Trump’s billionaire mate and his son set to win race for Warner Bros after Netflix backs away
Netflix dropped out of the fight to buy Warner Bros. Discovery, clearing the way for rival bidder Paramount Skydance to clinch its $US111 billion ($156 billion) deal for the historic Hollywood studio.
Netflix shares jumped as much as 13 per cent in after-hours trading, indicating that investors were happy to see the company walk away from the deal. Warner Bros. fell with investors no longer anticipating a bidding war. Paramount shares were unchanged.
“At the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” Netflix said in a statement.
“This transaction was always a “nice to have” at the right price, not a “must have” at any price.”
Netflix inked an $US82.7 billion deal, including assumed debt, to acquire the studio and streaming businesses of Warner Bros. in December, but repeated counteroffers from Paramount for the entire company reopened the bidding. Warner Bros. deemed Paramount’s latest $US31-a-share offer superior on Thursday (US time).
Paramount, led by technology heir David Ellison, is taking on billions of dollars in debt to finance its offer. And Ellison’s father, Oracle founder Larry Ellison is heavily backing the bid for his son’s company. Foreign sovereign wealth funds have also provided equity for the offer, drawing scrutiny.
The Ellisons also have a close relationship with President Donald Trump — bringing more politics into question. Trump’s son-in-law Jared Kushner’s private equity firm, Affinity Partners was part of the original bid for Warner Bros before withdrawing in December. Trump also previously made unprecedented suggestions about his involvement in seeing a deal through, before walking back those statements and maintaining that regulatory approval will be up to the Justice Department.
Netflix, an early mover in online television, has built a profitable business with more than 325 million consumers around the globe paying a monthly subscription for its TV shows and movies. Legacy film and TV producers like Paramount and Warner Bros. have launched their own streaming businesses, but lack the subscriber base of rivals as their traditional networks lose viewers and advertisers.
Paramount’s offer included Warner Bros. cable-TV networks, such as CNN and TNT. The company, kicked off the bidding for Warner Bros. with a private offer in September. That was just one month after David Ellison closed on the merger of his Skydance Media with Paramount, giving the 43-year-old control of the Paramount film studio, streaming service and TV networks including CBS and MTV.
Paramount’s CBS has seen significant editorial shifts, notably with the installation of Free Press founder Bari Weiss at CBS News, under new Skydance ownership. And if Paramount’s acquisition of Warner is successful, critics warn of similar changes at CNN.
Warner Bros. began soliciting offers for the business in October before finalising the deal with Netflix in December.
After apparently losing the fight, Paramount launched a multipronged campaign to get back in the game. The company launched a tender offer for Warner Bros. shares and threatened a proxy fight at the next annual meeting. The company lobbied regulators and politicians, including Trump, with David Ellison making multiple trips to Washington to make his case.
Paramount also promised to give Warner Bros. $US2.8 billion to pay Netflix for terminating their agreement and to pay Warner Bros. $US7 billion if its deal fails to win required regulatory approvals.
Bloomberg, AP
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