Paramount Global has intensified its pursuit of Warner Bros. Discovery, sweetening its $108 billion hostile bid with a “ticking fee” designed to address regulatory concerns and incentivize Warner shareholders. The revised offer, still pegged at $30 per share in cash, now includes a quarterly payment of $0.25 per share – roughly $650 million each quarter – should the deal not receive regulatory approval by the end of .
This move represents Paramount’s latest attempt to disrupt the existing agreement between Warner Bros. Discovery and Netflix, a deal valued at $83 billion. Paramount, led by CEO David Ellison, is vying for control of Warner’s extensive content library, a prize coveted in the rapidly evolving media landscape. While the ticking fee signals confidence in securing regulatory clearances, Paramount has, for now, refrained from increasing the per-share offer price, a point analysts suggest is crucial to winning over a larger proportion of Warner shareholders.
Warner Bros. Discovery’s board previously rejected Paramount’s initial bid, deeming it “inadequate.” However, sources close to Paramount indicate that raising the offer price remains an option, particularly before a planned shareholder vote on the Netflix deal, anticipated in . The addition of the ticking fee is strategically timed, aiming to sway shareholders who may be hesitant due to potential delays in regulatory approval.
The escalating battle for Warner Bros. Discovery is unfolding against a backdrop of heightened antitrust scrutiny of large-scale media mergers. Both the U.S. Department of Justice and regulators across the Atlantic are closely examining the proposed transactions, raising concerns about potential monopolies and reduced competition. The DOJ has initiated reviews of both the Netflix-Warner Bros. Discovery agreement and Paramount’s hostile bid, requesting additional information from all three companies.
The regulatory hurdles are significant. The prospect of a Warner sale to either Paramount or Netflix has already triggered concerns from lawmakers worldwide. The Department of Justice is specifically investigating whether a Netflix takeover of Warner Bros. Discovery could lead to monopolistic control of content distribution. Netflix, in recent testimony before U.S. Lawmakers, argued that it faces competition not only from traditional Hollywood studios but also from online platforms like YouTube, emphasizing the evolving definition of the television market.
Netflix co-chief executive Ted Sarandos defended the proposed acquisition during a hearing in Washington, pushing back against accusations from Republican senators alleging a political agenda in the company’s programming choices. Senators Ted Cruz and Josh Hawley led the questioning, focusing on claims of “woke” programming. This political dimension adds another layer of complexity to the regulatory review process.
Beyond the regulatory challenges, Paramount has also committed to covering the $2.8 billion termination fee that Warner Bros. Discovery would owe Netflix if it were to accept Paramount’s offer instead. This financial commitment further demonstrates Paramount’s determination to secure the deal and mitigate potential costs for Warner shareholders.
The ticking fee itself is a relatively uncommon, but increasingly utilized, tactic in large mergers. It essentially compensates shareholders for the time value of money while awaiting regulatory approval, acknowledging the uncertainty inherent in the process. Paramount’s decision to implement this mechanism underscores its belief that the deal will ultimately be approved, but provides a financial incentive for Warner shareholders should delays occur.
The outcome of this bidding war will have significant implications for the future of the media industry. A successful Paramount acquisition of Warner Bros. Discovery would create a media powerhouse with a vast library of intellectual property and a combined streaming presence capable of competing more effectively with established players like Netflix and Disney. Conversely, a completed Netflix-Warner Bros. Discovery deal would further consolidate the streaming landscape and potentially reshape the distribution of content.
The situation remains fluid, and the next few weeks are likely to be critical. A decision by Paramount to increase its offer price before the Warner shareholder vote could significantly alter the dynamics of the deal. The fate of Warner Bros. Discovery rests on a complex interplay of regulatory approvals, shareholder preferences, and the strategic ambitions of three media giants vying for control.
