Warner Bros Discovery has rejected a hostile takeover bid by Paramount launched last week to rival plans by streaming giant Netflix to acquire the Hollywood giant.
In a statement, Warner Bros said the terms of the Netflix merger were better, while the Paramount offer “once again fails to address key concerns that we have consistently communicated ... throughout our extensive engagement and review of their six previous proposals”.
“We are confident that our merger with Netflix represents superior, more certain value for our shareholders.”
Netflix shocked the industry on December 5 by announcing it had sealed an agreement to buy the film and television studio and HBO Max streaming business for nearly US$83 billion (NZ$143.5b) in the entertainment industry’s biggest consolidation deal this decade. Warner Bros also owns the news broadcaster CNN.
Three days later, Paramount – whose chief executive is David Ellison, the son of Larry Ellison, an ally of President Donald Trump – launched an all-cash tender offer valuing the entertainment giant at US$108.4b.
But Warner Bros described the Paramount offer yesterday as risky, saying it was backed up by “an unknown and opaque revocable trust” and involved “no Ellison family commitment of any kind”, among other factors.
Warner Bros Discovery also stressed that the Paramount offer’s dependence on foreign investors – US$24b of the financing is from Middle East sovereign wealth funds – would require further regulatory scrutiny.
“Our deal structure is clean and certain, with committed debt financing from leading institutions,” Netflix co-chief executives Ted Sarandos and Greg Peters wrote in a letter to Warner Bros shareholders, according to Business Insider.
“There are no contingencies, no foreign sovereign wealth funds, and no stock collateral or personal loans,” they added.
Trump has repeatedly weighed in on the bidding war, saying the Netflix deal “could be a problem” as it would leave Netflix with a huge market share of the film and TV industry.
He later said that he wanted to ensure new ownership of CNN as part of the sale. He has long criticised CNN for airing critical news coverage that he refers to as “fake news”.
‘Strong rationale’
The President’s powerful son-in-law, Jared Kushner, was initially a minor investor in the latest Paramount bid through his Middle East-backed private equity company, Affinity Partners. However, he backed out of the deal on Tuesday.
“We continue to believe there is a strong strategic rationale for Paramount’s offer,” Affinity Partners said in a statement to AFP.
Unlike Netflix’s offer, Paramount’s latest bid included the buyout of cable channels such as CNN, TNT, TBS and Discovery, which would be added to its group of TV assets, including CBS, MTV and Comedy Central.
As Netflix emerged as the likely winning bidder for Warner Bros, Hollywood’s elite launched an aggressive campaign against the acquisition.
The streaming giant is viewed as a pariah in some Hollywood circles, largely because of its reluctance to release content in cinemas and its disruption of traditional industry practices.
In an interview on Tuesday in Paris, Sarandos said it would continue to distribute Warner Bros films in cinemas if its takeover bid succeeded.
“We’re going to continue to operate Warner Bros studios independently and release the movies traditionally in cinema,” he said, while admitting his past comments on theatrical distribution “now confuse people”.
- Agence France-Presse