Warner Bros. Discovery has decided to resume discussions with Paramount, owned by Skydance, to consider their “best and final” proposal, despite its existing commitment to a deal with Netflix. The company, renowned for owning HBO Max and a vast library of popular content such as the Harry Potter series and DC superhero franchise, disclosed in a recent regulatory filing that Netflix has granted them a waiver to engage in talks with Paramount for the next seven days.
This move aims to address any outstanding issues and clarify specific terms of Paramount’s latest offer. While Paramount had previously made unsuccessful bids, including a hostile bid in December, Warner’s leadership reiterated their preference for the Netflix merger. In a letter to Paramount’s board, Warner Bros. chairman Samuel DiPiazza Jr. and CEO David Zaslav emphasized that they have not found Paramount’s proposal to be superior to the existing Netflix agreement.
The deal with Netflix, valued at $72 billion, involves the sale of Warner’s studio and streaming business, covering its TV and movie production arms along with HBO Max. The total enterprise value, including debt, amounts to approximately $83 billion. The decision to re-engage with Paramount represents a change for Warner Bros., as Paramount had previously expressed frustration over the lack of meaningful engagement before the Netflix merger announcement.
Both Warner Bros. and Netflix have expressed confidence in their existing agreement, despite the resumption of talks with Paramount. The streaming giant granted Warner a seven-day waiver to address the ongoing situation. Paramount, on the other hand, considers Warner’s recent actions as unusual but remains open to constructive discussions.
Paramount continues to pursue its tender offer of $30 per share, aiming to outbid Netflix’s proposal. Additionally, Paramount expressed willingness to raise its offer to $31 per share pending further engagement with Warner. The company has also introduced incentives such as a “ticking fee” and a commitment to cover Warner’s breakup payout to Netflix.
The potential deal will grant the acquirer ownership of Warner’s extensive film and television catalog, including iconic titles like Casablanca and Citizen Kane, as well as popular HBO shows like Game of Thrones. However, regulatory approval will be required for any sale due to industry concerns and implications. Warner Bros. has a shareholder vote scheduled for March 20 on the Netflix merger, with a stock rise noted for both Warner Bros. and Paramount Skydance ahead of the meeting.