In the latest development of a bidding war full of twists and turns, Warner Bros. Discovery is reportedly preparing to tell shareholders to reject a hostile takeover bid from Paramount.
Just over one week after Paramount officially tendered an offer of $30 per share to Warner shareholders, in an attempt to overtake a deal with Netflix that Warner’s board had approved, the board is prepared to advise shareholders to reject the offer, according to a report in The Wall Street Journal.
The move was widely expected as Paramount CEO David Ellison has indicated that the $30 share price is not his “best and final” offer. Assuming Warner’s shareholders reject the proposal, it will be up to Ellison whether Paramount sweetens the deal.
As previously reported, Netflix has agreed to pay Warner $27.75 per share for the company’s studio and streaming businesses. Paramount’s offer covers the entire Warner portfolio, including cable assets such as TNT Sports. The value of said cable assets is at the crux of Paramount’s proposal to shareholders. Ellison has said publicly that he believes the legacy businesses will be worth approximately $1 per share if Netflix’s transaction goes through. Warner’s cable channels are spun off into an independent entity. Netflix and the Warner board have assigned a value of $3-$4 to the independent company, which would make the total value of their offer exceed the $30 price Paramount has proposed.
Should Paramount come forth with a better offer, likely in the low- or mid-$30 range, some Warner shareholders “would be ready to tender their shares in the Paramount deal,” per The Wall Street Journal report.
According to a Bloomberg report, Warner is advising shareholders to reject Paramount’s bid due to financing uncertainty and potential regulatory hurdles. Paramount’s offer is backed in large part by Middle Eastern sovereign wealth funds, which could draw the attention of federal regulators despite assurances from Ellison that his family’s fortune backs the full amount of the deal.
Paramount would argue its close ties with the Trump administration offer a clearer path towards regulatory approval, though the president has offered sharp criticism of the company in recent days.
The next step will be to see whether Paramount ups its bid. Its initial tender offer expires on Jan. 8, so it is possible the company will not make an improved bid until then.
Whatever the case, the future of TNT Sports hangs in the balance.
About Drew Lerner
Drew Lerner is a staff writer for Awful Announcing and an aspiring cable subscriber. He previously covered sports media for Sports Media Watch. Future beat writer for the Oasis reunion tour.