Warner Bros. Discovery is reopening discussions with Paramount, owned by Skydance, to review the company’s “best and final” proposal. This move comes as Warner Bros. Discovery reaffirms its commitment to the agreement it made with Netflix. Warner Bros. Discovery, known for its ownership of HBO Max and iconic franchises like “Harry Potter” and DC superheroes, has received a waiver from Netflix to engage in talks with Paramount for the next seven days.
During this period, both companies will address unresolved issues and clarify specific terms outlined in Paramount’s latest bid. Despite rejecting previous offers from Paramount, including a hostile bid in December, Warner Bros. Discovery emphasized that the resumption of talks does not indicate a shift in its stance. The company’s leadership reiterated their support for the merger with Netflix.
Netflix had agreed to acquire Warner Bros. Discovery’s studio and streaming business for $72 billion in an all-cash deal. This transaction includes legacy TV and movie production arms, as well as HBO Max, bringing the total enterprise value to around $83 billion. The completion of this deal is pending the separation of Warner’s cable operations.
The decision by Warner Bros. Discovery to re-engage with Paramount represents a change in strategy. Paramount had previously expressed disappointment in Warner Bros.’ lack of meaningful engagement before the Netflix merger announcement. Meanwhile, Netflix expressed confidence in the value and certainty of their existing agreement with Warner Bros. Discovery.
In response to Warner’s actions, Paramount labeled the board’s move as “unusual” but expressed readiness to participate in constructive discussions. Paramount maintained its tender offer of $30 per share, asserting its offer’s superiority over Netflix’s proposal and hinting at a potential proxy fight.
Unlike Netflix, Paramount aims to acquire Warner’s entire business, including networks like CNN and Discovery, with an all-cash offer made in December. Paramount indicated willingness to increase its bid to $31 per share upon engagement with Warner. Paramount has also sweetened its deal with incentives like a “ticking fee” and a commitment to cover Warner’s breakup payout to Netflix.
The successful bidder will gain control of Warner’s extensive library of films and TV shows, such as “Casablanca,” “Citizen Kane,” and popular HBO programs like “Game of Thrones.” However, concerns persist over the impact of such a deal on the entertainment industry, with regulatory approval being a crucial step. Warner Bros. has a shareholders’ meeting scheduled for Friday, where the vote on the Netflix merger will take place on March 20. On the stock market, Warner Bros. and Paramount Skydance saw positive gains, reflecting investor interest in the ongoing developments.