Warner Bros. asks investors to reject takeover bid from Paramount Skydance

Warner Bros. is telling shareholders to reject a takeover bid from Paramount Skydance, saying that a rival bid from Netflix will be better for customers.

“We strongly believe that Netflix and Warner Bros. joining forces will offer consumers more choice and value, allow the creative community to reach even more audiences with our combined distribution and fuel our long-term growth,” Warner Bros. said Wednesday.

“We made this deal because their deep portfolio of iconic franchises, expansive library and strong studio capabilities will complement — not duplicate — our existing business.”

Paramount went hostile with its bid last week, asking shareholders to reject the deal with Netflix favoured by the board of Warner Bros.

Paramount is offering $30 US per Warner share to Netflix’s $27.75 US.

Paramount’s bid isn’t off the table altogether. While Wednesday’s letter to shareholders means Paramount’s is not the offer favoured by the board at Warner Bros., shareholders can still decide to tender their shares in favour of Paramount’s offer for the entire company — including cable stalwarts CNN and Discovery.

Unlike Paramount’s bid, the offer from Netflix does not include buying the cable operations of Warner Bros. An acquisition by Netflix, if approved by regulators and shareholders, will close only after Warner completes its previously announced separation of its cable operations.

Paramount on Wednesday affirmed its offer from last week and urged Warner Bros. Discovery shareholders to tell the company they prefer Paramount’s “superior offer.”

“I have been encouraged by the feedback we have received from WBD shareholders who clearly understand the benefits of our offer,” Paramount CEO and chairman David Ellison said. “We will continue to move forward to deliver this transaction, which is in the best interest of WBD shareholders, consumers, and the creative industries.”

Takeover bids face regulatory scrutiny

Paramount has claimed it made six different bids that the Warner leadership rejected before announcing its deal with Netflix on Dec. 5. Only after that did it take its offer directly to Warner’s shareholders.

“The board reviewed Paramount Skydance’s most recent unsolicited tender offer with the same care and discipline it has applied throughout this process, including its review of multiple prior proposals,” Warner Bros. said in its statement.

“The board’s evaluation followed a thorough and consistent process and is grounded in its fiduciary duties.”

Beyond a greenlight from shareholders, both takeover bids face tremendous regulatory scrutiny. A change in ownership at Warner would drastically reshape the entertainment and media industry — impacting movie-making, consumer streaming platforms and, in Paramount’s case, the news…