Paramount tries to get ahead of Netflix, launches powerful takeover bid for Warner

Paramount launched a cash tender offer Monday for Warner Bros. Discovery that challenges a previously announced deal between WBD and Netflix.

The offer values the entertainment giant at $108.4 billion and represents a139% premium over Warner's share price in September, Paramount said in a statement that called Netflix's offer "inferior and uncertain."

"WBD shareholders deserve the opportunity to consider our superior cash offer," said David Ellison, Paramount's chairman and CEO.

Paramount Skydance had already submitted five bids for WBD

Unlike Netflix, which is proposing to acquire only the Warner Bros. studio and streaming platform HBO Max, Paramount Skydance wants to acquire all of WBD, including its portfolio of TV channels.

Before considering a sale, Warner Bros Discovery planned to separate these channels from the rest of the group—among them are CNN and Discovery—considering their lower growth potential in a context of cable TV retraction in the United States.

Paramount Skydance was, in fact, the first to express interest in Warner Bros Discovery and submitted at least five bids before Monday's, but WBD's board preferred Netflix, which also outbid cable operator Comcast.

Netflix valued Warner Bros and HBO Max at $83 billion, including debt

"Our offer is the highest among those on the table," assured Ellison during an interview with CNBC.

Netflix's proposal valued Warner Bros and HBO Max at $83 billion, including debt.

To try to convince WBD's board and shareholders, Paramount Skydance is willing to settle its offer entirely in cash, while Netflix includes a portion of the payment in shares.

An offer backed by the Ellison family's $270 billion

The group managed to raise this colossal sum by relying, in part, on the Ellison family, whose patriarch, Larry, is the second richest man in the world, with a fortune estimated at $270 billion according to Forbes.

In addition, David Ellison pointed out as another advantage of his proposal that "we are more certain to get approval from regulators" than Netflix. These statements echo the doubts that Donald Trump expressed during a ceremony in Washington on the desirability of a union between Netflix and Warner Bros.

Netflix already has "a very large market share," he recalled, which "could be a problem," he argued. Such a merger would bring together two of the world's three largest video platforms (excluding Amazon Prime because of its hybrid model), with more than 300 million subscribers for Netflix and 128 million for HBO Max.

"Allowing the world's first streaming service to merge with the third is bad"

"Allowing the first worldwide streaming service to merge with the third is bad for competition," David Ellison argued.

Ellison has the support of Trump, who is close to his father. Larry Ellison contributed financially to the U.S. president's election campaigns.

The Skydance director obtained, in July, the approval of the U.S. telecommunications and television regulator, the FCC, to acquire Paramount after promising a modification of the editorial lineup of CBS, a channel belonging to the group that has been heavily criticized by Trump.