Paramount's Battle
Paramount may have lost this battle, but the war isn’t over yet. Warner Bros. Discovery has officially rejected Paramount Skydance’s all-cash $30-per-share offer to buy out the iconic Hollywood company.
The deal is valued at a whopping $108bn.
Warner Bros. is moving towards mega streamer Netflix’s exclusive deal that they originally presented back on Dec. 5th. Their bid was about $27-per-share with a roughly $82.7bn total valuation. They’re looking to create a media juggernaut to compete with YouTube (as they’ve been shouting), which, as Ted Sarandos is now promising forcefully, will not extinguish theatrical altogether.
Netflix’s deal focuses exclusively on buying the Streaming & Studios (film/TV divisions), while WBD sees this deal as better for its shareholders in the long term.
In WBD’s official board of directors’ rejection letter to the David Ellison-run mammoth PSKY, it argued their proposal lacked binding financial guarantees and posed “significant risks and costs.”
The letter also says that Paramount Skydance:
“Has consistently misled WBD shareholders that its proposed transaction has a full backstop from the Ellison family. It does not.”
This is mentioned despite Paramount still maintaining that its bid is fully financed and backed by $41bn in equity commitments from the Oracle-founding Ellison family and its partnering investment firm, Redbird Capital.
According to SEC filings reported, Paramount’s deal carries a potentially pretty substantial personal buyout for WBD CEO David Zaslov, allegedly it’s around the “$500 M” number.
Netflix has not disclosed any individual compensation amount for the commander-in-chief alongside their offer.
There is still a long fight ahead, with WBD shareholders still having to approve the Netflix transaction, not to mention the multiple regulatory steps that need to be taken before any actual acquisition happens.
Interestingly, at some point in this process, Starz wanted to get in on the fun. The Outlander television network put in a $25bn offer for all of WBD’s cable networks and 20% of its Studios and Streaming businesses.