Paramount has lodged an aggressive $US108 billion ($163 billion) bid to buy Warner Bros. days after Netflix had its own bid accepted.
The deal would include Warner Bros film studio and streaming brands and is valued at US$30 cash per share— more than Netflix’s offering of US$27.75 per share.
The deal is being financed by Paramount Skydance, the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi and Affinity Partners, the investment firm owned by Jared Kushner, the son-in-law of President Donald Trump. The $US40.7 billion in required equity capital is being guaranteed by the Ellison family.
Paramount chief executive David Ellison described the hostile takeover deal as “pro-consumer, pro-creative talent, pro-competition”, arguing that Paramount Skydance is determined to “finish what we started”.
Paramount said the merger would generate more than $US6 billion in cost savings while maintaining theatrical releases and increased content spending.
In a Securities and Exchange Commission filing, Paramount said: “We are making the Offer because Warner Bros. chose a financially inferior and more uncertain and complex transaction as contemplated by the Netflix Merger Agreement (the “Proposed Netflix Transaction”) instead of our clearly superior Prior Proposal. We are making the Offer directly to the Warner Bros. stockholders and the board of directors of Warner Bros.”
Netflix’s $83 billion acquisition of Warner Bros studio and streaming business has already been accepted although it faces a backlash from politicians from both sides of US politics, as well as Hollywood guilds representing writers and directors.
Critics are concerned that a combined Netflix Warner Bros would concentrate the streaming business with 43 per cent share of global streaming subscribers. Other concerns include Netflix’s reluctance to release movies in cinemas and certain labour practices.
Netflix’s leaders Ted Sarandos and George Peters are confident of securing Warner Bros in spite of the opposition. Sarandos said that Netflix would continue Warner Bros theatrical releases “for now”.
A potential hurdle for Netflix could be US President Donald Trump, who regards Oracle founder and Republican donor Larry Ellison as a close ally.
Trump played down suggestions he favoured either bid, but said that he would “have to see what percentage of market they have”.
