Warner Bidding War: Netflix CEO Reacts Calmly to Paramount Offer
The takeover offer for Warner from Paramount was expected by Netflix CEO Sarandos. Meanwhile, it became known that Jared Kushner is also involved in the offer.
(Image: Grand Warszawski; Shutterstock.com)
Netflix CEO Ted Sarandos reacted calmly to Paramount's hostile takeover bid for Warner Bros. at an event hosted by investment bank UBS. "Today's move was completely expected," Sarandos said. "We've reached an agreement, and we're very happy with it – for the shareholders, for the consumers. We are very confident that we will get this through."
Netflix and Warner Bros. have agreed to acquire Warner's film and video game studios. After both companies made the agreement public, competitor Paramount approached shareholders directly with its offer. The media company is offering 108 billion US dollars in cash to buy Warner Bros. This equates to 30 US dollars per Warner share – a higher offer than Netflix's. The streaming giant is offering Warner shareholders 27.75 US dollars per share, which, however, consists only partly of cash and partly of Netflix shares.
Ultimately, shareholders have the say in which offer should be accepted. In response to Paramount's offer, Warner continues to recommend its investors favor the Netflix offer. This is not surprising, especially since Paramount had already submitted the same offer to Warner behind the scenes. However, Warner has apparently rejected it. Paramount complains that Warner has never seriously considered the offer. Unlike Netflix, Paramount wants to buy not only the film division but also the news business, including CNN.
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Paramount sees an advantage
Paramount is not only promoting the higher total sum to be distributed to shareholders but also the supposedly higher chances of success for the takeover: According to Paramount, Netflix, and Warner's combined 43 percent market share in the streaming business worldwide could be unacceptable to many antitrust authorities. Furthermore, Netflix has never completed a major acquisition. In contrast, a takeover of Warner by Paramount would strengthen competition, argues the media company.
Paramount is likely also relying on good relations with the Trump administration: Paramount CEO David Ellison is the son of Oracle founder Larry Ellison, who has good relations with US President Donald Trump. Furthermore, Trump's son-in-law, Jared Kushner, with his company Affinity Partners, is among the financiers for the Paramount offer, reports the Financial Times, among others.
Money from the Middle East
The report reveals further details about the structure of the offer. According to the report, the Ellisons are only paying 12 million US dollars themselves. 24 billion US dollars are to be provided by investment funds from the Middle East. 54 billion US dollars are to be invested with debt. According to the Financial Times, the offer was rejected by Warner, among other reasons, due to the involvement of investment funds from the Middle East.
According to the report, the Warner executives came to a different conclusion than Paramount: They believe that the Netflix offer has a greater chance of actually being completed.
(dahe)
