The battle for the iconic film and media group Warner Bros. has erupted this week, and according to economist Dyaran Bansraj of Erasmus School of Economics, the outcome is far from certain, so he states in an interview with the Dutch public broadcaster NOS.
On Friday, 5 December, Netflix announced a bid to acquire Warner Bros. as well as streaming service HBO Max. According to reports, Netflix offered roughly 83 billion dollars for the deal. But shortly afterwards, rival Paramount Skydance emerged with a hostile bid of 108.4 billion dollars, which would also include Warner Bros.’ television division, with channels such as CNN and Discovery.
Bansraj warns: ‘Foreign financing could put the deal under pressure’
According to Dyaran Bansraj, who previously conducted research into major acquisitions, the origin of the money behind Paramount’s bid is significant. ‘With Paramount, the financing for the deal comes largely from abroad; the regulator may reject that,’ he says. This means that even if Paramount submits the highest offer, the takeover is by no means guaranteed to go ahead.
What could happen next?
If the Warner Bros. board believes Paramount’s bid is superior, it can still return to Netflix and ask them to submit a new offer. But even if Netflix steps back, this does not necessarily mean the end of their chances, Bansraj notes: ‘Shareholders could still opt for Paramount.’ At the same time, it is possible that the regulator blocks Paramount’s bid due to concerns about foreign influence on the media landscape.
The outcome of this contest may shape the future of a significant part of the global film and television market. A takeover by Netflix would reinforce the dominance of streaming, while an acquisition by Paramount Skydance (including television channels and international investors) could further globalise the media landscape, bringing with it political and regulatory tensions. According to Bansraj, it is not a given that the highest monetary bid will automatically result in a successful deal. Regulation, shareholders, and international investments all play a crucial role.
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Click here for the full article (in Dutch) on the website of NOS. For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, mobile: +31 6 53 641 846.
