24 Feb (Reuters) – Warner Bros Discovery said on Tuesday that it was considering a new offer from Paramount Skydance, without disclosing the value of the deal, as the owner of CBS makes a last-ditch effort to prevent Netflix from buying the coveted Hollywood studio.
The latest offer is higher than Paramount’s previous proposal of $30 per share in cash, or $108.4 billion including debt, for all of Warner Bros., a source familiar with the matter told Reuters on Monday.
The offer came after a week of negotiations between the companies to address concerns that led HBO’s parent company to reject earlier proposals from Paramount in favor of Netflix’s deal of $27.75 per share, or $82.7 billion, for its studio and streaming assets.
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“The merger agreement with Netflix remains in effect and the Board continues to favorably recommend the transaction with Netflix,” Warner Bros. said in a statement.
Paramount said it had submitted a revised proposal, while Netflix did not immediately respond to a request for comment.
Shares of Netflix fell nearly 1% in early trading, while Warner Bros rose 0.8% and Paramount remained largely unchanged.
Analysts at MoffettNathanson said an offer from Paramount in the range of $34 per share would end the dispute and ‘prevent further debate over the value of Discovery Global’.
According to Warner Bros. estimates, Discovery Global could be traded for values between US$1.33 and US$6.86 per share.
If Warner Bros. consider Paramount’s new proposal superior to the agreement with Netflix, the streaming pioneer will have four days to respond, according to the agreement announced in December.
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HIGH RISK BATTLE
Either deal will reshape Hollywood’s power structure, handing the suitor one of the industry’s most coveted studios and an extensive catalog of content, as well as major franchises such as ‘Game of Thrones’, ‘Harry Potter’ and DC Comics. Netflix has plenty of cash on hand and could increase its bid for the owner of HBO Max. The company argues that its deal offers better value to investors, in part due to the spin-off of Warner Bros.’ cable TV assets. before acquisition.
Paramount, which has offered to buy all of Warner Bros, including the TV assets, believes these cable TV assets are worth virtually nothing.
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The company that owns CBS, led by Chief Executive David Ellison, believes it has an easier path to U.S. regulatory approval for a deal with Warner Bros. due to its close ties to the Trump administration.
To reassure investors, Paramount offered to cover the $2.8 billion fee that Warner Bros. Netflix would have to pay Netflix if the deal is canceled, in addition to paying around $650 million in cash for each quarter the deal isn’t completed after this year. The resumption of negotiations with Paramount also comes after pressure from Ancora Holdings, an activist investor that accumulated a stake of approximately US$200 million in the owner of HBO and accused the company of not properly dialoging with Paramount.
The investor criticized the Warner Bros. board. for accepting an inferior agreement and betting on an uncertain split. She plans to vote against the Netflix deal if Warner Bros. refuse to resume negotiations with Paramount.
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Warner Bros. shareholders said earlier this month that they would hold a vote on the Netflix deal on March 20th.
