Paramount’s $102 billion bid to sideline Netflix and buy Warner Bros Discovery — What you should expect

Paramount Skydance on Monday laid out a hostile bid worth $108.4 billion to acquire Warner Bros Discovery, days after Netflix offered $72 billion to buy the film studio and its streaming service — a battle that could see the end of a duopoly to make way for a monopoly.

In its bid to persuade Warner Bros Discovery shareholders, Paramount Skydance launched a tender offer for current WBD shares at $30 per share, all cash.

Paramount’s $30-per-share cash offer includes a $41 billion equity financing, as well as financing from Affinity Partners, the investment firm run by Jared Kushner, US President Donald Trump’s son-in-law, and several Middle Eastern government-run investment funds, and is backstopped by the Ellison family.

Paramount’s bid includes Warner Bros Discovery’s cable television properties; Netflix’s bid is limited to the Warner Bros film and television studios, HBO and the HBO Max streaming service.

How Paramount wants to override Netflix

Paramount said its tender bid will be open for 20 business days, and Warner Bros Discovery has to respond in 10 days. Addressing an investors call on Monday, Paramount Chief Strategy Officer Andy Gordon said that the company will keep options open to extend the deadline to keep the offer open for WBD shareholders.

During these 20 days, shareholders of Warner Bros Discovery can sell their shares to Paramount for $30, giving the company a chance to take over WBD if it gains 51% stake through the share sell.

“If [Paramount] seems to be gaining traction, we would not be surprised to see a reaction,” Raymond James equity analyst Ric Prentiss wrote in a note to clients, according to a report by CNBC.

In an interview with the news outlet, Paramount CEO David Ellison said that his company is “here to finish what we started”, and indicated that the $30 per share offer was not its “best and final” — an indication that he is willing to pay more.

How did Netflix react to Paramount’s offer?

Netflix, who entered into an agreement with Warner Bros Discovery, has committed to a $27.75-per-share, cash-and-stock deal.

Netflix could react to the hostile offer by increasing its own. However, Netflix co-CEO Ted Sarandos did not mention it was going in that direction when he spoke at the UBS Global Media and Communications Conference on Monday.

“Today’s move was entirely expected,” Sarandos said while brushing off the Paramount offer to buy Warner Bros Discovery made just hours earlier.

“We have a deal done, and we are incredibly happy with the deal. We think it’s great for our shareholders. It’s great for consumers. We think it’s a great way to create and protect jobs in the entertainment industry.”

Sarandos added, “We have a deal done, and we’re incredibly happy with the deal.”

Netflix’s Friday bid had rattled many in the Hollywood industry, and theatre fans in general who feared that a takeover of Warner Bros Discovery may put an end to the cinema experience.

Is Warner Bros Discovery going to side with Paramount?

Warner Bros. will “carefully review and consider Paramount Skydance’s offer,” according to a statement Monday.

It said the WBD board “is not modifying its recommendation with respect to the agreement with Netflix”, advising investors “not to take any action at this time with respect to Paramount Skydance’s proposal.”

Warner Bros. said it aims to advise stockholders on the board’s recommendation for the Paramount offer within 10 business days.

If Warner Bros. breaks its current agreement it will be required to pay Netflix a $2.8 billion fee.

Warner Bros. shares were up 4.4% to $27.23 at the close in New York on Monday, while Paramount gained 9%. Netflix lost 3.4% and is down 11% in the last four trading sessions.