00:00The back and forth continues. Give us an update here. Yeah. So for those who haven't been paying extra close attention. Paramount has now made seven or eight bids for Warner Brothers Discovery. This was the latest since it went public with its offer a couple of weeks ago. The main difference with this bid was that it kind of addressed concerns about whether Larry Ellison who along with his son David controls Paramount was fully backstopping the bid which he is.
00:28But Warner Brothers says it is still not enough. They haven't made a final decision. The board will meet next week. They'll likely be a filing next week when they make that decision. But Paramount hasn't really increased its offer in a few weeks. It keeps amending it by sort of tweaking things around the margins. And I think the Warner Brothers board is waiting to see if Paramount wants to offer more money because they still feel like their deal with Netflix is better. Yeah. So Lucas why not just say that then. Why not just say this is not valuing the company highly enough. Give us more money. Why add the part that they're not really sure about
00:58the financing. And it seems like that's a little bit aggressive to you know a group of bidders that we're already planning on potentially launching a lawsuit over this. Yeah I mean they've they've I think tried to enumerate a number of concerns about the Paramount bid so that it gives them cover what given the threat of lawsuits.
01:20And that Paramount has been on kind of this public campaign. Right. They've had one of their big shareholders Jerry Cardinale went on a very popular podcast and talked about why he thought that the Warner Brothers board was making the wrong decision.
01:32They have appealed directly to shareholders. They threatened lawsuits. So Warner Brothers has has created a pretty substantive paper trail laying out many concerns to explain.
01:41And it gives them it gives Paramount kind of more to do. They don't understand why I think Paramount's not just saying we'll match. We'll kind of agree to everything Netflix has agreed to.
01:50And here's even more money. That's that seems to be where Warner Brothers is at right now. I mean do we have any indication Lucas of what really Warner Brothers wants and what they think.
01:57Is it just coming down to money or is it actually who is the buyer. Money is the biggest thing.
02:03They you know the the Paramount offer and the Netflix offer are fairly comparable. A lot of it depends on how much value you assign to the cable networks that Warner Brothers owns.
02:12That's you know CNN TNT among many others. Warner Brothers thinks they're worth more than Paramount. Hence the disagreement.
02:19I think there's some concerns about Paramount as a buyer because look Paramount is a very small company. Right.
02:24If they didn't have the Ellison's behind them this would not be a deal that it could it could contemplate. But it does have one of the wealthiest families in the world behind them.
02:35So that and that helps get the deal done. But what does that mean or I guess I should say what does Paramount look like at the end of it.
02:42It is still a company sitting on a bunch of kind of troubled cable networks and some some studio and some streaming services that are kind of in the third tier.
02:50Netflix you know you're getting. You're getting the most valuable company in the entertainment business. Some one that's been run very well.
02:56And so I think they feel good about that deal. There are also some concerns about the limitations that Paramount would place on Warner Brothers in the interim period.
03:06If they were to do that deal limitations around what they could do with their debt. We saw this play out actually with the Ellison's in Paramount where they kind of got in some fights with the leadership at Paramount
03:14including and also with the creators of South Park over what they should do.
03:18It's up to a third party I guess to decide if a lot of these are window dressing and it's really just all about the money.
03:25I would assume that you know at the end of the day most of these deals are about who offers us the most money.
03:29If Paramount came and offered $32 a share, $34 a share, $35 a share they'd get the deal done.
03:35I was just going to say it feels like you know they want to go with Netflix and they just will go with Netflix.
03:41But I guess if Paramount there's a price for everything right. Paramount will be able to do this deal if it meets a certain price goal.
03:48But where will where will the bidding stop because Netflix could probably raise some more money to for this.
03:54Well, I think that's one of the the kind of concerns or things that Paramount is trying to work through right.
04:00If they are going to come back and offer more money, how do they do that in a way where they don't just end up in another bidding war that they lose right.
04:08They I think they felt like they were they've long felt like they were the favorite to win this.
04:12They were surprised by how aggressively Netflix came after it.
04:16They certainly share your belief that the Warner Brothers board just prefers the Netflix offer.
04:22And so if you're a Paramount and you come back and you only increase your bid by two or three dollars a share, that's something that Netflix could probably match.
04:29If you have to increase if you increase it by even more, some of those Netflix shareholders might balk and say, why are we doing this?
04:36Because you've already seen the share price of Netflix go down over the last few weeks as investors are worried about how much they're doing this deal and what this deal means for the company.
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