Paramount Stock Up 20% On Warner Deal; Democrats Warn Of 'Vigorous' Investigation

Investors loved the news that Paramount Skydance (PSKY) had beat Netflix (NFLX) in the bidding war for Warner Bros. Discovery (WBD).

On Friday, Paramount shares rose 20%, after Netflix announced it would not match the former’s offer of $31 a share to buy Warner Bros. Netflix’s withdrawal cleared the way for a Paramount-Warner Bros. deal.

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The all-but-approved merger — the Warner Bros. board still has to vote to officially accept Paramount’s offer — now sets up a partisan fight about whether to allow the deal. In the meantime, investors seem to think Warner Bros. went to the right company.

Shares of Paramount soared after it finally got the merger it coveted. Meanwhile, Netflix jumped around 14%, likely because investors were glad it didn’t get dragged into overpaying for Warner Bros. Netflix shares jumped earlier this week when the Warner Bros. board signaled it believed Paramount’s offer was more competitive.

Warner Bros. fell around 2%.

Democrats Warn Paramount, Warner Bros.

But with Paramount seeming to have won the corporate tug-of-war for Warner Bros., Democratic officials were already decrying the prospective deal.

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Senator Elizabeth Warren, who is often a vocal legislator on competition issues, warned against the deal.

“A Paramount Skydance-Warner Bros. merger is an antitrust disaster threatening higher prices and fewer choices for American families,” she said in a statement.

Democratic officials in California, home of the entertainment industry, cautioned against considering the merger a done deal.

“These two Hollywood titans have not cleared regulatory scrutiny — the California Department of Justice has an open investigation, and we intend to be vigorous in our review,” California Attorney General Rob Bonta said in a statement.

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Earlier this week, several Democratic Senators, including Warren and Senate Minority Leader Chuck Schumer, sent Paramount CEO David Ellison a letter warning him to keep records of communications with President Trump, his family members, or White House officials.

On Friday, one of the letter’s signatories, Cory Booker, the top Democrat on the Senate Judiciary antitrust subcommittee, asked Ellison to testify before Congress.

Paramount’s Ties To White House

The criticism from Democratic officials comes because of Paramount’s alleged close ties to President Donald Trump. Larry Ellison, the father of David Ellison and the cofounder of Oracle, is a longtime Republican donor, who is reportedly close to the White House. Trump has praised both Ellisons in the past, calling them “great.”

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When Netflix was still the prospective buyer for Warner Bros., Trump demanded it fire former Democratic official Susan Rice from its board. On Thursday, before Paramount won out, Netflix co-CEO Ted Sarandos went to the White House to meet with administration officials about the then-planned merger.

However, the deal fell through. Netflix pulled out, rather than resubmit an improved offer for Warner Bros., which it had the right to do.

“This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” Netflix said in a statement.

When Paramount boosted the offer to $31 a share, it meant the “deal is no longer financially attractive,” Netflix added. Its offer had been for $27.75 a share for only Warner Bros.’ studio and streaming businesses.

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