Paramount to WBD Shareholders: 'Long and Bumpy Ride' to a Netflix Purchase
A Netflix/Warner Bros. Discovery deal "appears to be in for a long and bumpy road as it navigates the global regulatory review process," Paramount Skydance warned WBD shareholders in a letter Wednesday. Paramount launched a hostile takeover bid for WBD this week after Netflix announced it was buying parts of the company for $82.7 billion in cash and stock (see 2512080007). In the letter, Paramount argued it was offering "a much shorter and more certain path to completion," as well as an all-cash purchase offer that's potentially more lucrative if Netflix stock drops.
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Paramount also said combining Netflix's and HBO Max's subscriberships would give the combined company 43% of the U.S. streaming service share. That's atop "other serious competition concerns raised, including from vertically integrating WBD's film and TV production studios into Netflix, which will give Netflix greater leverage over theatrical exhibitors and creative talent alike."
Netflix faces particularly big hurdles in getting regulatory approval in Europe, where it's far more dominant in streaming, Paramount added.
The regulatory review process could take upwards of two years, Paramount said. It has already filed pre-merger notifications with the FTC and DOJ and announced the case to the European Commission, "opening the path to pre-notification discussions."
Meanwhile, during a press conference at a meeting with business leaders Wednesday, President Donald Trump said any deal around WBD should involve CNN being sold. “I think the people that have run CNN for the last long period of time are a disgrace. I think it's imperative that CNN be sold,” Trump said, adding that CNN spreads “poison” and lies. His desire for CNN's sale could be considered in the decision on any deal, Trump said, but he could be talked out of that opinion by "antitrust people." He will be "probably involved, maybe involved" in the decision.
Later during the news conference, Trump also told a CNN reporter that she was "basically an arm of the Democrat party."
The rival Netflix and Paramount bids are a culmination of decades of consolidation and integration in the digital entertainment industry, Mogin Law blogged Tuesday. Either suitor, if approved, would transform the streaming market and "raise serious concerns about concentration, content diversity, and consumer choice," it said. Smaller competitors, creative labor and theaters "face uncertain prospects."
Mogin also said DOJ and the FTC should launch a full-scale antitrust review of a Netflix/WBD combination and its impact on competition. In many key markets around the world, Netflix/HBO Max would control more than 50% of the streaming market. Under the DOJ's 2023 merger guidelines, the deal would trigger a structural presumption of anticompetitive effects, Mogin added.