The co-CEOs of Netflix on Monday said they’re “incredibly happy” with the deal they’ve struck to acquire Warner Bros. and are “super confident” the deal will go through despite Paramount launching a hostile effort to buy the company in a deal that would give shareholders $18 billion more in cash than the $82.7 billion Netflix announced it would pay last week.
Paramount Skydance CEO David Ellison,
AFP via Getty Images
Key Takeaways
- Netflix’s co-CEOs Ted Sarandos and Greg Peters spoke at the UBS Global Media and Communications conference Monday and said Paramount’s move was “entirely expected,” adding they “have a deal done” and are “super confident we’re going to get it across the line and finish.”
- Paramount, run by David Ellison, said Monday morning it will offer $30 per share for Warner Bros. Discovery, Inc. and slammed the $27.75-per-share Netflix deal as offering “inferior and uncertain value,” and exposing Warner Bros. shareholders to a protracted regulatory clearance process.
- Unlike the deal struck with Netflix, which covered Warner’s film studio and streaming service—and would see the company’s Global Networks division, Discovery Global, spun off into a new publicly-traded company next year—Paramount’s offer is for the entirety of Warner Bros. Discovery.
- Paramount’s all-cash offer equates to $108.4 billion, while Netflix’s $82.7 billion offer is a mix of cash ($23.25 per share) and stock ($4.50).
- The announcement comes one day after President Donald Trump, who counts the billionaire Ellison family as big-time supporters, warned the Netflix deal could draw antitrust scrutiny and said the two entities’ combined streaming market share could “be a problem.”
- Netflix said it expected its deal to take 12 to 18 months to close pending required regulatory approvals, approval of Warner shareholders and other conditions, while Paramount said it is “highly confident in achieving expeditious regulatory clearance” under its proposal.
- Paramount said it has taken its offer public—and directly to Warner Bros. shareholders—after Warner Bros. “never engaged meaningfully” with six Paramount proposals submitted over the course of 12 weeks.
Crucial Quote
“We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process,” Ellison said in a statement Monday.
Paramount’s Hostile Takeover Is Not A Surprise
Ellison’s Paramount Skydance was seen as a front-runner in the bidding war to acquire Warner Bros. Discovery before the Netflix deal was announced, and it was widely reported Paramount would likely continue its pursuit of the company despite the seeming loss. Paramount’s lawyers on Thursday set a letter to Warner Bros. CEO David Zaslav in which they questioned the “fairness and accuracy” of the bidding process and, according to several news outlets, called the Netflix deal “doomed to fail” because of “serious antitrust concerns.” Ellison, son of Oracle founder and the world’s second richest person Larry Ellison, traveled to Washington D.C. last week to meet with federal officials about the acquisition (David Ellison enjoyed the support of the Trump administration earlier this year when his company, Skydance, acquired Paramount for $8.4 billion after a lengthy regulatory process). Trump on Sunday spoke to reporters on the red carpet at the Kennedy Center Honors and confirmed he met with Netflix co-CEO Ted Sarandos at the White House last week to discuss the deal. He said he would “be involved” in any antitrust decision, concerns over which stem from the large share of the streaming market Netflix would control if the deal goes through.
Big Number
301.63 million. That’s how many subscribers Netflix, the global leader in streaming, has as of the company’s last reporting. Warner’s HBO Max currently ranks fourth in streaming with an additional 128 million (it’s unclear how many of those subscribers are double counted as users of both services).
Chief Critic
Hollywood guilds, politicians and prominent entertainment figures have spoken out against the Netflix deal, expressing concerns the creation of a dominant streaming giant would mean job consolidation, a loss of creative outlets and threats to theatrical movie releases (Sarandos has said making movies specifically for big screens is an “outdated concept”). The Writers Guild of America, which said the merger “must be blocked” and the Directors Guild of America issued a statement raising concerns about hampering creativity and competition, saying the deal “raises significant concerns.” Michael O’Leary, president of theater owner association Cinema United, said the acquisition “poses an unprecedented threat to the global exhibition business.” Director James Cameron said such a deal “would be a disaster” and actress Jane Fonda said it puts “Hollywood, and democracy, at risk.”
The Ellisons’ Close Trump Ties
David Ellison has shown he has the patience to see a controversial deal through. Skydance’s Paramount acquisition was held up for over a year by the Federal Communications Commission and Paramount, CBS’ parent company, made several moves during the process that were seen as placating the administration and greasing the wheels so the deal would be approved. During the review process the company promised to pay $16 million to settle a lawsuit Trump brought over a “60 Minutes” interview conducted with Kamala Harris during the last election and, after late night host Stephen Colbert called out CBS for offering “a big fat bribe” to Trump in reference to the settlement, his show was canceled. CBS has said the cancellation was a financial decision, but the show was the No. 1 in late night ratings and Colbert is a frequent critic of Trump, who posted to Truth Social: “I absolutely love that Colbert got fired. His talent was even less than his ratings.” Paramount Skydance also recently greenlit a “Rush Hour 4” movie, reportedly at the request of Trump. The president has called the Ellisons “great guys” and “friends” on several occasions, and in a recent “60 Minutes” interview on CBS, called the Skydance Paramount acquisition “the greatest thing that’s happened in a long time to a free and open and good press.”
Surprising Fact
Jared Kushner, Trump’s son-in-law, is reportedly part of Paramount’s hostile bid. According to a regulatory filing with the Securities Exchange Commission, Kushner’s Affinity Partners has committed an unspecified amout of equity financing for the deal. Also committed is $11.8 billion from the Ellison family and an aggregate $24 billion commitment from sovereign wealth funds in Saudi Arabia, Abu Dhabi and Qatar.
Forbes Valuation
Larry Ellison is worth an estimated $272.7 billion as of Monday, making him the second-richest person in the world behind Elon Musk. He owns roughly 40% of software giant Oracle and in September became the second person ever worth more than $400 billion thanks to an AI-driven boom in Oracle’s stock price. He also owns nearly 50% of his son’s Paramount Skydance.
