Netflix’s co-chief executives issued a letter Monday expressing confidence in their ability to close Warner Bros. Discovery’s proposed $72 million acquisition, seeking to allay concerns that the deal would have a negative impact on the entertainment industry.
In a joint filing with the Securities and Exchange Commission, Greg Peters argued that combining the streaming giant with the historic film and television studio and its HBO Max service “will help drive our long-term growth by providing more choice and value for consumers and enabling the creative community to reach even larger audiences with our integrated distribution.”
This communication comes after raising the stake to $78 billion or a $30 share. Paramount is also looking to acquire WBD’s cable assets, including CNN and Discovery Networks. Warner Bros. Discovery has a vast library of popular and classic films, in addition to durable TV series such as “Friends,” which powers Paramount’s own streaming platform, Paramount+.
Paramount is trying to appeal directly to shareholders to put pressure on WBD as well. Paramount executives accused the company of not meaningfully engaging with multiple proposals submitted over a 12-week period.
The Hollywood community, particularly guild members, are not enthusiastic about the Netflix deal, fearing it will reduce the amount of movies and TV production produced and eliminate jobs.
Netflix shares, which closed at $93.77 on Monday, have fallen 15% in the past month amid Wall Street concerns about the viability of the company’s bid for Warner Bros. Discovery.
“We’ve seen this movie before, and we know how it ends,” the president of the Western Writers Guild of America said last week. “There’s a lot of promise that one plus one equals three. But it’s very hard to imagine how two giant companies, say Warner Bros. and Netflix, can maintain their current production levels.”
Peters and Sarandos counter that their proposal is “pro-consumer, pro-innovation, pro-worker, pro-creator and pro-growth.” The letter pointed to Nielsen data showing that Netflix, when combined with WBD, accounts for only 9% of all TV usage. YouTube is currently at 13%, but Paramount and WBD combined could bring it to 14%.
Executives argued that Netflix expected a hostile takeover from Paramount and that the company has “robust contracts in place” with the streamer. They also expressed confidence in getting government approval for the deal, citing the conventional wisdom that President Trump’s friendly relationship with Paramount CEO David Ellison and the investor’s father, Larry, would provide a lubricant for approval.
“We are confident we can cross the finish line and are really looking forward to what’s to come,” executives wrote. “We believe in this transaction, the value it creates, and are confident we will receive the necessary approvals to make it happen.
The deal requires approval from the Department of Justice. Trump said Netflix’s high share of the streaming market “could be problematic” for the company’s pursuits.
