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Democrat lawmakers are threatening to block Paramount Skydance's hostile takeover bid of Warner Bros. Discovery, claiming it received backing from Saudi, Qatari and United Arab Emirates sovereign wealth funds, as well as the President Donald Trump's son-in-law Jared Kushner's private equity firm, posing a national security threat.
Reps. Sam Liccardo of California and Ayanna Pressley of Massachusetts sent a letter to Warner Bros. Discovery's board and Treasury Secretary Scott Bessent on Wednesday (December 10) raising concerns over the potential risks of foreign entities gaining control of the American entertainment conglomerate.
“Future Congresses … will review many of the decisions of the current administration, and may recommend that regulators push for divestitures, which would undermine the strategic logic of this merger,” the letter states via Semafor. “We urge the Board to weigh these national security and regulatory liabilities in evaluating a transaction burdened by uncertain but potentially extensive mitigation obligations, foreign influence risks, or adverse regulatory action.”
The filing claims that the three Middle Eastern sovereign wealth funds and Kushner's firm “agreed to forgo any governance rights — including board representation — associated with their non-voting equity investments.”
Paramount, which was widely expected to be the frontrunner to purchase Warner Bros. Discovery, is now going directly to shareholders with an all-cash offer said to be worth $30 per share, equating to $108.4 billion in enterprise value, which exceeds the previously announced $27.75 per share deal Warner Bros. Discovery announced it had reached with Netflix on Friday (December 5).
"WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company. Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares."
Paramount's offer is "backstopped by the Ellison Family and RedBird Capital in addition to debt fully committed by Bank of America, Citi and Apollo," according to a news release.
"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. We believe they will benefit from the enhanced competition, higher content spend and theatrical release output, and a greater number of movies in theaters as a result of our proposed transaction. We look forward to working to expeditiously deliver this opportunity so that all stakeholders can begin to capitalize on the benefits of the combined company," Ellison added.
Netflix previously announced that they entered a "definitive agreement" to acquire Warner Bros. Discovery, Inc., which includes its film and television studios, HBO Max and HBO, on Friday. The total enterprise value is approximately $82.7 billion, with an equity value of $72 billion and cash and stock valued at $27.75 per share, pending approval as one of the most sweeping and consequential mergers in modern Hollywood's history.
The merger doesn't, however, include Warner-owned channels such as CNN and TNT.
Warner Bros Discovery announced it was up for sale in a news release shared in October. The company said it was undergoing a "review of potential alternatives" and had received "unsolicited interest from multiple parties" for purchase.
Warner Bros Discovery's board of directors said it would evaluate strategic options, "which will include continuing to advance the Company's planned separation to completion by mid-2026, a transaction for the entire company, or separate transactions for its Warner Bros. and/or Discovery Global businesses," according to the news release.