Warner Bros. Discovery has decided to reopen discussions with Paramount, owned by Skydance, to consider their “best and final” proposal, even as it continues to support the deal it made with Netflix. The company, known for owning HBO Max and a vast library of valuable content such as the Harry Potter series and DC superhero franchise, disclosed in a regulatory filing that it has obtained a waiver from Netflix to engage in talks with Paramount for the next seven days or until Monday.
This move allows both companies to address any outstanding issues and clarify certain terms of Paramount’s latest offer. Despite rejecting previous bids from Paramount, including a hostile bid in December, Warner Bros. emphasized that reopening discussions does not indicate a change in their stance as they remain fully committed to the Netflix merger, as stated by Warner Bros. chairman Samuel DiPiazza Jr. and CEO David Zaslav in a letter to Paramount’s board.
Netflix had agreed to acquire Warner’s studio and streaming business for $72 billion in an all-cash deal, including its legacy TV and movie production arms along with HBO Max. The total enterprise value of the transaction, including debt, amounts to around $83 billion, or $27.75 per share. This deal is set to be finalized following Warner’s cable operations separation.
The decision to re-engage with Paramount represents a shift for Warner Bros., as Paramount had previously expressed disappointment in the lack of meaningful engagement from Warner before the Netflix merger announcement. Despite the ongoing distractions caused by Paramount’s actions, Netflix expressed confidence in the value and certainty of the deal with Warner Bros.
Paramount, on the other hand, viewed Warner’s recent actions as unusual but expressed readiness to engage in constructive discussions. Paramount intends to maintain its tender offer at $30 US per share, asserting that it is a superior offer compared to Netflix’s proposal, while also pursuing a proxy fight.
Unlike Netflix, Paramount aims to acquire the entirety of Warner’s company, including networks like CNN and Discovery, with an all-cash offer of $77.9 billion made in December. Paramount further indicated a willingness to increase its per-share offer to $31 pending engagement with Warner.
Both companies have been making efforts to enhance their respective offers, with Paramount introducing measures like a “ticking fee” if the deal fails to materialize by the year’s end and a commitment to cover Warner’s proposed $2.8-billion breakup payout owed to Netflix. The successful bidder will gain control of Warner’s extensive film and television library, featuring classics like Casablanca and Citizen Kane, as well as popular HBO shows like Game of Thrones.
As Warner Bros. prepares for a special meeting on Friday and the shareholders’ vote on the Netflix merger on March 20, the company’s stock saw a rise of over two percent before the market opened on Tuesday. Paramount Skydance and Netflix also experienced slight increases in their stock values.
