Warner Bros.’ Discovery board announced Tuesday that Paramount Skydance’s revised bid of $31 per share could be “reasonably expected” to result in a “superior offer” in a potential acquisition deal with Netflix.
A press release issued by David Zaslav’s company said that WBD’s board has “not made a decision” on whether the proposed amendment is “better” than the merger agreement with Netflix, and that WBD plans to “further engage” with Paramount to determine whether it can arrive at “the company’s superior proposal” (as that term is defined within the language of the existing Netflix agreement). Warner Bros. Discovery said that if the board determines that such a transaction has been received, Netflix will “negotiate with WBD within four business days of its determination and propose amendments to the Netflix transaction.”
Late Tuesday, Paramount issued a statement announcing a tally of elements that had changed since the previous revised proposal submitted earlier this month.
“Paramount welcomes the WBD Board’s decision and looks forward to continuing to engage constructively with WBD to deliver the benefits of Paramount’s proposal to WBD shareholders, the creative community, and consumers,” Paramount said in a statement.
Key elements:
Increased acquisition price to $31 per share in cash. The start of the $0.25 daily “ticking fee” per quarter will be brought forward from January 30, 2026, until the Paramount deal closes, instead of starting in January. Increases regulatory break-up fees to $7 billion if a deal is not completed due to regulatory issues. Reaffirms that WBD will pay the $2.8 billion termination fee required to be paid to Netflix to terminate the existing Netflix Merger Agreement; Reaffirms that it will eliminate WBD’s potential $1.5 billion in financing costs associated with the proposed debt exchange; Agree to an obligation to contribute additional equity funds to the extent necessary to support the certificate of solvency required by PSKY’s lending banks; and agree to the definition of “materially adverse to the Company” prior to the closing of WBD’s linear If the network drops faster than expected, the price will not be lowered.
Netflix’s deal, which includes the acquisitions of Warner Bros. and HBO Max, is worth nearly $83 billion. Paramount recently submitted a $108 billion all-cash offer for all of WBD, including its linear cable channels. Paramount’s new offer adds $1 to the per-share price, bringing the total to about $111 billion, including the $33 billion in debt that WBD carries on its books.
As it stands, Warner Bros. Discovery’s Netflix deal remains in effect, and the WBD board continues to recommend in favor of the deal, with a vote expected on March 20th. Warner Bros. Discovery stressed that there is “no guarantee” that the board will decide the deal is better than the Netflix merger or that a “definitive agreement or transaction” will be reached through further discussions with Paramount.
Paramount’s new bid includes an increased purchase price of $31 per WBD share, plus a 25-cent daily ticking fee per quarter starting September 30, a $7 billion deregulation fee that Paramount Skydance would pay if the deal fails due to regulatory issues, and a $2.8 billion termination fee that Warner Bros. Discovery would have to pay to Netflix to exit its existing merger agreement.
In addition, Paramount’s new proposal includes additional funding required by Paramount Skydance’s lending banks “to the extent necessary to support the solvency certificate” and a definition of “material adverse impact on the company” that excludes the performance of WBD’s linear network business.
A representative for Netflix declined Variety’s request for comment on Tuesday. Paramount will announce its fourth quarter 2025 earnings on February 25th.
On Monday, the WBD board ended a busy seven days by seeking Netflix’s approval to engage in discussions with Paramount to “seek clarity” about Netflix’s “best and final offer.” In a letter to Paramount’s board from Warner Bros. Discovery CEO Zaslav and board chairman Samuel Di Piazza Jr., WBD asked Paramount Skydance to “clarify its proposal, which we understand includes a price per share of WBD exceeding $31.”
Under Netflix’s current deal with WBD, the streamer will acquire Warner Bros.’ studio and streaming business for $27.75 per share. WBD shareholders would retain a stake in the company’s proposed spinoff entity, Discovery Global, which operates CNN, TBS and other linear networks.
If Netflix raises its offer above $30 per share, “it would be difficult to make the accretion math work,” Fishman wrote. This factored in increased debt, “potential cannibalization of revenues, and necessary reductions in programming spending.”
“While we believe there are long-term benefits to owning Warner Bros., HBO, and HBO Max, we expect NFLX to follow a disciplined approach and exit the transaction if PSKY forces a bid significantly above $32 per share,” Moffett Nathanson analysts continued. “If PSKY decides to take a less aggressive approach during this exemption period, giving NFLX the opportunity to compete with a more modest increase from its current bid, we believe it will be difficult for PSKY to win a bidding war for WBD.”
Meanwhile, Donald Trump remains a wild card in the deal between Netflix and the World Bank and will face intense antitrust scrutiny after he said earlier this month that he would not be involved in reviewing the deal. In a social media post on Saturday, Netflix demanded that board member Susan Rice be “immediately terminated” or “pay the consequences.” Trump cited a tweet from far-right commentator Laura Loomer, who said Rice, who served as ambassador to the United Nations under Obama, was “threatening half the country with political retaliation by armed government.” Loomer also bizarrely claimed that if Netflix were allowed to acquire Warner Bros., “positive messages about the Democratic Party’s upcoming witch hunt against Trump by Barack Hussein Obama and his anti-white racist wife Michelle would likely be broadcast to all streaming services.”
On Tuesday afternoon, it was revealed that David Ellison is scheduled to attend President Trump’s State of the Union address, a move that will no doubt earn him praise from the president.
In recent weeks, the Justice Department has expanded its review of the proposed deal between Netflix and the World Bank, investigating whether the combined company would violate antitrust laws regarding the entertainment programming market. The Justice Department’s antitrust division contacted independent studios asking whether Netflix’s acquisition of Warner Bros. “could materially reduce competition or tend to create a monopoly in violation of Section 7 of the Clayton Act or Section 2 of the Sherman Act,” according to a copy of the letter seen by Variety.
Netflix claims that it does not have anything close to monopoly control in any market. In a statement to Bloomberg about the Justice Department’s expanded investigation, Chief Counsel David Heyman said, “Netflix operates in a highly competitive market. Any claims that it is or is attempting to monopolize are baseless. We do not hold a monopoly or engage in exclusive behavior, and as always, we are happy to cooperate with regulators regarding any concerns they may have.”
On Friday, Paramount announced that its proposed acquisition of WBD cleared a Justice Department milestone following the expiration of the statutory waiting period for Paramount Skydance’s “Certification of Compliance” with the Department’s second request for information under the Hart-Scott-Rodino Antitrust Act. Netflix’s Mr. Hyman accused Paramount of continuing to “mislead shareholders and distract from the facts,” and said, “HSR’s periodic milestones do not indicate approval from the Department of Justice or that any decisions have been made.”
Todd Spangler contributed to this report.
