Warner Bros. Tells Investors Netflix's Offer Is Better

Warner Bros. is telling shareholders to reject a takeover bid from Paramount Skydance, saying that a rival bid from Netflix will be better for customers. "We strongly believe that Netflix and Warner Bros. joining forces will offer consumers more choice and value, allow the creative community to reach even more audiences with our combined distribution, and fuel our long-term growth," Warner Bros. said Wednesday, per the AP. "We made this deal because their deep portfolio of iconic franchises, expansive library, and strong studio capabilities will complement—not duplicate—our existing business."

Paramount went hostile with its bid last week, asking shareholders to reject the deal with Netflix favored by the board of Warner Bros. Paramount is offering $30 per Warner share to Netflix's $27.75. Paramount's bid isn't off the table altogether. While Wednesday's letter to shareholders means Paramount's is not the offer favored by the board at Warner Bros., shareholders can still decide to tender their shares in favor of Paramount's offer for the entire company—including cable stalwarts CNN and Discovery.

Unlike Paramount's bid, the offer from Netflix does not include buying the cable operations of Warner Bros. An acquisition by Netflix, if approved by regulators and shareholders, will close only after Warner completes its previously announced separation of its cable operations. Paramount has claimed it made six different bids that Warner leadership rejected before announcing its deal with Netflix on Dec. 5. Only after that did it take its offer directly to Warner's shareholders.

Beyond a greenlight from shareholders, both takeover bids face tremendous regulatory scrutiny. A change in ownership at Warner would drastically reshape the entertainment and media industry—impacting movie making, consumer streaming platforms and, in Paramount's case, the news landscape. Critics of Netflix's deal say that combining the massive streaming company with Warner's HBO Max would give it overwhelming market dominance, whereas the Paramount+ streaming service is far smaller. However, Paramount's attempt to buy Warner's cable networks and news business raises concerns about further accelerating media consolidation.