Paramount Launches Hostile Takeover Bid For Warner Bros. Discovery

On Friday, fans of corporate consolidation rejoiced as Warner Bros. Discovery announced that it had reached a deal to sell its movie studio and streaming businesses to Netflix for $72 billion. That was not altogether surprising news, given that Netflix's rival bidder Paramount had already started posturing about mounting a challenge before WBD announced the winner, not something you do if you think you still have a chance of winning an auction. Last week, Paramount sent an ominous letter to WBD's board characterizing the sale as a "myopic process with a predetermined outcome that favors a single bidder." At the time the letter seemed like a prelude to a hostile takeover attempt; on Monday, Paramount formally launched that attempt.

Paramount's purchase offer is simple: $30 per share, in cash, for everything. Each aspect of that offer is distinct from Netflix's. When WBD began reshuffling the company around over the summer, it wasn't a pretext or preliminary for acquisition: The conglomerate simply wanted to unburden its streaming and studio businesses from the debt-riddled TV business (in their terms, the "global networks arm"). The Netflix deal accommodates that reshuffling. The streaming giant agreed to buy WBD's movie and streaming stuff, leaving the TV half of the business to be spun out on its own. Critically, Netflix also offered a mix of cash and stock. One might see the Netflix offer, at a comparatively lower $27.75 per share, and think that perhaps David Ellison, head of Paramount, was right about the WBD board being dead-set on his competitor, but, as the Wall Street Journal reports, "Warner saw Netflix’s deal as the superior one given that Warner shareholders would continue to own shares in both companies following its planned split." Given that shareholders would retain some measure of equity, WBD's internal math put the actual value of Netflix's offer between $31 and $32 per share.