“In a notable turn for the sale of the Warner Bros. empire, David Ellison’s Paramount has issued a letter to the board of the studio it hopes to acquire questioning if the David Zaslav-led company is overseeing “a tilted and unfair process.” Warner Bros. Discovery lawyers have replied to the letter, in a note viewed”, — write: www.hollywoodreporter.com
Warner Bros. Discovery lawyers have replied to the letter, in a note viewed by The Hollywood Reporterdeflecting concerns and saying, “Please be assured that the WBD Board attends to its fiduciary obligations with the utmost care, and that they have fully and robustly complied with them and will continue to do so.”
The note from Paramount, reportedly sent via its attorneys at Quinn Emanuel, seems to suggest that it believes Netflix has been receiving more favorable treatment so far in the bidding process. Second round bids to acquire Warner Bros. Discovery was due on December 1, and Paramount, Comcast and Netflix have all upped the ante to make offers.
Netflix is seen as interested in acquiring the studio and streaming business (the Warner Bros. studio, HBO and HBO Max), whereas Paramount is aiming for an outright acquisition that includes the cable channels division (CNN, TNT, Discovery) as well. Comcast’s latest bid would see it spin out NBCUniversal into Warner Bros. Discovery in what would likely be a stock-heavy transaction.
“Several US media outlets have reported on the enthusiasm by WBD management for a transaction with Netflix, and on statements by management that a transaction between WBD and Netflix would be a ‘slam dunk,’ while also referring to Paramount’s bid in a negative light,” read the Paramount letter, which CNBC published in full. “Additional reporting since the submission of revised bids on December 1 has indicated that WBD’s ‘board has really warmed to’ a transaction with Netflix due to the ‘chemistry between’ WBD management and Netflix management.”
Regulatory concerns appear to be a critical factor in any potential deal. Paramount reportedly upped its potential breakup fee to $5 billion in its latest offer, underscoring how it believes it has the best path to get through regulators, although the letter to WBD suggested that EU regulators may be taking a tougher stand on the deal.
The DOJ, meanwhile, is reportedly preparing for the event of a Netflix deal, planning an investigation and potentially a lawsuit to try and block it, given the potential combination of Netflix and HBO Max.
Left out of the conversation so far is Comcast. The letter and leaks from the administration suggest that Netflix has emerged as a preferred choice over NBCU, and that Paramount is not going to sit back and let the streaming giant win the prize.
More to come.