Warner Bros. Discovery (WBD) has officially dismissed Paramount’s buyout proposal as “illusory,” claiming that adhering to its own strategy for selling a significant portion of the media company to Netflix provides greater value for shareholders. In a formal response filed on Wednesday, WBD criticized Paramount’s hostile takeover offer initiated last week, stating it delivers inadequate value while exposing WBD to substantial risks and costs.
Shareholder Dynamics and Hostile Bid Debate
The decision about the buyout ultimately lies with WBD’s shareholders, some of whom have expressed intentions to reject the board’s advice and tender their shares to Paramount at $30 each. Conversely, Paramount executives assert that their proposal promises “more value and certainty” than WBD’s plans.
- WBD’s Position: The board argues Paramount’s offer is fraught with uncertainty.
- Paramount’s Financing: The deal is largely funded by royal families from Saudi Arabia, Qatar, and Abu Dhabi.
WBD raised concerns about Paramount’s financial backing, questioning the participation of international financiers in the process. Paramount, however, contends that it boasts “air-tight financing,” labeling WBD’s doubts as “absurd.”
Key Stakeholders and Financial Backing
David Ellison and his father Larry, involved in controlling Paramount, have faced scrutiny over this merger, notably due to Larry’s status as the third richest individual globally, with a net worth of around $240 billion.
- Ellison Family’s Role: Paramount insists that the Ellison family is fully supporting the bid.
- National Security Concerns: Some U.S. lawmakers, including Reps. Sam Liccardo and Ayanna Pressley, have raised alarms about potential foreign influence over prominent American media.
Despite reassurances from Paramount regarding the relinquishing of voting rights from Middle Eastern investors, doubts remain about the rationale behind their significant investment. Adding to the uncertainty, Jared Kushner’s Affinity Partners recently withdrew from the financing deal, which included substantial investments from the Saudi sovereign wealth fund.
Future Prospects and Strategic Moves
The competition between Paramount and WBD is expected to continue for several months, with the current offer for shares set to expire on January 8, though it could be extended. Financial analysts speculate that Paramount might present a revised offer or take legal action to further its takeover ambitions.
Meanwhile, as the acquisition dispute unfolds, Netflix is progressing with its initial agreement to acquire Warner Bros. assets, including the HBO Max streaming service. Co-CEOs Greg Peters and Ted Sarandos communicated to employees their confidence in the deal’s success, emphasizing its benefits for shareholders, consumers, and job security within the industry.
Anticipated Changes in Ownership Structure
Under WBD’s proposed strategy, the company plans to split into two publicly traded entities by next summer. This organization will enable Netflix to pursue regulatory approval for its acquisition of Warner Bros. The remaining division, named Discovery Global, will encompass CNN and other media channels.
In addition, former President Trump has expressed interest in the regulatory review, indicating a preference for Paramount’s bid while criticizing CNN’s management. He described the current CNN leadership as a “disgrace” and underscored the necessity of selling the network.
