Warner Bros. Discovery Urges Shareholders to Reject Paramount Bid
▼ Summary
– Warner Bros. Discovery’s board unanimously recommends shareholders reject a higher bid from Paramount Skydance and accept Netflix’s $82.7 billion acquisition offer.
– The board and Netflix leadership both criticize Paramount’s offer as inadequate, risky, and inferior compared to the certainty and value of the Netflix deal.
– Netflix executives state the merger would combine their strengths with Warner Bros.’ film studio and HBO, and commit to a traditional theatrical release window for films.
– A key financial backer, Jared Kushner’s Affinity Partners, has withdrawn from the consortium funding Paramount’s bid, creating regulatory and uncertainty concerns.
– The article suggests any major media merger will likely be negative for consumers, but a Paramount deal was seen as uniquely problematic due to its financiers and Ellison’s track record.
The board of Warner Bros. Discovery is formally advising its shareholders to turn down a substantial acquisition offer from Paramount Skydance, instead endorsing a competing bid from Netflix. This recommendation arrives amidst a high-stakes corporate battle, with the board asserting that the Netflix proposal delivers more certain and superior value. The decision underscores a pivotal moment for the future of one of Hollywood’s most storied studios and the rapidly consolidating media landscape.
Today, WBD’s board announced a unanimous decision that its shareholders should reject the Paramount Skydance bid and accept Netflix’s offer to acquire the company’s studio production and streaming divisions. This move follows Warner Bros. Discovery’s initial receptiveness weeks ago to Netflix’s $82.7 billion offer. Paramount Skydance subsequently attempted to reignite the contest by increasing its proposal to approximately $108 billion, a strategy that has now been publicly rebuffed.
In a statement explaining the rejection, board chair Samuel A. Di Piazza, Jr. characterized the latest offer from David Ellison’s company as “inadequate” and laden with “significant risks and costs imposed on our shareholders.” He emphasized that the proposal failed to resolve critical concerns that had been communicated during reviews of six previous overtures from Paramount. “We are confident that our merger with Netflix represents superior, more certain value for our shareholders,” Piazza stated, expressing optimism about the benefits of combining with the streaming giant.
Netflix leadership echoed this sharp critique. Co-CEOs Ted Sarandos and Greg Peters dismissed the Paramount Skydance offer as “unsolicited, inferior and illusory,” framing it as a precarious gamble for Warner Bros. Discovery investors. They portrayed their own path to becoming the favored suitor as a process that secured the optimal result for all stakeholders, including consumers and the creative community. Sarandos highlighted the strategic fit between the companies, noting plans to integrate Warner Bros.’ theatrical film division, television studio, and the HBO brand while maintaining a commitment to traditional theatrical releases. Peters added that a Netflix acquisition would be fundamentally pro-consumer and pro-growth.
While competitive rhetoric is commonplace in major deal-making, the board’s stance gains considerable weight due to a significant development behind the scenes. A key financial backer for David Ellison’s bid has withdrawn. Reports indicate that Affinity Partners, the private equity firm led by Jared Kushner, is no longer part of the consortium funding Paramount Skydance’s all-cash offer. This consortium notably includes sovereign wealth funds from Saudi Arabia, Abu Dhabi, and Qatar. The departure of Kushner’s firm, whose principal is former President Donald Trump’s son-in-law, removes a potential regulatory complication, as any acquisition would require approval from U.S. agencies like the Department of Justice and the Federal Trade Commission.
The ultimate outcome of this corporate contest will have profound repercussions. No matter who buys WBD, the results are likely to impact consumers and the broader entertainment industry significantly. However, a merger with Paramount Skydance presented particular concerns, given the composition of its financial backing and Ellison’s track record with other media acquisitions. The board’s forceful recommendation now sets the stage for shareholders to decide between two divergent futures for Warner Bros. Discovery.
(Source: The Verge)
