Jared Kushner's Affinity Partners backs out of Warner Bros takeover plan

Affinity Partners, the private equity firm founded by US President Donald Trump's son-in-law Jared Kushner, is set to exit the takeover battle for Warner Bros Discovery, Bloomberg reported. The move comes as Warner Bros Discovery is preparing to reject a bid from Paramount Skydance Corp that the firm had backed.

 

Earlier this month, Affinity emerged as a participant in Paramount's hostile bid for Warner Bros, a proposal that valued the Hollywood studio at approximately $108.4 billion, including debt. Paramount is reportedly trying to derail Netflix's $82.7 billion deal for Warner Bros.

 

After reviewing the offer, Warner Bros' board is likely to recommend that shareholders reject the tender as early as Wednesday (local time), the report added, citing sources. The board continues to view its existing agreement with Netflix as providing better value and greater deal certainty than Paramount’s proposal.

 

Sticking point in Paramount deal

 

Affinity had been set to help fund Paramount’s bid, but its involvement, led by Kushner drew fresh scrutiny because Trump has said he would personally review the deal, Bloomberg reported people familiar with the matter as saying. They said Affinity’s planned $200 million commitment was a relatively small part of the financing package.

 

According to an Affinity representative cited by Bloomberg, the dynamics of the investments have changed since it became involved in October. "With??"two??"strong competitors??"vying to secure??"the future??"of this??"unique American??"asset,??"Affinity??"has??"decided no longer to pursue??"the opportunity," the investment firm noted. "We??"continue to??"believe??"there is a strong strategic rationale for Paramount’s offer.”

 

Another sticking point, according to the report, has been Warner Bros' concerns regarding the financing proposed by Paramount, led by David Ellison. The equity is backstopped by a revocable trust that manages the wealth of David Ellison’s father, software billionaire Larry Ellison. Because the trust can withdraw assets at any time, Warner Bros Discovery may have little recourse if the backing is reduced.

 

The contest for Warner Bros Discovery could reshape the entertainment industry whichever side prevails. If Netflix wins, it would gain significant control over a major pipeline of films and television content for streaming audiences. Paramount’s pitch, by contrast, is to combine two long-established Hollywood studios in a bid to compete more effectively with Netflix, Walt Disney, and Amazon.

 

Trump unhappy with CBS, Paramount

 

The US President has recently expressed his unhappiness with Paramount over CBS News' coverage of his presidency. In a post on Truth Social, Trump wrote, "For those people who think I am close with the new owners of CBS, please understand that 60 Minutes has treated me far worse since the so-called 'takeover ' than they have ever treated me before," and added, "If they are friends, I’d hate to see my enemies!”

 

Despite Trump being critical of the network news coverage about him, his comments regarding the CBS coverage are now being scrutinised as investors are now looking for signals as to how the Trump administration might be leaning in the battle to purchase Warner Bros.

 

CBS-parent Paramount has been trying to top Netflix’s friendly offer for the studio, and Paramount chief David Ellison, the son of Oracle founder Larry Ellison, a longtime donor and supporter of Donald Trump, has cited his relationship with Trump as a factor that could smooth the regulatory review.

 

While Trump did not clarify which bid he favours, he did previously signal that he wanted the sale to include new ownership of CNN, the cable news network and a longtime foil in the Warner Bros portfolio.