Highlights
- Warner Bros board unanimously rejects Paramount Skydance's $108.4bn (£80.75bn) takeover bid.
- Netflix's $72bn (£53.7bn) deal for film and streaming businesses deemed superior by board.
- Paramount backed by billionaire Ellison family, while Netflix offer seen as better financed with clearer structure.
Warner Bros Discovery has told shareholders to reject Paramount Skydance's $108.4bn (£80.75bn) takeover bid, recommending instead a $72bn (£53.7bn) deal with Netflix for its film and streaming businesses.
The board "unanimously" agreed the Netflix deal was in the firm's best interests, despite Paramount claiming its offer was "superior" to the streaming giant's proposal.
Warner Bros Discovery put itself up for sale in October after receiving multiple expressions of interest. On December (5), it announced the agreement to sell its film and streaming businesses to Netflix.
In a lengthy legal filing, Warner Bros' board stated the Paramount offer poses "numerous and significant risks" and strongly rejected suggestions that the billionaire Ellison family, which backs Paramount and has close ties to the president, provides adequate financial support for the bid.
The board said Netflix's offer is well financed and offers better long-term value to shareholders, reflecting where power now lies in the entertainment industry.
Netflix co-chief executive Ted Sarandos welcomed the recommendation, calling the merger agreement "superior" and "in the best interest of stockholders." Netflix reiterated that its bid involves a clearer funding structure and less regulatory risk.
The two offers differ substantially. Netflix wants Warner Bros' movie studio and HBO streaming service, gaining access to the company's extensive content library, but not its pay-TV channels such as CNN and TNT.
Paramount, however, seeks to acquire Warner Bros in its entirety, including competitors to its own channels like CBS, MTV and Showtime, potentially raising regulatory concerns about reduced consumer choice.
A new owner would gain significant advantage in the competitive streaming market, acquiring franchises including Harry Potter, the MonsterVerse, Friends and HBO Max.
The Writers Guild of America has called for blocking any merger, arguing it would result in lower wages, job cuts and reduced content for viewers.
