Paramount goes hostile in bid for Warner Bros., challenging a $72 billion offer by Netflix

Paramount said its decision to go hostile came after it made several earlier offers that Warner management "never engaged meaningfully" with following the company's October announcement that it was open to selling itself.

In its appeal to shareholders, Paramount noted its offer also contains more cash than Netflix's bid — $18 billion more — and argued that it's more likely to pass scrutiny from President Donald Trump's administration, a big concern given his habit of injecting himself in American business decisions.

Over the weekend, Trump said the Netflix-Warner combo "could be a problem" because of the size of the combined market share and that he planned to review the deal personally.

For its part, Netflix says it is confident Warner will reject the Paramount bid and that regulators, and Trump, will back its deal, citing multiple conversations that co-CEO Ted Sarandos has had with him about the streaming company's expansion and hiring.

"I think the president's interest in this is the same as ours, which is to create and protect jobs," Sarandos said Monday at an investor conference.

Battle draws political attention in Washington

The fight for Warner drew strong reaction in Washington, with politicians from both major parties weighing in on the likely impact on streaming prices, movie theater employment and the diversity of entertainment choices and political views.

Paramount, run by David Ellison, whose family is closely allied with Trump, said it had submitted six proposals to Warner over a 12-week period before the latest offer.

"We believe our offer will create a stronger Hollywood. It is in the best interests of the creative community, consumers and the movie theater industry," the Paramount CEO said in a statement. Ellison added that his deal would lead to more competition in the industry, not less, and more movies in theaters.

A regulatory document released Monday suggested another possible Paramount advantage to win over Trump: An investment firm run by Trump's son-in-law Jared Kushner would be investing in the deal, too.

Also participating would be funds controlled by the governments of three unnamed Persian Gulf countries, widely reported as Saudi Arabia, Abu Dhabi and Qatar. Trump's family company has struck deals this year for buildings and resorts that bear his name in Saudi Arabia and Qatar, partnering in the former with a company closely tied to the government and in the latter with the government fund itself.

Also possibly in Paramount's favor are recent changes at CBS News since its October purchase of the news and commentary website The Free Press. The site's founder, Bari Weiss, who has a reputation for fighting "woke" culture, was then installed as editor-in-chief in a signal Ellison intended to shake up the storied network of Walter Cronkite, Dan Rather and "60 Minutes," long viewed by many conservatives as the personification of a liberal media establishment.

Trump is a wild card

Still, Trump is a wild card given his tendency to make decisions based on gut and his personal mood.

On Monday, he lashed out at Paramount for allowing "60 Minutes" to interview his ally-turned-enemy Rep. Marjorie Taylor Greene, writing on social media that "THEY ARE NO BETTER THAN THE OLD OWNERSHIP."

The drama surrounding control of Warner began Friday when Netflix made the surprise announcement that it had struck a deal with its management to buy the Hollywood giant behind "Harry Potter" and HBO Max.

The cash and stock proposal was valued at $27.75 per Warner share, giving it a total enterprise value of $82.7 billion, including debt that will be assumed in the deal. By contrast, the Paramount offer is for $30 per Warner share, and worth $108 billion, included assumed debt. Paramount's offer is set to expire on Jan. 8 unless it's extended.

But comparing the two deals is complicated because they are not buying the same thing. The Netflix offer, if it goes through, will only close after Warner completes its previously announced separation of its cable operations. Not included in the deal, which is unlikely to close for at least a year, are networks such as CNN and Discovery.

The federal government has the authority to kill any big media deals if it has antitrust concerns, but such matters are usually left to experts at the Department of Justice. In his decision to get involved personally, Trump has decided, as he has with other government norms. to make a sharp break with precedent.

That worries Usha Haley, a Wichita State University specialist in international business strategy, who noted that Ellison is the son of longtime Trump supporter Larry Ellison, the world's second-richest person.

"He said he's going to be involved in the decision. We should take him at face value," Haley said of Trump. "For him, it's just greater control over the media."

But others are uncertain how big a role Trump will play.

John Mayo, an antitrust expert at Georgetown University, said the scrutiny will be serious whichever offer is approved by shareholders and goes before the DOJ, and that experts there will keep partisanship out of their decisions despite the politically charged atmosphere.

"That may affect at least the rhetoric that occurs in the press," he said, "though I doubt it will affect the analysis that occurs at the Department of Justice."

Shares of Paramount surged 7% while those of Netflix fell 4.5% in afternoon trading Monday. Warner Bros. rose 3.5%.