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Paramount’s major acquisition of CNN parent company Warner Bros. Discovery is poised to clear a crucial hurdle later this week.\n <\/p>\n
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Warner will hold a special meeting for shareholders Thursday morning to vote on the $110 billion bid.\n <\/p>\n
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The deal is expected to be approved, as the company’s board of directors and multiple proxy advisory firms urge shareholders to vote in favor of it, moving Paramount closer to acquiring a much larger rival.\n <\/p>\n
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For shareholders, the math may be simple. A year ago, WBD was trading at about $8 a share, so Paramount’s $31 a share offer comes as a relief.\n <\/p>\n
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But Paramount CEO David Ellison’s ambitions to combine his company with WBD remain the subject of controversy and concern within and outside of Hollywood.\n <\/p>\n
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Thousands of actors, directors, writers and other entertainment professionals signed an open letter opposing the deal, arguing that further consolidation of the media industry would harm creators and consumers.\n <\/p>\n
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Opponents are hoping that state-level antitrust regulators will take action. Several Democratic state attorneys general also said they were investigating how the deal would affect media markets.\n <\/p>\n
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But Paramount executives are confident they will receive all the necessary approvals to complete the deal in the coming months. In fact, they’re betting on it. The terms of the deal include a so-called “ticking fee,” which would increase the price per share if the deal doesn’t go through by September 30.\n <\/p>\n
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“Our goal is to build a leading media and entertainment company that strengthens competition, better serves the creative community, and delivers more compelling stories to audiences around the world,” Ellison told advertisers Tuesday night.\n <\/p>\n
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Ellison added, “We’re doing just that by investing in great content, attracting and empowering great talent both in front of and behind the camera, and equipping our employees with cutting-edge technology that enables them to do their best work.”\n <\/p>\n
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In late February, Paramount won the bidding war for WBD after Netflix refused to compete with Paramount’s latest bid.\n <\/p>\n
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Netflix co-CEO Ted Sarandos later suggested Paramount had been an “unreasonable” bidder and said Netflix walked away without overpaying for the Warner Bros. studio, HBO Max streaming service and other trophy assets.\n <\/p>\n
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These Warner assets would turn Ellison, the son of Oracle billionaire Larry Ellison, into one of the world’s most powerful media moguls.\n <\/p>\n
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He has been at this point for quite some time and last year succeeded in taking control of Paramount from the Redstone family by merging it with his own production company, Skydance Media.\n <\/p>\n
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He then almost immediately approached WBD CEO David Zaslav with a takeover offer, which WBD repeatedly rejected until the stock price rose above $30 per share.\n <\/p>\n
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In the weeks since Paramount’s victory, management has begun the integration planning process with WBD, but the two companies will still have to operate separately for the time being.\n <\/p>\n
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In response to an open letter opposing the merger, Paramount argued that the partnership “will enhance both consumer choice and competition, creating greater opportunity for creators, viewers, and the communities in which they live and work.”\n <\/p>\n
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At last week’s box office convention, Mr. Ellison reiterated his commitment to release at least 30 new movies a year in theaters through both Paramount and Warner Bros. studios.\n <\/p>\n
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However, performing the calculations can be difficult. The Paramount-WBD merger will leave the company in debt, raise red flags with credit agencies, and almost certainly lead to mass layoffs by management to cut costs.\n <\/p>\n
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After Thursday’s WBD shareholder vote, Ellison will travel to Washington for a dinner “honoring President Trump’s White House and CBS White House correspondents.” The event will coincide with the White House Correspondents’ Association annual dinner this Saturday, which Donald Trump will attend for the first time as president.\n <\/p>\n
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The Paramount soiree, first reported by Lachlan Cartwright’s Breaker newsletter, has drawn heavy criticism, with some merger opponents planning a protest outside the event on Thursday night.\n <\/p>\n
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We do not respond to inquiries regarding events. However, it is easy to see a connection between the dinner plans and the ongoing regulatory review of the WBD contract.\n <\/p>\n
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Paramount’s warm relationship with President Trump contributed to the widespread perception that the administration had its blessing on the deal. FCC Chairman Brendan Carr said last month: “I think this is a good deal and I think it should be done fairly quickly.”\n <\/p>\n
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But Democratic state attorneys general think differently. The state auditor’s office is considering whether to challenge Paramount-WBD on antitrust grounds.\n <\/p>\n
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“This is not a done deal,” actress Jodie Sweetin, known for her role as Stephanie on “Full House,” told CNN International’s “Quest Means Business” earlier this week.\n <\/p>\n
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\u201cYou can still fight this issue, and really the biggest and most important place to fight it is at the state attorney general level,\u201d Sweetin said.\n <\/p>\n
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A coalition of state AGs recently succeeded in blocking Nexstar’s acquisition of a local television station owned by rival Tegna.\n <\/p>\n
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The U.S. government may scrutinize the funding behind the deal. Paramount’s financing includes support from state investors in Saudi Arabia, Abu Dhabi and Qatar.\n <\/p>\n
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But in a regulatory filing earlier this month, Paramount said the sovereign wealth fund had no governing powers and its relatively small stake could not automatically trigger a national security review.\n <\/p>\n
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European regulators are also keeping a close eye on Paramount. In the UK, the Competition and Markets Authority is inviting public comments and has indicated it will soon launch a stage one investigation.\n <\/p>\n
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From Paramount’s perspective, there are no serious antitrust arguments against the acquisition. For example, HBO Max and Paramount+ combined won’t be as big as Netflix.\n <\/p>\n
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Additionally, a person close to the deal said: “We have been in discussions with regulators for many months already.”\n <\/p>\n
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Analysts believe there is a good chance Paramount will make concessions to regulators, which could lead to relatively quick approval of the deal.\n <\/p>\n
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In the EU, regulators could prompt Paramount to “sell smaller European cable brands, divest niche channels or spin off certain regional assets,” Wall Street research firm MoffettNathanson said in an analyst note last month.\n <\/p>\n
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Alden Abbott, who served as the FTC’s chief legal officer during the Trump administration’s first term, wrote in a blog post that the oversight of Paramount WBD was “not a big deal.”\n <\/p>\n
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He wrote that the agreement “does not provide a clear mechanism for anticompetitive harm and appears unlikely to enable the exercise of market power.” \u201cAt the same time, it offers plausible efficiencies that could enhance competition with larger, better-capitalized rivals.\u201d\n <\/p>\n
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Those competitors include not only Netflix, but also big tech companies like Google, Apple, and Amazon.\n <\/p>\n<\/p><\/div>\n
#Warner #Bros #Discovery #shareholders #set #vote #Paramounts #mega #deal #CNN #Business<\/p>\n","protected":false},"excerpt":{"rendered":"
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