{"id":342065,"date":"2025-12-11T00:51:09","date_gmt":"2025-12-11T00:51:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/342065\/"},"modified":"2025-12-11T00:51:09","modified_gmt":"2025-12-11T00:51:09","slug":"paramount-letter-to-warner-bros-discovery-making-case-for-its-bid","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/342065\/","title":{"rendered":"Paramount Letter to Warner Bros. Discovery Making Case for Its Bid"},"content":{"rendered":"

\n\tDavid Ellison<\/a>, the CEO of Paramount Skydance<\/a> who has launched a hostile takeover bid for Warner Bros. Discovery<\/a>, is urging WBD shareholders to tender their shares and \u201cregister their view with the WBD board of directors that they prefer the superior Paramount transaction,\u201d the company said.<\/p>\n

\n\tParamount sent a letter from Ellison Wednesday addressed to WBD shareholders (read the full text below). According to Paramount, the letter \u201cclearly sets out why Paramount\u2019s $30.00 per share all-cash offer to acquire all of WBD is superior to WBD\u2019s transaction with Netflix.\u201d<\/p>\n

\n\t\u201cWe funded, founded and then merged Skydance with Paramount and know the sacrifices and investment it takes to capitalize and grow a media business,\u201d Ellison wrote in the letter. \u201cI am passionate and dedicated to this pursuit, committed to putting my own money in, and that is why I am writing to you today.\u201d<\/p>\n

\n\tSEE ALSO:\u00a0How Netflix\u2019s WB Megadeal Stunned Hollywood \u2014 and Sparked a Fight From David Ellison<\/a><\/p>\n

\n\tAmong other points, Ellison\u2019s letter to WBD shareholders reiterates Paramount\u2019s claim that the Netflix deal with Warner Bros. Discovery undervalues WB\u2019s TV networks<\/a>. According to Paramount\u2019s estimates, the WBD networks group (which the company plans to spin off as Discovery Global) has a value of $1 per share, whereas the WBD board\u2019s rejection of Paramount\u2019s $30\/share offer for the entire company implies WBD is valuing the global networks business at at least $2.25\/share.<\/p>\n

\n\tOn Monday,\u00a0Ellison\u2019s Paramount Skydance launched a direct-to-shareholders hostile takeover effort for WBD<\/a>, with its most recent bid carrying an enterprise value of $108.4 billion. That came after\u00a0Netflix and Warner Bros. Discovery on Dec. 5 announced an $83.7 billion agreement<\/a>, under which the streamer would buy WB\u2019s studios, HBO, HBO Max and games divisions.<\/p>\n

\n\tWarner Bros. Discovery said Monday that its board will \u201ccarefully\u201d review the Paramount offer<\/a> and issue a recommendation within 10 business days (as required by law). WBD\u2019s review of the Paramount bid is a formality, as Paramount already had submitted the $30\/share bid on Dec. 4 to the board. <\/p>\n

\n\tThe next step would be a higher per-share offer from Paramount Skydance in the coming days. Ellison noted that Paramount had communicated to WBD\u2019s representatives that the $30\/share proposal was not Paramount\u2019s \u201cbest and final\u201d offer.<\/p>\n

\n\tSEE ALSO: David Ellison Courted Warner Bros. Discovery\u2019s Zaslav Hard Over 12 Weeks to Win a Deal. Then WBD\u2019s Chief Stopped Responding to His Texts<\/a><\/p>\n

\n\tEarlier Wednesday, two Democratic lawmakers \u2014 U.S. Reps. Sam Liccardo (D-Calif.) and Ayanna Pressley (D-Mass.) \u2014 sent a letter to WBD CEO David Zaslav expressing \u201cserious national security concerns\u201d over Paramount Skydance\u2018s hostile takeover bid for Warner Bros. Discovery because the Paramount bid is backed by the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. According to Paramount, the three Arab wealth funds \u201chave agreed to forgo any governance rights \u2014 including board representation,\u201d which the company asserts means it does not need a review by CFIUS, interagency government entity tasked with oversight of foreign investment in U.S. companies.<\/p>\n

\n\tHere is the full text of Ellison\u2019s letter, which pointed WBD shareholders to Paramount\u2019s website with information about its hostile takeover bid (strongerhollywood.com<\/a>) including an FAQ for investors.:<\/p>\n

\n\tDear Warner Bros. Discovery Shareholder:<\/p>\n

\n\tParamount began pursuing Warner Bros. Discovery (\u201cWBD\u201d) because we, along with our partner RedBird Capital, believe we are the best stewards not only to build long-term value for the asset but also delight audiences and help cultivate a more vibrant creative community.<\/p>\n

