Paramount counters Netflix with hostile bid for Warner Bros

Paramount has countered Netflix with a cash bid for Warner Bros Discovery. Photo / Valerie Macon, AFP

Paramount has launched an all-cash tender offer to acquire Warner Bros Discovery for US$30 ($52) per share, challenging a previously announced deal between WBD and Netflix.

The hostile offer sets up a furious battle between Paramount – whose owner Larry Ellison is an ally of Donald Trump – and streaming behemoth Netflix to buy one of Hollywood’s most storied studios.

Netflix shocked the industry last week by announcing it had sealed an agreement to buy the Warner Bros studio, drawing bitter reactions from voices in Hollywood worried about the future of their industry.

Trump weighed in at the weekend, saying Netflix’s effort to acquire Warner Bros “could be a problem” as it would be left with a huge market share of the film and TV industry. He also said he would be “involved” in the decision.

“We’re really here to finish what we started,” David Ellison, chairman and CEO of Paramount, told CNBC as his company made a sixth offer for Warner Bros since the bidding war began in September.

Unlike Netflix’s offer, Paramount’s latest bid includes the buyout of cable channels such as CNN, TNT, TBS and Discovery – which would be added to its group of TV assets like CBS, MTV and Comedy Central.

The offer values the entertainment giant at US$108.4 billion and represents a 139% premium over WBD’s September stock price of US$12.54, when the bidding war began.

Paramount called Netflix’s bid, which values Warner Bros studios at nearly US$83b, “inferior and uncertain”.

“WBD shareholders deserve an opportunity to consider our superior all-cash offer,” Ellison said.

Netflix declined a request for comment from AFP.

‘Far from over’

“The Warner Bros Discovery acquisition is far from over,” said analyst Emarketer analyst Ross Benes.

“Netflix is in the driver’s seat but there will be twists and turns before the finish line ... The battle could become prolonged.”

Over the decades, Warner Brothers has produced film classics including Casablanca and Citizen Kane, as well as more recent blockbuster shows including Friends, Game of Thrones and the Harry Potter movies.

Paramount argued its deal provides greater regulatory certainty than the Netflix transaction, which it said would give Netflix a 43% share of global streaming subscribers and face “protracted regulatory challenges across the world”.

The combined company would unite Paramount’s portfolio – including Paramount Pictures, CBS, Nickelodeon and streaming site Paramount+ – with WBD’s assets including HBO Max and major sports rights.

Paramount said the merger would generate more than US$6b in cost savings while maintaining theatrical releases and increasing content spending.

Keeping movies in theatres is a very sensitive issue for the creative industry in Hollywood.

Netflix is already viewed negatively in some Hollywood circles, largely because of its reluctance to release content in theatres and its disruption of the industry.

Many veterans consider theatrical releases essential to cinema’s appeal and prestige, and also integral to maintaining Hollywood jobs and a vibrant economy.

Warner Bros Discovery’s share price skyrocketed more than 7% on Monday while shares in Netflix fell by over 2%.

- Agence France-Presse