is in exclusive negotiations to purchase Warner Bros. Discovery’s film and television studios, along with its streaming HBO Max, in a transaction valued at $28 per share, a source close to the talks told Reuters on Thursday.
The two companies could announce a deal in the coming days, assuming talks are successful, according to several people familiar with the talks cited by Bloomberg.
Warner Bros Discovery has been looking for a buyer for part or all of its business for months and Netflix would have prevailed as the main bidder over Paramount and Comcast, which also, given Warner’s enormous and attractive catalogue. The platform’s proposed acquisition is expected to reduce subscription costs for consumers by bundling Netflix and HBO Max.
The success of the purchase would give Netflix control of an immense catalog, including the entire Warner Bros. archive or the DC Comics universe, and the complete HBO collection. And although analysts point out that the union would not excessively expand Netflix’s market share, it would strengthen its position against other rivals.
Bloomberg reported that Netflix is willing to offer up to an additional $5 billion if government regulators try to block the purchase process by enforcing antitrust law. CNBC had previously reported that Netflix had submitted a proposal that consisted of 85% cash for the assets it intends to acquire. Netflix and Warner Bros Discovery have declined to comment on the reports.
News of a possible deal has led a consortium of leading film industry figures to urge the US Congress to intervene if Netflix’s bid is successful, warning of an imminent economic and institutional crisis in Hollywood, Variety reported.
Paramount anger
According to the ‘Wall Street Journal’, Warner Bros. Discovery would be seeking another final round of offers from interested parties, after it accused Warner of carrying out an unfair sales process that favors Netflix over other bidders. Warner Bros. Discovery reportedly received improved offers from potential bidders — Paramount, Comcast and Netflix — earlier this week, after asking them to improve initial offers submitted in late November.
In the letter to Warner Bros Discovery CEO David Zaslav, Paramount’s legal team has expressed concerns about the “fairness and appropriateness” of the bidding process, citing media reports that Warner Bros Discovery management favors Netflix’s proposal. Paramount Skydance, led by David Ellison, has requested confirmation about whether Warner Bros. Discovery has formed a special independent committee of impartial board members to evaluate the offers and oversee the sales process, according to the letter.
“We strongly urge you to grant powers to such a special committee composed of directors that do not give rise to suspicions of bias or dependence on other persons whose interests may differ from those of the shareholders,” Paramount’s legal team stated in the letter.
Paramount has attempted to buy the entire company. In October, Warner Bros. Discovery’s board of directors rejected a roughly $60 billion offer from Paramount and subsequently began a formal sale process.
