Paramount is very irritated with the way Warner Bros. Discovery is handling a possible sale and wants everyone to know that it won’t go smoothly if Netflix or Comcast are the winning bidder.
The David Ellison Company is pushing the regulatory angle hard, insisting that it is the only suitor with “a clear path to closure, based on decades of legal precedent.” In a letter from his lawyer to WBD, he insists that the competing offerings from Netflix and Comcast “both present serious problems that no regulator will be able to ignore.” That letter, submitted with its latest offer Monday, when the second round of offers was due, is separate from a missive sent yesterday calling WBD’s sales process unfair.
Letters from Par’s Melrose lot to WBD’s Burbank lot indicate that a filing or hostile takeover could be considered if and when WBD chooses a buyer other than Paramount, according to industry insiders.
“Netflix’s dominance in streaming and Comcast’s presence as a major player in broadband and MVPD each present unique and serious antitrust concerns that ensure a lengthy and costly review process and jeopardize the completion of either deal. Paramount is the easy route and its outcome is assured,” the letter states.
It mainly focused on the giant streamer. “The simple truth is that a deal with Netflix as a buyer will probably never be done,” he said. “Netflix is the only remaining big tech company that hasn’t faced serious global antitrust action, but attempting to acquire WBD’s assets will change that.”
It included charts and statistics detailing Netflix’s streaming dominance in the United States and abroad, which would be greatly expanded with the addition of HBO Max. He said that while Netflix might attempt to define a market that includes social media and short-video platforms like YouTube, Facebook and TikTok, that strategy is “doomed to fail” with regulators. The letter referenced a presentation of said argument to the WBD team last weekend.
He also noted that a Netflix-Warner Bros. deal. would reduce the number of films intended for wide theatrical release, “further driving consumers away from theaters and toward streaming and hurting theaters that are already struggling.”
Netflix reportedly said it would continue to honor WBD’s theatrical commitments, but Paramount called the statements “inherently time-limited, transactional, and defensive — intended to blunt an obvious theory of harm that law enforcement officials in the United States and outside the United States are expected to pursue.”
“Paramount provides WBD with a clear path to closure worldwide. There is no market segment in the United States or abroad where the parties’ combined share even approaches the 30 percent threshold that prompts regulators and competition authorities to presume a transaction is illegal. Rather, the transaction will create a much more robust competitor against the dominant streaming company, Netflix, while creating new opportunities for creators and talent. A combination of Paramount and WBD will therefore offer WBD shareholders the quickest and safest route to unlocking value,” Para said.
The WSJ, which was first to report on the second letter, said WBD had requested a third round of offers by today, although some are calling the situation a little more fluid. WBD hoped to find a buyer for all or part of the business by the end of the year. Paramount is taking on all of Warner Bros., including the global linear networks. Netflix and Comcast are in the running to buy streaming from Warner Bros. Studios and HBO Max.
On Comcast, Par wrote that “its presence as a leading broadband and MVPD player also has significant advantages.”
antitrust concerns. Antitrust Enforcement Has Changed and the Regulatory Path Difficult Comcast
faced during the acquisition of NBC Universal with a tortured and controversial consent decree.
will not be available under this or any subsequent administration.
Comcast and Warner both own major film and television studios. They have few other overlapping businesses, as the Philadelphia-based media giant is in the process of spinning off its cable networks into a new company, Versant. It is a major theme park owner and offers a broadband and video provider.
Dominic Patten contributed report
