The battle for control of Warner Bros Discovery has sharply escalated, as Paramount Skydance on Monday unveiled a massive $108.4 billion hostile takeover bid. The all-cash offer, backed by investors including Jared Kushner and Middle Eastern sovereign wealth funds, challenges Netflix’s recent $72 billion equity deal, setting up a long and politically sensitive fight over a key Hollywood media library.
What Are the Details of Paramount’s Hostile Bid?
Paramount’s unsolicited bid offers to buy all of Warner Bros Discovery at $30 per share in cash, a clear premium compared to Netflix’s $27.75 per-share offer that combines cash and stock. The bid represents a staggering 139% premium over Warner Bros’ stock price before the acquisition talks began.
Key features of the bid include:
- Total Value: $108.4 billion.
- Financing Backing: The offer is financed by Affinity Partners (Jared Kushner’s firm), the sovereign wealth funds of Saudi Arabia, Qatar, and Abu Dhabi, and is backstopped by the Ellison family (father Larry Ellison is the world’s second-richest person).
- Scope: Unlike Netflix’s bid for just the studios and streaming assets, Paramount’s offer is for the entire company, including its cable television networks.
Why Does Paramount Think Its Bid is Superior?
Paramount CEO David Ellison argues their offer is better for shareholders, regulators, and the creative industry. The company claims it provides shareholders $18 billion more in cash and a clearer, faster path to regulatory approval compared to the Netflix deal, which is already facing intense antitrust scrutiny.
Ellison positioned the bid as pro-Hollywood, stating, “We believe our offer will create a stronger Hollywood,” and emphasizing a commitment to theatrical releases and competition. Paramount also alleges bias in the bidding process, claiming Warner Bros’ management predetermined Netflix as the winner and dismissed their proposals.
What Are the Major Antitrust and Political Hurdles?
Both mega-deals face significant regulatory and political challenges, but of different natures.
- Netflix Deal: Bipartisan legislative resistance to Netflix’s prospective takeover of roughly half of the streaming business has drawn criticism for becoming a “nightmare” for customers.
- Paramount Deal: Would consolidate two major traditional media and cable TV operators. Democratic senators have previously warned such a merger could result in “one company controlling almost everything Americans watch on TV.”
The political dimension is heightened by the involvement of Jared Kushner (Trump’s son-in-law) and the Ellison family’s close White House ties. Analysts note Paramount is leveraging its political connections, with one market analyst commenting it’s a “sad commentary” that closeness to the Oval Office is seen as a deal-making advantage.
How Have the Markets and Players Reacted?
The hostile bid has immediately impacted the market and drawn other players to the sidelines.
- Stock Movement: Paramount shares rose 10%, Warner Bros Discovery rose 3.8%, while Netflix shares fell 4.2%.
- Comcast Bows Out: NBCUniversal parent Comcast stated it is not interested in straining its balance sheet for Warner Bros, effectively exiting the race.
- Warner Bros & Netflix: Both companies did not immediately comment on the new bid.
Your Questions Answered: Warner Bros Bidding War FAQs
Q: What is a “hostile” takeover bid?
A: The move involves an unsolicited offer sent directly to shareholders, sidestepping the board after prior talks were rejected or ignored. Paramount says it is approaching Warner Bros shareholders because the board did not respond to earlier offers.
Q: How is Paramount’s bid different from Netflix’s?
A: Paramount is offering to buy the entire company (including cable channels like CNN, Discovery) for $108B in all cash. Netflix is buying only the studio, film/TV library, and streaming assets (HBO Max) for $72B in a mix of cash and stock.
Q: Who is backing Paramount’s bid financially?
A: The bid is backed by an alliance of Jared Kushner’s Affinity Partners, the sovereign wealth funds of Saudi Arabia, Qatar, and Abu Dhabi, and is financially guaranteed (backstopped) by the Ellison family.
Q: What happens to the agreed Netflix deal now?
A: The Warner Bros Discovery board must now evaluate the new offer. Paramount’s higher price and all-cash terms will pressure the board to engage or risk shareholder lawsuits for not maximizing value. The Netflix deal includes a $5.8 billion break-up fee.
Q: Which deal is more likely to get regulatory approval?
A: Both face steep hurdles. Netflix’s deal raises “streaming monopoly” concerns. Paramount’s deal raises “traditional media/cable monopoly” concerns. Paramount argues its path is clearer, but both would trigger lengthy, uncertain antitrust reviews.
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