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TNT Sports parent company Warner Bros. Discovery has delivered a blunt response to the acquisition offer from Paramount: no thanks.
WBD said early Wednesday that its board has unanimously voted to reject the hostile bid that Paramount tendered last week, and is urging its shareholders not to participate in the tender offer.
The CBS Sports parent company had offered to buy all of WBD—including the sports and linear television assets—in a deal with an enterprise value of $108.4 billion.
In a letter to shareholders, WBD said that the Paramount bid was “inferior” to a deal that it has already struck with Netflix for WBD’s studios and streaming business, one that it continues to recommend and is worth $82.7 billion.
“The Paramount offer provides inadequate value and imposes numerous, significant risks and costs on WBD,” the company said in the shareholder letter.
WBD, however, went much further in detailing the perceived defects in the offer from Paramount and its chair and CEO, David Ellison. WBD called the Paramount offer “illusory,” and also attacked the financial backing that Ellison said he has amassed from a group that includes his billionaire father Larry, several Gulf sovereign wealth funds, and RedBird Capital Partners.
“Paramount has consistently misled WBD shareholders that its proposed transaction has a ‘full backstop’ from the Ellison family. It does not, and never did,” WBD’s letter continues.
Affinity Partners, the investment company run by Jared Kushner, the son-in-law of U.S. President Donald Trump, has already backed out of its involvement in the Ellison bid. “The dynamics of the investment have changed significantly since we initially became involved in October,” the firm said. The firm did insist, though, that “we continue to believe there is a strong strategic rationale for Paramount’s offer.”
Next Steps
Ellison and Paramount will now need to decide whether they want to raise their offer, previously an all-cash tender for $30 per WBD share. Ellison has already signaled a willingness to go higher and had earlier told WBD CEO David Zaslav by text that its bid was not “best and final.”
Netflix, meanwhile, also sent a separate letter to WBD shareholders Wednesday, saying that its WBD pact is “the right deal, with the right partner, at the right time.”
“Our deal structure is clean and certain, with committed debt financing from leading institutions,” wrote Netflix co-CEO Ted Sarandos. “There are no contingencies, no foreign sovereign wealth funds, and no stock collateral or personal loans.”
Fourth Bid
A regulatory filing Wednesday from WBD also mentioned a fourth offer for the company during prior bidding, adding to the known entries from Netflix, Paramount, and NBC Sports parent company Comcast. That additional unnamed entrant was an “American media company,” and surprisingly, was interested primarily in WBD’s linear assets, unlike the other bids.
WBD ultimately didn’t seriously pursue the offer, though.
If WBD ultimately proceeds with the Netflix deal, it would also continue with a planned split of the company that will create Discovery Global, a new holding entity that would house TNT Sports.
Editors’ note: RedBird IMI, in which RedBird Capital Partners is a joint venture partner, is the primary investor in Front Office Sports.
