Warner Bros Discovery (WBD) is reportedly considering reopening sales discussions with Paramount Skydance, potentially igniting a new bidding war with Netflix for the media giant. Board members at WBD are in talks about whether to engage again with Paramount, which has initiated a hostile cash takeover bid valued at $108.4 billion. This move aims to undermine WBD’s existing agreement with Netflix, as reported by Bloomberg.
In a proactive strategy, Paramount has indicated that it would cover a significant $2.8 billion fee owed to Netflix should WBD withdraw from their agreement. Additionally, Paramount has offered to facilitate a multibillion-dollar refinancing deal aimed at offsetting $1.5 billion in costs. They have also introduced a “ticking fee,” which could accrue approximately $650 million each quarter if the negotiations remain unresolved by the year’s end.
To enhance its lobbying efforts, Paramount recently appointed Rene Augustine, a former attorney from the Trump administration, as its senior vice-president of global public policy. David Ellison, Paramount’s chair and CEO, has emphasized the company’s “strong and unwavering commitment” to ensure that WBD shareholders receive the full value they deserve as they pursue the takeover.
WBD has acknowledged that it is currently reviewing the updated offer from Paramount. Under pressure from some its smaller shareholders—specifically Pentwater Capital Management and Ancora Holdings Group—WBD is considering engaging with Paramount as a rival bidder. However, thus far, only shareholders representing less than 2% of WBD’s stock have shown commitment to Paramount’s takeover efforts. The deadline for the bid has been extended twice and is currently set for February 20.
Should WBD choose to formally initiate discussions with Paramount, it would be required to notify Netflix prior to any engagement, a move that could potentially lead to an escalation in proposed offers. Earlier this year, Netflix had enhanced its offer for WBD’s studios and streaming assets by shifting to an all-cash proposal. This deal would allow Netflix to gain control over valuable entities like Warner Bros, which is known for its acclaimed franchises including Harry Potter, Superman, and Batman. Additionally, Netflix would acquire HBO, the network behind popular shows like Game of Thrones and Succession.
However, Netflix’s interest does not extend to WBD’s global networks division, which encompasses CNN, Cartoon Network, and Discovery Channel. Instead, these assets are expected to be spun off, allowing WBD investors to retain a stake.
As deliberations continue, members of the WBD board are weighing whether engaging with Paramount represents a more favorable option, but a consensus has yet to be reached. In an effort to provide clarity to shareholders, WBD has announced plans for a special meeting in April to vote on the proposed Netflix merger.
