Warner Bros. Discovery’s board is poised to reject a revised takeover offer submitted by Paramount Skydance last week as David Ellison continues his pursuit of assets he believes are essential to building a 21st century Hollywood stalwart.
Bloomberg News reported on Tuesday that the WBD board is expected to reject Paramount Skydance’s much-hyped amendment on December 22nd. WBD has already agreed to merge with Netflix in a deal worth more than $80 billion.
However, Paramount Skydance is not giving up and is making a takeover offer to WBD shareholders. As this tug-of-war unfolds in press releases, conference calls, and Securities and Exchange Commission filings, WBD stock has soared more than 170% this year, even though the stock has traded below $10 for most of 2024 and has been in the doldrums. Bloomberg reported that the WBD board will meet next week to formally vote on a response to Paramount’s latest proposal. A representative for WBD declined to comment on the matter.
The WBD board’s expected decision is not surprising, given there are no signs of a major shift in the board’s thinking about which company is best suited for Warner Bros. and HBO Max. The industry is also curious about how far Paramount intends to go to raise its bid above the current $30 per share price.
Paramount’s revised offer last week primarily concerned the financing of an all-cash deal. David Ellison’s father, software billionaire Larry Ellison, has taken steps to address concerns expressed by WBD about Paramount’s funding sources. Larry Ellison increased his personal stake in the deal by making a “$40.4 billion irrevocable personal guarantee” on Paramount’s $108 billion all-cash offer for all of WBD. This includes CNN, TNT, and several other established linear cable channels, which are currently scheduled to be spun off into independent companies next year.
Paramount’s Dec. 22 revised proposal also increased the penalty fee to match Netflix’s $5.8 billion payment to WBD if the deal fails regulatory review. Netflix’s contract value is just under $83 billion, but that doesn’t include linear cable channels. The Netflix deal is a combination of cash and stock.
If the WBD board is expected to reject it and Paramount increases its offer, the ball will move to Netflix’s court. It’s unclear what, if any, Netflix is willing to do.
