Warner Bros. Discovery says it’s worried there could be an exodus of employees if David Ellison’s Paramount Skydance beats out Netflix for control of the company.
Paramount has promised investors big cost savings — and WBD says employees may not stick around to find out whether their jobs are safe.
In the past few weeks, Paramount has addressed many of the issues WBD’s board had with its bid, but this one has stuck around.
“WBD may experience more substantial losses of employees and talent during the pre-closing period” if it picked Paramount’s bid over Netflix’s, the WBD board of directors wrote in an SEC filing released on Tuesday morning. It flagged the same issue in a January filing.
That’s because Paramount has promised investors $6 billion in so-called “synergies,” or cost savings. WBD’s board said these savings are “likely to come from workforce/headcount reductions,” especially “given the overlapping nature of the studio, streaming and linear networks businesses” of Paramount and WBD.
Joe Bonner, a media analyst at Argus Research, said layoffs are to be expected during mergers or acquisitions.
“I can’t think of a case where a management argued for or against a merger deal based on employee layoffs or not,” Bonner said.
Bonner added that “WBD’s case is somewhat unique in that its business depends on talent that can walk out the door and who just might not want to work for the Ellisons.” Bonner cited the example of Anderson Cooper, who is leaving CBS News’ “60 Minutes” program after nearly 20 years. (Cooper did not mention the Ellisons in his statement about his exit.)
Although WBD chose Netflix’s acquisition offer for its studio and HBO assets, the company is formally giving Paramount one more chance to raise its bid for the entire company, after nine previous offers.
Netflix has told shareholders it expects to save between $2 billion and $3 billion if it wins and takes over assets that include HBO, HBO Max, and WBD’s studio. While the streaming giant may also lay off staffers, it says much of its savings would come from the licensing costs it would no longer have to pay out to WBD.
“We’re not cutting jobs — we’re making jobs,” Netflix co-CEO Ted Sarandos said at the UBS media conference in mid-December.
A Paramount spokesperson declined to comment.
Netflix’s winning bid was $27.75 per share for the most valuable parts of WBD, while Paramount insists its $30-per-share proposal for the whole company, including WBD’s cable networks, is a better deal.
Both bids are all cash, so the tug of war may come down to how much WBD’s TV networks are worth — and how high Paramount bids.
