Warner Bros Rejects Paramount Bid, Now the Real Battle Begins

Just as Sumner Redstone aggressively consolidated Hollywood in the ’80s, a new crop of dealmakers is running his playbook. Fresh off a ParamountPARA

acquisition, the Ellison family had launched a hostile takeover bid for Warner Bros. DiscoveryWBD

. But with Paramount’s stock down 32% from recent highs, a Presidential blast, and a swift deal rejection, not all is glittering behind their silver screen.

• Paramount’s $77.9B all-cash offer topped Netflix’sNFLX
  by ~$6B, but Warner prefers Netflix’s bid because it excludes cable networks like CNN and TNT — providing a spinoff opportunity.
• Powering Paramount’s bid included $11.8B from the Ellisons, $54B in Wall Street debt, and $24B from Middle Eastern sovereign funds — the latter of which unnervedWBD
  .

What’s next: Paramount won’t raise its bid immediately, but it’s polling $WBD shareholders and proxy advisers for feedback before the Jan. 8 tender deadline. CEO David Ellison is pushing ahead with lobbying efforts, recently dining with White House reps and Sen. Ted Cruz to build political support. Warner shareholders remain split on which offer delivers more value, and one banker expects “many twists and turns” ahead. Be it Netflix or the Ellisons, the winner gets to reshape Hollywood once again.