Paramount goes hostile in bid for Warner Bros., challenging a $72 billion offer by Netflix

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NEW YORK (AP) — Paramount on Monday launched a hostile takeover offer for Warner Bros. Discovery, initiating a potentially bruising battle with rival bidder Netflix to buy the company behind HBO, CNN and DC Studios, and the right to reshape much of the nation's entertainment landscape.

Emerging just days after top Warner managers agreed to Netflix's $72 billion purchase, Paramount's bid seeks to go over the heads of those leaders by appealing directly to Warner shareholders with more money — $74.4 billion — and a plan to buy all of Warner's business, including the cable business that Netflix does not want.

Paramount said its decision to go hostile came after it made several earlier bids that Warner management “never engaged meaningfully” with following the company's October announcement that it was open to selling itself.

In its appeal to shareholders, Paramount noted its offer also contains more cash than Netflix's bid — $18 billion more — and argued that it's more likely to pass antitrust scrutiny from the Trump administration.

Netflix on Monday said it had no comment about Paramount's challenge. But on Friday, Netflix downplayed concerns that regulators would oppose a combination of Netflix and Warner’s HBO Max streaming business.

The fight for Warner drew strong reaction in Washington, with politicians from both major parties picking sides and citing the likely impact on streaming prices, movie theater employment and the diversity of entertainment choices and political views.

Over the weekend, President Donald Trump weighed in, too, saying a Netflix-Warner combo “could be a problem” because of the size of the combined market share.

Paramount, run by David Ellison, whose family is closely allied with Trump, said it had submitted six proposals to Warner over a 12-week period before the latest offer.

“We believe our offer will create a stronger Hollywood. It is in the best interests of the creative community, consumers and the movie theater industry," Paramount Chairman and CEO David Ellison said in a statement. He added that his deal would lead to more competition in the industry, not less, and more movies in theaters.

Adding to the political intrigue in the dueling bids, a regulatory document released Monday stated that an investment firm run by Trump's son-in-law Jared Kushner would be investing in the Paramount deal, too.

On Friday, Netflix struck its deal to buy Warner Bros. Discovery, the Hollywood giant behind “Harry Potter” and HBO Max. The cash and stock proposal is valued at $27.75 per Warner share, giving it a total enterprise value of $82.7 billion, including debt.

The transaction is expected to close in the next 12 to 18 months, after Warner completes its previously announced separation of its cable operations. Not included in the deal are networks such as CNN and Discovery.

The federal government has authority to kill any big media deals if it has antitrust concerns. Trump has said he will be personally involved in the decision regarding Warner Bros.

Usha Haley, a Wichita State University professor who specializes in international business strategy, said Paramount’s ties to Trump are notable. Ellison is the son of longtime Trump supporter Larry Ellison, the world’s second-richest person.

“He said he’s going to be involved in the decision. We should take him at face value,” Haley said of Trump. “For him, it’s just greater control over the media."

The bid for Warner Bros. comes on the heels of Paramount's October purchase of the news and commentary website The Free Press. Paramount then installed the site's founder, Bari Weiss, as the editor-in-chief of CBS News, saying it believes the country longs for news that is balanced and fact-based.

It was a bold step for the television network of Walter Cronkite, Dan Rather and “60 Minutes,” long viewed by many conservatives as the personification of a liberal media establishment. The network placed someone in a leadership role who has a reputation for resisting orthodoxy and fighting “woke” culture.

Paramount's tender offer is set to expire on Jan. 8 unless it's extended.

Shares of Warner Bros. jumped nearly 4%, and Netflix was down 4% Monday in early afternoon trading. Paramount was up 9%.

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Associated Press writers Matt Sedensky, David Bauder and Charles Sheehan in New York contributed to this report.