Netflix vs Paramount: Why the Warner Bros Board Is Rejecting a $108 Billion Bid
- Warner Bros’ board is set to reject Paramount’s $108.4 billion offer. - Paramount’s deal has weakened after Affinity Partners exited the financing, reports say. - The board will likely recommit to Netflix's $72 billion.
Two major companies have made offers to acquire Warner Bros. Discovery (one of the world’s largest movie, TV, and streaming companies). Netflix made a $72 billion bid in cash and stock. And made an all-cash offer of $108.4 billion. However, it wants the entire Warner Bros company. Warner Bros’ board has finally decided to reject Paramount’s bid. So what changed? Is Warner Bros considering moving ahead with Netflix? If so, what are the reasons? For all that, learn more.
Why Are Netflix and Paramount Eyeing Warner Bros.?
- Warner Bros owns famous movies like Casablanca, Citizen Kane, and Harry Potter...
- The American popular sitcom Friends.
- HBO and the HBO Max streaming service.
- And a massive library of films and TV content.
Therefore, whoever secures Warner Bros. will have an advantage in the streaming war (as content is king).
What Did Netflix Offer to Warner Bros.?
It offered to pay $72 billion in cash and stock for Warner Bros’ non-cable assets. This side of the business has Warner Bros. movies, TV studios, and content. In fact, Netflix was leading this race earlier this month.
Paramount Made an $108.4 Billion Offer After Netflix
Immediately after Netflix’s offer, Paramount CEO David Ellison made a bolder move by going directly to Warner Bros. shareholders. He offered $108.4 billion:
- $30 per share.
- All cash.
- And expected to buy the entire Warner Bros company, not just parts of it.
Paramount says it made a better offer than Netflix’s. And claims it will face fewer regulatory hurdles (government approvals).
How Is Paramount Funding This Huge Deal?
According to Paramount, it arranged money from different sources:
$41 billion in new equity (own money)
Backed by:
- Ellison family
- RedBird Capital
- $54 billion in loans (debt)
From big financial institutions:
- Bank of America
- Citigroup
- Apollo
What Just Changed Now?
Warner Bros’ board could announce a decision as early as Wednesday. And here's what the reports say:
- The board is mostly against Paramount’s offer and would advise shareholders to vote against it.
- And may recommit to Netflix’s deal.
- However, nothing is confirmed yet.
Why Might Warner Bros Prefer Netflix?
According to reports (however, nothing confirmed):
- Netflix has a better track record of running a global streaming business.
- Netflix's offer is much simpler to execute.
- Netflix's deal will likely have less uncertainty compared to Paramount’s heavy debt-funded offer.
Important Twist: A Key Financier Exits - Paramount
Affinity Partners (owned by Jared Kushner) was one of Paramount’s financing partners. According to Bloomberg, Affinity Partners has exited the deal, making Paramount’s bid weak.
Nitin Konde
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