A private equity firm associated with Jared Kushner, President Donald Trump’s son-in-law, has withdrawn its financial support for Paramount’s acquisition bid for Warner Bros. Discovery. The firm announced this decision on Tuesday, indicating a change in the investment landscape surrounding the competitive bids for Warner Bros.
Shortly after Warner Bros. agreed to be acquired by Netflix in early December, Paramount launched its own bid to acquire Warner Bros. Discovery, aiming to appeal directly to Warner’s shareholders with a higher offer of $30 per share, compared to Netflix's $27.75 per share. Paramount’s strategy is to bypass the Warner management in a bid for greater shareholder engagement and support.
As one of the “big five” Hollywood studios, Warner Bros. holds significant assets, including Warner Bros. Pictures, HBO, the DC Comics universe, and the highly lucrative Harry Potter franchise. Experts suggest that acquiring Warner could either reinforce Netflix’s dominance in the streaming industry or establish Paramount as a formidable competitor. The potential acquisition is seen as a key move that could reshape the dynamics of the streaming wars.
Paramount, recognizing its smaller size relative to Netflix, cited Warner’s lack of meaningful engagement regarding previous offers as the impetus for its direct approach. In an effort to win over Warner’s shareholders, Paramount publicly detailed its new offer and provided an option for them to tender shares directly at a fixed price. The bid also includes Warner’s entire portfolio, encompassing cable networks such as CNN, which Netflix excluded from its offer.
In an added layer of complexity, Paramount argued that its offer might be more favorably viewed by regulatory bodies during the Trump administration. President Trump has expressed concerns that the merger of Warner and Netflix could create market share challenges due to the size of the companies involved.
Kushner's withdrawal of financial backing from his firm, Affinity Partners, represents a significant blow to Paramount. The specific amount that Affinity Partners was contributing to the offer has not been disclosed in Paramount’s recent SEC filings. In a statement, Affinity Partners noted, “With two strong competitors vying to secure the future of this unique American asset, Affinity has decided no longer to pursue the opportunity.” The firm acknowledged that the dynamics surrounding the investment had changed notably since its initial involvement in October, though it maintained that there remains a solid strategic rationale for Paramount’s bid.
Despite Kushner's withdrawal, Paramount's bid continues to receive support from wealth funds linked to three Gulf states, reportedly including Saudi Arabia, Abu Dhabi, and Qatar. The oversight of Paramount has recently transitioned to David Ellison, a figure connected to a significant donor to Trump, but the former president has critiqued the Ellison family regarding their treatment by CBS News on the program “60 Minutes.” Trump remarked on social media, “If they are friends, I’d hate to see my enemies!”
Warner Bros. is in the process of reviewing Paramount’s offer and is expected to provide guidance to its shareholders on whether the proposal represents a superior option compared to the ongoing negotiations with Netflix. The outcomes of these bids will likely have far-reaching implications for the entertainment industry and the competitive landscape of streaming services.
