Studio fight: Hostile takeovers and egos are back

If there were any doubts that hostile corporate takeovers, which went into a decline after their heyday in the 1980s, are back, the $78-billion hostile bid by Paramount for Warner Bros.

- MICHAEL HILTZIK COLUMNIST

Discovery should put them to rest.The bid by Paramount, which is controlled by the family of billionaire Larry Ellison, has many of the features of hostile corporate bids of the past. What the pursuers typically bring to the table are boatloads of money, typically well into the billions, and ego.

It’s the second factor that often keeps takeover bids alive long after the proposed deals lose their economic rationality. Once the bidders state their intentions publicly, they become increasingly reluctant to be seen as losers. Indeed, the drama of the dealmaking often exceeds its dollars-and-cents logic.

The drama is at least part of what has captivated the business and entertainment worlds about the battle for Warner. Paramount’s hostile bid, which was formally announced Monday, has thrown a monkey wrench in to a deal for much of Warner Bros. Discovery submitted by Netflix —which received the blessing of the Warner board only four days earlier. The board is tasked with weighing the comparable values of the two offers for shareholders. The Netflix bid is for only part of the company — Netflix had offered $72 billion — or $27.75 a share — for a big chunk of the company: the Warner Bros. film and television studios, which hold the rights to Batman and Harry Potter, among the company’s iconic assets; its Burbank lot; and HBO and HBO Max.

The rest of Warner Bros. Discovery — Warner's basic cable channels, including CNN, TBS, Food Network and TLC—would be spun off as a separate company, which Warner estimates would be worth $3 to $4 a share, making the total value of the bid more than $31 a share.

Paramount's bid stands currently at $30 per share, for the entire company.

Netflix’s apparent victory had brought its stock price to $103.22 on Dec. 4. Since the announcement of Paramount's bid, it has fallen by about 9%, suggesting that shareholders are rattled by the possibility that the streaming service may lose out.