- Warner Brothers Discovery just rejected Paramount’s purchase offer
- The WBD board of directors favors the agreement with Netflix
- Don’t expect a closed deal anytime soon.
Last week, it looked like Paramount might swoop in to steal Warner Bros. Discovery from Netflix with a hostile takeover bid that outbid the streaming giant, but now it looks like WBD is sticking with its Stranger Things lover.
That’s because WBD’s board officially rejected David Ellison’s Paramount offer, calling it “inadequate, with significant risks and costs imposed on our shareholders” (via The Hollywood Reporter).
Their complaints focused on two key issues.
The first is that WBD has doubts that Larry Ellison – the father of David Ellison, who is helping finance the Paramount deal – can provide the full backing that Paramount’s offer claims it can. Basically, Larry Ellison is offering a trust with assets and liabilities as a guarantor for the Paramount deal, but because the agreement does not disclose what these assets are and because the assets within the trust can be moved or changed, WBD is not convinced that this can serve as a reliable backup.
The second is the participation of Middle East sovereign funds. While the Ellisons’ involvement would arguably help grease the regulatory wheels (as Larry is a close ally of President Donald Trump), the fear is that money from Saudi Arabia, Abu Dhabi and Qatar will simply undo that political goodwill, as American lawmakers may not be interested in these foreign powers being so involved with such a major entertainment provider.
It probably doesn’t help that Jared Kushner’s investment fund (Kushner is Trump’s son-in-law) has also withdrawn its financial support as part of the Paramount deal.
WBD added that, in addition to this financial and regulatory uncertainty, it does not believe the Paramount deal is materially better than Netflix’s offer. He sees it as more risk without gain.
Netflix also sent a letter to WBD shareholders to explain why its offer is “superior on multiple fronts.”
Far from climax
While this sounds like the end of the story, it is almost certainly not.
For starters, WBD’s board doesn’t have the final say on Paramount’s offer: its shareholders do. While WBD’s board said in a letter to shareholders that the Netflix deal is superior, shareholders could still decide to sell their stake to Paramount.
Even if they agree with the board’s assessment, Paramount may not back down.
Reports suggest that David Ellison sent a text message to WBD CEO David Zaslav telling him that Paramount might be willing to go above $30 a share, saying, “Please note how important it is that we did not include ‘best and final’ in our offer.”
Likewise, if the Paramount consortium comes back with a better offer, Netflix could respond with an even bigger purchase deal. The declines in the share prices of Netflix and Paramount suggest that markets are predicting a bidding war.
It’s also worth noting that while there is a lot of attention paid to the US government’s views on the deals (especially given Trump’s close personal ties to the Ellisons and his unprecedented promise to want to be directly involved in the decision-making process on the deal), the US is likely not the only government to intervene. The EU will also intervene, and its commission does not seem to boast the same personal affinity for the Ellisons.
There’s still time for more to happen in 2025, but I’m hoping the biggest events won’t happen until 2026, giving us a lot more time to watch this drama unfold. Personally, I can’t wait to see Netflix’s dramatization of all this.
Follow TechRadar on Google News and add us as a preferred source to receive news, reviews and opinions from our experts in your feeds. Be sure to click the Follow button!
And of course you can also follow TechRadar on TikTok for news, reviews, unboxings in video form and receive regular updates from us on WhatsApp also.
