Warner Bros. Discovery (WBD) has announced a significant development regarding its ongoing negotiations with Paramount, as the company’s board has deemed a revised proposal from Paramount could potentially lead to a “Company Superior Proposal.” This decision comes in the context of WBD’s existing merger agreement with Netflix, prompting further discussions between the two companies.
The enhanced bid from Paramount includes a cash offer of $31 per share, along with a daily ticking fee of $0.25 per quarter that would commence after September 30, 2026. It also proposes a substantial $7 billion regulatory termination fee which Paramount would need to pay if the deal is obstructed by regulatory hurdles. Additionally, Paramount would be responsible for the $2.8 billion termination fee that WBD must pay to Netflix if they decide to end their current agreement. This new proposal obligates Paramount to contribute further equity funding, as required by PSKY’s lending institutions, and modifies the “Company Material Adverse Effect” clause to exclude uncertainties regarding WBD’s Global Linear Networks business performance.
The inclusion of a Material Adverse Effect clause allows the buyer to renegotiate terms or even terminate the deal if unforeseen circumstances adversely impact the financial standing of the company, which in this case could pertain to cable operations.
Both Paramount and WBD confirmed the revised offer, although specific details remain limited. Initial expectations were that Paramount would increase its offer above $30, and the additional dollar increase was enough to reignite negotiations, particularly as it addresses several concerns raised by Warner.
WBD has clarified that it has not yet decided whether the updated proposal from PSKY can indeed be categorized as superior to the Netflix merger. This lingering ambiguity allows WBD to engage further with Paramount to explore the possibility of reaching an agreement. Should WBD’s board determine that Paramount’s proposal is superior to the Netflix merger, it would allow Netflix a four-business-day window to negotiate and potentially revise its existing transaction.
Despite these developments, WBD has emphasized that the current Netflix deal remains intact, and the board continues to recommend moving forward with it without any revisions to their stance.
Netflix has refrained from commenting on the situation publicly. The streaming giant is in the midst of a deal to acquire Warner’s studio and streaming assets for $27.75 per share in cash, while also laying plans to spin off WBD’s cable networks into a standalone public entity where shareholders would receive stock.
Paramount has been actively pursuing WBD since last fall, initiating unsolicited offers shortly after concluding the merger with Skydance. Following WBD’s decision to open an auction process, Netflix ultimately was selected over Paramount and other bidders, culminating in a deal announced on December 5. Since then, Paramount has made various attempts to present its offer to WBD, but these overtures have only recently gained traction.
This evolving situation illustrates the dynamic and competitive nature of the media landscape, particularly as companies assess their strategic partnerships and market presence in an ever-changing environment.