Warner Bros. Discovery is reopening discussions with Paramount, owned by Skydance, to consider their final offer, despite the ongoing support for their deal with Netflix. The regulatory filing confirmed that Warner Bros. Discovery obtained permission from Netflix to engage with Paramount for a limited period. This opportunity allows both parties to address unresolved issues and clarify terms in Paramount’s recent proposal, with the provision for Netflix to match Paramount’s offer.
Previously rejecting Paramount’s bids, including a hostile bid in December, Warner Bros. Discovery emphasized that resuming talks does not signify a shift in their stance. The company reiterated its commitment to the Netflix merger, as stated by Warner Bros. chairman Samuel DiPiazza Jr. and CEO David Zaslav in a letter to the Paramount board.
The deal with Netflix, valued at $72 billion, covers the acquisition of Warner’s studio and streaming business, including HBO Max. The total enterprise value, including debt, amounts to approximately $83 billion, marking a significant transaction pending the completion of Warner’s cable operations separation.
Paramount expressed surprise at Warner’s decision to re-engage in discussions, labeling it as unconventional. Nevertheless, Paramount expressed readiness for constructive dialogue while maintaining their tender offer at $30 US per share and pursuing a proxy fight. Paramount aims to acquire Warner’s entire company, which includes networks like CNN and Discovery, with an enhanced bid of $31 per share pending engagement.
In efforts to sweeten the deal, Paramount proposed additional incentives, such as a “ticking fee” for a delayed deal closure and a commitment to cover Warner’s breakup payout to Netflix. The prospective acquirer of Warner’s extensive film and television library, which boasts iconic titles like Casablanca and Citizen Kane, faces industry disruption concerns and regulatory reviews.
The special meeting for Warner Bros. scheduled for Friday will culminate in a shareholder vote on the Netflix merger on March 20. The news prompted positive market reactions, with Warner Bros. and Paramount Skydance stocks rising, reflecting the industry’s anticipation of a significant deal on the horizon.
