Paramount Skydance refuses to accept defeat at the hands of Netflix, launching a hostile takeover of Warner Bros Discovery (WBD), including the legacy global networks service.
Paramount’s proposal values WBD at $108.4 billion, including debt, with an equity value of $77.9 billion. The all-cash offer equates to $30 per share, compared with Netflix’s $27.75 per share bid. Netflix’s $82.7 billion offer covers only WBD’s studios and streaming operations, with plans to spin off the global networks into a separate entity, Discovery Global.
In a statement, Paramount said its bid provides shareholders with $18 billion more in cash than Netflix’s consideration. The move takes the case directly to shareholders, who now face a choice between the two offers. As seen in previous hostile takeovers, such as Kraft’s acquisition of Cadbury, boards have limited ability to block deals once shareholders accept.
What’s the difference between Netflix’s offer for WBD and Paramount’s hostile offer?
- Paramount’s all-cash offer equates to an enterprise value of $108.4 billion (including assumption of debt), with an equity value of $77.9 billion. It is worth $30 per share. The offer is for the entirety of WBD.
- Netflix’s offer equates to an enterprise value of $82.7 billion, but is only for the studios and streaming business. It is worth $27.75 per share in a mix of cash ($23.25) and stock ($4.50).
Where’s all the money coming from?
Paramount’s offer is backed by Oracle co-founder Larry Ellison, father of David Ellison, the boss of Paramount. There’s also money from RedBird Capital Partners. Combined, they are backing the offer with $40.7 billion in capital. There’s also funding from the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi as well as Affinity Partners, the investment company formed by Jared Kushner, the US President’s son-in-law.
On the subject of the US President – Donald Trump expressed concern over Netflix’s proposed takeover. At the weekend he said the takeover “could be a problem”.
By when will we know more?
Paramount’s offer to WBD shareholders is on the table for a month from today.
How soon could Paramount take over WBD?
As Paramount wants to buy the whole business, it wouldn’t have to wait for the global networks part of the business to complete its spin-off from Warner Bros. As a result, it expects completion within 12 months, whereas Netflix’s acquisition might take as long as 18 months to complete.
What would Paramount do with WBD?
Most parts of WBD would seamlessly integrate into Paramount Skydance, such as WBD’s film and TV studios business.
WBD’s HBO Max and Discovery+ services would be easy to combine into Paramount+, creating a massive content library of entertainment, reality, sport, news and children’s programmes.
CBS News and CNN would logically come together in an enlarged news division.
In the UK, the hostile takeover could see free-to-air channel 5 combine with WBD’s UK free-to-air networks. However, the resulting dominance in both legacy linear and new streaming services may trigger deeper regulatory scrutiny.
And TNT Sports UK, which just lost rights to the Champions League to Paramount+ could end up retaining coverage.
Given the many twists and turns in the battle for Warner Bros Discovery, it may be premature to make any firm predictions.
By: Marc Thornham | Image: AI Generated on behalf of RXTV