Paramount's hostile bid for Warner Bros. has Trump's involvement: Details

Tech billionaire and Oracle chief Larry Ellison's son David Ellison-led Paramount Skydance on Monday, launched a $108 billion hostile offer to buy Warner Bros. Discovery (WBD) against Netflix's $82.7bn deal. Paramount's proposed all-cash deal includes Warner Bros.'s entire business, including the legacy cable-TV and news networks, unlike Netflix's offer for just the film studios and streaming business.

 

Paramount's offer is likely to value the media group at $30 a share and offer $18 billion more in cash than the Netflix deal.

Why is Paramount aggressively bidding?

The latest offer isn't the first time Paramount has made a bid to buy Warner Bros. Ellison has made at least six proposals over 12 weeks to take over WBD during a closed-door bidding process. However, these were rejected by the company’s board over concerns that it would lead to "excessive media contraction."

 

  But after these failed attempts, Paramount has taken its offer directly to Warner Bros. shareholders and its board of directors, stating the benefits.

Trump's involvement in the deal

Paramount's latest all-cash offer is in partnership with Donald Trump’s son-in-law, Jared Kushner, and some Middle East sovereign wealth funds. The Ellison family and RedBird Capital had committed to backstop the entire $40.7bn of equity capital. According to the Financial Times, financing would also come from Saudi Arabia, Abu Dhabi, and Qatar sovereign wealth funds, as well as from Kushner’s Affinity Partners. 

Trump has raised concerns over Netflix's offer. Speaking at an event in Washington DC on Sunday, he said Netflix has a "big market share" and the firms' combined size "could be a problem". Trump also said that he would have a say in whether a proposed merger between Netflix and Warner Bros. should go forward.

Who is likely to win the bid?

In its letter on Monday, Paramount has expressed optimism about winning the bid. "Paramount is highly confident in achieving expeditious regulatory clearance for its proposed offer, as it enhances competition and is pro-consumer, while creating a strong champion for creative talent and consumer choice," the company said.

 

"In contrast, the Netflix transaction is predicated on the unrealistic assumption that its anticompetitive combination with Warner Bros., which would entrench its monopoly with a 43 per cent share of global Subscription Video on Demand (SVOD) subscribers, could withstand multiple protracted regulatory challenges across the world," it added.

 

Meanwhile, Netflix Chief Ted Sarandos called the Paramount counteroffer "entirely expected". "We’re super confident we’re going to get it across the line and finish," he added.  ALSO READ | What Netflix's acquisition of Warner Bros means for the future of movies

What will happen next?

Paramount’s offer for Warner Bros. is set to expire at 5 pm on January 8, but the deadline can be pushed back. Acknowledging the offer, Warner Bros. said it would "carefully review and consider" the approach but added that it was "not modifying its recommendation with respect to the agreement with Netflix."

 

According to The Guardian, at some point in the next 10 days, WBD said that it will convey the board’s recommendation on Paramount to its shareholders.