In the wake of streaming service Netflix entering into a definitive agreement to acquire Warner Bros., Paramount has made an offer of their own for the entirety of Warner Bros. Discovery (WBD). This all-cash tender offer is to acquire all outstanding shares of WBD for $30.00 per share in cash. Paramount’s proposed transaction is for the entirety of WBD, including the Global Networks Division, which runs linear television outlets CNN, TNT Sports, and Discovery, as well as free-to-air channels across Europe, and digital products such as Discovery+ and Bleacher Report. WBD’s Global Networks Division is not included in Netflix’s proposed acquisition, which is valued at $27.75 per share and would see the Global Networks Division spun off into its own publicly traded company.
Paramount writes in a statement that their offer to WBD shareholders “provides a superior alternative to the Netflix transaction, which offers inferior and uncertain value and exposes WBD shareholders to a protracted multi-jurisdictional regulatory clearance process with an uncertain outcome along with a complex and volatile mix of equity and cash.” Paramount also notes that WBD has “never engaged meaningfully” with the six proposals they have submitted over the course of 12 weeks, prompting them to “[take] its offer directly to WBD shareholders and its Board of Directors to ensure they have the opportunity to pursue this clearly superior alternative.”
David Ellison, Chairman and CEO of Paramount, said: “WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company. Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
Netflix’s proposed acquisition of Warner Bros. has been met with industry pushback, including from cinema trade association Cinema United, which argued that the deal would risk removing 25% of the annual domestic box office. Wrote Cinema United President and CEO Michael O’Leary, “The proposed acquisition of Warner Bros. by Netflix poses an unprecedented threat to the global exhibition business. The negative impact of this acquisition will impact theatres from the biggest circuits to one-screen independents in small towns in the United States and around the world.”
Paramount’s Ellison, by contrast, argues that Paramount’s acquisition of Warner Bros. would “create a stronger Hollywood. It is in the best interests of the creative community, consumers and the movie theater industry. We believe they will benefit from the enhanced competition, higher content spend and theatrical release output, and a greater number of movies in theaters as a result of our proposed transaction. We look forward to working to expeditiously deliver this opportunity so that all stakeholders can begin to capitalize on the benefits of the combined company.”
The studio has launched www.StrongerHollywood.com for additional information and arguments aimed at WBD shareholders. Among these are promises that Paramount will “invest to grow the creative engines at the heart of WBD and Paramount, maintaining the studios of both companies and focusing on attracting and retaining world-class creative talent to grow the scaled supply of high-quality content for our combined services and third-party distribution. This includes maintaining the current WBD theatrical slate with plans for additional growth.” Paramount adds: “Paramount strongly believes in the value of releasing feature movies in theaters and will continue to do so for the theatrical content of both Paramount and WBD studios.”
Netflix has confirmed it expects to maintain Warner Bros.’ current operations, including the theatrical release of its films. The streamer did not provide any details on whether those theatrical releases would extend beyond any pre-existing agreements between filmmakers and Warner Bros. It has neither commented on the length of theatrical exclusivity any of those releases would receive, nor on the presence of a theatrically-driven marketing campaign to support them. Netflix has given select theatrical releases limited marketing support under exclusivity windows that have extended up to 30 days, after which they are made available on its SVOD streaming platform.
Other organizations to voice their opposition to the Netflix-Warner Bros. deal include the European cinema trade group UNIC and the UK Cinema Association, both of which highlight the proposed deal’s risk to the global cinema landscape.
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