\n\tWe funded, founded and then merged Skydance with Paramount and know the sacrifices and investment it takes to capitalize and grow a media business. I am passionate and dedicated to this pursuit, committed to putting my own money in, and that is why I am writing to you today.<\/p>\n

\n\tOver the past 12 weeks, Paramount presented six proposals to the WBD Board of Directors and management to acquire all of WBD. On Monday, we launched a $30.00 per share all-cash tender offer to present our superior transaction to you directly.<\/p>\n

\n\tOur tender offer documents filed with the Securities and Exchange Commission include the complete bid package we submitted to the WBD Board of Directors on December 4. We want you to see firsthand what Paramount proposed and what we, along with our equity and debt financing partners, were prepared to execute on that very day.<\/p>\n

\n\tOur public offer \u2013 identical to the terms we presented to WBD privately \u2013 delivers superior value and a faster, more certain path to completion than the transaction announced with Netflix. IT IS NOT TOO LATE TO REALIZE THE BENEFITS OF PARAMOUNT\u2019S PROPOSAL IF YOU CHOOSE TO ACT NOW AND TENDER YOUR SHARES.<\/p>\n

\n\tParamount\u2019s $30.00 All-Cash Offer for All of WBD Delivers Greater Value Than Netflix<\/p>\n

\n\tOur offer is financially superior to Netflix\u2019s transaction, which provides WBD shareholders with lower value, less cash and significantly less certainty. On its face, Netflix is offering WBD shareholders $23.25 per share in cash, $4.50 in stock and a share in WBD\u2019s Global Networks spin-off. In reality, however, the total value is materially lower than advertised:<\/p>\n

\n\t1) Netflix\u2019s cash component is ~$18 billion lower than Paramount\u2019s in the aggregate (~$7 per share).<\/p>\n

\n\t2) Netflix\u2019s stock price closed at $96.71 on Tuesday and, as of this writing, is trading at $93.81, more than $4 below the low-end of the collar on its stock consideration. This reduces the value of Netflix\u2019s offer.<\/p>\n

\n\t3) During the pendency of a regulatory review process that could take two years or more, WBD shareholders will be exposed to Netflix stock\u2019s downside risk, including technology sector volatility, a lofty ~25x forward EBITDA multiple and the uncertainty of seven future quarterly earnings results. For reference, Netflix has lost approximately one quarter of its market capitalization ($110+ billion) since its last quarterly earnings report and amid its pursuit of WBD.<\/p>\n

\n\t4) Buried in an 8-K filing on Friday was a mechanism providing a dollar-for-dollar reduction in the purchase price if more debt gets allocated to Streaming & Studios because of an unspecified cap on Global Networks. While the limit is undisclosed, every $1 billion above it could represent a reduction of ~$0.40 \/ share.<\/p>\n

\n\t5) Netflix\u2019s transaction leaves WBD shareholders with 100% of the risk of the Global Networks standalone plan. As outlined on our December 8 investor call, we believe Global Networks is worth ~$1 \/ share which would mean a total headline value to WBD shareholders in the Netflix deal of $28.75 \u2013 below our $30.00 all-cash offer. This is before any risk adjustments described above and any time-value-of-money discounting of Netflix\u2019s offer to account for the substantially longer timeline to close (~$1.25 \/ share for every six months).1 In addition, the Netflix transaction would further exacerbate the decline of Global Networks.<\/p>\n

\n\t1 Based on 4.5x consensus next twelve months EBITDA (including allocation of stock-based compensation and corporate overhead) of $3.9 billion as of Q3\u201926 (expected separation closing date WBD announced as part of Netflix transaction) and net debt of $15 billion. 4.5x multiple is based on equity research analysts who perform a sum-of-the-parts analysis of WBD and is also within range of where research analysts expect Versant to trade, despite the facts that Versant will have materially lower net leverage (~1.25x vs. Global Networks >3x), strong news (e.g., CNBC and MS Now), live sports (e.g., Golf Channel, English Premier League, the Olympics, others) and high-growth digital assets (e.g., GolfNow, Fandango). WBD Linear has also historically struggled to achieve analyst consensus expectations.<\/p>\n

\n\tParamount Has Air Tight Financing to Deliver on its Offer to You<\/p>\n

\n\tParamount has lined up all necessary financing to deliver its $30.00 per share all-cash offer to WBD shareholders.<\/p>\n

\n\tAs presented to the WBD Board, Paramount\u2019s offer is not subject to any financing conditions and will be financed by $41 billion of new equity backstopped by the Ellison family and RedBird Capital and $54 billion of debt commitments from Bank of America, Citi and Apollo.<\/p>\n

