- Warner Brothers Discovery has just rejected Paramount’s buyout offer
- The WBD board is in favor of the Netflix deal
- Don’t expect a done deal just yet
Last week, it looked like Paramount might be poaching Warner Bros. Discovery from Netflix with a hostile takeover bid that trumped the streaming giant’s offer, but now it looks like WBD is sticking with its Stranger Things paramour.
That’s because the WBD board has officially rejected the bid from David Ellison’s Paramount, calling it “inadequate, with significant risks and costs imposed on our shareholders” (via The Hollywood Reporter ).
Their complaints revolved around two key issues.
The first is that WBD doubts that Larry Ellison—David Ellison’s father, who is helping finance the Paramount deal—can provide the full backstop that Paramount’s offer claims he can. Essentially, Larry Ellison is offering a trust with assets and liabilities as a guarantor of Paramount’s deal, but because the deal does not disclose what those assets are, and because assets in the trust can be moved or changed, WBD is not convinced that this can serve as a reliable backstop.
The second is about the involvement of Middle Eastern sovereign funds. While the Ellisons’ involvement would no doubt help grease the regulatory wheels – as Larry is a close ally of President Donald Trump – the fear is that the money from Saudi Arabia, Abu Dhabi and Qatar would just undo political goodwill, as US lawmakers may not be interested in having these foreign powers so heavily involved in such a significant entertainment provider.
It probably doesn’t help that Jared Kushner’s investment fund (Kushner is Trump’s son-in-law) has also pulled its financial backing as part of the Paramount deal.
WBD added that, on top of this financial and regulatory uncertainty, it does not believe the Paramount deal is significantly better than Netflix’s offer. It sees it as more risk without gain.
Netflix also sent a letter to WBD shareholders to explain why their offer is “superior on multiple fronts.”
Far from climax
While this sounds like the end of the story, it almost certainly isn’t.
For starters, WBD’s board doesn’t have the final say on the Paramount offer: its shareholders do. While WBD’s board has said in a letter to shareholders that Netflix’s deal is superior, shareholders may still decide to sell their stake to Paramount.
Even if they agree with the board’s assessment, Paramount must not withdraw.
Reports suggest that David Ellison texted WBD chief David Zaslav that Paramount might be willing to go above $30 per share. stock, saying, “Please note that we did not include ‘best and last’ in our bid.”
Likewise, if Paramount’s consortium comes back with a better offer, Netflix could respond with an even bigger buyout deal. The drop in both Netflix and Paramount’s share prices suggests that the markets are anticipating a bidding war.
It’s also worth noting that while there’s a lot of focus on the U.S. government’s thoughts on the deals — especially given Trump’s close personal ties to Ellison and his unprecedented pledge to be directly involved in the decision-making process surrounding the deal — the U.S. is unlikely to be the only government to weigh in.
There’s still time for more to happen in 2025, but I expect the biggest developments won’t happen until 2026 – giving us plenty more time to see how this drama unfolds. Personally, I can’t wait for the Netflix-made dramatization of it all.
Follow TechRadar on Google News and add us as a preferred source to get our expert news, reviews and opinions in your feeds. Be sure to click the Follow button!
And of course you can too follow TechRadar on TikTok for news, reviews, video unboxings, and get regular updates from us on WhatsApp also.
