Paramount is refusing to accept defeat in the Warner Bros. Discovery auction, launching a $78-billion hostile takeover of its rival Monday after being spurned last week in the bidding.
The move comes four days after Warner’s board unanimously selected Netflix as the winner.
Paramount has beefed up its offer with backing from Middle Eastern sovereign wealth funds, including Saudi Arabia, a Chinese firm and President Trump’s son-in-law Jared Kushner’s investment firm Affinity Partners, according to a Monday regulatory filing.
The presence of a member of the president’s family in a proposed corporate takeover, which includes news channel CNN and the historic Warner Bros. properties, immediately complicates an already fraught regulatory picture.
Last week, Netflix had offered $72 billion — or $27.75 a share — for a big chunk of the company: Warner Bros. film and television studios, which hold the rights to Batman, Bugs Bunny and Harry Potter, the expansive lot in Burbank and HBO and HBO Max. Additionally, Netflix would take on more than $10 billion in Warner Bros. debt for a total deal value of $82.7 billion.
Paramount, backed by billionaire Larry Ellison’s family, had entered the final week of the auction with a $25 a share, all-cash offer for all of Warner Bros. Discovery, according to people involved in the auction who were not authorized to comment. In the final hours, Paramount upped its offer to $30 per share — but still came away empty-handed.
Paramount confirmed Monday that it submitted its $30-per-share offer just a few hours before Netflix was announced as the winner.
“We never heard back,” Paramount Chairman and Chief Executive David Ellison told CNBC on Monday morning. “We’re really here to finish what we started.”
Despite the decision by Netflix and Warner Bros. Discovery to pursue a deal, Paramount is directly appealing to shareholders to vote on their offer in what is commonly known as a hostile takeover.
Historically, hostile takeover bids are difficult to pull off, but there have been some notable exceptions, including Elon Musk’s $44-billion acquisition of the company formerly known as Twitter in 2022. Two decades ago, Comcast failed in a hostile takeover bid for Walt Disney Co.
Warner Bros. Discovery said Monday that its board would “carefully review and consider Paramount Skydance’s offer in accordance with the terms of Warner Bros. Discovery’s agreement with Netflix.”
Warner’s board remains supportive of Netflix’s bid, the company said. Shareholders will receive recommendations from the Warner board within 10 business days. The company has long wanted the auction to be wrapped up by Christmas.
“Warner Bros. Discovery stockholders are advised not to take any action at this time with respect to Paramount Skydance’s proposal,” the company said in a statement.
Paramount began its pursuit of Warner in mid-September. It is now bypassing Warner’s board, management and bankers and appealing directly to shareholders in a hostile takeover effort. In a statement, Paramount said its bid was a “superior alternative” to Netflix’s, which will face a rigorous and lengthy antitrust review.
Netflix co-Chief Executive Ted Sarandos said Paramount’s move was “entirely expected.”
“We have a deal done and we are incredibly happy with the deal,” Sarandos said at a UBS conference, adding that he believes Netflix’s takeover of the historic company would be great for shareholders, consumers and Hollywood workers. “We’re superconfident we’re going to get it across the line and finish.”
Already, the biggest weakness in Netflix’s deal was concern that the tech company may not be able to win regulatory approval. The company has more than 300 million streaming subscribers worldwide, and adding HBO Max would more than double the number of subscribers for competing video-on-demand subscription services.
In a statement, Paramount called Netflix’s offer “inferior,” one that would expose Warner shareholders “to a protracted multi-jurisdictional regulatory clearance process with an uncertain outcome.” Paramount has long counted on its warm relationship with President Trump to smooth the regulatory process, at least in the U.S.
Warner Bros. Discovery continues to believe that Netflix submitted the best offer.
Netflix is not buying Warner’s basic cable channels, including CNN, TBS, Food Network and TLC, and Warner figures it can spin off those assets into a separate company, Discovery Global, that would be worth about $3 to $4 a share.
When adding the Discovery Global value with Netflix’s price of $27.75 a share, Warner believes that its shareholders will come away with more than $31 a share for the company — more than what Paramount has offered.
