decisions based on his mind and his personal mood. He has continued to publicly attack Paramount over CBS’s editorial decisions 60 minutes,
“For those who think I’m close to the new owners of CBS, please understand this. 60 minutes “Since the so-called ‘takeover’ he has treated me worse than he has ever treated me before,” Trump wrote on his Truth social platform on Tuesday. If they’re friends, I’d hate to see them enemies!”
