00:00It feels like everyone's waiting, including Warner Brothers Discovery, for Paramount to raise its bid, but it's not doing that. Why not?
00:07It hasn't done that yet, and that's really the big question.
00:09I mean, things are essentially at an impasse here because Paramount has essentially brought the same offer now three, four times to Warner Brothers.
00:17Warner Brothers has rejected the same exact offer.
00:20Of course, in Paramount's most recent offer, before they reaffirmed it today, you know, they did offer to backstop the equity.
00:26Ellison backstopped the equity. Warner Brothers said yesterday that, you know, that was a great move in the right direction.
00:32There's still all these other issues with the offer, one being, you know, it's risky.
00:35It's a risky LBO, the biggest of all time. There's a lot of debt coming onto it, and it doesn't offer enough value relative to the Netflix deal.
00:42And so the question is, you know, why are they talking past each other?
00:46I mean, Paramount has said, you know, we've done everything.
00:49We've catered to Warner Brothers, and Warner Brothers isn't engaging.
00:52Warner Brothers has said, we've told you exactly what you need to do to win this, and you're not doing it.
00:55So there seems to be some miscommunication.
00:58There seems to be some miscommunication, and it feels like Warner Brothers is not helping itself,
01:02because in this latest reaffirmation of its offer, they actually said the cable channels that they are also including in their offer is worth nothing,
01:10which is kind of curious. Why do they want it then?
01:13And for them to say that, it does benefit them to say that the cable networks are worth nothing,
01:17because that means that their offer for streaming in studios, you know, is technically worth more than Netflix's,
01:23because Netflix's would be $27.75 plus $0 for, you know, what's going to be spun off to shareholders.
01:30But it is an interesting tactic.
01:31And I'll be interested to see, you know, what happens from here, because it seems like what they want to do is wait,
01:39and wait for Netflix's stock price to keep declining, wait for maybe regulators to come in and say,
01:45we don't think this is a good deal, and maybe wait for Netflix or Warner Brothers to get cold feet
01:49and then become more amenable to this deal with Paramount,
01:51or wait for shareholders to pressure Warner Brothers to take the Paramount offer.
01:55So how have shareholders responded so far? Because we did, this is a hostile bid from Paramount Skydance.
02:01Have shareholders tendered their offers?
02:03So the latest data we have, they put out, Paramount put out a press release a couple weeks ago
02:07saying that about 1% of shareholders had tendered their shares, so not very many at all.
02:14Now, often in these situations, people do wait till the end to really tender,
02:19so that could be part of what's holding things up.
02:21But Paramount has extended the tender offer now to January 21st,
02:25so there's more time for them to make the rounds with investors
02:28and, you know, convince them that they should go this way.
02:31But so far, we've heard some support, some shareholders, like Pentwater came out yesterday,
02:36sent a letter to Warner Brothers and said, you know, we really want you to engage, why aren't you?
02:40Other shareholders have said, why would they do that unless Paramount raised its bid?
02:44Okay, so we're all waiting. What's the next thing on the calendar?
02:46What's the next thing that's going to move this saga along?
02:48So there's the shareholder vote, and then there's stuff that's not necessarily scheduled,
02:53but that we'll be waiting for.
02:55You know, maybe Paramount will decide to raise its bid,
02:57or maybe we'll get some signals out of regulators about how they're feeling about the existing deal
03:02that is on the table or the Paramount deal.
03:04Maybe Paramount will amend its offer.
03:06You know, there's a lot that could happen,
03:08but the one true catalyst that we know of is the shareholder vote.
03:12And Netflix has not said anything, right?
03:14It's stayed pretty quiet through this.
03:15Netflix yesterday basically applauded Warner Brothers' board for reaffirming their existing deal
03:22and for saying that the Paramount recent offer was not as, you know, not on equal footing to theirs.
03:27But other than that, yeah, they've been pretty quiet.
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