Warner Bros. Denies Paramount’s Hostile Bid, Criticizes Ellison Family’s Investment Failure
Warner Bros. Discovery has firmly rejected a hostile takeover bid from Paramount, stating that it carries significant risks due to inadequate financial backing from the Ellison family. The proposed offer, valued at $108 billion, has been characterized by Warner’s board as fundamentally flawed. They emphasize that Paramount has misled stakeholders regarding its financial commitments.
Warner Bros. Discovery’s Position on Paramount’s Bid
In a letter to shareholders, Warner’s board asserted that Paramount’s claims about having a “full backstop” from the Ellison family are unfounded. They stated, “It does not, and never has.” This unanimous decision highlights the board’s concerns that the proposed bid is not in the best interests of its shareholders.
Details of Paramount’s Offer
- Cash offer of $30 per share, totaling $78 billion for the entire company.
- Paramount would absorb Warner’s debt, making the total deal valued at $108 billion.
- Ellison family claims to support the bid, but Warner insists no clear funding commitment is in place.
David Ellison, CEO of Paramount, reaffirmed his company’s intentions, stating, “We remain committed to bringing together two iconic Hollywood studios.” He emphasized that the deal would benefit Warner Bros. Discovery (WBD) shareholders and the broader entertainment industry.
Warner’s Rejection of Paramount’s Financing
The Warner board expressed doubts about the solidity of Paramount’s financing plan. They noted that the most recent proposal lacked a genuine commitment from the Ellison family. Instead, they described gaps and contingencies in Paramount’s offer, which could leave Warner’s shareholders exposed to risk.
Competition with Netflix
Warner’s board has thrown its weight behind Netflix’s recent bid of $82.7 billion for its assets, including HBO and CNN. They reiterated that Netflix’s proposal of $27.75 per share represents the most secure and advantageous outcome for shareholders. In contrast, they believe Paramount’s financing does not provide similar reassurances.
Warner is also looking to spin off its linear cable channels, including CNN and TBS, within the next year.
Concerns Over Paramount’s Strategy
Issues have arisen surrounding the credibility of Paramount’s bid, especially following the withdrawal of Jared Kushner’s Affinity Partners from the financing discussion. Paramount’s proposal requires over $60 billion in debt financing, raising questions about its feasibility.
Regulatory Challenges
Both companies face potential antitrust considerations from regulatory bodies. Warner’s board noted no substantial difference in regulatory risk between the bids from Paramount and Netflix.
As the negotiations continue, shareholders will ultimately decide the fate of Warner Bros. The process has drawn parallels to a dramatic saga, resembling a storyline from HBO’s acclaimed series, ‘Succession.’ Industry observers are eager to see how this high-stakes competition unfolds.
