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Warner Bros. Discovery on Wednesday rejected a bid from Paramount to acquire it for what is now the eighth time. How much more clear can the company say, “We’re just not that into you?” Warner Bros. Discovery’s board believes that Paramount’s bid remains “inferior” to what Netflix is offering, according to a statement, and the board again advised the company’s shareholders to reject it.
It’s the latest in a back and forth that has stretched back to last fall and will continue up until at least “late spring, early summer,” as WBD chairman Samuel Di Piazza said on CNBC on Wednesday morning, when shareholders are expected to vote on which deal they prefer: Netflix or Paramount.
But as Warner Bros. was making its case to shareholders about why it still prefers Netflix’s offer, the organization representing theater owners in North America, Cinema United, went to Congress to plead its case that, actually, neither Netflix, nor Paramount, and quite possibly anybody, should acquire Warner Bros. Discovery.
So who does or doesn’t want what, and why?
In speaking with Congress, Cinema United and CEO Michael O’Leary argued that a Netflix-WBD merger would have an “irreversible negative impact” on movie theaters nationwide. It would lead to fewer movies being made, less diversity of those films, more leverage from the studios over theaters, and more job losses, it argues. And it believes that’s especially true of Netflix but also of Paramount or another major studio.
“Such an acquisition will further consolidate control over production and distribution of motion pictures in the hands of a single, dominant, global streaming platform in a market that is already highly concentrated. The impact will not only be felt by theatre owners, but by movie fans and surrounding businesses in communities of all sizes,” the group said in its statement to Congress. “If Paramount or another major studio ends up displacing Netflix as the buyer, our concerns are no less serious. A combination of Paramount and Warner Bros., for instance, would consolidate as much as 40 percent of each year’s domestic box office in the hands of a single dominant studio.”
Cinema United points to Disney gobbling up Fox and how that effectively cut the two studios’ output in half after the 2019 merger. It also said that Netflix has been openly hostile to theaters and on average has only put its movies in theaters for a span of 11-17 days, well below the average of other films, all without some decent marketing spend. All these are fears that most would’ve presumed, but now exhibitors are finally going public with their fears.
But from Warner Bros.’ point of view, the Netflix deal is a better one than Paramount’s because at least Netflix is a stable, $400 billion+ company with the likelihood that it will actually close, and it offers several billion dollars in assurances if it doesn’t. CNBC’s David Faber grilled Di Piazza on Wednesday, because from the outside looking in, it isn’t obvious why Paramount’s deal is so much worse now after eight bids. Faber even asked Di Piazza if the real reason Warner Bros. won’t do the deal with Paramount and the Ellisons is “you don’t like them.”
“That’s nothing further from the truth,” Di Piazza said on CNBC. “We have talked to them now since September. We’ve given them lots of input on what they needed to do to change. At the last minute, they went to [$30 per share]. And then it was after the last minute that they guaranteed it.”
Paramount’s offer to Warner Bros. Discovery is to buy the entire company for $30 per share, while Netflix has agreed with WBD to buy just the studio and streaming assets — not the cable channels that are being spun off — for $27.75 per share. After WBD’s last rejection of Paramount, it wanted Larry Ellison, one of the richest men in the world, to personally guarantee the money needed to back up its offer. He agreed to do that, but Warner Bros. Discovery still believes Paramount, which has a lot of cable channels of its own and just completed its own long and drawn out merger with Skydance, may not be as guaranteed as it seems.
“The entire sector is under stress. And remember, we’re 18 months, 15 to 18 months in closing. Financial markets can change,” Di Piazza said. “The market conditions generally can change. And the media business, particularly the linear business, is under stress. So, what happens if at that point they decide, you know, we’re just not going to close?”
As of this moment, Netflix is still on the fast track to acquire Warner Bros. Discovery, but there’s going to be a lot more opinions from all sides before that finally happens.
English (US) ·