As time runs out on the sale of the Warner Bros. empire, Netflix, Comcast and Paramount are pushing to snap up the David Zaslav-led studio conglomerate and crown jewels like HBO. Behind the scenes, players explain to the Warner Bros. board of directors. Discovery why they should pursue their multibillion-dollar bid — and the maneuvering has intensified in recent days.
David Ellison’s Paramount, which has been aggressive in pursuing an outright acquisition of all of Warner Bros. Discovery, has sent several letters to Warners outlining its case, while emphasizing why Netflix and Comcast’s offers are heavier. On Dec. 1, a letter of more than 4,000 words was sent by lawyers hired by Paramount outlining why Netflix’s offer poses “substantial risks” and Comcast’s offer offers “unique and significant risks” in getting to the finish zone of a completed deal.
“Although a proposed Paramount/WBD transaction would be pro-competitive and would likely benefit from a favorable and relatively smooth approval process from regulators, a transaction with Netflix or Comcast would face serious uncertainty and significant opposition from antitrust enforcement agencies in the United States and abroad,” attorneys for Latham & Watkins and Cravath wrote on behalf of Paramount in the regulatory letter viewed by The Hollywood Reporter.
Netflix, which now appears to be seen as having the inside line, is interested in acquiring the studios and streaming businesses (the Warner Bros. studio, HBO and HBO Max), while Paramount is also offering to buy the relatively struggling cable channel division (TNT, TBS, CNN, HGTV and Food Network). Comcast’s offer would turn NBCUniversal into Warner Bros. Discovery in what could be a stock-heavy transaction.
Paramount is considered the studio conglomerate that is arguably closest to the Trump administration, given Oracle founder Larry Ellison and his son David Ellison’s friendly relationship with the White House. It’s a card the Paramount team could look to play as the sales process unfolds. Warners has outlined a plan to complete a deal or split by the end of the year.
A separate letter from Paramount written by Quinn Emanuel’s lawyers that leaked Thursday took issue with “a biased and unfair process” and took several jabs at Netflix, suggesting that Warners management viewed the streaming giant more favorably than Paramount.
Below are some excerpts from the offensive line’s talking points in the Dec. 1 Paramount letter from Latham & Watkins and Cravath as Ellison’s team makes its case. An example: Netflix holding back Warner Bros. films. of movie theaters is cited several times in Paramount’s letter and could be a major emerging narrative if the streaming giant wins its bid for Warners.
On Netflix:
► “Netflix dominates video-on-demand streaming in the United States, Europe and globally. WBD has positioned HBO Max as a significant challenger to Netflix’s SVOD dominance, particularly in Europe. Regulators around the world will rightly examine the loss of competition to dominant streamer Netflix and the impact of any Netflix-WBD deal on streaming customers and content creators in each of these jurisdictions.”
► “Netflix does not have the same incentive to release films theatrically and will be incentivized to use WBD’s world-class IP library to consolidate Netflix’s streaming dominance while hurting theatrical distribution, talent and moviegoers. »
► “Netflix, if combined with WBD, will reduce the number of films intended for wide theatrical release, further moving consumers away from theaters and toward streaming and hurting theaters that are already struggling. Given that Netflix’s co-CEO has called physical movie theaters an “outdated” concept, Netflix’s ownership of WBD’s studio would continue the trend toward more empty seats in theaters as Netflix moves its films away from first theatrical runs.”
► “Netflix’s attempts to define a market that includes social media and short-video platforms are doomed to failure – regulators in the United States and abroad have rejected such a dubious approach, and they will do so here. »
► “In combination with the fourth largest player in the SVOD market – HBO Max – the resulting company would have a 43% share among global SVOD subscribers. This makes an alleged deal illegal under US law, which is even less restrictive than the laws of the myriad other jurisdictions that will evaluate the deal.”
On Comcast:
► “Comcast’s presence as a major player in broadband and MVPD also presents antitrust and other regulatory issues, potentially limiting access, raising prices, or otherwise negatively affecting consumers. Comcast previously faced a lengthy antitrust review and complex consent judgment with the DOJ when it merged with NBCU in 2011.”
► “WBD content would increase Comcast’s ability and incentive to retain or increase costs to compete with MVPDs and other distributors for its vast content holdings. Comcast could also reduce or eliminate compatibility between its products and those of its competitors.”
► “While Comcast has announced plans to create MS NOW with other networks in Versant, for now a Comcast/[WBD] The deal will bring two major 24-hour news networks (MS NOW and CNN) under common control. Customers will have fewer choices and industry talent will have fewer outlets for their services.
► “Comcast’s bid is likely to face significant regulatory scrutiny in Europe as well. Comcast is already one of the largest audiovisual players in Europe, operating through its subsidiaries Sky Group and NBCUniversal. Any transaction with Comcast is likely to be subject to significant antitrust scrutiny as part of an attempt to consolidate its dominant position.”
