Paramount Assures WBD Shareholders of Strong Financing and Quicker Approval Process Than Netflix

Paramount Advances Hostile Takeover Bid for Warner Bros. Discovery

Paramount has intensified its pursuit of Warner Bros. Discovery (WBD), appealing directly to shareholders following a failed series of buyout offers aimed at acquiring the streaming giant from Netflix.

In an open letter addressed to WBD shareholders, Paramount CEO David Ellison asserted, “we are the best stewards not only to build long-term value for the asset but also delight audiences and help cultivate a more vibrant creative community.” He emphasized his commitment, stating, “I am passionate and dedicated to this pursuit, committed to putting my own money in, and that is why I am writing to you today.”

Ellison detailed Paramount’s strategy, highlighting six prior offers made to WBD, with the most recent one at $30 in cash. All proposals were rejected, culminating in WBD’s decision last Friday to sell its studio and streaming assets to Netflix. Paramount criticized the deal, claiming its offer was financially superior and posed less risk. The company is now approaching stockholders directly, promising to buy their shares if they choose to sell. “IT IS NOT TOO LATE TO REALIZE THE BENEFITS OF PARAMOUNT’S PROPOSAL IF YOU CHOOSE TO ACT NOW AND TENDER YOUR SHARES,” the letter declared emphatically.

The letter underscored that Paramount has robust financing in place to support its offer and that it is willing to collaborate with regulatory authorities for the transaction’s review, contrasting this with the complexity of WBD’s impending deal with Netflix. Paramount suggested that WBD faces a challenging regulatory environment due to its leading position in the streaming sector.

Paramount has set a January 8 deadline for WBD stockholders to respond, although that timeline could be extended. With a vigorous public relations campaign, Paramount aims to persuade shareholders to reconsider WBD’s already-approved arrangement and align with the Ellison-led proposal.

WBD has ten days to reply to Paramount’s hostile bid. In response, the company noted that its board has conducted a fair and transparent process with all bidders, including granting extensive due diligence opportunities. “As we communicated on Monday, the Warner Bros. Discovery Board is reviewing the latest offer submitted by Paramount Skydance,” WBD stated, confirming that this proposal mirrors one previously rejected.

Netflix co-CEOs expressed confidence in finalizing their agreement amidst this competitive landscape, indicating no disruption to their plans.

Financing has emerged as a crucial point in Paramount’s proposal, which highlighted its concerns about WBD’s apprehension regarding significant investments from three Middle Eastern sovereign wealth funds and Jared Kushner’s Affinity Partners. WBD raised issues around the potential for a CFIUS (Committee On Foreign Investment in the U.S.) investigation due to these factors.

To address financing concerns, Paramount committed that the full $41 billion in new equity would be supported by the Ellison Family Trust, with Middle Eastern investors relinquishing board seats or governance roles. Ellison sought to clarify this point in his letter, emphasizing, “Paramount’s offer is not subject to any financing condition.”

He elaborated on the swift response to WBD’s request for an equity backstop, noting, “Our December 4 offer included an equity commitment from the Ellison family trust, which contains over $250 billion of assets…”

Ellison dismissed speculation regarding the trust’s financial reliability as “absurd,” pointing out that WBD and its advisors did not reach out with questions or concerns during the negotiation process.

Paramount’s letter also announced the initiation of Hart-Scott-Rodino (HSR) approval in the U.S. and initiated discussions with the European Commission, positioning the company to streamline legal approvals for the proposed acquisition.