Paramount, a Skydance Corporation has affirmed its commitment to acquiring Warner Bros. Discovery, Inc. in response to the WBD Board’s recommendation against Paramount’s $30.00 per share all-cash tender offer. Paramount’s offer provides WBD shareholders superior value compared to the transaction with Netflix, including the certainty of 100% cash and no exposure to equity market fluctuations:

• Paramount’s offer is $30 per share in cash versus Netflix’s cash component of only $23.25 per share (an $18 billion difference in the aggregate);
• The value of Netflix’s offer has been further reduced as its share price trades below the bottom of the “collar” on its stock component;
• Netflix’s offer would leave WBD shareholders owning a highly leveraged stub in Global Networks and WBD’s Board provides no valuation of that stub; and
• Netflix’s offer has a dollar-for-dollar reduction to what WBD shareholders will receive tied to the net debt on Global Networks.

Paramount is highly confident its offer would receive timely regulatory approval because it would enhance competition in the creative industries rather than entrench a dominant streaming monopoly that the Netflix transaction envisions.Paramount has lined up all necessary financing to deliver its offer to WBD shareholders, and it is not subject to any financing conditions. Paramount’s offer will be financed by $41 billion of new equity backstopped by the Ellison family and RedBird Capital and $54 billion of debt commitments from Bank of America, Citi and Apollo.

“We remain committed to bringing together two iconic Hollywood studios to create a unique global entertainment leader. Our proposal clearly offers WBD shareholders superior value and certainty, a clear path to close, and does not leave them with a heavily indebted sub-scale linear business. I have been encouraged by the feedback we have received from WBD shareholders who clearly understand the benefits of our offer. We will continue to move forward to deliver this transaction, which is in the best interest of WBD shareholders, consumers, and the creative industries.” David Ellison, Chairman & CEO, Paramount commented.

WBD’s own narrative of the actions that led to its inferior transaction with Netflix reveals a process which was not run to secure the best offer for WBD shareholders. Most notably, the absence of any engagement by WBD with Paramount in the face of a superior all-cash $30 per share offer speaks for itself.  WBD seeks to justify racing to conclude an inferior deal with Netflix with a “kitchen sink” litany of purported questions and concerns. Missing from the cloud of obfuscation is any explanation for why WBD and its advisors did not lift a finger to get any of those questions answered or concerns addressed? WBD seeks to mislead its shareholders into believing this is a complicated question about legal documents. In reality, it is all quite simple: $30 in cash fully backstopped by a well-capitalized trust (in existence for approximately 40 years) of one of the most well-known founders and entrepreneurs in the world, Larry Ellison. Yet from mid-September all the way through to December 4, what is glaring is the absolute resistance on the part of WBD to even engage in a single negotiating session with Paramount or its advisors, and a refusal even to provide a mark-up of any transaction document. 

As described in Paramount’s letter to WBD shareholders, Paramount’s December 4 offer included an equity commitment from the Ellison family trust, which contains over $250 billion of assets (more than 6x the equity funding commitment) including approximately 1.16 billion Oracle shares and tens of billions of dollars in other assets. This information is publicly available; and, notably, the trust has been a counterparty in other completed public company transactions including for Twitter, which involved one of WBD’s advisors. The equity commitment papers submitted to WBD were identical in all material respects to commitments that the advisors to WBD had agreed to in other large transactions such as Twitter and Electronic Arts.    

Also missing in WBD’s long exposition of its flawed process is any financial analysis whatsoever to show what numbers the WBD Board considered. Where is the valuation of the stub equity in Global Networks?  Where is the description of the financial analysis their bankers provided—disclosure that is standard when a board of directors explains its thinking to its shareholders? WBD shareholders deserve to know this information and understand what is being hidden from them. It is also noteworthy that the Board of WBD failed to even make the determination that Paramount’s $30 per share all-cash offer “could reasonably be expected to lead to a superior proposal” under WBD’s transaction agreement with Netflix. This failure is yet another example of WBD’s pattern of ignoring Paramount’s value-maximizing offer, perhaps in the hopes it will just go away. But Paramount is committed to its offer and looks forward to WBD shareholders choosing a Paramount transaction over Netflix. 

WBD shareholders have the ultimate power to determine the future of WBD. With this in mind, Paramount has acted to provide WBD shareholders with transparency and a voice by taking its superior offer directly to them. The Netflix transaction requires approval by WBD shareholders at a special shareholder meeting. But there is no reason to wait months to have your voice heard. Paramount urges WBD shareholders to send a clear message now to the WBD Board that they prefer Paramount’s superior offer by tendering their shares today.

WBD shareholders and other interested parties can find additional information about Paramount’s superior offer at www.StrongerHollywood.com.