Warner Bros. at Crossroads as Rival Bids Intensify
Warner Bros. Discovery is weighing whether to reopen merger discussions with Paramount Skydance Corp. after receiving sweetened takeover terms, according to people familiar with the matter, adding a fresh twist to an already high-stakes battle for control of the storied Hollywood studio.
Key Takeaways:
- Paramount has revised its offer, including covering a $2.8 billion breakup fee tied to Netflix.
- The new proposal could trigger a renewed bidding contest.
- Warner Bros. remains bound by its existing agreement and has made no formal decision.
- Shareholder pressure is mounting, though tender participation remains limited.
Directors at Warner Bros. Discovery are debating whether Paramount’s amended proposal could deliver a superior outcome for shareholders or ignite a renewed bidding war with Netflix Inc., the people said, asking not to be identified because the deliberations are private. The company remains bound by its existing agreement with Netflix.
Revised Terms Raise Stakes
Paramount Skydance has sought to address financial sticking points that previously complicated talks. The studio has offered to cover the $2.8 billion termination fee Warner Bros. would owe Netflix if it abandoned the current deal. It has also proposed to backstop the company’s debt refinancing and compensate shareholders should the transaction fail to close by Dec. 31, signaling confidence that regulators would ultimately approve the tie-up.
Warner Bros. earlier agreed to sell its film studio and HBO Max streaming platform to Netflix in a transaction valued at $27.75 a share. Paramount countered with a $30-per-share tender offer aimed directly at investors, while simultaneously pressing regulators to clear its alternative bid.
At the time of writing Warner Bros shares are priced at $27.99.
Both suitors have left the door open to higher offers. Paramount Chief Executive Officer David Ellison has said publicly that the company’s proposal is not necessarily final. Executives at Netflix have also indicated flexibility on price if circumstances require.
Market pressures are also intensifying. Netflix shares have declined in recent months amid investor concern over the scale and cost of acquiring Warner Bros., underscoring the delicate balance between strategic ambition and financial discipline. Analysts say that while both companies are motivated to secure prized assets, neither is eager to overpay.
Shareholder Pressure Builds
Chris Marangi, co-chief investment officer at Gabelli Funds, described Paramount’s revised approach as inventive in structure but said investors would likely welcome a higher headline bid. Some shareholders, including Pentwater Capital Management and Ancora Holdings Group, have publicly urged Warner Bros.’ board to engage with Paramount.
So far, however, support for Paramount’s tender offer has been muted, with less than 2% of outstanding shares committed, according to people familiar with the matter.
Should Warner Bros. formally re-engage, it would be required to notify Netflix under the terms of their agreement. Netflix would retain the right to match any superior proposal that emerges.
With regulatory scrutiny, shareholder activism and competitive bidding converging, the board’s next move could reshape the competitive landscape of the US media and streaming industry.
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