Warner Bros weighing revised bid from Paramount as bidding war escalates

Warner Bros Discovery revealed on Tuesday that it is contemplating a new bid from Paramount Skydance, in an effort to prevent Netflix from acquiring the highly sought-after Hollywood studio. The exact value of the proposed deal was not disclosed by Warner Bros. However, a source familiar with the matter disclosed that Paramount’s latest offer surpasses its previous bid of $30 per share in cash, amounting to $108.4 billion including debt, for the entirety of Warner Bros.

This recent development follows a series of discussions between the two companies to address concerns that led to Warner Bros rejecting previous bids from Paramount in favor of Netflix’s $27.75 per share, or $82.7 billion, deal for its studio and streaming assets. Despite the new offer from Paramount, Warner Bros reiterated its support for the Netflix merger agreement, stating that the Board continues to recommend the Netflix transaction.

Both Netflix and Paramount have yet to provide any comments regarding the latest bid. In premarket trading, shares of all three companies experienced a slight increase ranging between 0.4% and 0.8%. If Warner Bros deems the new bid from Paramount to be superior to the Netflix deal, the streaming giant will have a four-day window to respond, as stipulated in the agreement announced back in December.

Whichever deal ultimately materializes will significantly alter the landscape of Hollywood by granting the acquirer ownership of one of the industry’s most sought-after studios, along with an extensive content library and major franchises like “Game of Thrones,” “Harry Potter,” and DC Comics. Netflix, equipped with substantial cash reserves, has the capacity to enhance its offer for HBO Max owner Warner Bros. The company has argued that its proposal provides greater value to investors, particularly due to a planned spin-off of Warner Bros’ cable assets before the acquisition.

On the other hand, Paramount, which aims to acquire all of Warner Bros including its TV assets, deems the cable assets to be of minimal value. Led by CEO David Ellison, the CBS owner is confident in its ability to secure U.S. regulatory approval for a potential Warner Bros deal, given its close connections to the Trump administration. To instill confidence in investors, Paramount has offered to cover the $2.8 billion fee that Warner Bros would owe Netflix if the deal falls through, and to provide approximately $650 million more in cash for each quarter that the deal remains unresolved after this year.

The renewed negotiations between Warner Bros and Paramount were spurred by pressure from activist investor Ancora Capital, which recently acquired a stake of approximately $200 million in the HBO owner. Ancora Capital criticized Warner Bros for accepting an inferior deal and taking a gamble on an uncertain spinoff. The investor has expressed its intention to vote against the Netflix deal if Warner Bros does not resume discussions with Paramount.

With all these developments unfolding, the future ownership of Warner Bros remains uncertain as both Paramount and Netflix vie for control of the esteemed Hollywood studio.