Paramount’s Enhanced Offer Could Secure Warner’s Preferred Deal Over Netflix
Warner Bros. Discovery (WBD) is currently evaluating a revised proposal from Paramount, which could enhance its position over the existing agreement with Netflix. This latest offer is characterized as what WBD calls a “Company Superior Proposal,” potentially influencing the merger terms.
Details of Paramount’s Enhanced Offer
The key elements of Paramount’s new bid include:
- Increased purchase price of $31 per share in cash.
- A ticking fee of $0.25 per quarter, starting after September 30, 2026.
- A $7 billion termination fee if regulatory issues arise, payable by Paramount.
- A $2.8 billion fee for WBD’s existing Netflix deal, to be covered by Paramount.
- Commitment for additional equity funding, ensuring compliance with lending bank requirements.
- A “Company Material Adverse Effect” clause excluding WBD’s Global Linear Networks business performance.
Next Steps for WBD and Paramount
WBD’s board has not yet determined if Paramount’s offer constitutes a superior proposal compared to Netflix. However, this review allows WBD to further engage with Paramount to seek a potential agreement. If a superior proposal emerges, Netflix would have four business days to renegotiate its terms.
Despite the ongoing discussions, WBD remains committed to its current agreement with Netflix. The board maintains its recommendation in favor of the deal, which is valued at $27.75 per share for Warner’s studio and streaming assets.
Background on the Proposed Merger
Paramount’s interest in acquiring Warner has been evident since last fall, following its merger with Skydance. After WBD opted for Netflix in December 2022, Paramount pursued a hostile tender offer directly with shareholders to advance its bid. However, WBD has previously rejected these offers.
As WBD navigates these negotiations, the outcome remains uncertain. The future of its merger with Netflix hangs in the balance as discussions with Paramount unfold.
