Paramount makes a move in Washington and seeks Donald Trump’s support to block Netflix’s purchase of Warner Bros.
The Ellisons are pulling strings in Washington to prevent Netflix from buying Warner Bros. at all costs, and Paramount is launching a hostile takeover bid.
Hollywood is going through a crucial moment, with the majors making all kinds of moves to prevent Netflix from absorbing Warner Bros. When the transaction seemed a foregone conclusion, Paramount Skydance launched a hostile takeover bid to WB shareholders with the intention of offering a much more attractive deal to shareholders, bypassing the company’s management. Now it has transpired that the Ellisons have made a move in Washington to win Donald Trump’s approval for this possible acquisition. According to sources close to the White House, David Ellison has promised drastic changes at CNN if Paramount acquires Warner.
Paramount’s desperate plan to buy Warner Bros. before Netflix closes the deal for good
Over the past few months, Paramount Skydance has attempted to buy Warner Bros. Discovery by making multiple increasing offers. On December 4, CEO David Ellison launched his sixth bid—the highest to date—of $77.9 billion. However, signs that Warner had chosen another buyer began to become apparent when CEO David Zaslav stopped responding to Ellison’s numerous calls and messages. The ghosting was a bad omen.
The big surprise came just one day later, on December 5, when Warner and Netflix announced that they had reached a purchase agreement valued at $72 billion. At that moment, Paramount went into DEFCON 1, and the Ellison clan mobilized its resources. Larry Ellison, founder of Oracle, ally of Trump, and father of David Ellison, called the U.S. president to warn him that the deal with Netflix would be “very harmful” to competition.
Meanwhile, David Ellison traveled to Washington to curry favor with President Trump, promising drastic changes at CNN if Paramount acquires Warner, according to the Wall Street Journal. This is an implicit offer of editorial reorientation at CNN aimed at winning Trump’s support in the regulatory process. This gesture could be particularly appealing to the POTUS, given his long-standing feud with CNN and his stated interest in seeing changes at the network, which he has accused for years of acting in a biased manner against him.
Following this, Paramount broke protocol on December 8, launching a hostile takeover bid directly to Warner Bros. shareholders. The offer, valued at $108.4 billion, would be too attractive to ignore, as it offers shareholders $18 billion more in cash than Netflix’s bid, as well as being more viable from a regulatory standpoint. The deal is financially backed by three Middle Eastern sovereign wealth funds, as well as Jared Kushner, Trump’s son-in-law.
What is Donald Trump’s position in the battle for the acquisition of Warner Bros.?
Donald Trump has not publicly declared his preference for either Netflix or Paramount, stating the following on the matter: “Neither of them is particularly friendly to me.” Instead, everything points to him wanting Paramount and Netflix to compete for his approval, with the implicit threat that whoever has not previously won his favor will face considerable obstacles from the administration and entities such as the Federal Trade Commission (FTC).
Although the president has requested to be kept informed of any possible antitrust investigation into the Netflix deal, the reality is that Warner and Zaslav always bet on Ted Sarandos’ streaming platform. According to Allen & Co., Warner’s advisors, “cash is king”: the conglomerate was looking for speed in the transaction and total liquidity to get out of its financial quagmire through the sale, and Netflix offered all of this. For now, we will have to see how events unfold following Paramount’s counteroffer.
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What is at stake in Hollywood is no small matter: Warner Bros. is considered one of the industry’s historic gems. It is a century-old studio whose catalog ranges from classics such as Casablanca to modern hits such as The Big Bang Theory, The Sopranos, and Game of Thrones. Therefore, controlling Warner means, for all intents and purposes, redefining the global entertainment landscape, which is why the battle between Paramount and Netflix is far from over. The war for Warner has only just begun, and for now, it is a developing story that is updated day by day and minute by minute.
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