Paramount Makes It Clear: WBD-Netflix Deal Is Unlikely as They Share Their Concerns
Paramount is expressing strong dissatisfaction with Warner Bros. Discovery’s handling of the potential sale process and has made it clear that it will not accept a decision favoring either Netflix or Comcast without contest.
The David Ellison-led company is advocating for its position by emphasizing regulatory considerations. In a letter addressed to WBD, Paramount asserts that it is the only bidder with “a clear path to closing based upon decades of legal precedent.” The letter further highlights that rival bids from Netflix and Comcast “present serious issues that no regulator will be able to ignore.”
The correspondence was submitted alongside Paramount’s latest offer when second-round bids were due on Monday. This letter follows a previous communication wherein Paramount criticized WBD’s sale process as being unfair.
Insiders suggest that Paramount’s letters indicate the possibility of a litigation or hostile takeover should WBD choose a buyer other than them.
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Paramount’s letter specifically pointed to potential antitrust issues. “Netflix’s dominance in streaming and Comcast’s presence as a leading broadband and MVPD player each present unique and serious antitrust concerns that guarantee a long, expensive review process and imperil closing either deal. Paramount is the easier path, and its outcome is assured,” the letter stated.
Focusing primarily on Netflix, the letter claims, “The simple truth is that a deal with Netflix as the buyer likely will never close.” It argues that while Netflix has not faced significant global antitrust enforcement thus far, acquiring WBD assets would likely change that.
Paramount included statistical data demonstrating Netflix’s significant position in the streaming market, asserting that acquiring HBO Max would further strengthen this dominance. The company criticized Netflix’s suggested strategy to frame the market to include social media and short-form video platforms, deeming it “doomed to fail” with regulators. This point was reportedly presented to WBD’s team in a recent meeting.
Additionally, the letter warns that a Netflix-Warner Bros. merger could limit theatrical releases, exacerbating existing challenges for cinemas already struggling to attract audiences.
While Netflix has reportedly stated its commitment to honoring WBD’s theatrical obligations, Paramount regards these assurances as “inherently time-limited, transactional and defensive,” aimed at addressing valid concerns about the deal’s antitrust implications.
Clarifying its own offer, Paramount noted that it presents WBD with a straightforward path to closure. The letter highlights that the combined market share of Paramount and WBD does not approach the 30 percent threshold that would trigger regulatory scrutiny. Paramount argues that such a merger would enhance competition against Netflix while creating new opportunities for creators.
The Wall Street Journal, which first reported on Paramount’s second letter, noted that WBD has requested a third round of bids by today. However, sources indicate that the situation remains fluid. WBD hopes to finalize a buyer for part or all of the company by the end of the year, with Paramount seeking to acquire all of Warner Bros., including global linear networks. Meanwhile, Netflix and Comcast are looking to purchase Warner Bros. Studios and HBO Max streaming.
On the topic of Comcast, Paramount noted that its role as a leading broadband and MVPD provider also raises significant antitrust concerns. The letter highlighted shifts in antitrust enforcement, contrasting the challenges Comcast faced during its acquisition of NBC Universal, which involved a contentious consent decree.
Both Comcast and Warner possess major film and television studios, but their overlap is minimal, especially as Comcast is spinning off its cable networks into a new entity, Versant. Comcast also has significant interests in theme parks and broadband services.
Dominic Patten contributed to this report.
