Hollywood Shake-Up: Paramount Launches Hostile Bid for Warner Bros.

On Monday, David Ellison’s Paramount Skydance, announced a new all-cash offer to buy all the shares of WBD at $30 per share.

This is the same price Ellison offered earlier in a Dec. 4 bid to WBD’s board. Paramount wants to buy the whole company, including its TV networks like CNN, TBS, and TNT.

This latest move comes after Netflix and WBD revealed a deal on Friday, where Netflix will buy Warner Bros.’ studio operations, HBO, and HBO Max for $72 billion.

Paramount says its cash offer is worth $108.4 billion, including debt. In comparison, the Netflix deal is a mix of cash and stock and is valued at $82.7 billion, not counting the TV business. Paramount called Netflix’s offer “a volatile and complex structure.”

“Paramount’s strategically and financially compelling offer to WBD shareholders provides a superior alternative to the Netflix transaction, which offers inferior and uncertain value and exposes WBD shareholders to a protracted multi-jurisdictional regulatory clearance process with an uncertain outcome along with a complex and volatile mix of equity and cash,” Paramount said when announcing the takeover bid.

David Ellison’s father, Oracle co-founder Larry Ellison, is backing the deal, along with RedBird Capital Partners.

They also funded Skydance Media’s purchase of Paramount Global. Paramount said the new offer also includes $24 billion in backing from the sovereign wealth funds of Saudi Arabia, Qatar, and Abu Dhabi. Affinity Partners, the company run by Jared Kushner, is also supporting the deal, and Tencent has committed $1 billion. The offer will also be financed partly by $54 billion in debt from Bank of America, Citi, and Apollo Global Management.

Paramount added that the Middle Eastern funds and Kushner’s group will not take any board seats or governance rights. According to Paramount, this means the deal will not fall under the review of the Committee on Foreign Investment in the United States, which checks foreign investments for national security risks.

Ellison has tried to buy WBD several times. He made his first offer of $19 per share on September 14, followed by $22 per share on September 30, and $23.50 on October 19. WBD rejected all three. He then made a $26.50 all-cash bid on December 1 and the $30 per share offer on December 4. Despite this, WBD’s board chose Netflix as the buyer for Warner Bros. and HBO Max.

Paramount says its offer is $18 billion higher than Netflix’s. The company also claims that the WBD board chose Netflix based on an unrealistic view of the TV networks spin-off, which will be called Discovery Global, and that the valuation is “unsupported by the business fundamentals and encumbered by high levels of financial leverage assigned to the entity.”

It’s not clear if WBD chief David Zaslav would still be offered a co-chairman or co-CEO position in a merged Paramount Skydance-WBD, which Ellison suggested in earlier bids.

David Ellison, chairman and CEO of Paramount, said in a statement, “WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company. Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion.”

“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. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”

Paramount said WBD shareholders can get more information about the offer on strongerhollywood.com.

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