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.”
Netflix’s deal, which includes the acquisitions of Warner Bros. and HBO Max, is worth nearly $83 billion. Paramount recently submitted a $108 billion offer for all of WBD, including the cable channels. Paramount’s new proposal is approximately $112 billion.
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.
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.”
