The bidding war over one of Hollywood’s major studios is ending. After months of back-and-forth bids, threats of hostile takeover and even political intrigue, two of the entertainment industry’s leading studios will soon merge. The deal is being met with mixed reactions within the entertainment industry and could have major repercussions for news coverage as well.
Netflix drops out of bidding war for WBD, opening the way for Paramount to purchase rival
Ted Sarandos and Greg Peters, who serve as joint CEOs of Netflix, announced Thursday that their company would not increase their bid for purchasing Warner Bros. Discovery to match an offer by rival Paramount Skydance.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” they explained of their previous offer to buy Warner Bros. “However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.”
The decision ends a months-long bidding war for Warner Bros. between Netflix, the streaming giant looking to absorb one of Hollywood’s most famed studios, and Paramount Skydance, another of Hollywood’s giant studios looking to absorb one of its former rivals; Paramount and Warner Bros. are two of the “big five” legacy studios in the American entertainment industry. During this process, the WBD board initially favored a purchase by Netflix, leading Paramount to attempt a hostile takeover of WBD while increasing the size of its offer.
Reactions from within Paramount, Netflix and WBD
Even before Netflix officially dropped its bid, the WBD board endorsed Paramount’s most recent offer as “superior” to Netflix’s deal. Paramount CEO David Ellison said at the time, “We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing.” It was a change in tide as internally it seemed that Netflix was favored.
Now that the bidding war has concluded, the moods within all three companies appear very different. Variety reported that Paramount executives celebrated the deal with champagne, with one executive describing a scene of “tears of exhaustion and happiness” as Paramount was now poised to own properties such as Warner Bros. TV, Warner Bros. Animation, CNN and more. Opinions at Netflix were more ambivalent, with some disappointment at losing potentially valuable television and film production companies but also relief at avoiding a deal that could have been financially risky. Meanwhile, a WBD exec told Variety that the news was “obviously very upsetting to employees,” and came as a “gut punch.” Employees of the company fear the deal will lead to massive layoffs as the two companies merge.
Opinions outside the three companies contained questions concerning both the chances of the merger surviving regulatory scrutiny and the financial health of the merged company, which would have tens of billions of dollars in debt.
Worry that Paramount will enforce a right-wing shift in news coverage
While many worried about what may happen to theaters with WBD under Netflix, there was also worry about the political implications of WBD being under the new Paramount.
With this recent news, that worry has only amplified. Ellison is the son of Oracle founder Larry Ellison, an ally of President Donald Trump. In the lead-up to the Paramount/Skydance merger, which required the Trump administration’s approval, Paramount was accused of interfering with its CBS News brand, including its famed 60 Minutes program, to appease the president. Although Trump said he “shouldn’t be involved” in the process of WBD being purchased by either Paramount or Netflix, deals which would require approval from his Justice Department’s antitrust division, Trump also recently called for Netflix to fire former United Nations Ambassador Susan Rice from the streaming company’s board. Assuming Trump’s regulators approve the purchase of WBD, Paramount would now also own CNN, a network Trump has long targeted, claiming it’s biased against him. The Paramount deal has raised fears among CNN journalists that the news network would be remodeled in a right-leaning direction similar to how CBS News, another target of Trump’s accusations, has been made more conservative-friendly since Trump returned to the White House. Paramount could even merge the CNN and CBS newsrooms.
The Paramount purchase of Warner Bros. Discovery is far from a done deal, with federal, state and European regulators having to weigh in concerning the merger. But the appearance of a friendly Trump administration gives Paramount an apparent edge while also creating worries that the tone of news and content created by the merged studio giant will be bent closer to Trump’s preferences.
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