The fight to take control of Warner Bros Discovery has intensified after Paramount Skydance increased its takeover bid, reported news agency Reuters. The revised offer is aimed at challenging Netflix, which is currently Warner Bros’ preferred buyer.
The fresh bid marks another twist in what has become . Warner Bros Discovery owns some of Hollywood’s most recognised titles, including the Harry Potter and Game of Thrones franchises. The outcome of this contest could reshape the streaming market.
Paramount’s updated proposal improves on its earlier offer of $108.4 billion, or $30 per share, for the entire company.
As per the report, the new bid seeks to address concerns raised by Warner Bros about how certain Paramount’s financing arrangements are.
It had offered $27.75 per share in cash, valuing the studios and streaming assets at about $82.7 billion. Under the deal terms, Netflix has the right to match Paramount’s latest offer.
Netflix is seen as having strong cash reserves and could increase its bid. Paramount’s proposal is backed by Oracle billionaire Larry Ellison, father of Paramount Skydance’s David Ellison.
Earlier, Warner Bros rejected an improved proposal from Paramount. That version included covering Netflix’s $2.8 billion termination fee and adding a 25-cent per share quarterly “ticking fee” from next year. The ticking fee was meant to compensate shareholders for any delay in completing the transaction.
Warner Bros said the February 10 offer from Paramount did not qualify as a superior proposal. The board then asked Paramount to submit its “best and final offer” within seven days, setting a deadline of February 23.
Analysts at MoffettNathanson had previously said that a bid of around $34 per share from Paramount could bring the bidding war to an end and avoid further debate over the value of Discovery Global.
A key difference between the two offers is Warner Bros’ plan to spin off its cable television assets into a separate company called Discovery Global. These assets include CNN and HGTV. Warner Bros has estimated that the spinoff could be worth between $1.33 and $6.86 per share.
Netflix has argued that its offer gives Warner Bros shareholders additional upside from the Discovery Global spinoff. Warner Bros has also said that separating the cable business would give the new company more flexibility in strategy, operations and finances.
Paramount, however, has questioned the value of the cable assets. It has said the spinoff, which is central to Netflix’s offer, is effectively worthless.
Warner Bros, led by Chief Executive David Zaslav, has also faced pressure from activist investor Ancora Capital. The investor has built a stake of about $200 million in the company and accused it of failing to engage properly with Paramount.
Ancora has warned that if Warner Bros does not reopen discussions with Paramount, it will vote against the Netflix deal and hold the board accountable at the annual meeting.
Shares of Paramount rose 1.3% to $10.70 in extended trading after news of the revised offer, Reuters reported.
Warner Bros shareholders are scheduled to vote on Netflix’s offer on March 20. The outcome of that vote will be a key step in deciding the company’s future.
Even if shareholders approve the deal, it must still pass reviews by competition authorities in the United States and Europe. Regulators will assess whether a merger between Netflix’s global streaming platform and Warner Bros’ studio and TV assets could reduce competition or limit consumer choice.
Lawmakers from both major U.S. political parties have raised concerns about possible harm to consumers and content creators.
Paramount has said it has already received foreign investment clearance in Germany. It is also in discussions with antitrust regulators in the United States, the European Union and the United Kingdom. The company has argued that its offer faces fewer regulatory risks than Netflix’s.
If Paramount succeeds, the combined business would be larger than Disney and would bring together two major television operators. Some Democratic senators have said this could result in control over “almost everything Americans watch on TV”.
The transaction would also place CNN under the control of the Ellison family, who recently acquired CBS News and appointed journalist Bari Weiss as editor-in-chief.
For Netflix, acquiring HBO Max would create the largest global streaming service, with about 500 million subscribers.
Netflix co-CEO Ted Sarandos has said he is confident the deal would win approval. He has argued that Netflix’s proposal would be better for Hollywood because it would avoid job cuts in an industry already affected by fewer productions and uneven box office returns.
Netflix has also said that combining its service with HBO Max could lower costs for consumers by offering bundled services at a reduced price.
However, its claim that it needs Warner Bros to compete with YouTube, the most-watched TV distributor in the United States, is expected to face questions from the Department of Justice.
As part of its review, the U.S. Department of Justice is examining whether Netflix engaged in anti-competitive practices, according to Reuters.
Netflix has cited data from media measurement firm Nielsen showing that Google’s YouTube accounts for more viewing time on U.S. televisions than other streaming platforms.
The final decision will depend on shareholder support and regulatory clearance, as the battle for control of Warner Bros Discovery enters a critical stage.