Paramount has launched a US$108.4 billion (about C$150 billion) hostile takeover bid for Warner Bros. Discovery (WBD), directly challenging Netflix’s recently announced plans to acquire the entertainment giant.
In a news release, Paramount said Netflix’s US$82.7 billion (about C$114.5 billion) holds “inferior” value for WBD shareholders, arguing that it would lead to a “protracted multi-jurisdictional regulatory clearance process with an uncertain outcome.” Paramount claims its offer presents “a more certain and quicker path to completion” for WBD. It also says it wants to buy all of WBD, including its Global Networks business, which is home to news and sports brands like CNN and Discovery, whereas Netflix is only interested in WBD’s film and streaming divisions.
Of course, there are reasons to be apprehensive about either move beyond general disdain for consolidation. With Netflix, there is concern about the future of the already-bumpy theatrical business. While Netflix has said it would honour existing deals for WBD theatrical releases, it says it intends for these windows to “evolve” to become more “consumer-friendly.” To date, the company has largely only released movies in theatres for the requisite amount of time to be eligible for awards like the Oscars. People also aren’t optimistic about Netflix’s commitment to the theatrical business, given that co-CEO Ted Sarandos has previously called the theatrical model “outdated.”
Paramount, meanwhile, draws scrutiny due to owner David Ellison’s close ties to Donald Trump. For instance, he recently drew headlines for greenlighting the long-gestating Rush Hour 4 simply because Trump asked him to do so. Affinity Partners, the holding company of the U.S. president’s son-in-law, Jared Kushner, is also part of Paramount’s bid for WBD. And this is to say nothing that sovereign wealth funds from Saudi Arabia — a regime that is known for human rights issues like the murder of journalist Jamal Khashoggi — are backing Paramount’s move.
It remains to be seen what will come out of both Netflix and Paramount’s respective bids for WBD. Naturally, either venture will be met with intense regulatory scrutiny. Trump, for his part, said he’ll be involved in the approval of the WBD sale, noting that it “could be a problem” if Netflix acquires the company due to how much market share it would then hold.
Image credit: Paramount
Source: Paramount
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