Paramount Says Warner Bros Cable Channels Worth Nothing, Insists Bid Superior To Netflix Deal
Much of the debate in the monthslong battle has focused on the value of Warner Bros. cable networks like TNT and CNN, which have been losing viewers and advertisers as consumers shift to streaming.
Paramount Skydance Corp. reaffirmed its offer to buy Warner Bros. Discovery Inc. for $30 a share in cash, insisting its hostile bid is superior to one from Netflix Inc. after multiple rejections.
Paramount’s offer “represents the best path forward” for Warner Bros. shareholders, Paramount said in a statement on Thursday. The company has “cured every issue raised” by Warner Bros., most notably by providing an irrevocable personal guarantee by billionaire Larry Ellison, it said, for $40.4 billion in equity financing.
Much of the debate in the monthslong battle has focused on the value of Warner Bros. cable networks like TNT and CNN, which have been losing viewers and advertisers as consumers shift to streaming. Netflix is only acquiring the Warner Bros. studios and streaming businesses, and under its plan Warner Bros. shareholders will receive stock in a new entity that owns the cable channels.
Paramount pointed to the poor market debut of Versant Media Group Inc., the cable assets spun out of Comcast Corp., which began trading earlier this week. The shares have declined about 30% in the first few days of trading. The disappointing performance of Versant, along with the $15.1 billion in debt the spinoff will carry, leads Paramount to value the Discovery Global shares at zero, according to the statement.
Versant’s “performance to date illustrates the challenged path ahead for Discovery Global,” Paramount said.
On Wednesday, Warner Bros. again rejected an amended takeover offer from Paramount, expressing skepticism about the financing of the deal and the substantial debt it would entail. The Warner Bros. board said in a letter to shareholders that it has doubts that Paramount would be able to close the deal and that its proposal carries significant risks and uncertainties compared with Netflix’s offer of $27.75 per share in cash and stock for Warner Bros.’ studios and streaming business.
Paramount is competing with Netflix for control of one of Hollywood’s most storied studios, the home of films like Batman and Harry Potter as well as HBO, one of the crown jewels of TV. Despite submitting multiple offers, its attempts have been repeatedly rebuffed.
Warner Bros. Chairman Samuel DiPiazza said in an interview on CNBC on Wednesday that in addition to financing concerns about Ellison’s bid, “ultimately, he didn’t raise the price. So in our perspective, Netflix continues to be the superior offer.”
Paramount also argued on Thursday that the value of Netflix’s offer has decreased due to declines in the streaming giant’s share price. Netflix’s proposal is comprised of $23.25 in cash and $4.50 in Netflix stock.
“Our offer clearly provides WBD investors greater value and a more certain, expedited path to completion,” said David Ellison, chief executive officer of Paramount, in the statement. “Throughout this process, we have worked hard for WBD shareholders and remain committed to engaging with them on the merits of our superior bid and advancing our ongoing regulatory review process.”
