After 10 tries, David Ellison’s Paramount Skydance has finally made a proposal that Warner Bros. Discovery’s board is excited about.
Paramount is prepared to pay $31 per share for all of WBD, including its TV networks like CNN and TruTV, up from $30 per share in its previous public offers, WBD told shareholders on Tuesday afternoon.
WBD’s board said Paramount’s offer “could reasonably be expected” to lead to a superior proposal to Netflix’s. However, WBD added that its board had “not made a determination” yet as to whether Paramount’s latest bid is actually better.
If WBD’s board determines that Paramount’s bid is better, then Netflix would have four days to submit a sweetened offer, if it wants. Netflix has offered $27.75 per share for WBD’s streaming and studio assets, and doesn’t want its cable channels. While Netflix could stand pat, doing so could put its dream of buying HBO at risk.
WBD hadn’t been impressed with Paramount’s prior offers, raising issues about everything from its equity backstop to its initial hesitation to cover costs like a breakup fee to Netflix. Paramount patched up those perceived holes by putting a guarantee from billionaire Larry Ellison, the father of Paramount’s CEO, and agreeing to reimburse WBD’s payout to Netflix if the board switched deals.
Paramount’s new offer also includes a so-called “ticking fee,” which will pay WBD shareholders $0.25 per share for each quarter that Paramount’s deal for WBD doesn’t close, starting on September 30. Previously, the ticking fee was slated to start in January 2027.
Paramount has long believed its offers for WBD were better than Netflix’s, reasoning that WBD’s cable channels don’t have much value after accounting for how much debt they’re expected to carry.
Netflix has sold its deal for WBD’s studio and HBO assets as simpler and better for Hollywood. The streaming juggernaut argued that it would “protect and create jobs in America” compared to Paramount, which has promised investors $6 billion in savings if it buys WBD. Netflix has said its deal could create $2 billion to $3 billion in synergies.
WBD warned last week that an employee exodus was possible if it took Paramount’s offer, since staffers could fear mass job cuts.
Another pivotal factor in the fight for Warner Bros. is the regulatory process, both in the US and abroad.
President Donald Trump has sent mixed signals about Netflix’s planned acquisition of Warner Bros., saying that its market share “could be a problem” before pledging to stay out of the process and leaving the antitrust decision up to the US Department of Justice.
A White House spokesperson told Business Insider last week that the president “has great relationships with all parties in this potential transaction and remains neutral in this process with no preference for either bidder.”
Days later, Trump said Netflix should take Susan Rice off its board “or pay the consequences.” Rice, a White House official under Obama and Biden, had gone on a podcast and criticized Trump and the corporations that she believes “take a knee” to him. Netflix co-CEO Ted Sarandos downplayed Trump’s complaint, saying that the company’s Warner Bros. bid is “not a political deal.”
If Netflix decides to increase its offer, WBD shareholders will be in a win-win situation.
