The co-chief executives of Netflix issued a letter Monday expressing confidence in their ability to close a proposed $72-million acquisition of Warner Bros. Discovery while trying to allay fears the deal will hurt the entertainment industry.
The joint note filed with the Securities and Exchange Commission by Greg Peters and Ted Sarandos maintained that combining the streaming behemoth with the historic movie and TV studios and its HBO Max service “will offer consumers more choice and value, allow the creative community to reach even more audiences with our combined distribution, and fuel our long-term growth.”
The communication follows the Dec. 8 hostile bid from Paramount, which has upped the ante to $78 billion or $30 share. Paramount is also seeking to acquire WBD’s cable assets including CNN and Discovery Networks. Warner Bros. Discovery has a massive library of popular and classic films along with durable TV series such as “Friends,” that would fortify Paramount’s own streaming platform Paramount+.
Paramount is going directly to shareholders in order to also put pressure on WBD. Paramount executives have accused the company of not engaging meaningfully with multiple proposals it put forth over the course of 12 weeks.
The Hollywood community — especially among Guild members — are not enthralled with the Netflix deal, fearing it will reduce the amount of movies and TV shows created, and eliminate jobs.
“We’ve seen this movie before, and we know how it ends,” Michele Mulroney, president of the Writers Guild of America West said last week. “There are lots of promises made that one plus one is going to equal three. But it’s very hard to envision how two behemoths, for example, Warner Bros. and Netflix … can keep up the level of output they currently have.”
Peters and Sarandos counter that their proposal “is pro-consumer, pro-innovation, pro-worker, pro-creator, and pro-growth.” The letter pointed to Nielsen data that shows Netflix would only account for 9% of all TV usage if combined with WBD. YouTube currently has 13% while the potential combination of Paramount and WBD would be 14%.
The executives said Netflix expected the hostile bid from Paramount and contend the company has “a solid deal in place” with the streamer. They also expressed confidence in getting government approval for a deal, addressing the prevailing wisdom that the friendly relationship between President Trump and Paramount Chief Executive David Ellison and his investor father Larry will help grease the wheels for approval.
“We’re confident we’ll get it over the finish line—and we’re genuinely excited about what’s ahead,” the executives wrote. “We believe in this deal—in the value it creates— and we’re confident we’ll get the approvals we need to make it happen.
The deal will need the approval of the Department of Justice. Trump has said that Netflix’s large share of the streaming market “could be a problem” for the company’s pursuit.
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