Warner Bros Reopens Paramount Talks as Hollywood Bidding War Intensifies
Warner Bros Discovery has dramatically reignited takeover discussions with Paramount Skydance, escalating the fierce bidding war with streaming giant Netflix for one of Hollywood's most coveted studio groups. The media conglomerate confirmed it is entering seven days of formal deal talks with the David Ellison-backed Paramount group, even as it continues to publicly support its previously agreed $82.7 billion deal with Netflix.
Paramount's Aggressive Revised Offer
This strategic move follows months of sustained pressure from Paramount, which has repeatedly submitted unsolicited all-cash offers of $30 per share for Warner Bros Discovery, all of which were previously rejected. The latest development emerged after Paramount indicated it would be prepared to increase its bid if formal negotiations were initiated.
In a revealing letter released by Warner Bros Discovery, the board stated: "On February 11th, a senior representative of your financial advisor communicated orally to a member of our Board that PSKY would agree to pay $31 per WBD share if we engage with you, and that $31 is not PSKY's best and final proposal." This communication suggests Paramount could potentially lift its headline valuation beyond the current $108.4 billion, significantly intensifying the competitive contest.
Sweetened Terms and Financial Commitments
Paramount had already enhanced its approach in recent weeks by adding a substantial 25-cent-per-share quarterly ticking fee. This provision, worth approximately $650 million in cash each quarter, would be payable if the transaction fails to close beyond the end of 2026. Furthermore, Paramount committed to covering Warner Bros Discovery's substantial $2.8 billion break fee payable to Netflix, along with up to $1.5 billion in refinancing costs.
The original per-share offer of $30 in cash already surpasses Netflix's $27.75 all-cash bid, which itself represented an improvement from an earlier mixed offer of cash and stock. Under Netflix's existing agreement, the streaming behemoth would acquire Warner's prestigious studios and streaming assets, including Warner Bros, HBO, and valuable franchises such as Harry Potter and Game of Thrones. Meanwhile, Netflix could potentially spin off the company's global networks, including CNN and Discovery, to existing shareholders.
Divergent Strategic Approaches
Paramount, in contrast, is pursuing a comprehensive acquisition strategy seeking to buy the entire Warner Bros Discovery group, including its extensive cable operations. This fundamental difference in approach creates distinct strategic implications for the future of the media landscape.
Shareholder Pressure and Board Deliberations
Warner Bros Discovery has thus far maintained public support for the Netflix agreement, but Bloomberg reports indicate that directors are now actively debating whether Paramount's revised offer might represent a superior outcome for shareholders. Any formal, public discussions with Paramount would require Warner Bros Discovery to notify Netflix, potentially triggering further bidding enhancements from both competing parties.
Ancora Holdings, which has accumulated a substantial stake approaching $200 million, has openly opposed the Netflix deal, arguing the board failed to engage seriously with Paramount's alternative proposal. However, shareholders representing less than two percent of Warner Bros Discovery's stock have so far tendered in support of Paramount's offer. Notably, the hostile bid's deadline has already been extended twice to February 20th.
Financing and Regulatory Concerns
Significant concerns persist within the Warner board regarding Paramount's financing structure, which involves private equity backing and support from the Saudi sovereign wealth fund. Directors have previously questioned the equity backing arrangements, as well as the overall balance sheet strength supporting the offer.
Meanwhile, regulatory considerations are casting substantial shadows over the Netflix transaction, as US antitrust officials express growing concerns about competition within the media and streaming sector. This regulatory review process could extend for months, introducing further uncertainty into the already complex situation.
Paramount maintains that its proposal would encounter fewer competition hurdles, with chief executive David Ellison asserting the pursuit reflects Paramount's "strong and unwavering commitment to delivering the full value WBD shareholders deserve." Warner Bros Discovery has confirmed it is thoroughly reviewing the amended offer as the high-stakes corporate drama continues to unfold.
