Paramount launches $108.4bn hostile bid for Warner Bros Discovery

Paramount Skydance on Monday mounted a hostile $108.4 billion bid for Warner Bros Discovery in a dramatic move to outbid Netflix and build a media group capable of challenging the streaming giant.

Netflix had appeared to win a weeks-long auction on Friday with a $72 billion equity offer for Warner Bros Discovery’s TV and film studios and streaming assets. Paramount’s new proposal, however, ensures the contest over Warner’s prized HBO and DC Comics properties will continue.

Warner Bros Discovery’s board said on Monday it would review Paramount’s offer but did not change its recommendation in favor of Netflix, advising shareholders to take no action for now.

Paramount’s $30-per-share cash bid is financed in part by Affinity Partners, the investment firm founded by Jared Kushner, and includes backing from several Middle Eastern sovereign wealth funds. The offer is also backstopped by the Ellison family; Larry Ellison, the father of Paramount CEO David Ellison, is among the financial backers.

Paramount argued its bid is superior to Netflix’s, offering shareholders about $18 billion more in cash and, it said, presenting a clearer path to regulatory approval. The studio said a Paramount-Warner combination would benefit the creative community, movie theaters and consumers by increasing competition.

“We believe our offer will create a stronger Hollywood,” Paramount CEO David Ellison said, adding the proposal provides higher headline value, greater certainty and “pro-Hollywood, pro-consumer and pro-competition” outcomes. Paramount’s offer covers Warner Bros Discovery’s cable television assets as well; Netflix’s bid is limited to the film and TV studios, HBO and HBO Max.

Analysts warned the deal would attract intense antitrust scrutiny, since a merger of two major television operators could significantly reduce competition. Democratic senators last month warned such consolidation could leave one company controlling a large share of what Americans watch on TV. The combined company would also rival Disney in scale, stoking further consolidation concerns.

Paramount’s offer values Warner Bros Discovery at a 139% premium to its pre-auction market value and surpasses Netflix’s $27.75 per-share mixed cash-and-stock proposal.

At a UBS conference, Netflix co-CEO Ted Sarandos said Paramount’s hostile bid was expected but expressed confidence Netflix would close its deal. He disputed Paramount’s synergy claims, saying such gains typically come from cost cuts rather than job creation.

In its regulatory filings, Paramount said the Ellison family and private equity firm RedBird Capital had agreed to backstop $40.7 billion in equity. The financing package also includes contributions from Kushner’s Affinity Partners, Saudi and Qatari sovereign wealth funds, and an Abu Dhabi government-owned firm.

U.S. Senator Elizabeth Warren described the proposed merger as an “antitrust fire” and criticised the high-profile backers of the bid, saying it raised questions about influence and national security risks.

If Warner Bros accepts Paramount’s offer, it would owe Netflix a $2.8 billion breakup fee; if Netflix’s deal collapses, Netflix would face a $5.8 billion penalty. Both bidders are expected to face close regulatory scrutiny.

Market reactions on Monday showed shares of Paramount rising 7.3%, Warner Bros Discovery up 5.3%, and Netflix down about 4%.

Industry observers said the fight is likely to be prolonged as Paramount courts shareholders, regulators and politicians. Paramount said it had submitted six proposals over 12 weeks and accused Warner Bros of not engaging meaningfully, claiming the sale process was tilted toward Netflix.

Paramount maintained it would protect Hollywood talent, keep supporting theatrical releases, and that its path to regulatory approval would be more certain than Netflix’s. In response, Warner Bros management was reported to have viewed the Netflix deal as a “slam dunk” and to have spoken unfavorably about Paramount’s proposal.

Paramount CEO David Ellison told CNBC there was an “inherent bias” in the bidding process, underscoring how the takeover battle is likely to remain contentious.