The enhanced proposal underscores Paramount’s confidence in securing the media giant, even as Warner Bros. Discovery’s board continues to recommend Netflix’s $82.7 billion agreement.
The improved offer introduces a 25-cent-per-share ticking fee for Warner Bros. Discovery shareholders, which would translate to approximately $650 million in cash for every quarter the transaction is not closed beyond December 31, 2026.
The company also agreed to fund the $2.8 billion termination fee that Warner Bros. would owe Netflix if the previously announced $82.7 billion deal for its studio and streaming assets fails to close.
Furthermore, Paramount will eliminate WBD's potential $1.5 billion financing cost related to its debt exchange offer, while also confirming it will "fully reimburse WBD's shareholders for the $1.5 billion fee, without reduction to the separate $5.8 billion reverse termination fee."
Paramount also said that its debt financing sources will extend the maturity of WBD's existing $15 billion bridge loan if WBD's won't. In this case, Paramount will cover any incremental costs.
TL;DR
- Paramount adds a 25-cent per share quarterly ticking fee starting early 2027
- Commits to covering $2.8 billion Netflix breakup fee if rival deal collapses
- Maintains $30 per share bid, valued at $108.4 billion including debt
- Netflix deal faces regulatory scrutiny and activist investor resistance
Although Paramount did not increase its $30-per-share offer, which values the transaction at $108.4 billion including debt, it presented the new financial commitments as meaningful enhancements aimed at delivering greater certainty to investors.
Paramount has extended the deadline for its tender offer to February 20, seeking additional time to persuade investors. It also increased the personal guarantee from Oracle co-founder Larry Ellison to $43.3 billion and expects to finance the deal with $54 billion in debt commitments from Bank of America, Citigroup, and Apollo.
“The additional benefits of our superior $30 per share, all-cash offer clearly underscore our strong and unwavering commitment to delivering the full value WBD shareholders deserve for their investment,” said Paramount CEO David Ellison. “We are making meaningful enhancements – backing this offer with billions of dollars, providing shareholders with certainty in value, a clear regulatory path, and protection against market volatility.”
Warner Bros., home to franchises such as Game of Thrones, Harry Potter, and DC Comics superheroes Batman and Superman, remains a coveted asset for both bidders.
Under Paramount’s plan, it would acquire Warner Bros.’ television networks, including CNN and TNT, which would then be spun off into a separately traded company named Discovery Global ahead of the Netflix merger.
Netflix’s Proposal Raises Questions Around Discovery Global And Regulation
Netflix has framed its acquisition as transformative, potentially giving it access to Warner Bros.’ vast content library, such as Friends, Harry Potter, Batman, Superman, and host of other DC Comics characters.
The combination could enable new streaming-first spinoffs, prequels, and sequels, and position Netflix as the largest global streaming platform with roughly half a billion subscribers.
However, Paramount has argued that the Netflix structure exposes Warner Bros. shareholders to financial uncertainty, as the amount of cash consideration depends on the performance and leverage of Discovery Global at the time of the spinoff.
Paramount estimated that if Discovery Global were spun off with leverage similar to Comcast’s NBCUniversal cable network spinoff to Versant, Netflix’s cash consideration could decline to $23.20 per share.
Warner Bros.’ board has maintained that Netflix’s merger agreement is superior, noting that investors would retain a stake in Discovery Global. A special shareholder meeting to vote on the Netflix transaction is expected by April.
Meanwhile, the U.S. Department of Justice is reportedly reviewing whether Netflix engaged in anti-competitive practices as part of its regulatory examination.
Topics For More Insights
- Netflix Revises Offer To All-Cash For Warner Bros. Discovery in Bid Battle With Paramount
- Paramount Skydance Sues Warner Bros. Discovery Over Netflix Deal
- Some Warner Bros. Investors Split On Paramount Skydance Offer
- Warner Bros. Discovery Once Again Rejects Paramount’s Revised Bid, Reaffirms Netflix Deal
- Paramount Skydance Offers WBD $108.4 Billion To Snub Netflix’s $72 Billion Bid
Activist Pressure Mounts As Paramount Extends Tender Offer Deadline
Activist investor Ancora Holdings has built a roughly $200 million stake in Warner Bros. and plans to oppose the Netflix deal. Reports indicate the firm could initiate a proxy fight if the board does not secure what it considers the best possible outcome for shareholders.
Warner Bros. currently has a market capitalization of about $69 billion, placing Ancora’s stake at less than 1% of the company.
Despite these enhancements, some analysts remain doubtful about Paramount’s chances.
“The sweetened deal is unlikely to sway WBD away from Netflix and toward Paramount. Paramount is throwing spaghetti at the wall and hoping something sticks,” said Ross Benes, senior analyst at Emarketer.
Warner Bros. said its board would review the revised proposal but has not altered its recommendation in favor of Netflix. Shares of Warner Bros. rose 2% in afternoon trading, while Netflix gained 1.7% and Paramount was up 1.3%.
