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David Ellison’s Paramount Skydance is not giving up in its aggressive campaign to acquire Warner Bros Discovery (WBD), launching a hostile bid despite the announcement on Friday that Netflix had agreed to buy the company’s studio and streaming operation.
Netflix’s accepted bid valued the company at $27.75 a share, though the entertainment company did not agree to acquire WBD’s traditional television assets, including the news network CNN.
Paramount’s all-cash tender offer sent directly to shareholders on Monday morning is for $30 a share and would be for the entire company, offering a total enterprise value of $108.4bn, a major premium to the company’s stock price.
In making its case to shareholders, Paramount claimed its acquisition of the company provides significantly better value for shareholders would be much likelier to survive regulatory scrutiny. David Ellison and his father, Larry, whose family is financially backing the deal, are both friendly with the Trump administration. Larry Ellison had already had early conversations with a senior Trump aide about what changes he might want to see at CNN.
In a statement, David Ellison called the Netflix deal “an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process”.
“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company,” he said. “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’s Paramount Skydance had already made several offers that were rejected during the bidding process. The company said Monday that it was concerned that shareholders “were not presented [the] most compelling and superior transaction.”
Last week, attorneys for Paramount sent a letter to WBD suggesting the company was not fairly considering its offer. “It has become increasingly clear, through media reporting and otherwise, that WBD appears to have abandoned the semblance and reality of a fair transaction process, thereby abdicating its duties to stockholders, and embarked on a myopic process with a predetermined outcome that favors a single bidder,” they wrote.
Netflix’s acquisition of the studio and streaming assets of WBD provided some relief for some employees at CNN, who had been concerned about the likely merger of the network with CBS News and its controversial editor in chief Bari Weiss.
“I think this is the best outcome for CNN for sure,” a senior network producer told the Guardian after the Netflix acquisition was announced, describing a “palpable sense of relief” at the network. But, the person added, “there is still a hell of a lot of anxiety around the Discovery Global spin-off and what comes next”.
Some employees at CBS News had also feared a merger with CNN’s parent company, concerned that a tie-up could lead to significant job losses. “A merger with CNN is the one thing that would make me genuinely worried about losing my job,” one CBS News staffer said.
Paramount’s generous offer on Monday for WBD could re-ignite those concerns for employees at both networks. If the Netflix deal moves forward, however, CNN will be spun off – as planned – into a standalone company encompassing traditional television networks.
On Sunday, Donald Trump said he would be personally involved in the review for the Netflix-WBD transaction, which he said would have implications for competition considering Netflix’s “big market share”. But he had kind words for Netflix’s co-chief executive Ted Sarandos, who visited the White House recently.
Several American politicians, including US Senator Elizabeth Warren, and entertainment unions, however, had expressed strong reservations about the deal.
Because no television licenses would be transferred in a potential acquisition, the acquisition of WBD is very unlikely to be subject to the review of the Federal Communications Commission and its Trump-picked chairman, Brendan Carr. But the deal would need to be reviewed for anti-trust concerns by the Department of Justice.
“Paramount is highly confident in achieving expeditious regulatory clearance for its proposed offer,” the company said Monday, “as it enhances competition and is pro-cosumer, while creating a strong champion for creative talent and consumer choice.”
