Paramount makes a bid for WBD

 

Hostile territory: Paramount makes a bid for WBD

Niv Bavarsky

Leave it to a merger between entertainment companies to have drama. Paramount Skydance launched an all-cash $108 billion hostile takeover bid for Warner Bros. Discovery yesterday, three days after Netflix announced a deal to buy WBD for $82.7 billion. “We’re really here to finish what we started,” Paramount CEO David Ellison told CNBC, referencing the six bids his company made before Netflix’s offer was accepted, and making sure his words were as hostile as the takeover bid itself. Paramount is relying on more money for shareholders and what it sees as a more straightforward path to a green light from regulators to bolster its bid: Paramount’s offer is $30 per share in cash, and could reportedly go higher. Netflix made its deal at $27.75 per share in cash and stock. While Netflix only wants WBD’s streaming and studio businesses, Paramount wants it all. The path to Hollywood runs through Washington No matter which bid ultimately triumphs, a deal can only close if antitrust regulators sign off. The Netflix deal was already facing scrutiny, with President Trump saying Sunday that Netflix’s large market share “could be a problem.” Paramount is perceived as more likely to get the nod. That’s partly because it lacks Netflix’s streaming dominance and partly because of who’s involved: Some of Paramount’s funding comes from Affinity Partners, an investment firm started by Trump’s son-in-law Jared Kushner. Sovereign wealth funds of Saudi Arabia, Abu Dhabi, and Qatar have also kicked in $24 billion, per Bloomberg—but they and Kushner would forgo any board voting rights, which could help push the deal through. Meanwhile, Ellison is the son of Oracle CEO Larry Ellison, an ally of Trump. Market reaction: Netflix shares dropped more than 3% yesterday, while Paramount shot up 9%. But…Paramount’s perceived pandering may be having the opposite effect. Semafor reports some officials in DC have expressed frustration at the notion that the Justice Department would favor the Ellison family.—DL