Paramount Skydance Corp on Monday launched a hostile takeover offer for Warner Bros Discovery Inc, initiating a potentially bruising battle with rival bidder Netflix Inc to buy the company behind HBO, CNN and a famed movie studio along with the power to reshape much of the US’ entertainment landscape.
Emerging just days after top Warner managers agreed to Netflix’s US$72 billion purchase, the Paramount bid seeks to go over the heads of those leaders by appealing directly to Warner shareholders with more money — US$74.4 billion — and a plan to buy all of Warner’s business, including the cable business that Netflix does not want.
Paramount said its decision to go hostile came after it made several earlier offers that Warner management “never engaged meaningfully” with following the company’s October announcement that it was open to selling itself.
Photo: EPA
In its appeal to shareholders, Paramount said its offer also contains more cash than Netflix’s bid — US$18 billion more — and argued that it is more likely to pass scrutiny from US President Donald Trump’s administration, a big concern given his habit of injecting himself in US business decisions.
Over the weekend, Trump said the Netflix-Warner combo “could be a problem” because of the size of the combined market share and that he planned to review the deal personally.
Netflix said it is confident Warner would reject the Paramount bid and that regulators, and Trump, would back its deal, citing multiple conversations that co-CEO Ted Sarandos has had with him about the streaming company’s expansion and hiring.
“I think the president’s interest in this is the same as ours, which is to create and protect jobs,” Sarandos said on Monday at an investor conference.
Paramount, run by David Ellison, whose family is closely allied with Trump, said it had submitted six proposals to Warner over a 12-week period before the latest offer.
“We believe our offer will create a stronger Hollywood. It is in the best interests of the creative community, consumers and the movie theater industry,” Ellison said in a statement.
He added that his deal would lead to more competition in the industry, not less, and more movies in theaters.
A regulatory document released on Monday suggested another possible Paramount advantage to win over Trump: An investment firm run by Trump’s son-in-law, Jared Kushner, would be investing in the deal, too.
Also participating would be funds controlled by the governments of three unnamed Persian Gulf countries, widely reported as Saudi Arabia, the United Arab Emirates and Qatar. Trump’s family company has struck deals this year for buildings and resorts that bear his name in Saudi Arabia and Qatar, partnering in the former with a company closely tied to the government and in the latter with the government fund itself.
The US federal government has the authority to kill any big media deals if it has antitrust concerns, but such matters are usually left to experts at the US Department of Justice.
In his decision to get involved personally, Trump has decided, as he has with other government norms, to make a sharp break with precedent.
Shares of Paramount surged 9 percent on Monday while Netflix fell 3.4 percent, and Warner Bros closed up 4.4 percent.
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