Warner Bros. Discovery is reportedly reassessing merger discussions with Paramount Skydance Corp. following the receipt of updated takeover terms, according to reports.
Insiders indicate that Warner Bros.’ board members are weighing whether Paramount’s revised offer could lead to a more favourable transaction or potentially ignite renewed competition with Netflix Inc. Currently, Warner Bros. is still tied to its existing agreement with Netflix, and no formal decision has been reached.
Paramount’s new proposal appears to address significant financial concerns. The studio has offered to cover the US$2.8 billion termination fee that Warner Bros. would incur if it opts out of the current deal with Netflix. Additionally, it proposed supporting Warner Bros.’ debt refinancing and compensating shareholders if the merger doesn’t close by December 31, suggesting confidence in obtaining regulatory approval.
Previously, Warner Bros. had arranged to sell its film studio and HBO Max streaming platform to Netflix in a deal valued at US$27.75 per share. In contrast, Paramount has launched a competing tender offer of US$30 per share, directly appealing to shareholders while concurrently lobbying regulators to approve its alternative deal.
Both Paramount and Netflix have expressed a willingness to enhance their offers if needed. Paramount’s CEO, David Ellison, has publicly stated that the current proposal is not final, while Netflix has also indicated some pricing flexibility.
Despite this, market pressures are increasing. Shares of Netflix have dropped significantly in recent months amid investor concerns over the size and expense of the Warner Bros. acquisition. Analysts observe that while both companies are eager to clinch the deal, neither wants to inflate their bid.
Chris Marangi, co-chief investment officer at Gabelli Funds, noted that Paramount’s revised proposal demonstrates ingenuity in deal structuring but emphasised that investors are likely hoping for a higher offer. Several Warner Bros. shareholders, including Pentwater Capital Management and Ancora Holdings Group, have publicly pressed the board to engage with Paramount.
However, shareholder interest in Paramount’s tender offer has been relatively low so far, with fewer than 2% of outstanding shares having been tendered.
If Warner Bros. decides to re-engage with Paramount, it must first notify Netflix in accordance with the terms of their agreement, wherein Netflix retains the right to match any superior proposal that arises.
Amid regulatory scrutiny, shareholder activism, and competitive bidding dynamics, Warner Bros.’ upcoming decisions could significantly influence the future of the U.S. media and streaming landscape.
