For Warner Bros. Discovery, the decision to reject Paramount in favor of a $82.7 billion deal with Netflix was “not a hard choice,” board chairman Samuel Di Piazza Jr. said on Wednesday.
Paramount CEO David Ellison made a total of six proposals over twelve weeks. But despite his argument of “air-tight financing” and an easy path to regulatory approval within 12 months, the David Zaslav-led media giant disagreed.
Particularly, the board said Wednesday that Paramount Skydance has “consistently misled” WBD shareholders that the $40.7 billion of equity financing in its proposed transaction is fully backstopped by the Ellison family. They argued that using the Ellison family’s revocable trust is “no replacement for a secured commitment by a controlling stockholder” and that its assets and liabilities are “not publicly disclosed and are subject to change.”
It added that the bid relies on “the credit worthiness of a $15 billion market cap company with a credit rating at or only a notch above ‘junk’ status from the two leading rating agencies” and that its $9 billion in proposed synergies are “both ambitious from an operational perspective and would make Hollywood weaker, not stronger.”
“After each of their proposals, we told them, as we did the other bidders, what you needed to do to reach our expectation. They chose not to,” Di Piazza Jr. told CNBC on Wednesday. “And in the end, the board’s responsibility is to take the highest value considering the risk and the other implications. We think that Netflix is compelling, and so it wasn’t really a hard choice.”
More to come…
