SOTS 2nd Hour: Netflix-Warner Deal Heats Up - The Latest, Plus IMAX CEO's Predictions, & LIVE: IBM CEO 12/8/25

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Sara Eisen (1:09)

Good Monday morning again. Welcome to Squawk on the Street. I'm Sara Eisen with David Faber and Mike Santoli. We are live, as always, from Post 9 of the New York Stock Exchange. Carl has the morning off. Coming up this hour, breaking developments this morning, as Paramount launches a tender offer for Warner Bros. Discovery, following last week's bid from Netflix. We'll tell you what Paramount Skydance CEO, David Ellison, just told David about the offer. And speaking of deals, IBM says it's buying Data Company Confluent in an $11 billion acquisition and a move to boost its position in the AI race. We'll talk to IBM CEO Arvind Krishna, first on CNBC, about the news. And a key Supreme Court hearing taking place this hour in a test of presidential power that could have implications for the Fed. We'll explain straight ahead.

David Faber (1:52)

All right, let's start off, though, with that breaking news. We got at the top of the hour, of course, involving Warner Bros. Discovery. Paramount, as Sara just told you, has launched an all-cash, $30 a share tender offer to acquire the company. What this has the effect of doing, of course, is putting to shareholders what they believe was a superior offer to the one that was accepted by Warner Bros. Discovery, namely from Netflix, valued at some $27.75 a share, 85% of which was cash, the remainder in stock. By the way, I do want to point out, as you take a look at Netflix, it is actually below the bottom of the collar. So there is ever so slightly some erosion in the overall value of the deal. Given $3.50 of it is made up of stock, but there's a collar, but once you get to the bottom or below, the ratio stays the same, and so there is a bit of erosion there. But that's not what David Ellison joined me to talk about this morning. What he wanted to talk about, of course, as you might imagine, was his feeling that they were disadvantaged throughout the process and that in fact, when you look at both companies from a competitive standpoint in terms of what a Netflix ownership of Warner Bros. would look like from an antitrust perspective versus Paramount, not to mention, of course, simply what Ellison says is the pro-competitive nature of their potential deal.

David Ellison (3:13)

Our offer is $30 a share, all cash, $41 billion in equity that's backstopped by the Ellison family in Redbird, $54 billion in debt with commitments from Citi, Bank of America, and Apollo. We have faster regulatory certainty to close, and our deal is pro-consumer, it's pro-creative talent, it's pro-competition, and we believe that when you actually, to further contextualize, there are $30 in cash, or sorry, $30 a share is basically $17.6 billion in cash more than the $23 in share that they signed up.

David Faber (3:50)

Right. Well, you're paying for global networks, their deal doesn't involve paying for global networks, which are traded as its public company, which by the way also figures very prominently here in trying to determine what the overall value of the respected deals are, because there are 27.75, including obviously the stock portion of their deal, but it also includes, well, what's global networks? Is it a $2 stock? Is it a $4 stock? What do you see? Because that can go a long way in terms of at least determining why the board may have said, no, we think Netflix is superior.

David Ellison (4:22)

So respectfully, we think that basically that's valued at $1 a share.

David Faber (4:26)

Why $1?

David Ellison (4:27)

So if you look at version where the median of all of this is, it's about four and a half times. You have to get to five times equity value or more to basically get to the $3 plus that you're claiming. But again, I think the most important thing to go back here is, look, we're sitting on Wall Street where cash is still king. We're offering shareholders $17.6 billion more cash than the deal they currently have signed up with Netflix. And we believe when they see what is currently in our offer, that that's what they'll vote for.