In a desperate attempt to outbid Netflix and establish a media powerhouse that would contest the streaming giant’s hegemony, Paramount Skydance made a hostile bid of $108.4 billion for Warner Bros. Discovery on Monday.
After a weeks-long bidding fight with Paramount and Comcast, Netflix won the $72 billion equity agreement for Warner Bros. Discovery’s TV, movie, and streaming properties on Friday.
However, the competition for Warner Bros. and its valuable HBO and DC Comics assets will not be resolved quickly due to Paramount’s most recent attempt.
Paramount said that its all-cash, $30 per share offer for Warner Bros. Discovery is better than Netflix’s, giving shareholders $18 billion more in cash and a simpler route to regulatory clearance.
Additionally, it made the case that customers, movie theaters, and the creative community would all gain from increased competition if Paramount and Warner Bros. merged.
In a statement, Paramount CEO David Ellison said, “We believe our offer will create a stronger Hollywood.”
Over the weekend, U.S. President Donald Trump questioned Netflix’s offer, which has a $5.8 billion breakup fee and is certain to come under intense antitrust investigation.
Bipartisan politicians and Hollywood unions have already sharply criticised the offer due to worries that it would result in job losses and higher consumer pricing.
Following the company’s proposal, Paramount shares were up 3.7% in morning trading. Netflix shares dropped 3.6%, while Warner Bros. Discovery saw a 6.7% increase.
TURNS AND TWISTS
But Paramount’s offer would also come under some scrutiny.
Combining Paramount with Warner Bros. would strengthen Paramount’s dominant position in the studio business, which some fear may result in job losses due to the industry’s growing consolidation.
The Warner Bros. board was worried about the financing, but Paramount had increased its offer to $30 per share for the entire firm on Thursday.
Warner Bros. Discovery “never engaged meaningfully” with the six ideas Paramount offered over 12 weeks, according to the company’s appeal to shareholders.
The $30 cash offer outperforms Netflix’s $27.75 offer, which combines cash and shares, and is a 139% premium over the company’s unaltered stock price.
The acquisition of Warner Bros. Discovery is still ongoing. Although Netflix is in the lead, there will be detours before the finish line.
To impede Netflix, Paramount will make appeals to lawmakers, stockholders, and regulators. Ross Benes, senior analyst at eMarketer, warned that the conflict might drag on.
Beginning in September, Paramount made several unsuccessful attempts to create an entertainment juggernaut that could rival Netflix and other behemoths like Apple that have ventured into the media.
The studio contended that merging its Paramount+ streaming service with Warner Bros.’ HBO Max would set it up for expansion and produce a significant rival to Netflix, Amazon Prime Video, or Walt Disney’s Disney+ that gives customers additional options.
Paramount insisted that it would stand up for Hollywood and its artists, that it would continue to release films in theatres, and that it would do so even if it merged with Warner Bros.
The studio contended that combining Warner Bros.’ television networks, such as CNN and TNT, with Paramount’s television portfolio would put them in a better position.
It had been written to Warner Bros. raising concerns about the sale procedure and claiming that the corporation had foregone a fair bidding process and had already decided Netflix would win.
That came after rumors that Warner Bros. executives disparaged Paramount’s offer and referred to the Netflix transaction as a “slam dunk.”
“BIAS AGAINST US”
Paramount CEO David Ellison claimed there is “inherent bias” against his firm in the bidding in an interview with CNBC on Monday.
“In this transaction, we will be the biggest investor.
In an interview with CNBC, Ellison stated, “We are literally sitting here today because we are fighting for our shareholders and the shareholders of Warner Bros. Discovery.”
Given Ellison’s substantial financial resources and the support of his father, Oracle co-founder and the second-richest person in the world, Larry Ellison, who has strong ties to the Trump administration, some analysts and industry professionals believe Paramount is the greatest option for acquiring Warner Bros. Discovery.
According to Bloomberg News, In mid-November, Trump met with Ted Sarandos, co-CEO of Netflix, and advised the executive that Warner Bros. should sell to the highest bidder.
Unless Netflix boosts its prices or operates distinct platforms—neither of which the brokerage anticipates—the combined business will have significant overlap, and its combined streaming revenue would decrease, according to Morningstar analysts.
Sarandos stated that Netflix is “highly confident” in the regulatory process and that the deal would increase value for consumers, shareholders, and talent to calm antitrust concerns.
As it develops into gaming, live entertainment, and larger consumer ecosystems, analysts predicted that Netflix’s drive would come from gaining exclusive, long-term control of premium IP and lowering its reliance on outside studios.
For its gaming aspirations, access to WBD’s enormous intellectual property would offer instant credibility, audience reach, and merchandise potential—an area where Netflix is still developing original content and brand recognition.
