Warner Bros Discovery has rejected Paramount Skydance’s beefed up £81billion takeover bid – and urged shareholders to back a rival offer from Netflix.
In the latest twist in a battle that has gripped Hollywood, the Warner Bros board warned that Paramount’s offer was ‘inadequate’ and hinges on ‘an extraordinary amount of debt’.
And the century-old studio, whose films range from Casablanca to Harry Potter, reaffirmed its commitment to a deal with streaming giant Netflix.
The decision is a bruising setback for Paramount, which is behind films including The Godfather and Mission: Impossible and hit shows such as Yellowstone and Landman.
Last month billionaire Larry Ellison, whose family controls Paramount, provided a £30billion guarantee to back the offer.
But Warner Bros yesterday said Paramount’s financing plan would saddle the smaller Hollywood studio with £65billion in debt once the acquisition closed, making it the largest leveraged buyout in history.
Victory for Netflix would hand it control of Warner Bros’ vast back catalogue of films as well as TV titles such as The Sopranos and Game of Thrones from streaming brand HBO.
Netflix is seeking to build an unassailable position in streaming with its own hits including Bridgerton and Squid Game.
But the deal is likely to face close scrutiny from competition regulators.
Netflix co-chief executives Ted Sarandos and Greg Peters welcomed the Warner Bros decision, saying it recognizes the streaming giant’s deal ‘as the superior proposal that will deliver the greatest value to its stockholders, as well as consumers, creators and the broader entertainment industry’.
Danni Hewson, head of financial analysis at AJ Bell, said: ‘The blockbuster battle for Warner Bros Discovery continues to provide thrilling entertainment for bystanders.
‘It seems unlikely the credits are going to roll on this drama just yet. The ball is now back in Paramount’s court, so we’ll have to wait and see what their next move is.
‘President Trump has said he intends to be involved in reviewing the merger, so some back channels may be opened to the White House.
‘The US president no doubt has his hands full with developments in Venezuela, but the entertainment industry is his wheelhouse, and as we know, he’s permanently interested in a deal.’
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