Hostile All-Cash Bids To Watch…
Word on the streets is that…
“Paramount made a hostile all-cash bid of $30 per share for Warner Bros. Discovery, bypassing the board after it favored Netflix’s $72 billion deal. Led by CEO David Ellison, the offer values WBD at $108.4 billion, a 139% premium over its September stock price. It also promises $18 billion more cash than Netflix’s cash-and-stock deal, backed by Bank of America, Citigroup, and Apollo. Paramount claims its bid faces fewer regulatory hurdles, while Netflix’s merger would create a streaming giant with 43% of global subscribers, raising antitrust concerns.”
These deals are indeed significant and should be closely monitored, not for the reasons being reported. Similar deal flows are likely to occur in the music recording industry and other media sectors like journalism.
The issue lies not only in the size of these deals or the acquisition of intellectual property rights, but also in the assumption made. Before Netflix, there was Blockbuster videos. I used to work for Blockbuster as an assistant manager. The myth and legend is that Netflix’s founders attempted to sell to Blockbuster, but they declined the deal, believing the startup was incapable of challenging them. Blockbuster embarrassingly went out of business, and Netflix became Netflix. However, it appears Netflix who wisely learned from that lesson is now taking what is considered hostile actions to secure its future as they are in their Blockbuster Videos Era.
The problem lies in their assumption, and I believe I understand what they are banking on. I know what they are betting on, where they are placing all their chips, and nothing could be further from the truth. Let’s observe this situation closely and learn how cash gets moved around before the shit show.
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