Paramount on Monday mounted a hostile takeover bid for Warner Bros. Discovery, a brazen attempt to secure a Hollywood prize snatched away by Netflix last week.
Netflix announced an $83 billion deal to buy a big part of Warner Bros. Discovery on Friday, in an agreement approved by the boards of both companies. In a news release on Monday, Paramount went around the Warner Bros. Discovery board and straight to shareholders with what it called a superior offer.
Paramount said it would pay $30 per share in cash, valuing the company at around $108 billion, including debt. It said it was going to shareholders because the board of Warner Bros. Discovery is “pursuing an inferior proposal” that would lead to “a challenging regulatory approval process.”
Paramount has offered to buy all of Warner Bros. Discovery, including the Warner Bros. movie studio, the HBO Max streaming service and a portfolio of cable channels including CNN. The cable channels are not part of the Netflix deal.
“We believe our offer will create a stronger Hollywood,” David Ellison, the chief executive of Paramount, said in a press release. “It is in the best interests of the creative community, consumers and the movie theater industry.”
Warner Bros. Discovery had no immediate comment.
Paramount’s hostile takeover attempt is the latest in a series of increasingly strident overtures to Warner Bros. Discovery in recent weeks. Just before Netflix announced it had struck a deal, Paramount sent a letter to David Zaslav, the chief executive of Warner Bros. Discovery, alleging that the company ran a “myopic” sale process that “favors a single bidder.”
Warner Bros. Discovery said in a response that it “fully and robustly” complied with its obligations to shareholders. The company ran a weekslong bidding process that also drew interest from Comcast, the cable company that owns NBCUniversal.
Shares of Warners Bros Discovery closed at $26 a share on Friday, after its deal with Netflix was announced. It was up nearly 5 percent premarket when Paramount announced its bid.
A key part of assessment will be whether shareholders expect that regulatory authorities will approve the transaction. The deal between Netflix and Warner Bros. Discovery would include Warner Bros. movie studio and HBO Max, enhancing Netflix’s market power in streaming even more. At the Kennedy Center Honors on Sunday, President Trump praised Ted Sarandos, Netflix’s co-chief executive, but noted that the company had a “very big market share,” adding that he would be “involved” in the regulatory review.
Netflix is expected to argue that regulators should consider its business as part of the much larger entertainment industry that also includes platforms like YouTube and TikTok, as well as tech giants like Amazon and Apple. The social media application Meta successfully made a similar argument defending itself against monopoly charges in a recent case.
If the deal falls through because of a failure to get the necessary approvals, Netflix would pay a $5.8 billion fee to Warner Bros. Discovery, according to documents filed with federal regulators. If it accepts a superior unsolicited bid from Paramount, or any other rivals, it would owe Netflix $2.8 billion, according to the documents.
Netflix’s deal for Warner Bros. Discovery landed like a bomb in Hollywood, setting off fears that the streaming giant would eventually marginalize theatrical releases for one of the few remaining major film studios. Netflix has pledged to continue theatrical releases for movies from Warner Bros. Discovery, a significant development, but many in Hollywood are skeptical of the company’s long-term commitment to theatrical distribution.
Hostile takeover bids are relatively uncommon at the top of the media industry, where cozy relationships among moguls and special classes of stock often make them impractical. But there is some precedent. Brian Roberts, the chief executive of Comcast, attempted a hostile takeover of Disney in 2004, as that company was embroiled in shareholder tumult. The bid was ultimately unsuccessful.
Benjamin Mullin reports for The Times on the major companies behind news and entertainment. Contact him securely on Signal at +1 530-961-3223 or at [email protected].
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