Paramount Skydance has reportedly submitted a higher offer for Warner Bros Discovery, escalating efforts to disrupt the HBO Max owner’s potential deal with Netflix.
A source familiar with the matter told Reuters on Monday that the improved bid aims to address Warner Bros’ concerns about financing certainty.
This intensified bidding war for coveted Hollywood assets, including the Harry Potter and Game of Thrones franchises, highlights the growing competition in the streaming market. Paramount’s initial offer stood at $108.4 billion, or $30 per share, for the entire company.
The specifics of the revised bid were not immediately clear. Warner Bros and Paramount declined to comment, and Netflix could not be reached.
Warner Bros’ chosen suitor Netflix, which offered to buy the studios and streaming assets for $27.75 per share in cash, or $82.7 billion, is allowed to match the latest bid from David Ellison-led Paramount.
Netflix has ample cash and could bump up its offer for HBO Max owner, while Paramount’s rival bid is backed by Oracle ORCL.N billionaire Larry Ellison.
The CBS parent was asked to submit its “best and final offer” after Warner Bros rejected an enhanced bid that included paying the $2.8 billion in termination fee to Netflix and adding a 25-cent per share quarterly “ticking fee” from next year to compensate Warner Bros shareholders for any delay in deal closure.
Warner Bros had said Paramount’s February 10 offer still falls short of what its board would consider a superior proposal and gave a seven-day deadline until February 23 to submit a revised offer.
MoffettNathanson analysts had earlier said that an offer in the range of $34 per share from Paramount would end the bidding war and “avoid further debate over Discovery Global’s value.”
Warner Bros plans to spin off Discovery Global, which holds cable TV assets such as CNN and HGTV, could fetch between $1.33 and $6.86 a share, according to Warner Bros estimates.
Netflix said its offer gives Warner Bros shareholders added upside from the Discovery Global spinoff, which WBD argues will add value by giving the new company greater strategic, operational and financial flexibility.
However, Paramount has said the cable spinoff central to the streaming giant’s offer is effectively worthless.
The David Zaslav-led Warner Bros came under pressure from Ancora Capital after the activist investor built a roughly $200 million stake in the HBO owner and accused the company of failing to adequately engage with Paramount.
The investor warned if Warner Bros refuses to re-enter discussions with Paramount, it will vote against the Netflix deal and hold the company’s board accountable during its annual meeting.
Regulatory Scrutiny
Warner Bros shareholders were set to decide the fate of Netflix’s offer on March 20, with the vote expected to be a pivotal moment in the high-stakes bidding war to seal the future of one of Hollywood’s most iconic movie studios.
A green light from investors would move the deal forward, but it would still face intense scrutiny from U.S. and European competition authorities, who must assess whether combining Netflix’s NFLX.O global streaming power with Warner Bros’ WBD.O century-old studio assets would reduce competition or limit consumer choice.
A bipartisan array of lawmakers have raised concerns about the potential harm for consumers and creatives.
Paramount said it has already secured foreign-investment clearance in Germany and is in talks with antitrust regulators in the U.S., the European Union and the UK. Paramount has repeatedly argued it has a clearer path to regulatory approval than Netflix.
Paramount’s bid will create a studio bigger than market leader Disney DIS.N and fuse two major TV operators, which some Democratic senators say will control “almost everything Americans watch on TV”.
It will also hand control of CNN to the conservative-leaning Ellisons, soon after they acquired CBS News and installed Bari Weiss as its editor-in-chief.
For Netflix, a combination with HBO Max would make it the biggest global streaming player, with roughly half a billion subscribers.
Netflix co-CEO Ted Sarandos has voiced confidence in winning approval, saying the company’s bid would be better for Hollywood as it would avoid job cuts in an industry already hit by fewer productions and uneven box-office returns.
The streaming pioneer said during deal talks the potential combination of its streaming service with HBO Max would benefit consumers by lowering the cost of a bundled offering.
But its argument that it needs Warner Bros to compete with YouTube, America’s most-watched TV distributor, is likely to face pushback from the Department of Justice.
As part of its regulatory review, the U.S. Department of Justice is examining whether Netflix engaged in anti-competitive practice.
Netflix has pointed to statistics by media analysis firm Nielsen that say Google’s YouTube accounts for more viewing time on U.S. televisions than other streaming services.
