Trump Enters the Fight Over Paramount’s Warner Bros. Bid
David Ellison, son of tech billionaire and Oracle chief Larry Ellison, spearheaded a $108 billion hostile bid through Paramount Skydance to acquire Warner Bros. Discovery, positioning it against Netflix’s $82.7 billion agreement. Paramount’s proposed all-cash deal encompasses Warner Bros.’s entire business, which includes the legacy cable-TV and news networks, in contrast to Netflix’s offer that pertains solely to the film studios and streaming business. Paramount’s proposal is expected to appraise the media group at $30 per share, providing $18 billion more in cash compared to the Netflix agreement. The latest offer marks yet another instance of Paramount attempting to acquire Warner Bros. Ellison has submitted a minimum of six proposals over the course of 12 weeks to acquire WBD amid a confidential bidding process. Nonetheless, the company’s board dismissed these proposals due to worries that it would result in “excessive media contraction.”
Following these unsuccessful efforts, Paramount has approached Warner Bros. shareholders and its board of directors directly, outlining the advantages of its proposal. Paramount’s most recent all-cash proposal is made in collaboration with Donald Trump’s son-in-law, Jared Kushner, along with several sovereign wealth funds from the Middle East. The Ellison family and RedBird Capital have pledged to support the full $40.7 billion of equity capital. Reports says that financing would also be sourced from sovereign wealth funds in Saudi Arabia, Abu Dhabi, and Qatar, in addition to Kushner’s Affinity Partners. Trump has expressed apprehensions regarding Netflix’s proposal. During an event in Washington DC on Sunday, he stated that Netflix possesses a “big market share” and that the combined size of the firms “could be a problem”. Trump stated that he would have a role in determining whether the proposed merger between Netflix and Warner Bros. should proceed.
In its letter on Monday, Paramount conveyed a sense of optimism regarding the potential to win the bid. “Paramount is highly confident in achieving expeditious regulatory clearance for its proposed offer, as it enhances competition and is pro-consumer, while creating a strong champion for creative talent and consumer choice,” the company stated. “In contrast, the Netflix transaction is based on the unrealistic assumption that its anticompetitive merger with Warner Bros., which would solidify its monopoly with a 43 percent share of global Subscription Video on Demand subscribers, could endure numerous lengthy regulatory challenges worldwide,” it added. In the meantime, Netflix Chief Ted Sarandos described the Paramount counteroffer as “entirely expected. We’re super confident we’re going to get it across the line and finish,” he stated.
Paramount’s offer for Warner Bros. is scheduled to expire at 5 pm on January 8; however, there is potential for the deadline to be extended. In response to the proposal, Warner Bros. stated it would “carefully review and consider” the approach, while also noting that it was “not modifying its recommendation with respect to the agreement with Netflix.” The Guardian reports that within the next 10 days, WBD will communicate the board’s recommendation regarding Paramount to its shareholders.
