Paramount’s Bold Move: Hostile Takeover Bid for Warner Bros Shakes Up Media Industry

Paramount Challenges Netflix with Superior All-Cash Offer for Warner Bros

Paramount has launched a dramatic hostile takeover bid for Warner Bros Discovery (WBD), directly challenging Netflix’s recent acquisition agreement and setting the stage for a major shake-up in the global entertainment sector.

Key Points at a Glance

• Paramount offers $108.4bn (£81bn) in an all-cash bid for the entirety of Warner Bros Discovery, including its Global Networks division
• Netflix had previously agreed a $72bn (£54bn) deal, involving both cash and stock, to acquire WBD
• Paramount’s proposal values Warner Bros shares at $30 (£22.50) each, $18bn (£13.5bn) more in cash than Netflix’s offer
• Paramount is taking its offer directly to WBD shareholders after six unsuccessful private proposals
• Both deals face regulatory scrutiny, with political connections and antitrust concerns in the spotlight

Paramount’s Direct Approach to Shareholders

After six previous proposals were ignored by the Warner Bros Discovery board, Paramount has decided to bypass the board and appeal directly to shareholders. The company argues that its all-cash offer is not only financially superior but also provides a quicker and more certain path to completion compared to Netflix’s mixed cash-and-stock deal.

Paramount’s chairman and CEO, David Ellison, stated:

“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company. Our public offer provides superior value, and a more certain and quicker path to completion.”

Comparing the Paramount and Netflix Offers

• Paramount’s Bid: $108.4bn (£81bn) all-cash, $30 (£22.50) per share, for the entire Warner Bros Discovery group, including Global Networks
• Netflix’s Deal: $72bn (£54bn) cash and stock, $27.75 (£20.80) per share, excludes the Global Networks division, which will be spun off as Discovery Global

Paramount claims its offer is a “strategically and financially compelling” alternative, while Netflix’s deal is seen as riskier due to its reliance on future stock value and a more complex regulatory process.

Regulatory and Political Hurdles

Both takeover bids are expected to face intense scrutiny from regulators, given the potential for market dominance and job losses in the industry. US President Donald Trump has already raised concerns about the Netflix deal’s impact on competition and indicated he will be involved in the approval process.

However, Paramount’s bid may benefit from close ties between the Ellison family and the Trump administration. Industry analysts suggest these relationships could influence the regulatory outcome in Paramount’s favour.

What’s Next for Warner Bros Discovery?

• The Netflix deal cannot be finalised until Warner Bros splits its studio and streaming operations from its global networks division
• Paramount’s offer covers the entire company, potentially simplifying the process
• Both deals could reshape the future of the entertainment industry, with major implications for content, jobs, and competition

Industry Reactions

David Zaslav, president and CEO of Warner Bros Discovery, praised the Netflix deal for uniting “two of the greatest storytelling companies in the world”. However, with Paramount’s aggressive new bid, the final outcome remains uncertain.

Sources: (SKYMoney.com, Reuters.com)