Warner Bros favours Netflix offer over $108bn Paramount bid

Warner Bros Discovery has asked its shareholders to reject Paramount Skydance’s $108.4 billion (£80.75 billion) takeover bid.

Paramount had stated that its offer was “higher” than the $72 billion deal Warner Bros struck with Netflix for its movie and streaming businesses.

But in a dramatic twist in the story of who will take control of one of Hollywood’s oldest and most famous movie studios, Warner Brother’s board “unanimously” recommended rejecting the offer and agreed that the deal with Netflix was in the company’s best interests.

The media giant put itself up for sale in October after receiving “multiple” expressions of interest from potential buyers, including approaches from Paramount Skydance.

On December 5, Warner Bros. Discovery announced that it had agreed to sell its film and streaming businesses to Netflix.

In a lengthy legal filing, Warner Bros. Discovery’s board said Paramount’s bid posed numerous and significant risks, and strongly rejected the notion that the Ellison family – one of America’s richest – financially backed the bid.

Paramount is backed by the billionaire Ellison family, which has close ties to the president.

Reflecting the current power situation in the entertainment industry, the Warner Bros. board says streaming giant Netflix’s bid is well-financed and provides better long-term value for shareholders.

Netflix welcomed Warner Bros.’ recommendation. Ted Sarandos, Netflix’s co-chief executive, called the company’s merger deal “superior” and “in the best interest of shareholders.”

In a letter to Warner Bros shareholders, Netflix reiterated its position that its bid for Warner Bros involves a clearer financing structure and less regulatory risk.

Paramount could yet come back with another offer, which means the buyout saga haunting Hollywood isn’t over yet.

There are considerable differences between the Netflix and Paramount offerings.

Netflix wants to buy the Warner Bros. film studio. and its streaming service HBO, which would also give it access to Warner Bros’ rich library of content and secure access to these films and shows for its subscribers.

But he doesn’t want the media giant’s pay TV channels. If Warner Bros. were to agree to the Netflix deal, that would leave Warner Bros. to sell its television networks, such as CNN and TNT, to a separate company before the buyout is finalized.

Paramount, on the other hand, wants to buy out all of Warner Bros., which would involve acquiring competitors to its own television networks such as CBS, MTV and Showtime.

Regulators may question an erosion of consumer choice as the entertainment industry continues to consolidate its ownership.

The week after Netflix announced its deal to acquire Warner Bros., Paramount Skydance launched a new deal for the entire company, including its television networks.

A Warner Bros takeover is likely to face scrutiny from competition regulators in the United States and Europe.

A new owner of Warner Bros. would have a significant advantage in the highly competitive streaming market. It would get a huge library of movies and TV shows, including Harry Potter, MonsterVerse, Friends, and the HBO Max streaming service.

Some in the film industry have criticized the proposed merger of all or part of Warner Bros. with a rival. The Eastern and Western chapters of the Writers Guild of America called for blocking the merger, arguing that it would lead to lower wages and job cuts.

The volume of content aimed at viewers would also be reduced, it says.