Paramount Skydance on Monday launched a hostile bid worth $108.4 billion US for Warner Bros. Discovery, throwing a wrench into a proposed $72-billion US equity deal with Netflix in a last-ditch effort to create a media powerhouse that would challenge the dominance of the streaming giant.
The Warner Bros. Discovery board of directors on Monday afternoon said it would review Paramount’s offer, but is not modifying its recommendation with respect to Netflix. It advised the company to “take no action at this time” regarding the Paramount Skydance proposal.
Netflix co-CEO Ted Sarandos said Paramount’s proposal was “entirely expected” and that the streaming giant is still “super confident” its deal will be completed.
Unlike Netflix, Paramount is also offering to buy the cable television assets of Warner Bros. It is the same bid that Warner Brothers had previously rejected in favour of the offer from Netflix. Paramount executives said their offer is worth about $18 billion US more than the competing bid from Netflix, which they said is based on an “illusory prospective valuation” of those cable assets.
Anti-trust concerns
The bid has already drawn sharp criticism from bipartisan lawmakers and Hollywood unions over concerns that it could lead to job cuts and higher prices for consumers.
However, analysts say Paramount’s offer comes with its own risks, including additional debt needed to make the transaction work. The acquisition would also bring its own anti-trust scrutiny as a consolidation of two major television operators.
Netflix has agreed to buy Warner Bros. Discovery’s TV and film studios and streaming division for $72 billion US. If the deal gets regulatory approval, it would shift the media landscape, and some movie theatre companies are voicing concern for their future.
What is a hostile takeover bid?
Paramount’s offer was made in an unusual way. After Netflix and Warner Bros. jointly announced their deal on Friday, Paramount publicly revealed information around its own offer — an end-run manoeuvre commonly known as a hostile takeover bid.
Such a move usually involves an unsolicited buyer acting against the explicit wishes of the company they intend to buy. Elon Musk engaged in such a move when he paid $43 billion US for Twitter (now X). Similar to Paramount’s offer, that deal was made against the apparent plans of Twitter’s board of directors.
Pitching its proposition directly to Warner Bros. shareholders, Paramount sought to sway them against the deal put forward by the company’s board of directors.
In its appeal, Paramount said it submitted six proposals over the course of 12 weeks, but Warner Bros. “never engaged meaningfully” with these proposals.
Quality vs. quantity
Speaking to CBC News, Exclaim! Magazine film editor Rachel Ho said the relative plusses — and considerable minuses — of either deal have likely put Warner Bros. between a rock and a hard place.
The general outlook inside the industry, she said, is that Paramount’s acquisition is somewhat less risky. Paramount, she said, is also a traditional movie house that has prioritized quality over quantity, unlike Netflix.
Netflix is “a content farm in many ways,” she said. “They’re just looking to churn out as much as possible.”
That’s compounded by Sarandos’s opposition to theatrical exclusivity windows: the industry practice of keeping movies solely in theatres for a set amount of time, before moving to home viewing.
Though Sarandos has since tried to assuage fears Netflix would kill theatre-going, he has long described exclusivity windows as not being consumer friendly. Production groups from the European cinema trade body UNIC, to the Writers Guild of America and Directors Guild of America have said Netflix’s acquisition could pose a risk to the future of moviegoing.
Ho says Paramount is unlikely to shrink theatrical releases as much, but its closeness with the Trump administration poses other concerns. Paramount’s bid is partially backed by Larry Ellison, the co-founder of Oracle, the father of Paramount CEO David Ellison and one of the world’s richest people. The elder Ellison also has close ties with the White House.
Paramount’s bid comes on the heels of its October purchase of the news and commentary website the Free Press.
The site’s founder, Bari Weiss, who has a reputation for fighting “woke” culture, was then installed as editor-in-chief of CBS News, another Paramount property.
Some observers took her appointment as a signal Ellison intended to shake up the storied network of Walter Cronkite, Dan Rather and 60 Minutes, long viewed by many conservatives as the personification of a liberal media establishment.
It also follows Paramount’s $8-billion US merger with Skydance, which was approved after months of turmoil revolving around U.S. President Donald Trump’s legal battle with 60 Minutes. Critics of that settlement lambasted it as a veiled bribe to appease Trump, amid rising alarm over editorial independence.
“It is definitely a concern that not just Warner Brothers shareholders need to be concerned about, but I think all of us need to be concerned about that,” Ho said.
Likewise, U.S. Sen. Elizabeth Warren, a Democrat, said Paramount’s offer “is backed by a who’s who of Trump buddies … raising serious questions about influence-peddling, political favoritism, and national security risks.”
One of the investors partially backing Paramount’s offer is Affinity Partners, run by Trump’s son-in-law, Jared Kushner.
Trump said on Monday that neither bidding party are “friends” of his and that he had not spoken to Kushner about the Paramount bid.
How will this affect Canadians?
Whichever buyer succeeds, the effect on Canadian entertainment landscape is anything but certain, entertainment lawyer Dave Stern told CBC News.
Given the length of time it will take either a Paramount or Netflix deal to get governmental approval, any prospective changes on the consumer-side of things are likely still far in the future.
But given Warner Bros.’ many agreements with Canadian media holders — notably Bell Media’s multi-year deal, which gives the streaming platform Crave access to HBO content — Stern says the streaming experience in Canada may eventually shift considerably.
If either Paramount or Netflix suddenly have access to Warner Bros.’ huge library of content, Stern says, it will likely be incentivized to either pay Canadian streamers to void those contracts, or simply allow those contracts to lapse.
“The value here is the content. So do you really want to keep it on Crave for X amount of years? Or do you want to pull it and merge your platforms?” Stern said. “Or put it on your own platform, or have the freedom to do whatever you think is best for your market and for your consumers.”
Speculating further, Stern says there’s a chance this could help boost Canadian production. If Canadian media companies get a considerable payday to void their contracts while simultaneously losing access to American content, he said, they may be incentivized to invest more in creating and licensing Canadian content to fill those gaps.
“Regardless of who completes this bid, be it Paramount or Netflix, I think it’ll be net positive for Canadians,” he said.
