The regulatory review process for Netflix to acquire Warner Bros. has already begun, Warner Bros. Discovery CEO David Zaslav said in a letter sent to staff early Wednesday morning that TheWrap obtained.
The note came on the heels of WBD’s board unanimously voting for shareholders to reject Paramount’s all-cash offer.
“As part of its work, 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,” Zaslav wrote. “The Board’s evaluation followed a thorough and consistent process and is grounded in its fiduciary duties.”
The CEO then provided staff a copy of the board’s filing and a press release about the transaction. He also emphasized that until the acquisition goes through, Netflix and Warner Bros. will be run as two separate companies and that “our operating plans remain unchanged.”
After three rounds of bids involving Comcast, Netflix and Paramount, Warner Bros. Discovery accepted Netflix’s proposal to acquire Warner Bros. — the company’s streaming and studio spinoff — on Dec. 5. The $72 billion deal would put the whole enterprise value at $82.7 billion and give WBD shareholders $27.75 per share.
Paramount, which put in six bids altogether to acquire all of Warner Bros. Discovery, was not pleased with that decision. Three days after WBD announced it was going with Netflix, the company appealed directly to WBD shareholders, offering $108.4 billion in an all-cash bid that would give shareholders $30 per share. That offer was originally funded by the Ellison family, three Middle Eastern sovereign wealth funds and the Chinese technology company Tencent as well as commitments from RedBird Capital Partners and Jared Kushner’s Affinity Partners.
That was then, and this is now.
On Tuesday, Kushner’s Affinity Partners backed out of Paramount’s offer. This news came after Donald Trump blasted the Paramount-owned CBS on Truth Social, claiming that “60 Minutes” has treated him worse ever since Skydance took over Paramount, adding, “If they are my friends, I’d hate to see my enemies.”
Early on Wednesday morning, WBD’s board released a letter and a SEC filing unanimously rejecting Paramount’s all-cash offer, calling the bid “inadequate” and “illusory.” Specifically, the board noted Paramount’s latest offer fails to address concerns the company raised repeatedly throughout Paramount’s six bids to acquire the company. It also revealed that the $40.7 billion of equity financing in Paramount’s proposed transaction was not fully backstopped by the Ellison family, claiming that the company “consistently misled” shareholders.
As for the $2.8 billion breakup fee that will be owed to Netflix if WBD does not proceed with this deal, Paramount has not offered to cover that amount, meaning that WBD would incur it as well as approximately $1.5 billion in financing costs.
As for Netflix’s offer, the board reiterated that this offer would be more diversified than Paramount’s. In addition to giving WBD shareholders $23.25 in cash, they would also get $4.50 in shares of Netflix common stock (based on a collar range of $97.91 to $119.67 at the time of closing) as well as the value of shares in Discovery Global.
