Paramount, led by David Ellison, isn’t giving up its bid to win Warner Bros. Late last week the Warner Bros. board announced it had accepted an $82.7 billion proposal from Netflix. It’s an offer Ellison tells shareholders is an “inferior proposal.” He has since launched an attempted hostile takeover after the historically brutal bidding war.
This morning, Ellison made it clear that he is prepared to outbid Netflix — by a substantial amount. Ellison is offering shareholders $30 per share, all in cash, for the entire company. Netflix is only interested in Warner Bros. and not the linear TV networks which are set to be spun off into a separate company this coming year. Its offer is only $27.75 per share, in a combination of cash and stock.
David Ellison in an interview with Bloomberg – YouTube, Bloomberg Podcasts
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“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company,” Ellison said in a statement. The carefully crafted line may be attempt to appeal to investors who felt disenfranchised by Warner Bros.’ surprise decision to go with Netflix.
“Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion,” Ellison said. Money talks, in Hollywood and on Wall Street. If Ellison can prove he’s offering a sure thing to shareholders, he may give them the final say.
Warner Bros. leadership may have to take it, like it or not.
“A Volatile and Complex Structure”
The Friday evening announcement that Netflix was acquiring Warner Bros. studio and HBO assets sent shockwaves through the industry. It’s an agreement that Paramount called “a volatile and complex structure” with its mix of cash ($23.25 per share) and stock ($4.50) being subject to future Netflix performance. It has an enterprise value of $82.7 billion.
A graphic showing the Netflix and Warner Bros. Logos – Netflix
Paramount, in contrast, is promising shareholders a more streamlined buyout. Ellison’s company wants to acquire not just the studio and HBO, but also Discovery, CNN, and the TV networks. It’s an offer with an enterprise value of $108.4 billion (including assumption of debt). It’s being paid in all-cash and will not be dependent on the future.
In effect, Paramount is arguing that its offer is cleaner and simpler than the deal Warner Bros. accepted from Netflix. Of the agreement with Netflix, Paramount argues, it puts shareholders at risk of going through the ordeal of “a protracted multi-jurisdictional regulatory clearance process with an uncertain outcome along with a complex and volatile mix of equity and cash.”
President Trump Weighs In
Sunday night, President Trump weighed in on the potential Warner Bros./Netflix merger. While he said that Netflix co-CEO Ted Sarandos is a “fantastic man,” he noted that it “could be a problem” because of economic concerns. Trump promised he would be involved in the regulatory process.
U.S. President Donald Trump sits for an interview with ABC News – YouTube, ABC News
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David Ellison and his father, Oracle co-founder Larry Ellison, have had a good public working relationship with the current administration. Their recent merger between Paramount and Skydance moved very quickly. In comparison, any merger between Netflix and Warner Bros. is expected to drag out over years.
A Two-Pronged Appeal
Should Netflix, the biggest streaming provider in the world, take over a legacy studio and the second-biggest streaming service (HBO), many fear for the future of entertainment. The Ellison-led Paramount has promised to protect theatrical distribution and release windows for Warner Bros., which may sway many in the industry to their side.
David Ellison talks to Bloomberg – YouTube, Bloomberg Podcasts
To add weight to its argument, Paramount launched the website StrongerHollywood.com, which lays out the Warner Bros. hostile takeover plan in detail.
Ultimately, many don’t see this as just fight for financial results, but for the heart and soul of the entertainment industry and the arts. Whether Paramount’s two-pronged appeal will be enough to sway shareholders, or if Netflix will maintain its grip, has moved out of the boardroom and into the hands of the people most affected.
Do you think Paramount or Netflix will win the fight for Warner Bros? Let us know in the comments!
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