Paramount Skydance has initiated a hostile bid to acquire Warner Bros. Discovery following its recent failure to secure a deal with Netflix for the company's legacy assets. This announcement was made on Monday, indicating a bold move by Paramount in the competitive media landscape.
The bid is set at an all-cash offer of $30 per share, which matches the proposal that Warner Bros. Discovery rejected just last week. David Ellison, CEO of Paramount Skydance, expressed disappointment over the lack of response from Warner Bros. Discovery regarding their previous offer. This initiative aims to appeal directly to WBD shareholders, marking a significant step in Paramount's acquisition strategy.
To support this bid, Paramount has secured equity financing from the Ellison family and RedBird Capital, alongside $54 billion in debt commitments from major financial institutions including Bank of America, Citi, and Apollo Global Management.
Following the announcement, shares of Paramount rose approximately 5% in premarket trading, while Warner Bros. Discovery shares increased by about 6%. In contrast, shares of Netflix saw a slight decline. This fluctuation in stock values reflects the ongoing competitive dynamics in the media sector.
Last Friday, Netflix disclosed its agreement to acquire Warner Bros. Discovery's studio and streaming assets for a staggering $72 billion. Paramount had been vying for the entirety of Warner Bros. Discovery, which includes valuable assets such as CNN and TNT Sports. Additionally, Comcast has shown interest in bidding for WBD's streaming and studio businesses, further intensifying the competition.
Paramount's executives are poised to present arguments to the Warner Bros. Discovery board, asserting that maintaining the entire company aligns with the best interests of its shareholders. They believe that their acquisition deal could encounter a significantly shorter regulatory approval process, thanks to Paramount's smaller size and its amicable relationship with the Trump administration.
Ellison stated, “We've had great conversations with the President about this, but I don't want to speak for him,” reinforcing the notion that the political climate may favor their bid.
The proposed acquisition by Netflix has already sparked antitrust questions, particularly regarding the consolidation of two leading streaming platforms. Reports indicate that the Trump administration is scrutinizing the deal, with President Donald Trump commenting on market share issues that could pose challenges for Netflix.
In the event that Netflix's deal fails to gain approval, they have agreed to pay Warner Bros. Discovery a significant $5.8 billion as part of their agreement. Conversely, Warner Bros. Discovery has stipulated a $2.8 billion breakup fee should they opt to withdraw from the deal to pursue other merger opportunities.
This situation is evolving rapidly, and stakeholders are advised to stay informed as new developments unfold. The competitive landscape of media acquisitions continues to shift, with Paramount Skydance poised as a formidable player against Netflix and Comcast.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Following Comcast’s planned spinoff, Versant will become the new parent company of CNBC. This story is developing, and updates will be provided as new information becomes available.