The proposal from Paramount emerged just a few days after Warner Bros. agreed to a deal with Netflix. Previously, both giants, Paramount and Netflix, had competed for Warner Bros.' assets for several months.
According to the latest news, on December 5, Netflix announced its intention to acquire only the Warner Bros. film studio and the HBO Max streaming service for $82.7 billion (at $27.75 per share). In contrast, Paramount is offering to acquire the entire Warner Bros. company, including well-known cable channels such as CNN, TNT Sports, and Discovery, with their offer exceeding Netflix's price by $17.6 billion.
Paramount's CEO, David Ellison, emphasized: "Cash still has weight on Wall Street. We are confident that, upon seeing our offer, shareholders will prefer it." He also noted that the deal with Paramount has a better chance of regulatory approval.
The board of directors of Warner Bros. Discovery confirmed that it would consider the offer from Paramount, but would not change its recommendations regarding the deal with Netflix. The board was advised "not to take any action" in response to Paramount's offer.
To hinder the deal between Netflix and Warner Bros., Paramount secured financing from sovereign funds in the Middle East and from Affinity Partners, a company linked to Jared Kushner, the son-in-law of U.S. President Donald Trump.
President Trump had previously expressed that the Netflix deal with Warner Bros. could create problems, considering Netflix's already significant market share. It is worth noting that David Ellison's father, Larry Ellison, a billionaire and chairman of Oracle's board, has good connections with the White House administration, as reported by Reuters.
After the announcement of the new offer, shares of Paramount and Warner Bros. Discovery increased by 7% and 5% respectively during trading, while Netflix's shares fell by more than 4%.
If the deal with Netflix does not go through, Warner Bros. will be obligated to pay the streaming service a penalty of $2.8 billion. If the deal does not receive regulatory approval, Netflix will compensate Warner up to $5.8 billion.
