$108 billion hostile Paramount bid as fight for Warner Bros heats up

Paramount Skydance on Monday launched a hostile bid of $108.4 billion for Warner Bros Discovery, in a last-ditch effort to outbid Netflix and create a media powerhouse that would challenge the streaming giant's dominance.

Netflix had emerged victorious on Friday from a weeks-long bidding war with Paramount and Comcast, securing a $72 billion equity deal for Warner Bros Discovery's TV, film studios, and streaming assets. But Paramount's latest attempt means the jockeying for Warner Bros and its prized HBO and DC Comics assets will not come to a conclusion swiftly.

Paramount's $30-per-share cash offer includes financing from Affinity Partners, the investment firm run by Jared Kushner, US President Donald Trump's son-in-law, and several Middle Eastern government-run investment funds, and is backstopped by the Ellison family. Larry Ellison, the world's second-richest person, is the father of Paramount head David Ellison and has close ties to the White House.

"We believe our offer will create a stronger Hollywood," Paramount CEO David Ellison said in a statement.

The studio argues its bid for the entirety of Warner Bros Discovery is superior to Netflix, giving shareholders $18 billion more in cash and an easier path to regulatory approval. It also argued that a Paramount-Warner Bros combination, which would be among the largest media deals in history, would be in the best interest of the creative community, movie theaters and consumers, who would benefit from enhanced competition.

Paramount's bid includes Warner Bros Discovery's cable television properties; Netflix's bid is limited to the Warner Bros film and television studios, HBO and the HBO Max streaming service.

Analysts noted that Paramount's offer comes with its own antitrust scrutiny as a consolidation of two major television operators. Last month, Democratic senators warned that such a transaction would result in "one company controlling almost everything Americans watch on TV." The combined studio would also have a greater market share than current leader Walt Disney Co, and add to fears of consolidation that have hit the industry hard in recent years.

The offer represents a 139% premium over the company's undisturbed stock price, and bests Netflix's $27.75 offer that mixes cash and stock.

Kushner, Saudis part of Paramount offer

Warner Bros Discovery and Netflix did not immediately respond to requests for comment on Paramount's deal.

In a regulatory filing, Paramount said that the Ellison family, which owns Paramount, along with private equity firm RedBird Capital, had agreed to backstop $40.7 billion in equity capital. The offer also includes financing from Kushner's Affinity Partners, the Saudi and Qatari sovereign wealth funds, and L'imad Holding Co, owned by the government of Abu Dhabi.

Netflix's offer comes with a $5.8 billion break-up fee and was likely to face strong antitrust scrutiny; US President Donald Trump raised questions about the offer over the weekend. The bid has already drawn sharp criticism from bipartisan lawmakers and Hollywood unions over concerns that it could lead to job cuts as well as higher prices for consumers.

"While it is perhaps a sad commentary on the US that Paramount thinks its closeness to the occupant of the Oval Office will help it seal the deal, it is merely doing what it can to steal a march on its rival," said Chris Beauchamp, chief market analyst at UK-based IG Group.

Shares of Paramount were up 10% on Monday. Warner Bros Discovery rose 3.8%, while Netflix shares fell 4.2%.

One company that appears to be out of the running is NBCUniversal parent Comcast, whose president Mike Cavanagh said the company was not interested in taking its balance sheet to "any stressful level" to buy Warner Bros.

Twists and turns

Reuters had already reported, citing sources familiar, that Paramount had raised its offer to $30 per share on Thursday for the entire company, but that the Warner Bros board had concerns about the financing.

Paramount maintained that it would be a champion of Hollywood and its talent, would remain committed to releasing movies in theaters, and that its path to regulatory approval would be faster than Netflix's.

"Our proposal is superior to Netflix's in every dimension, higher headline value, increased certainty in that value, greater regulatory certainty, and a pro-Hollywood, pro-consumer and pro-competition future," said Ellison.

In its appeal to shareholders, Paramount said it submitted six proposals over the course of 12 weeks, but Warner Bros "never engaged meaningfully" with these proposals.

"The Warner Bros Discovery acquisition is far from over," said eMarketer senior analyst Ross Benes. "Paramount will appeal to shareholders, regulators, and politicians to try to stymie Netflix. The battle could become prolonged."

Paramount has argued the combination of its Paramount+ streaming service with Warner Bros' HBO Max would position it for growth, and create a meaningful competitor to Netflix, Amazon Prime Video or Walt Disney's Disney+.

'Bias against us'

The company said it had sent a letter to Warner Bros, questioning the sale process and alleging the company has abandoned a fair bidding process and predetermined Netflix as the winner.

That followed reports that Warner Bros' management called the Netflix deal a "slam dunk" while speaking negatively about Paramount's offer.

In an interview with CNBC on Monday, Paramount CEO David Ellison said there was an "inherent bias" in the bidding.

Bloomberg News has reported Trump met Netflix co-CEO Ted Sarandos in mid-November, telling the executive Warner Bros should sell to the highest bidder. In his CNBC interview Monday, Ellison said he had "great conversations" with Trump, but did not characterize the discussions.

Looking to allay antitrust fears, Sarandos had said the deal would drive value for consumers, shareholders and talent, saying Netflix is "highly confident" in the regulatory process.

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