Wachtell Lipton Rosen & Katz Partner Andrew Nussbaum Talks Warner Bros. Sale, Netflix
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What is the background of Andrew Nussbaum and his role in the Warner Bros. deal?
Bloomberg Audio Studios Podcasts, radio, news. Joining us now is Andy Nussbaum, co-chair of the Executive Committee at Wachtel Lipton. He is the main legal advisor to Warner Brothers. Also, Mark Boydman, he's the head of media and entertainment and partners at Salomon Partners, and of course, Bloomberg Deals Media Reporter, specializing, Deals Reporter specializing in media, I should say. Michelle Davis, thank you all so much for joining today. Andy, I'd love to kick it off with you in a very simple and perhaps complicated answer. Why is Netflix the preferred partner for this deal?
The Netflix transaction is the result of a very extensive process that this board really undertook in 2022 after we acquired WarnerMedia to get the value out of those assets, to de-lever the company, to make the operations more effective and robust, and then looked at separating the businesses. And then it turned out not only did we have the possibility to separate the two businesses, but also a lot of people were interested in buying one or the other or both. And so as a result of a very large public process, very robust, competitive, the Netflix transaction came out on top. And we do believe that that is by far the superior transaction for our shareholders.
Mark, let me bring you in on this because you are a veteran of this industry. You have long worked with media companies, tracked media deals. What are the sort of considerations one should have? And what is a very large transaction?
Sure, Danny. It all comes down to speed, certainty. And what Netflix does offer is speed and certainty. They're moving ahead. They have the cash. They have the balance sheet. I think what you see is other bidders who don't provide that certainty. And shareholders, at the end of the day, Wall Street loves certainty.
And Andy, we know that Warner Brothers shareholders are going to get a chance to vote on this deal in the coming weeks. What have you been hearing from shareholders so far about how they're viewing the Netflix deal? Obviously, Paramount's also trying to break this deal up.
So the Netflix deal, which is really two deals, the $27.75 in cash that our shareholders would receive when that transaction closes, plus the spun-off Discovery Global linear network business as a new public company, we have tremendously happy shareholders. The Netflix transaction on its own reflects a more than 120% increase in the value of the company since last September. And if you look over a two-year period, more than a 200% return to shareholders. So our shareholders are thrilled. The board is pleased. It's a great strategic fit, and it's tremendous value for our shareholders.
Why is Netflix considered the preferred partner for the Warner Bros. sale?
But might those shareholders be more thrilled if you get a sweetened offer from Paramount Skydance? If they pony up $34, would that complicate things?
If we receive a revised proposal from Paramount, we will do what we have done for months, which is we will consider it on its terms, on the merits, not based on what they say they will do or may do in the media, but what they actually are willing to commit to in a legal document.
And to that point, I mean, Mark, put yourself in the Paramount board's shoes. I mean, if you're Paramount and you've been saying for weeks now that your offer wasn't best and final, what are you waiting for? What do you think they're waiting for? What's their next move going to be?
Yeah, I think it comes down to the certainty. They have a team that's evaluating whether to raise this. But is it about price or is it about certainty? And it comes down to financing, right? You've got Netflix that has a balance sheet. They've got the cash. You have Paramount that has to structure and finance the deal. And so they're also limited by the financing markets. And again, it comes down to certainty.
And I would agree with that, by the way. I think value and certainty are separate but entirely related. It's excellent to sign up a deal, but it's critical to close the transaction. And we have a tremendously high degree of confidence that the Netflix transaction will close.
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Chapters
4 chapters
1
What is the background of Andrew Nussbaum and his role in the Warner Bros. deal?
0:02–2:30
2
Why is Netflix considered the preferred partner for the Warner Bros. sale?
2:30–5:30
3
What are the main considerations for media companies in large transactions?
5:30–7:12
4
How are Warner Bros. shareholders reacting to the Netflix deal?
7:12–8:48
Speakers
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