Paramount raises bid for Warner Bros Discovery to counter Netflix
What's the story
Paramount Skydance has upped its offer for Warner Bros Discovery in a strategic move to thwart the latter's deal with Netflix. The bidding war over this coveted Hollywood asset, which includes the Harry Potter and Game of Thrones franchises, is heating up. The new bid from Paramount improves its initial offer of $108.4 billion ($30 per share) for the entire company and seeks to address Warner Bros' concerns over financing certainty.
Preferred choice
Netflix's offer stands at $82.7 billion
Warner Bros' preferred suitor, Netflix, had offered to buy the studios and streaming assets for $27.75 per share in cash ($82.7 billion). The streaming giant has enough cash reserves and could increase its offer for HBO Max owner. Paramount's rival bid is backed by Oracle billionaire Larry Ellison. Warner Bros had rejected an enhanced bid from CBS parent that included paying a $2.8 billion termination fee to Netflix and adding a 25-cent per share quarterly "ticking fee" from next year.
Revised proposal
Analysts suggest Paramount needs to go higher
Paramount was given a seven-day deadline until February 23 to submit a revised offer. Analysts had earlier suggested that an offer around $34 per share from Paramount would end the bidding war. Warner Bros plans to spin off its cable TV assets into Discovery Global, which could fetch between $1.33 and $6.86 a share, according to estimates by Warner Bros.
Offer comparison
Paramount dismisses cable spinoff as virtually worthless
Netflix has claimed its offer gives Warner Bros shareholders added upside from the Discovery Global spinoff, which is expected to add value by giving the new company greater strategic, operational, and financial flexibility. However, Paramount has dismissed the cable spinoff central to Netflix's offer as virtually worthless. Meanwhile, Ancora Capital has pressured Warner Bros after building a roughly $200 million stake in the HBO owner and accusing it of not properly engaging with Paramount.
Decision date
Warner Bros shareholders set to vote on March 20
Warner Bros shareholders will decide the fate of Netflix's offer on March 20. The vote is expected to be a key moment in this high-stakes bidding war for one of Hollywood's most iconic movie studios. A green light from investors would move the deal forward but still face intense scrutiny from US and European competition authorities. They will assess whether combining Netflix's global streaming power with Warner Bros' century-old studio assets would reduce competition or limit consumer choice.