Last Friday, after three months of public auction, Netflix made headlines with an agreement to acquire Warner Bros studios and its HBO Max streaming service for nearly $83 billion. The operation, pending regulatory approval, seemed to settle a complicated matter with numerous political and business implications. However, less than 72 hours later, the board has been significantly shaken after Paramount, frustrated by the negotiation outcome, has launched a hostile takeover bid of $108 billion to acquire the entire company.
The significance of the operation goes far beyond the entertainment industry, the future of streaming, or movie theaters. Paramount is controlled by David Ellison, son of Oracle's founder Larry Ellison, one of the wealthiest individuals on the planet and a personal friend and ally of Donald Trump. Ellison is the founder of Skydance, a production company that acquired Paramount in July for $8 billion, gaining control of CBS network, along with historic channels like MTV, Nickelodeon, Comedy Central.
The U.S. has five major cable news networks: Fox News, CNN, CBS, ABC, and NBC. Until now, Fox, owned by Rupert Murdoch and conservative, was the only openly pro-Trump network. The arrival of the Ellisons at Paramount, and therefore at CBS, has brought significant changes, including the merger with The Free Press, a young online media outlet, and its owner, a former journalist from The New York Times. Or the inclusion of a well-known Republican as a viewer advocate. Warner's operation now has a crucial aspect: control of CNN.
Netflix's offer did not affect the largest 24-hour news network, as the agreement was for the studios and streaming, but Warner Bros was splitting into two companies, and the one operating CNN or TNN remained separate, at least temporarily. But now the entire country is focused on the political operation amid an unprecedented campaign by the Executive Branch against the media. With maneuvers to cancel programs deemed hostile, lawsuits worth tens of billions against newspapers, or deals with TV networks to pay Trump tens of millions for lawsuits that previously would have had no merit. Now, however, the White House openly threatens to use regulators to revoke licenses from networks or veto billion-dollar business operations and mergers.
That's what Trump has been doing in recent weeks. Talking about license revocations or, as he did this past weekend, saying he would directly involve himself in the agreement between Netflix and Warner Bros, citing concerns about competition. That's Paramount's stance, which on Friday complained that if Netflix got its way, "there would be no more competition in Hollywood." Just hours later, the president's son-in-law, who is simultaneously negotiating the Gaza or Ukraine peace agreements, is dealing with sovereign and private funds from Qatar or the United Arab Emirates, sitting at the table.
Paramount's all-cash offer, not only for the studios but also for streaming and cable, amounts to $30 per share (2.25 dollars more than its rival), which, according to Ellison, "provides shareholders $18 billion more in cash than Netflix's proposal." However, Warner would also have to pay nearly $3 billion to Netflix if the agreement is terminated.
Foul play has marked the weekend. With Paramount telling shareholders that regulators would not allow the operation and likely force overly burdensome antitrust clauses, and Netflix claiming that Paramount lacks the necessary capital and must rely on foreign entities to complete the operation, compromising U.S. national security.
In the submitted documents, Paramount explains that the Ellison family, along with the private equity firm RedBird, supports the operation with $40.7 billion in capital. The offer also includes funding from Affinity Partners, led by Jared Kushner, the president's son-in-law. Another portion comes from Saudi and Qatari sovereign investment funds, and L'imad Holding Co., owned by the Abu Dhabi government.