Paramount is plenty peeved about the way Warner Bros Discovery is conducting a possible sale and it wants everyone to know it won’t go quietly if either Netflix or Comcast are the winning bidder.
The David Ellison company is pushing the regulatory angle hard, insisting it’s the only suitor with “a clear path to closing based upon decades of legal precedent.” In a letter from its counsel to WBD, it insists rival offers from Netflix and Comcast both “present serious issues that no regulator will be able to ignore.” This epistle, submitted alongside its latest offer on Monday, when the second round bids were due, is separate from a missive delivered yesterday calling WBD’s sale process unfair.
The letters from Par’s Melrose lot to WBD’s Burbank lot indicate a court filing or hostile takeover play may be in the cards if and when WBD picks a buyer other than Paramount, according to industry insiders.
“Netflix’s dominance in streaming and Comcast’s presence as a leading broadband and MVPD player each present unique and serious antitrust concerns that guarantee a long, expensive review process and imperil closing either deal. Paramount is the easier path, and its outcome is assured.,” the letter said.
It mostly focused on the giant streamer. “The simple truth is that a deal with Netflix as the buyer likely will never close,” it said. “Netflix is the only remaining Big Tech company that has not faced serious global antitrust enforcement, but attempting to acquire the WBD assets will change that.”
It included charts and stats detailing Netflix’s dominance of streaming in the U.S. and abroad, which would be greatly expanded with the addition of HBO Max. It said that while Netflix may attempt to define a market to include social media and short-form video platforms like YouTube, Facebook and TikTok, that strategy is “doomed to fail” with regulators. The letter referenced a presentation of said argument to WBD’s team last weekend.
It also noted that a Netflix-Warner Bros. deal would reduce the number of films for broad theatrical release, “further pushing consumers away from theaters to streaming and harming those theaters which are already struggling.”
Netflix has reportedly said it would continue to honor WBD’s theatrical commitments, but Paramount called the statements “inherently time-limited, transactional and defensive—aimed at blunting an obvious theory of harm that enforcers in the U.S. and outside the U.S. are expected to pursue.”
“Paramount provides WBD with a clear path to closing around the world. There is no market segment in the U.S. or abroad where the parties’ combined share even comes close to the 30 percent threshold that triggers regulators and competition enforcers to presume that a transaction is illegal. To the contrary, the transaction will create a much more robust competitor against the dominant firm in streaming, Netflix, while creating new opportunities for creators and talent. A combination of Paramount and WBD accordingly will provide WBD shareholders the fastest and most certain path to unlocking value,” Para said.
The WSJ, which first reported on this second letter, said WBD has asked for a third round of bids by today although some are calling the situation a bit more fluid. WBD had hoped to settle on a buyer for all or part of the company by year end. Paramount is going for all of Warner Bros., including global linear networks. Netflix and Comcast are in the running to buy the Warner Bros. Studios and HBO Max streaming.
On Comcast, Par wrote its “presence as a leading broadband and MVPD player also presents significant antitrust concerns. Antitrust enforcement has shifted, and the tough regulatory path Comcast faced when it acquired NBC Universal with a tortured and controversial consent decree will not be available under this Administration or any subsequent one.”
Comcast and Warner both have major film and television studios. They have few other overlapping businesses as the Philadelphia-based media giant is spinning off its cable networks into a new company, Versant. It is a major theme park owner and offers broadband and video provider.
Dominic Patten contributed to this report
