Netflix CEOs tour Warner Bros lot as board rejects Paramount bid

Netflix co-CEOs Ted Sarandos and Greg Peters toured the Warner Bros. studio lot in Burbank on Wednesday, meeting with CEO David Zaslav and approximately 400 employees in a display of unity as the companies advance their $82.7 billion merger agreement.variety+2

The visit coincided with Warner Bros. Discovery board's unanimous rejection of Paramount's $108 billion hostile takeover bid, citing concerns over financing sources and declaring Netflix's cash-and-stock offer "superior" and more certain for shareholders.variety+2

Paramount is proposing an all-cash deal for the entire company including cable networks, while Netflix's offer focuses solely on acquiring Warner Bros. and HBO, with Netflix arguing its $400 billion market capitalization provides greater financial stability.variety+2

Netflix co-CEOs Ted Sarandos and Greg Peters made a high-profile visit to the Warner Bros. studio lot in Burbank on Wednesday, receiving a guided tour from Warner Bros. Discovery CEO David Zaslav in a calculated show of unity as the companies move toward their $82.7 billion merger.variety+2

The visit came hours after Warner Bros. Discovery's board unanimously rejected Paramount's $108 billion hostile takeover bid and reaffirmed its recommendation for Netflix's offer, calling it the "superior" and "more certain" path forward for shareholders.cnbc+2

Financing Concerns Sink Paramount Bid

Warner Bros. Discovery's board cited "significant risks and costs" associated with Paramount's $30-per-share all-cash offer, which seeks to acquire the entire company including its cable networks. The board expressed particular concern that the Ellison family, led by Oracle co-founder Larry Ellison, has not provided a full equity backstop for the financing, instead relying on what the board described as an "unknown and opaque revocable trust".cnbc+4

Board Chairman Samuel Di Piazza said Netflix's cash-and-stock deal of $27.75 per share provides greater certainty, backed by Netflix's $400 billion market capitalization and investment-grade balance sheet. Netflix has also committed to a record $5.8 billion reverse termination fee if the deal fails regulatory approval.businessinsider+2

During Wednesday's studio visit, Sarandos and Peters met with approximately 400 Warner Bros. employees at the Steven J. Ross Theater and fielded questions from staff. Photos released by Warner Bros. Discovery showed the trio strolling past the iconic Warner Bros. water tower.variety+3

Viewership Share Battle

Netflix has defended the deal by arguing the combined entity would capture just 9.2% of U.S. TV viewership, still trailing YouTube Alphabet Inc. at 12.9% and Disney The Walt Disney Company at 11.4%. By contrast, a Paramount-Warner Bros. Discovery combination would command 14% of the market.prnewswire+2

The streaming giant has also committed to maintaining traditional theatrical windows for Warner Bros. films, seeking to alleviate industry concerns that the deal would further erode cinema attendance. "Our intentions when we buy Warner Bros. will be to continue to release Warner Bros. studio movies in theaters with the traditional windows," Sarandos said earlier this week at a Paris event.deadline+3

Warner Bros. Discovery shareholders have until January 8 to tender their shares to Paramount, though that deadline could be extended. If shareholders reject the Netflix deal in favor of Paramount, Warner Bros. Discovery would owe Netflix a $2.8 billion breakup fee.businessinsider+2

Sources (61)