Warner Bros Discovery Reopens Bidding War with Paramount Deadline
Warner Bros Discovery (WBD) has reignited negotiations with Paramount Skydance, issuing a strict seven-day ultimatum for the rival company to present its best and final offer. This move aims to surpass an existing binding agreement with Netflix, intensifying a high-stakes corporate battle in the entertainment sector.
Netflix Waiver Enables Limited Talks
To facilitate discussions with Paramount, WBD's board secured a special waiver from Netflix. Under the current merger terms, Warner Bros can only engage with alternative bidders if the board deems it could lead to a reasonably superior offer. This legal loophole permits restricted negotiations despite prior constraints, adding a layer of complexity to the ongoing takeover saga.
Last week, Paramount informally indicated it would increase its existing $30-per-share offer by $1 if talks resumed. In response, WBD chair Samuel DiPiazza Jr and CEO David Zaslav emphasized in a letter to Paramount's board that they remain committed to the Netflix deal but are open to evaluating a superior proposal. They stated, "We welcome the opportunity to engage with you and expeditiously determine whether Paramount Skydance can deliver an actionable, binding proposal that provides superior value."
Key Assets and Financial Stakes
The Netflix agreement, valued at $82.7 billion, would grant the streaming giant control over WBD's prized assets, including the Warner Bros studio behind iconic franchises like Harry Potter, Superman, and Batman, as well as HBO, home to acclaimed series such as Game of Thrones, The White Lotus, and Succession. Notably, the global networks division—encompassing CNN, Cartoon Network, and the Discovery Channel—is excluded from this deal and is slated to be spun off as a separate entity, with WBD investors receiving shares.
Paramount has bolstered its bid by offering to cover a $2.8 billion fee owed to Netflix if the deal collapses and proposing a multibillion-dollar refinancing to eliminate $1.5 billion in costs. Additionally, it included a ticking fee of approximately $650 million in cash per quarter if the transaction is not finalized by year-end. Backed by a $40 billion personal equity guarantee from Oracle founder Larry Ellison, father of Paramount CEO David Ellison, the company has also threatened to nominate new board members at WBD to obstruct the Netflix merger.
Shareholder Vote and Industry Implications
WBD has scheduled a shareholder vote for March 20 to decide on the Netflix takeover, while Paramount faces a deadline of February 23 to submit its final offer. Netflix has acknowledged the disruption caused by Paramount's actions, stating, "While we are confident that our transaction provides superior value and certainty, we recognise the ongoing distraction for WBD stockholders and the broader entertainment industry caused by Paramount Skydance's antics." If Paramount presents a superior bid, Netflix retains the right to enhance its own proposal, setting the stage for a potential bidding war that could reshape the film and streaming landscapes.
This development follows WBD's previous rejection of multiple sweetened offers from Paramount, which led to a hostile $108.4 billion takeover attempt directly with shareholders. The outcome of these negotiations will significantly impact corporate strategies and market dynamics in the global entertainment industry.