Netflix offered a cash and stock deal. On Friday, the company said it would take a year to 18 months to gain the necessary regulatory approvals. Paramount is banking on investors being concerned about a possible regulatory fallout with the Netflix deal.
“Look, we’re sitting on Wall Street, where cash is still king,” Ellison told CNBC. “We are offering shareholders $17.6 billion more cash than the deal that they currently have signed up on Netflix. We believe when [Warner shareholders] see what is currently in our offer, that that’s what they’ll vote for.”
Since mid-September, Paramount has submitted six bids for all of Warner Bros. Discovery.
Trump said Sunday that Netflix’s deal to buy Warner Bros. Discovery “could be a problem” because of the size of the streaming service’s combined market share. Trump said he “would be involved” in his administration’s decision whether to approve any deal.
Paramount said its $30 per share, all-cash offer represents a 139% premium to Warner’s $12.54 stock price on Sept. 10, the day before Paramount’s pursuit was leaked in the media. With the absorption of Warner’s cable channels and its heavy debt load, the Paramount deal would have an enterprise value of $108.4 billion.
That’s roughly what AT&T paid to buy the company, then called Time Warner Inc., in 2018 after spending nearly two years fighting in court with the first Trump administration.
A federal judge finally cleared the way for AT&T’s takeover, but after three years the phone company wanted to flee Hollywood and made a deal with Discovery’s David Zaslav, allowing his smaller company to take over in 2022.
“The Trump card is the best card Paramount-Skydance has but it could backfire in multiple directions,” New Street Research media analyst Blair Levin said Monday in a note to investors. “As they say in Hollywood, ‘stay tuned.’”
Warner and Netflix could claim that Trump’s Justice Department, if it seeks to intervene, was trying to squash their deal simply because of politics. The inclusion of Kushner in the deal also could open the door to conflict-of-interest arguments.
“Courts, and the public, in the past, have regarded Presidential involvement in antitrust challenges as problematic,” Levin wrote in his note.
Paramount’s 11th-hour offer for Warner contained “opaque” details about its financing, a person involved in the auction who was not authorized to speak publicly told The Times over the weekend. The fuzzy nature of Paramount’s backers gave the Warner board pause in contrast to the Netflix offer, which spelled out its financing, the person said.
In a Securities & Exchange Commission filing Monday, Paramount disclosed that Larry Ellison’s family has provided an $11.8-billion commitment. An additional $24 billion would come from three sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi.
The controversial Chinese tech firm Tencent would provide an additional $1 billion, Paramount said. It said RedBird Capital Partners, an investor in Paramount, and Kushner’s Affinity Partners would also provide an undisclosed level of debt financing.
When asked about his son-in-law’s involvement in the Paramount bid, Trump told reporters at the White House: “I don’t know. I’ve never spoken with him about that. He’s really trying to work on Gaza.”
Should Paramount prevail, it would confront a heavy debt load that would bring more layoffs in an industry already reeling from downsizing. “As with Netflix, Paramount’s expected hostile bid for WBD raises significant concerns for our members and the industry,” a spokesperson for the Directors Guild of America said in a statement.
Just like with the AT&T deal for Time Warner, the Trump administration may not have the final say. If the U.S. Justice Department sues to block the Netflix deal, the matter will go before a federal judge.
However, Paramount hired Trump’s former antitrust regulator — Makan Delrahim — in the hope of steering a successful regulatory review. Delrahim joined Paramount in October as its chief legal officer.
“We believe our offer will create a stronger Hollywood. It is in the best interests of the creative community, consumers and the movie theater industry,” David Ellison said in a statement. “We believe they will benefit from the enhanced competition, higher content spend and theatrical release output, and a greater number of movies in theaters as a result of our proposed transaction.”
Paramount’s tender offer is set to expire Jan. 8, 2026, unless it’s extended.
Shares of Warner Bros. jumped 4.4% on Monday to $27.23. Paramount gained 9% to $14.57 a share while Netflix lost 3.4% to $96.79.
Times staff writers Wendy Lee and Stephen Battaglio contributed to this report.
