Warner Bros deal battle: Company tells shareholders to reject Paramount Skydance bid; Netflix deal preferred

Warner Bros. is urging its shareholders to turn down Paramount Skydance's takeover offer. The company believes a competing proposal from Netflix is more beneficial for customers and better aligns with the board's responsibilities.

The media giant conveyed its recommendation in a letter to investors, stating that the board thoroughly reviewed Paramount Skydance's “unsolicited tender offer.” According to Warner Bros., this evaluation adhered to a consistent process, firmly rooted in the board's fiduciary duties.

Paramount Skydance launched its hostile bid last week after Warner Bros. agreed to a deal with Netflix on December 5. Paramount is offering $30 per share, exceeding Netflix's $27.75 bid. While Warner Bros. has stated its preference, shareholders ultimately decide whether to tender their shares to Paramount. Paramount's offer encompasses the entire company, including cable networks such as CNN and Discovery.

A key difference lies in the scope of the two bids. Netflix's offer excludes Warner Bros.' cable operations and is contingent upon the company first separating those assets. In contrast, Paramount seeks to acquire Warner's cable networks and news businesses.

Before approaching shareholders directly, Paramount claims it made six separate offers that Warner Bros. leadership rejected.

Both proposed deals are now subject to intense regulatory scrutiny due to the size of the companies and the potential impact on the entertainment and media landscape. Critics of the Netflix deal suggest that combining Netflix with Warner's HBO Max could create excessive market dominance in the streaming sector. That said, the reality is a bit more complicated. Netflix co-CEOs Greg Peters and Ted Sarandos have dismissed this concern, stating they see the deal as beneficial for the industry as a whole.

Concerns have also been raised regarding the potential impact of either deal on film and television production, as well as editorial control. Paramount's bid, which would unite CBS and CNN under one corporate umbrella, has intensified scrutiny regarding media consolidation and newsroom independence.

The political climate adds another layer of uncertainty. Former US President Donald Trump has suggested that regulatory approval could be influenced by political factors. He has publicly questioned Netflix's bid, citing potential market concentration as a “problem.” Trump has also been critical of Paramount regarding editorial decisions at CBS' “60 Minutes.”

Paramount Skydance has not yet responded to requests for comment.