Paramount Skydance has improved its offer for Warner Bros. Discovery, offering shareholders extra money for each quarter the deal falls through after this year and agreeing to cover the termination fee that the HBO owner will owe Netflix if it abandons the negotiation.
Although Paramount has not increased its offer per share, the incentives mark the company’s latest attempt to win over Warner Bros. shareholders for control of some of the world’s most valuable TV and film assets.
Paramount has offered to pay a “waiting fee” of 25 cents per share, which will amount to approximately $650 million in cash each quarter between the beginning of 2027 and the closing of the deal with Warner Bros, the company said on Tuesday.
The company did not increase its total offer of $30 per share, or $108.4 billion including debt, for Warner Bros. as a whole, including cable TV assets.
Paramount said it will finance the $2.8 billion termination fee that Warner Bros. will owe Netflix if the $82.7 billion deal involving the studio and streaming assets falls through.
Both Netflix and Paramount covet Warner Bros. for its leading film and television studios, extensive content library, and major franchises such as “Game of Thrones,” “Harry Potter,” and the DC Comics superheroes Batman and Superman. Paramount, which owns CBS, will also acquire Warner Bros.’ television networks, including CNN and TNT, assets that were slated to be a separate, publicly traded company, Discovery Global, before the merger with Netflix.
Several analysts stated that the new offer signals Paramount’s confidence that the deal with Netflix may not be approved by regulatory authorities and that it offers an easier path to approval, but it may not be enough to sway investors who were expecting a higher bid.
“It’s unlikely that the most advantageous deal will steer WBD away from Netflix and closer to Paramount. Is Paramount just throwing spaghetti at the wall and hoping something sticks?” said Ross Benes, senior analyst at Emarketer. Besides raising the price, Paramount’s best chance of stealing WBD is if external regulators block Netflix.
Representatives from Warner Bros. Discovery and Netflix did not comment on the matter.
SIGNIFICANT IMPROVEMENTS
Paramount also revealed several other measures aimed directly at responding to criticism of its offer from the Warner Bros. board of directors.
The company said it will support the debt swap planned by Warner Bros., offering to fully reimburse the potential $1.5 billion fee owed to bondholders, without reducing the separate $5.8 billion reverse termination fee owed to Netflix, should the merger deal with Warner Bros. not go through.
“We are making significant improvements by supporting this offering with billions of dollars, providing shareholders with certainty of value, a clear regulatory path, and protection against market volatility,” said Paramount CEO David Ellison in a statement.
Paramount also increased the personal guarantee of Oracle co-founder Larry Ellison to $43.3 billion and expects to finance the deal with $54 billion in debt from Bank of America, Citigroup, and Apollo.
Warner Bros. could not be reached immediately for comment.
Uncertainty surrounding Discovery Global
Paramount said it is open to discussing contractual solutions with Warner Bros. management to address the possibility that Discovery Global’s financial performance may continue to deteriorate beyond what is projected.
The company argued that Netflix’s offer leaves Warner Bros. shareholders exposed to significant uncertainty, since the amount of money they will receive depends entirely on Discovery Global’s financial situation at the time of the spin-off.
Paramount estimated that if Discovery Global is spun off with leverage similar to Comcast’s spin-off of most of its cable networks from NBCUniversal to Versant, Netflix’s cash value for the business would fall to $23.20 per share.
The company led by David Ellison has extended the deadline for its offer until February 20th.
For Netflix, gaining access to Warner Bros.’ key assets, from “Friends” to “Batman,” could give it the cultural power to develop a new wave of spin-offs, prequels, and sequels exclusive to streaming. This would also make Netflix the largest global streaming company, with approximately half a billion subscribers.
Warner Bros. will hold a special meeting with investors to vote on the deal with Netflix, with the streaming pioneer stating that the meeting should take place by April.
Last month, Netflix switched to an all-cash offer for Warner Bros., without raising its price tag of $82.7 billion.
Warner Bros. management stated that the merger agreement with Netflix is superior to Paramount’s offer because its investors will retain a stake in Discovery Global, which was negotiated separately.
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