\n\tOn December 3, WBD told us they wanted an Ellison family backstop on our equity financing. We delivered it to them less than 24 hours later. Our December 4 offer included an equity commitment from the Ellison family trust, which contains over $250 billion of assets (more than 6x the equity funding commitment) including approximately 1.16 billion Oracle shares and tens of billions of dollars in other assets. This information is publicly available; and, notably, the trust has been a counterparty in other completed public company transactions including for Twitter, which involved one of WBD\u2019s advisors. In fact, the equity commitment papers submitted to WBD were identical in all material respects to commitments that the advisors to WBD had agreed to in other large transactions such as Twitter and Electronic Arts.<\/p>\n

\n\tTo suggest that we are not \u201cgood for the money\u201d (or might commit fraud to try to escape our obligations), as certain reports have speculated, is absurd. That absurdity is underscored by the fact that WBD and its advisors never picked up the phone or typed out a responsive text or email to raise any question or concern or to seek any clarification about either the trust or our equity commitment papers.<\/p>\n

\n\tOur debt commitments are not conditioned upon Paramount\u2019s financial condition nor is there any \u201cmaterial adverse change\u201d condition tied to Paramount. The conditions dovetail with our proposed merger agreement, which provided maximum certainty to WBD and its shareholders.<\/p>\n

\n\tNetflix Faces Severe Regulatory Uncertainty & Closing Risk \u2013 Paramount Does Not<\/p>\n

\n\tParamount\u2019s offer not only delivers superior value and certainty, but also a much shorter and more certain path to completion. To underscore our confidence, we have already filed for Hart-Scott-Rodino (HSR) approval in the United States and announced the case to the European Commission, opening the path to pre-notification discussions. We look forward to working collaboratively with the relevant authorities to work through the review process and deliver this transaction to you and our other stakeholders.<\/p>\n

\n\tWBD\u2019s transaction with Netflix, on the other hand, appears to be in for a long and bumpy ride as it navigates the global regulatory review process. Netflix is the #1 streaming business globally by subscriber count and HBO Max is #4. Combining these two yields an overwhelming market share of ~43% \u2013 more than 2x the #2. This is in addition to the other serious competition concerns raised, including from vertically integrating WBD\u2019s film and TV production studios into Netflix, which will give Netflix greater leverage over theatrical exhibitors and creative talent alike. Notably, and as an indicator of its global dominance, Netflix\u2019s current equity market capitalization dwarfs that of all other major media companies and theatrical exhibitors combined (even after the above-mentioned $110+ billion loss in value):<\/p>\n

\t\t\t\t\t\t\"\"<\/p>\n

\n\t(1) Based on unaffected price as of September 10, 2025 (prior to WSJ leak).<\/p>\n

\n\tOutside the United States, Netflix\u2019s regulatory path is particularly challenged in Europe where its dominance is far more entrenched. Our analysis was conducted by the former deputies of merger enforcements for the European Commission and the U.K.\u2019s Competition and Markets Authority. Netflix is by far the dominant streaming service in Europe, accounting for 51% of the total European OTT subscription revenue in 2024, with Disney a distant second at only 10%. The acquisition of WBD\u2019s Streaming & Studios business is a blatant attempt to eliminate one of Netflix\u2019s only viable international competitors in HBO Max. Market share analysis aside, Netflix also needs to satisfy Europe\u2019s new landmark Digital Services Act and Digital Markets Act created for a situation precisely like this \u2013 protecting consumers from Big Tech overreach.<\/p>\n

\n\tThe argument being advanced publicly by Netflix and its proxies states that regulators should ignore the SVOD market and instead utilize a gerrymandered market definition that includes services like YouTube, TikTok, Instagram, and Facebook. Netflix\u2019s claim boils down to trying to mask its dominance in SVOD by grouping together all internet-enabled video, media, social media, or otherwise. No regulator has ever accepted such a broad approach to market definition, and to do so would require regulators to give up on merger enforcement in media and social media alike.<\/p>\n

\n\tIt is noteworthy that, unlike Paramount\u2019s willingness to agree to remedies up to a \u201cmaterial adverse effect\u201d on the combined company, Netflix\u2019s regulatory remedy commitments expressly state no remedy whatsoever can be imposed on Netflix\u2019s business. Netflix also has a longer timeline \u2014 an \u201coutside date\u201d of 21 months. Paramount backed up its commitments with a $5 billion regulatory reverse termination fee. Netflix\u2019s incremental $800 million over that amount does not close the gap between the differences in regulatory complexity and challenges.<\/p>\n

