If you're looking for a drama-filled hostile takeover bid, Paramount Skydance Corp. (PSKY) just delivered one for the history books. The company officially launched an all-cash tender offer on Monday for Warner Bros. Discovery, Inc. (WBD), going straight to shareholders with a $108.4 billion proposition that aims to torpedo Warner Bros.' existing deal with Netflix, Inc. (NFLX).
The Offer Nobody Asked For (But Shareholders Might Want)
Paramount is offering $30 per share in cold, hard cash for the entire Warner Bros. Discovery operation. That's roughly $108.4 billion, and it's positioned as a direct challenge to the Netflix deal that Warner Bros. management already agreed to. The Netflix arrangement values Warner Bros. at approximately $28 per share, mixing cash and stock for specific studio and streaming assets. But here's the difference: Netflix wants to break up the company and cherry-pick the good parts, while Paramount is proposing to buy everything, including those aging cable networks nobody seems to want anymore.
David Ellison, Paramount's CEO, isn't being subtle about his intentions. "We're really here to finish what we started," he told CNBC on Monday. "We put the company in play." His pitch to shareholders is straightforward: Paramount's offer keeps the legendary studio together rather than dismantling it, and more importantly, it's offering real money upfront.
The Regulatory Chess Match
Paramount's legal team is making an interesting argument about antitrust risk. They're saying a Netflix-WBD combination would face insurmountable regulatory barriers worldwide because regulators won't buy Netflix's claim that it competes in the same ad-supported market as Instagram or YouTube. Translation: Netflix is too dominant in streaming, and adding Warner Bros.' content library would raise too many red flags.
Warner Bros.' board, however, has fired back with its own regulatory concerns. They're worried about where Paramount's money is coming from. The bid relies heavily on non-U.S. funding, including some heavyweight sovereign wealth funds. That's the kind of thing that gets the Committee on Foreign Investment in the United States (CFIUS) very interested very quickly.
The investor roster backing Paramount reads like a geopolitical who's who: Saudi Arabia's Public Investment Fund, the Qatar Investment Authority, Abu Dhabi's L'imad Holding Company PJSC, and Jared Kushner's Affinity Partners. That's a lot of foreign government money, and CFIUS exists specifically to scrutinize deals like this.
Ellison seems confident he can navigate these waters, pointing to what he called Paramount's "friendly" relationship with the Trump administration during his CNBC interview. Whether that translates to regulatory approval is anyone's guess.
Show Me The Money
Paramount is banking on a simple thesis: shareholders care about cash more than anything else. "We're sitting on Wall Street, where cash is still king," Ellison said. "We are offering shareholders $17.6 billion more cash than the deal they currently have signed up with Netflix, and we believe when they see what it is currently in our offer that that's what they'll vote for."
That's a compelling pitch if you're a Warner Bros. shareholder looking at two offers side by side. One gives you $28 per share in a mix of cash and stock for part of the company. The other gives you $30 per share, all cash, for the whole thing. The math isn't complicated.
The market seemed to pick its favorites on Monday. Netflix shares dropped 4% in midday trading, while Paramount Skydance jumped 9% and Warner Bros. Discovery climbed 3.5%. Investors are clearly taking this seriously.
Whether Paramount can actually close this deal is a different question entirely. Hostile tender offers don't have a great success rate in media, regulatory approval could take months or crater entirely, and Warner Bros. management clearly prefers the Netflix arrangement. But Ellison is betting that when shareholders see an extra $17.6 billion on the table, none of that will matter. In his words, cash is still king. We're about to find out if he's right.