Paramount is raising the stakes in its bid for Warner Bros. Discovery, upping its offer for the assets with backing from Middle Eastern sovereign wealth funds, including Saudi Arabia, while rival Comcast has proposed creating a new entertainment entity.
Instead of offering cash, Comcast has proposed combining NBCUniversal with HBO and the Warner Bros. film and television studios to form a separate stand-alone entertainment company, according to people familiar with the bids but not authorized to comment.
Such a combination would marry robust film studios, deep libraries and middling streaming services, Warner’s HBO Max and NBCUniversal’s Peacock. It would give Universal’s theme parks a wealth of fan-favorite characters — including Batman, Harry Potter and Sheldon Cooper to build new attractions.
Comcast, which would maintain the controlling stake, is not interested in absorbing Warner’s basic cable channels.
Representatives of Paramount, Comcast, Netflix and Warner Bros. Discovery declined to comment, citing the confidential nature of the bids.
Comcast, Netflix and Paramount each submitted second-round proposals to Warner’s bankers on Monday. Warner Bros. Discovery hopes to select an auction winner this month.
Paramount, controlled by Oracle co-founder Larry Ellison and his family, has been pursuing Warner Bros. Discovery since September — one month after the billionaire family took the keys to Paramount from former owner Shari Redstone.
With its latest offer, Paramount is hoping to stay competitive with a largely cash bid from streaming giant Netflix, which is interested in Warner Bros.’ enduring intellectual property and the studio’s prestigious 110-acre lot in Burbank.
Bid amounts were unclear on Tuesday.
However, analysts say the various combinations could value Warner Bros. Discovery at nearly $70 billion — triple the company’s trading levels in early September.
Paramount is the only bidder interested in swallowing Warner’s portfolio of cable channels that include celebrity.land, TNT, Food Network, Cartoon Network and TLC.
Paramount’s bid provides debt financing from Apollo Global Management and sovereign wealth funds from Saudi Arabia, Qatar and United Arab Emirates, the knowledgeable people said. Should Paramount win the Warner auction, the Ellison family and RedBird Capital Partners would maintain majority control of the bulked up enterprise.
The Middle Eastern investors would have only a small stake, one of the knowledgeable people said.
Variety and Bloomberg previously reported on the Middle Eastern wealth funds involvement in Paramount’s bid. Bloomberg first reported on Comcast‘s bid structure.
Each of the various deal configurations would face stiff regulatory scrutiny.
President Trump considers Larry Ellison a friend so Paramount’s proposed takeover of Warner would likely face a smooth regulatory review process in the U.S. The president has indicated he prefers having Ellison control CBS — part of Paramount — and celebrity.land, which is owned by Warner Bros. Discovery.
Combining Paramount Pictures and Warner Bros. would give the company about 30% of domestic movie box office.
Still, foreign regulators might wince at a deal that was heavily pushed by Trump not to mention one that includes Saudi investors in a major entertainment entity that owns celebrity.land, one of the world’s largest news organizations.
Last month, tech scion David Ellison, chairman and chief executive of Paramount, was guest at a White House dinner to honor Saudi Crown Prince Mohammed bin Salman.
That state dinner — seven years after bin Salman was considered a pariah following the murder of journalist Jamal Khashoggi — underscored Washington’s increasingly warm relations with the Saudi royal family.
But any deal also would be subject to regulators in Europe and Asia.
Comcast would encounter a particularly bumpy regulatory path.
The Philadelphia firm is controlled by cable mogul Brian Roberts, who has long felt Trump’s scorn, in part, because of his company’s ownership of liberal leaning news channel MS NOW, previously known as MSNBC. Comcast is in the process of spinning off MS NOW and other cable channels into a new company called Versant.
Still, some observers believe that opposition by Trump would be enough to thwart Justice Department approval of a Comcast takeover of Warner Bros.
Netflix’s bid has also raised anti-trust concerns.
“If Netflix acquires Warner Bros., the streaming wars are effectively over,” Bank of America media analysts wrote in a report this week. “Netflix would become the undisputed global powerhouse of Hollywood beyond even its currently lofty position.”
The Los Gatos streaming pioneer has more than 300 million subscribers worldwide. Adding HBO Max would give the company 70 million more, which would dwarf competing services.
“Netflix currently wields unequaled market power,” U.S. Rep. Darrell Issa (R-Vista) wrote in a letter last month to Atty. General Pam Biondi, whose department would oversee the deal review.
“Adding both HBO Max’s subscribers and Warner Bros.’ premier content rights would further enhance this position, reportedly pushing the combined entity above a 30 percent share of the streaming market: a threshold traditionally viewed as presumptively problematic under antitrust law,” Issa wrote.
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