\n\tFor the avoidance of doubt, our $6 billion synergy estimate does not rely on cuts to content budgets at our studios and we intend to continue running both separately post-close. Our synergy analysis relies on efficiencies elsewhere across the combined organization, including technology, linear networks optimization, and real estate rationalization. Having experienced what it is like to act in and produce films first-hand, I have profound respect for creative talent. This is why we are fully pro-Hollywood, dedicated to supporting a growing theatrical slate of over 30 films per year<\/a> and investing in the people and storytelling that drive the industry forward.<\/p>\n

\n\tWBD\u2019s Murky Sale Process<\/p>\n

\n\tOver the last few days, we have heard from WBD shareholders and other stakeholders all asking the same question\u2014what happened? Frankly, we are asking the same question.<\/p>\n

\n\tThe WBD sale \u201cprocess\u201d was unusual in that, over the entire period, its advisors never delivered to Paramount a single markup of any of our transaction documents\u2014not our merger agreement nor our equity commitment documents. In addition, there was not a single \u201creal time\u201d negotiating session with us.<\/p>\n

\n\tWhen Paramount submitted its fifth proposal on December 1, a proposal accompanied by full transaction documents that we stated we were prepared to sign, we offered $26.50 \/ share in cash.<\/p>\n

\n\tOn December 3, WBD provided feedback on Paramount\u2019s proposal and communicated that the WBD Board would be \u201cmeeting periodically over the course of this week\u201d but they never asked for a re-bid (which is strange if your goal is to maximize value for shareholders). On that call, our advisors asked whether the WBD Board continued to prioritize cash consideration as they had consistently communicated to us. WBD\u2019s lead advisor\u2019s response: \u201cIsn\u2019t cash always king?\u201d One must ask: was that same message being delivered to Netflix?<\/p>\n

\n\tDespite the opaque process, Paramount proactively submitted a revised offer with full transaction documentation in under 24 hours (at 11:00 am ET on December 4) and stated that Paramount and our funding sources were ready to sign it immediately. This revised offer addressed all of the scarce feedback that Paramount received.<\/p>\n

\n\tYet on that final pivotal day when WBD\u2019s fate hung in the balance, we received not a single call, text or email to clarify anything about Paramount\u2019s $30 per share all cash offer. Instead, and while in possession of our superior and fully committed bid and documents that entire day, the WBD Board and its advisors sprinted toward a deal with Netflix (even ignoring two separate texts from myself and Paramount\u2019s advisors stating that we had never said \u201cbest and final\u201d).<\/p>\n

\n\tWBD Shareholders Have the Power to Get WBD on the Right Path<\/p>\n

\n\tOur proposal represents a compelling opportunity for WBD shareholders. We are committed to seeing this transaction through.<\/p>\n

\n\tSince Monday, we have had the opportunity to speak with a number of WBD shareholders who have expressed confusion and disappointment at the process that WBD conducted, which appears to have prioritized a deal with Netflix over shareholder value maximization. Multiple equity research notes published over the last 48 hours have also agreed that our offer is superior and that the Global Networks spin-off does not close the gap to $30.00 in cash.<\/p>\n

\n\tFrom here, you can expect WBD to respond to our tender offer within 10 business days via a 14D-9 filing with the SEC. Our tender offer will remain open for at least 20 business days. The closing of the tender offer is conditioned upon, among other things, a majority of WBD shares tendering in our favor, receipt of regulatory approvals, termination of the Netflix merger agreement and entry into a definitive merger agreement with us.<\/p>\n

\n\tWE URGE YOU TO REGISTER YOUR VIEW WITH THE WBD BOARD THAT YOU DEEM PARAMOUNT\u2019S OFFER TO BE SUPERIOR BY TENDERING YOUR SHARES TODAY.<\/p>\n

\n\tSincerely,<\/p>\n

\n\tDavid Ellison
Chairman and Chief Executive Officer
Paramount Skydance Corporation<\/p>\n","protected":false},"excerpt":{"rendered":"David Ellison, the CEO of Paramount Skydance who has launched a hostile takeover bid for Warner Bros. Discovery,…\n","protected":false},"author":2,"featured_media":342066,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[54],"tags":[18205,88,48502,92,10343],"class_list":{"0":"post-342065","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tv","8":"tag-david-ellison","9":"tag-entertainment","10":"tag-paramount-skydance","11":"tag-tv","12":"tag-warner-bros-discovery"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/342065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=342065"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/342065\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/342066"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=342065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=342065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=342065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}