Netflix Warner Bros. Deal Paramount Streaming War

Netflix is breaking open its piggy bank to keep⁢ Paramount Skydance CEO‍ David Ellison from crashing its Warner Bros.⁢ deal.

The ⁣streaming giant​ just sweetened its offer for the Warner Bros. studio and ⁢HBO by offering all-cash, matching a⁣ key feature of⁢ Paramount’s hostile bid.

“Our ‌revised all-cash agreement will enable an expedited⁤ timeline ⁤to a stockholder vote and provide greater financial certainty,” Netflix co-CEO ‌Ted Sarandos said in a⁢ statement announcing the ​news.

While Netflix isn’t raising its bid from​ $27.75 per share, converting $4.50 per share in stock to cash takes ‌away a variable for Warner Bros. ⁢Discovery shareholders.‍ Netflix shares are‍ down 13% since the Warner Bros. deal was ⁣made public and have fallen⁢ 28% since late October.

Paramount ⁤believes its⁣ all-cash offer of $30 per ‌share for all⁣ of‌ WBD is superior to ⁢Netflix’s winning bid for WBD’s key assets, which include its studio, HBO,⁢ and HBO Max, but not its TV networks. Ellison has made eight bids for WBD, all of which have been rejected. Paramount is now suing WBD while fighting for spots on its board.

A ⁤key remaining point of difference between the two ‌bids hinges on the perceived value of ⁢WBD’s networks. Paramount is looking to buy them, while ‌Netflix is not.

If WBD’s‍ cable channels, such as CNN, TNT, and HGTV, are ⁤valued at less than $2.25 per share, or $5.9 ​billion, then Paramount’s proposal appears, ⁢at ⁢first glance, ⁣to be more appealing than Netflix’s. However, WBD has said‌ that it⁢ must knock off $1.79 per share from Paramount’s bid to account for costs it would incur by‍ changing course, like a $2.8 billion breakup fee to Netflix. That would mean WBD’s cable networks only ​need⁢ to be worth $0.46 per share for Netflix’s bid to be ​financially superior in the⁣ board’s eyes.

Paramount has argued that the WBD‌ cable networks it wants to buy are worth $0 ⁢per⁢ share, or only as ⁣much as the debt they’re expected to carry. ellison and company acknowledged “the theoretical ⁣possibility” that those TV assets ⁣could be worth $0.50 per share.

Most⁤ media analysts have a rosier view of WBD’s cable business,valuing its channels⁣ anywhere⁢ from the low single digits to⁤ $3.51 per share. even a ⁣glass-half-empty ⁤view based⁣ on the⁣ valuation of