Warner Bros. Discovery (WBD) is once again in negotiations with Paramount Skydance, granting the media group a week to submit a revised bid that surpasses Netflix’s existing agreement. The move, announced on , is a calculated effort by the WBD board to pressure Paramount into strengthening its offer, or withdrawing from the pursuit altogether.
Netflix has been given a seven-day waiver to allow WBD to engage with Paramount Skydance, but maintains that its current agreement remains the “only signed, board-recommended agreement” and the “only certain path to delivering value to WBD’s stockholders.” The situation represents a high-stakes battle for control of the legendary studio, owner of valuable intellectual property including the Harry Potter and Friends franchises.
The catalyst for reopening talks was an approach from a “senior representative” of Paramount, who indicated a willingness to increase its offer to $31 per share, up from the previous $30, if WBD engaged in “meaningful deal talks.” Paramount had previously accused WBD of not giving its bid a fair consideration compared to Netflix’s. However, no formal increase materialized, prompting WBD to demand a firm commitment.
Paramount’s current bid values WBD at approximately $108.4 billion, encompassing the company’s entire portfolio, including cable TV assets not included in Netflix’s $82.7 billion offer. Paramount sweetened its bid last week by offering to cover a $2.8 billion termination fee owed to Netflix, as well as a $650 million “ticking fee” for WBD shareholders, designed to compensate them for the delay in finalizing a deal.
Despite reopening discussions, WBD Chairman Samuel A. Di Piazza Jr. Reiterated the board’s preference for the Netflix merger, citing its “tremendous value,” clearer regulatory path, and protections for shareholders. A shareholder vote on the Netflix deal is scheduled for .
The regulatory landscape remains a key consideration. Paramount believes its proposal has a better chance of securing antitrust approval than Netflix’s, a claim disputed by Netflix, which stated that Paramount had “repeatedly mischaracterised the regulatory review process.” Netflix retains the right to match any competing offer from Paramount.
Investors have signaled a price threshold for considering a competing bid, with expectations of at least $33 per share. The situation is further complicated by the involvement of activist investors. Ancora Holdings recently took a $200 million position in WBD and publicly opposed the Netflix deal. Paramount is also reportedly in discussions to nominate Pentwater Capital Management, a significant WBD shareholder, to the company’s board as part of its takeover attempt.
The back-and-forth between the media giants highlights the intense competition for dominance in the streaming landscape. A merger between WBD and either Paramount or Netflix would create a media powerhouse with significant control over content production and distribution. The outcome of these negotiations will have far-reaching implications for the future of the entertainment industry.
WBD’s decision to revisit talks with Paramount underscores the financial incentives at play. While the board currently favors the Netflix deal, the potential for a higher offer from Paramount is difficult to ignore, particularly given the scrutiny from shareholders and activist investors. The next seven days will be critical in determining whether Paramount can present a compelling enough bid to sway WBD’s decision.
Shares in Paramount rose approximately 4 percent in premarket trading on , while WBD shares saw a 3 percent increase, closing the previous trading day at $28. Paramount characterized WBD’s response to its offer as “unusual” but expressed its willingness to engage in “good faith and constructive discussions.”
