Warner/Netflix: Paramount strikes back!

The proposed transaction covers the entirety of Warner Bros. Discovery, not just the split of the studio and its streaming division. Yet it is this latter entity that Netflix has committed, through a binding agreement, to acquire for $72 billion (for an enterprise value of $82.7 billion; see Netflix wins the bidding war for Warner Bros. Discovery, but…). Paramount indicates that its offer corresponds to an enterprise value of $108.4 billion (including debt). In announcing this hostile takeover attempt, Ellison stated in a press release relayed by Variety: “WBD shareholders deserve the opportunity to consider our superior, all-cash offer for their shares across the entire company. Our public offer, which uses the same terms as those we presented privately to the Warner Bros. board of directors, is a significant investment in the company’s future.” Discovery offers superior value as well as a more certain and faster path to completion. We believe the WBD board is pursuing an inferior proposal, which exposes shareholders to a mix of cash and stock, an uncertain future stock market value for the Global Networks linear TV business, and a complex regulatory approval process. We are reaching out directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares. Paramount is pulling out all the stops to buy Warner right under Netflix's nose. Paramount says Warner Bros. Discovery shareholders can find additional information about Paramount's proposal at strongerHollywood.com. According to the press release published on this site, the offer is guaranteed by Paramount's "well-capitalized principal shareholders" (i.e., the Ellison family), the private equity firm RedBird Capital, and $54 billion in debt commitments provided by Bank of America, Citi, and Apollo Global Management. The press release makes no mention of Middle Eastern funds, such as the Saudi sovereign wealth fund PIF, which previous press articles suggested were involved in earlier bids. The future of cinema is undoubtedly at stake now. In short, in the now open war between Netflix and Paramount, with an erratic American president caught in the middle, the fate of Warner, and by extension that of cinema, is being decided in a highly volatile arena where it is very difficult to predict who will ultimately win. The only difference with a poker game is that here, nobody seems to be bluffing. While we await the next twist in this saga, which may, in a few months or years, provide material for a film, the question remains whether we'll go see it in theaters… or watch it from the comfort of our sofas. To be continued.