©Courtesy of Paramount Pictures 

Warner Bros. Discovery announced on Wednesday morning that it is giving a thumbs-down to Paramount’s hostile takeover bid, arguing that Netflix would be a better suitor. Paramount is offering $30 per share for the entire company, while Netflix is making a $27.75-per-share offer for Warner Bros. and HBO.

In a letter to its shareholders, Warner’s board declared that Paramount’s bid “provides inadequate value and imposes numerous, significant risks and costs on WBD.” Paramount countered by arguing that its takeover would offer “superior value and a faster, more certain path to completion than the Netflix transaction.”

The royal families of Saudi Arabia, Qatar, and Abu Dhabi are the financial sources backing Paramount’s offer, which has raised security questions in the minds of some lawmakers. In a letter to Warner Bros. Discovery, Reps Sam Liccardo and Ayana Pressley wrote that “This transaction raises national security concerns because it could transfer substantial influence over one of the largest American media companies to foreign-backed financiers.” In its SEC filings, however, Paramount claims that Saudi Arabia, Qatar, and Abu Dhabi have agreed to give up any voting rights if the transaction goes through.

On Tuesday of this week, Affinity Partners, which is Jared Kushner’s private equity fund, withdrew from the bidding process. Affinity, which is financed in part by Saudi money, stated: “With two strong competitors vying to secure the future of this unique American asset, Affinity has decided no longer to pursue the opportunity” and “We continue to believe there is a strong strategic rationale for Paramount’s offer,” which is set to expire on January 8, subject to extension.

Meanwhile, Netflix’s co-CEOs Greg Peters and Ted Sarandos have told employees that “We have a solid deal in place [that is] great for our shareholders, great for consumers, and a strong way to create and protect jobs in the industry.” Sarandos added that “The Warner Bros. Discovery Board reinforced that Netflix’s merger agreement is superior and that our acquisition is in the best interest of stockholders.

This was a competitive process that delivered the best outcome for consumers, creators, stockholders and the broader entertainment industry. Netflix and Warner Bros. complement each other, and we’re excited to combine our strengths with their theatrical film division, world-class television studio, and the iconic HBO brand, which will continue to focus on prestige television. We’re also fully committed to releasing Warner Bros. films in theaters, with a traditional window, so audiences everywhere can enjoy them on the big screen.”

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