Paramount Sends Letter to Warner Bros. Shareholders Saying Its Offer Is ‘Superior’

Paramount stock has gained 41% this year. (Getty Images)

Key Points

• Paramount sent a letter to Warner Bros. Discovery shareholders, asserting its $30 per share all-cash offer is superior to Netflix’s bid.
• Paramount claims its offer has an $18 billion higher cash component and faces fewer regulatory hurdles than Netflix’s proposal.
• Netflix’s co-CEO stated a combined Netflix and Warner Bros. Discovery would hold 9% of US view hours, behind a potential Paramount-WBD at 14%.

Paramount Skydance isn’t going down without a fight—and this time they’re taking the fight straight to Warner Bros. Discovery shareholders.

Paramount said in a news release on Wednesday night that the company has sent a letter to Warner Bros. shareholders that “clearly” sets out why their $30 a share all-cash offer to acquire all of Warner Bros. is “superior” to the Warner Bros. transaction with Netflix .

“Our public offer—identical to the terms we presented to WBD privately—delivers superior value and a faster, more certain path to completion than the transaction announced with Netflix,” the letter reads, adding in all caps that “IT ISN’T TOO LATE TO REALIZE THE BENEFITS OF PARAMOUNT’S PROPOSAL IF YOU CHOOSE TO ACT NOW AND TENDER YOUR SHARES.”

The letter also listed several reasons why Paramount believes its offer to Warner Bros. is superior to the agreement announced by Netflix. The Paramount+ owner pointed to the difference in price tags, noting that Netflix’s cash component is about $18 billion lower than Paramount’s. Paramount also said that it would have a much easier time receiving regulatory approval for the deal than Netflix would.

“Netflix is the #1 streaming business globally by subscriber count and HBO Max is #4. Combining these two yields an overwhelming market share of ~43%—more than 2x the #2,” the letter read.

Netflix declined to respond to a Barron’s request for comment.

Co-CEO Gregory Peters said at a UBS media conference on Monday—citing data from research firm Nielsen—that when it comes to view hours of TV, Netflix ranks No. 6 in the U.S., behind YouTube at No. 1, then Walt Disney , NBCUniversal, Fox, and Paramount.

If combined with Warner Bros, “we go from 8% of view hours today in the United States to 9%. So we’re still behind YouTube at 13%. And potentially worth noting that we would be behind what would be if Paramount combined with WBD, them at 14%,” Peters said. “So we think that there’s a really strong fundamentals based case here for why regulators should approve this deal.”

Paramount’s CEO is David Ellison, whose father, Larry Ellison, is the co-founder of Oracle and a friend of President Donald Trump.

Paramount also published a filing with the Securities and Exchange Commission regarding the latest takeover bid, which listed multiple financing partners. Those included private-equity firm Affinity Partners, led by Trump’s son-in-law Jared Kushner.

Wednesday’s letter to shareholders comes after Netflix announced on Dec. 5 that it has agreed to pay $27.75 a share in cash and stock for Warner Bros, or about $72 billion. Netflix will also assume nearly $11 billion in debt and intends to take on around $50 billion of new debt to fund the cash portion of the acquisition.

Paramount launched its $30 a share hostile bid for Warner Bros. on Monday in response.

Shares of Paramount rose 0.5% to $14.79 in Thursday’s premarket trading. The stock has gained 41% this year, through Wednesday’s close.

Write to Angela Palumbo at angela.palumbo@dowjones.com