Paramount Skydance has initiated a hostile bid valued at $108.4 billion for Warner Bros Discovery, intensifying the competition in the media landscape. This move comes shortly after Netflix secured a $72 billion equity deal for Warner Bros Discovery’s TV and film assets, marking a significant shift in the ongoing battle for dominance in the streaming market.
The Warner Bros Discovery board announced on March 4, 2024, that it would evaluate Paramount’s offer but maintained its existing recommendation regarding Netflix’s proposal. The board advised shareholders to “take no action at this time” concerning the Paramount bid.
Paramount’s offer of $30 per share includes financing from Affinity Partners, an investment firm led by Jared Kushner, who is notably linked to former President Donald Trump. The bid is further supported by several Middle Eastern government-backed investment funds and the Ellison family, with Larry Ellison, the world’s second-richest individual, backing the initiative.
Paramount argues that its proposal offers a superior value for shareholders, providing an additional $18 billion in cash compared to Netflix’s offer. The company asserts that a merger would benefit the creative community, cinema operators, and consumers, fostering greater competition in the industry. In a statement, Paramount CEO David Ellison emphasized, “We believe our offer will create a stronger Hollywood.”
The bid encompasses Warner Bros Discovery’s entire portfolio, including its cable television properties. In contrast, Netflix’s offer focuses primarily on Warner Bros film and television studios, HBO, and the HBO Max streaming service. Analysts have raised concerns about the potential antitrust implications of a Paramount-Warner Bros merger, warning that it could lead to further consolidation within the industry.
Last month, Democratic senators, including Elizabeth Warren, cautioned that such a transaction could result in “one company controlling almost everything Americans watch on TV.” The proposed merger would elevate Paramount’s market share beyond that of Disney, heightening fears of monopolization in a sector already grappling with consolidation challenges.
Paramount’s offer represents a remarkable 139 percent premium over Warner Bros Discovery’s pre-bid value. Netflix’s competing bid, which combines cash and stock, sits at $27.75 per share. During a UBS conference, Netflix co-CEO Ted Sarandos expressed confidence in completing the deal, describing Paramount’s bid as “entirely expected.” He critiqued the anticipated synergies from the offer, suggesting they may lead to job cuts rather than job creation.
In regulatory filings, Paramount disclosed that the Ellison family and private equity firm RedBird Capital would backstop $40.7 billion in equity capital for the bid. This financial backing, combined with support from Kushner’s firm and various sovereign wealth funds, underscores the significant resources behind the offer.
Senator Warren has voiced strong opposition, stating that a merger would pose an “antitrust fire” and could raise concerns over political favoritism and national security. Despite Trump’s distancing from both bidders, he noted that neither party is aligned with him, emphasizing his intention to “do what’s right.”
Criticism has also emerged regarding Netflix’s bid, with bipartisan lawmakers and Hollywood unions expressing fears of potential job losses and increased consumer prices. Chris Beauchamp, chief market analyst at UK-based IG Group, commented that Paramount’s strategy relies on its proximity to the current administration, suggesting it aims to gain an advantage over its rival.
As the battle for Warner Bros Discovery unfolds, the industry watches closely, aware that the outcome could reshape the media landscape significantly. Whether Paramount can successfully navigate the regulatory landscape and secure the deal remains uncertain, but the implications of this bidding war are poised to reverberate across the entertainment sector.
