Warner Bros. backs Netflix bid, tops Paramount’s $108 billion bid

Warner Bros. Discovery has told its shareholders to reject Paramount Skydance’s $108.4bn (£80.75bn) takeover bid.

Paramount has said its offer is “Better than” Warner Bros.’s $72 billion deal with Netflix for its movie and streaming businesses.

But in a dramatic plot twist in the story of who will control one of Hollywood’s oldest and most famous film studios, Warner Bros.’s board of directors has “unanimously” recommended rejecting the offer, agreeing that a deal with Netflix is ​​in the company’s best interests.

The media giant offered to sell in October after receiving “multiple expressions of interest” from potential buyers, including an approach from Paramount Skydance.

On December 5, Warner Bros. Discovery said it had Agrees to sell its movie and streaming businesses to Netflix.

Warner Bros. Discovery’s board of directors said in a lengthy legal filing that Paramount’s takeover offer poses numerous significant risks and strongly disputed suggestions that the Ellison family, one of the richest families in the United States, provided financial backing for the acquisition.

Paramount is backed by the billionaire Ellison family, which has close ties to the president.

Warner Bros.’s board of directors said streaming giant Netflix’s takeover bid is well-funded and could provide better long-term value for shareholders, reflecting the current strength of the entertainment industry.

Netflix welcomed Warner Bros.’s suggestion. Netflix co-chief executive Ted Sarandos called the company’s merger agreement “superior” and “in the best interest of shareholders.”

In a letter to Warner Bros. shareholders, Netflix reiterated its position that the acquisition of Warner Bros. involves a clearer financing structure and fewer regulatory risks.

There’s still a chance Paramount could make another offer, meaning the Hollywood acquisition saga isn’t over yet.

There are big differences between Netflix and Paramount’s services.

Netflix hopes to acquire Warner Bros. Movie Studios and its HBO streaming service, which will also give it access to Warner Bros.’s rich library of content and securely access those movies and shows for its subscribers.

But it doesn’t want the media giant’s pay-TV channels. If Warner Bros. agrees to the Netflix deal, Warner Bros. would sell its television networks, such as CNN and TNT, to an independent company before the acquisition is completed.

Paramount, on the other hand, wants to buy out Warner Bros., which would mean acquiring rivals of its own TV channels, such as CBS, MTV and Showtime.

As the entertainment industry continues to consolidate ownership, regulators are likely to raise questions about the erosion of consumer choice.

A week after Netflix announced its deal to acquire Warner Bros. Paramount Skydance launches new offer for the company as a whole, including its television networks.

The Warner Bros. acquisition is expected to face scrutiny from U.S. and European competition regulators.

The new owners of Warner Bros. will gain a significant advantage in the competitive streaming market. It will have a vast library of movies and TV shows, including “Harry Potter,” “Monsterverse,” “Friends” and the HBO Max streaming service.

Mike Proulx of research firm Forrester said the battle for control of Warner Bros. will take months to resolve.

“What’s happening now feels like a more substantial episode of HBO’s Succession in real life,” he said. “If you think you know how this episode ends, think again.”

Some in the film industry have criticized plans to merge all or part of Warner Bros. with a rival. The East-West chapter of the Writers Guild of America has called for blocking the merger, arguing it would lead to lower wages and layoffs.

The amount of content for viewers will also be reduced, it said.