The board of Warner Bros Discovery (WBD) tells shareholders Netflix’s previously accepted offer is the more superior deal. All parties involved have stepped up efforts to persuade shareholders ahead of the Christmas break.
Writing to shareholders, WBD raised grave concerns about Paramount’s hostile takeover offer. One of the main issues with the offer was the funding source. The letter warned shareholders that Paramount proposed “that you rely on an unknown and opaque revocable trust for the certainty of this crucial deal funding”.
Meanwhile, Netflix has also written to WBD shareholders, reaffirming the benefits of their offer. The letter from Netflix Co-CEOs Greg Peters and Ted Sarandos said:
“Netflix and Warner Bros. complement each other, and we’re excited to combine our strengths with their theatrical film division, world-class television studio, and the iconic HBO brand, which will continue to focus on prestige television. We’re also fully committed to releasing Warner Bros. films in theaters, with a traditional window, so audiences everywhere can enjoy them on the big screen.”
Paramount’s response
According to US media sources, Paramount may still increase its offer to shareholders. In the meantime, it’s holding firm on its current offer. Following WBD’s letter to shareholders, Paramount said on Wednesday its bid was superior as it “provides the certainty of 100% cash and no exposure to equity market fluctuations.”
Paramount also said it was “highly confident its offer would receive timely regulatory approval because it would enhance competition in the creative industries rather than entrench a dominant streaming monopoly that the Netflix transaction envisions.”
In a strong rebuttal, Paramount added:
WBD seeks to justify racing to conclude an inferior deal with Netflix with a “kitchen sink” litany of purported questions and concerns. Missing from the cloud of obfuscation is any explanation for why WBD and its advisors did not lift a finger to get any of those questions answered or concerns addressed?
WBD seeks to mislead its shareholders into believing this is a complicated question about legal documents. In reality, it is all quite simple: $30 in cash fully backstopped by a well-capitalized trust (in existence for approximately 40 years) of one of the most well-known founders and entrepreneurs in the world, Larry Ellison. Yet from mid-September all the way through to December 4, what is glaring is the absolute resistance on the part of WBD to even engage in a single negotiating session with Paramount or its advisors, and a refusal even to provide a mark-up of any transaction document.
What’s at stake?
A reminder: Netflix only wants the Warner Bros part of WBD. That excludes traditional US cable networks and UK/European free-to-air channels. TNT Sports USA is also excluded, but not WBD’s global sporting assets, which include its sports channels outside of the USA and associated sports rights, including the Olympics.
Paramount is interested in the whole of WBD, which it would integrate into its own business.
President Trump has indicated he will be involved in the decision-making process. He’s previously indicated concerns about Netflix’s bid for WBD. Meanwhile, Affinity Partners, a firm set up by the President’s son-in-law Jared Kushner’s is no longer among the group of investors backing the Paramount bid. That was confirmed by US media outlets on Tuesday.
By: Marc Thornham