Paramount Strikes Back: Hostile Bid to Take Over Warner Bros.

Hollywood just hit the fast-forward button on chaos. Last week, Netflix said it struck a deal to buy Warner Bros. Discovery. Over the weekend, Paramount decided it was not going to let that stand and came back with a hostile bid for the whole company. Yes, this is as messy as it sounds. Here is what actually happened and why everyone is suddenly talking about enterprise value like it is a new franchise.

What Netflix says it bought

Netflix and Warner Bros. Discovery announced a sale agreement valuing WBD at roughly $82.7 billion. If it goes through, that would fold a mountain of Warner/HBO IP into Netflix, including TV and film staples like 'The Big Bang Theory', 'The Sopranos', 'Game of Thrones', 'The Wizard of Oz', and the DC Universe. A bunch of HBO shows already live on Netflix, so this would be the super-sized version of that crossover. All of it would sit next to Netflix staples like 'Wednesday', 'Money Heist', 'Bridgerton', 'Adolescence', and 'Extraction'.

Paramount crashes the party

Paramount had been in the mix earlier, but David Zaslav reportedly turned down multiple offers. Rather than walk away, David Ellison and company are now trying to blow up the Netflix deal with an aggressive end run: a hostile tender offer for every outstanding WBD share at $30 cash apiece. On their math, that tags WBD with an enterprise value of about $108.4 billion.

'WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company... We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.'

Paramount is pitching its bid as cleaner and faster than Netflix's. They say they are offering $18 billion more in cash than Netflix, and they are calling Netflix's valuation of WBD's Global Networks business 'illusory' and not backed by fundamentals. They are also arguing that the Netflix route drags everyone through a long, multi-country regulatory process with a shaky outcome, plus a complicated mix of equity and cash that could bounce around in value. Paramount is taking this straight to WBD shareholders because the WBD board is backing the Netflix agreement.

Who is bankrolling Paramount's move

The offer is backed by the Ellison family and RedBird Capital, with debt financing they say is fully committed by Bank of America, Citi, and Apollo. In other words, they are trying to remove the 'Can you actually pay for this?' question from the conversation.

Paramount's pitch (and the jabs at Netflix)

Along with the numbers, Paramount is making a broader case. They claim Netflix's deal could mean higher prices for viewers, lower pay for creators and talent, and damage to movie theaters in the U.S. and abroad. They also point out that Netflix has never digested a giant acquisition before, which, in their view, ups the risk for WBD shareholders. Their counter-narrative: their combined company would be better for creatives, consumers, and theaters because it would boost competition, raise content spending, and put more films in cinemas. They say they want to move quickly so everyone can start reaping the benefits.

• Netflix/WBD sale agreement: enterprise value of about $82.7 billion
• Paramount hostile tender: $30 per WBD share in cash, valuing WBD at about $108.4 billion
• Paramount says its bid includes $18 billion more in cash than Netflix's
• Key IP at stake: 'The Big Bang Theory', 'The Sopranos', 'Game of Thrones', 'The Wizard of Oz', DC Universe (headed to Netflix if that deal closes)
• Paramount backers: Ellison family and RedBird Capital; debt commitments from Bank of America, Citi, and Apollo
• Paramount's criticism: Netflix deal brings regulatory uncertainty, a complex cash/stock mix, potential higher consumer prices, lower creator pay, and harm to theaters
• Paramount's promise: more competition, higher content spend, and more theatrical releases

Where this goes next

This is the part where lawyers, bankers, and very tired comms teams earn their keep. WBD's board is recommending the Netflix transaction, but Paramount is trying to pry the company away by taking its cash offer directly to shareholders. If you are sensing a lot of deal mechanics and chest-thumping, you are not wrong. The numbers are huge, the IP pile is bigger, and both paths come with regulatory question marks.

Bottom line: Netflix laid down an $82.7 billion marker. Paramount just slapped $108.4 billion on the table, in cash-heavy fashion, and told shareholders to take a harder look. Buckle up.