Warner Bros. Discovery rejected an offer from Paramount for $108 billion and ratified its merger with Netflix for strategic reasons.
Warner Bros. Discovery (WBD) officially rejected the purchase counteroffer presented by Paramount, despite the fact that it valued the company at a figure considerably higher than the proposal of Netflix. The decision, adopted unanimously by its board of directors, ratifies the entertainment conglomerate’s path towards its merger with the streaming platform.
In a statement issued this Wednesday, WBD pointed out that Paramount’s hostile offer “does not respond to the interests of the company or its shareholders” and reiterated that the agreement reached with Netflix represents a “superior and safer value” in the long term, beyond the immediate appeal of a higher figure.
The dispute between the entertainment giants began in September and this was the sixth offer presented by Paramount to stay with Warner Bros. Discovery, one of the most emblematic companies in Hollywood and owner of brands such as Warner Bros. Pictures, HBO and CNN. Paramount’s most recent counteroffer, submitted just days after Netflix’s announcement, valued WBD at about $108.4 billioncompared to the almost 83,000 million agreed with the streaming platform.
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Netflix surprised the industry on December 5 by announcing the agreement to acquire Warner Bros. Discovery, an operation that promises to reconfigure the global map of cinema, television and streaming. Since then, paramount attempted to stop the transaction with a significantly higher cash proposal.
Oracle’s Larry Ellison to personally back Paramount’s bid for Warner Bros.
In a new attempt to strengthen its offer, paramount “sweetened” the proposal by including a personal financial guarantee of Larry Ellisonfounder and president of Oracle. Ellison reportedly pledged to personally ensure $40.4 billion in equity financing to support the total supply of $108.4 billion. In addition, he agreed not to revoke the family trust, a sign of direct support for the operation led by his son, David Ellisoncurrent CEO of Paramount.
Despite this financial reinforcement, the board of directors of Warner Bros. Discovery maintained its reservations about the stability and strategic viability of Paramount’s proposal, and chose to move forward with Netflix in an increasingly concentrated and competitive market.
Paramount’s offer also took on a political overtone. David Ellison is the son of Larry Ellison, an ally of the former president donald trumpwho recently expressed interest in cnn —a channel with which it has maintained a conflictive relationship— would have new owners as part of an eventual sale of WBD.
By rejecting the proposal of paramount, Warner Bros. Discovery avoid, at least for now, that scenario. Under current terms, cnn will become part of the ecosystem of Netflixwithout the direct intervention that some political sectors seemed to promote.
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With this decision, W.B.D. made it clear that in the battle for the future of global entertainment not everything is defined by price: strategy, financial stability and long-term projection outweighed the additional billions put on the table.
