getty imagesWarner Bros Discovery has asked its shareholders to reject Paramount Skydance’s $108.4bn (£80.75bn) takeover bid.
Paramount said its proposal was “better” than the $72 billion deal that Warner Bros. made with Netflix for its film and streaming businesses.
But in a dramatic twist in the saga of who will take control of one of Hollywood’s oldest and most famous movie studios, Warner Bros.’s board “unanimously” recommended rejecting the offer and agreed that a deal with Netflix was in the firm’s best interests.
The media giant put itself up for sale in October after receiving “multiple” expressions of interest from potential buyers, including an approach from Paramount Skydance.
On December 5, Warner Bros. Discovery said it had agreed to sell its film and streaming business to Netflix.
In a lengthy legal filing, Warner Bros. Discovery’s board said Paramount’s offer creates numerous and significant risks and strongly rejects the idea that the Ellison family – one of America’s richest – is financially supporting the bid.
Paramount is backed by the billionaire Ellison family, which has close ties to the president.
Netflix possesses strong financial backing and offers superior long-term value.
In a reflection of where power now lies in the entertainment industry, the Warner Bros. board says the offering from streaming giant Netflix is well financed and provides better long-term value to shareholders.
Netflix welcomed the recommendation from Warner Bros. Netflix co-chief executive Ted Sarandos called the company’s merger agreement “superior” and “in the best interests of shareholders”.
In a letter to Warner Bros. shareholders, Netflix reiterated its stance that its bid for Warner Bros. includes a clear funding structure and low regulatory risk.
Paramount could still come back with another offer, meaning the saga of Takeover Hollywood is far from over.
There are significant differences between the Netflix and Paramount offerings.
Netflix is looking to purchase Warner Bros. movie studios and its HBO streaming service, which would give it access to Warner Bros.’s rich library of content and secure access to those movies and shows for its subscribers.
But it does not want the media giant’s pay-TV channels. If Warner Bros. goes with the Netflix deal, it would leave Warner Bros. having to sell off its television networks, such as CNN and TNT, to a separate company before the acquisition is completed.
On the other hand, Paramount wants to buy Warner Bros. outright, which would mean acquiring its TV channel competitors like CBS, MTV and Showtime.
Regulators may raise questions about the lack of consumer choice as the entertainment industry continues to consolidate ownership.
A week after Netflix announced its deal to acquire Warner Bros., Paramount Skydance launched a new offer for the entire company, including its television networks.
Warner Bros.’s acquisition is expected to face scrutiny from competition regulators in the US and Europe.
The new owner of Warner Bros. will gain a significant advantage in the highly competitive streaming market. It will have a huge library of movies and TV shows, including Harry Potter, the MonsterVerse, Friends and the HBO Max streaming service.
Some in the film industry have criticised plans to merge all or part of Warner Bros. with a rival. The East and West branches of the Writers Guild of America called for the merger to be stopped, arguing that it would result in lower wages and job cuts.
It added that the amount of content for viewers will also be reduced.
