The Warner Bros. Discovery board of directors announced Tuesday that a revised bid from Paramount Skydance of $31 per share could “reasonably be expected” to lead to a “superior proposal” in its potential acquisition deal with Netflix.
Per a press release issued by the David Zaslav-led company, WBD’s board “has not made a determination” as to whether the revised proposal is “superior” to the merger agreement in place with Netflix, and WBD “will engage further” with Paramount to determine if a “company superior proposal” — a term defined within the language of its existing Netflix pact — can be reached. If the board finds such a deal has been received, Warner Bros. Discovery says Netflix will “have four business days after such determination to negotiate with WBD and to propose any revisions to the Netflix transaction.”
Later on Tuesday, Paramount issued a statement and tally of the elements that changed from its previous amended offer fielded earlier this month.
“Paramount welcomes the WBD Board’s determination and looks forward to continuing to engage constructively with WBD to deliver the benefits of Paramount’s proposal to WBD shareholders, the creative community and consumers,” Paramount said in a statement.
Key elements:
- Increased the purchase price to $31 a share in cash;
- Accelerated timing of the daily “ticking fee” of $0.25 per quarter to begin after September 30, 2026, until the consummation of the Paramount transaction, rather than starting in January.
- Increased the regulatory breakup fee to $7 billion in the event the transaction does not close due to regulatory matters;
- Reaffirmed it will pay the $2.8 billion termination fee which WBD would be required to pay to Netflix to terminate its existing Netflix merger agreement,
- Reaffirmed it will eliminate WBD’s potential $1.5 billion financing cost associated with its debt exchange offer,
- Agreed to an obligation to contribute additional equity funding to the extent needed to support the solvency certificate required by PSKY’s lending banks, and
- Agreed to a “Company Material Adverse Effect” definition that means the price won’t be dropped if WBD’s linear networks decline faster than expected before the deal closes.
The Netflix deal, which includes buying Warner Bros. and HBO Max, is valued at nearly $83 billion. Paramount most recently fielded a $108 billion all-cash offer for the entirety of WBD, including its linear cable channels. By adding $1 to the per-share price, new Paramount proposal comes all-in at approximately $111 billion, including the $33 billion in debt that WBD is shouldering on its books.
As it stands, Warner Bros. Discovery’s Netflix agreement remains in effect, and the WBD board says it is continuing to recommend in favor of that deal, which is up for a vote on March 20. Warner Bros. Discovery emphasized that there’s “no assurance” that the board will find the transaction superior to the Netflix merger, or “that any definitive agreement or transaction” will come from further discussions with Paramount.
The new Paramount bid will include an increased purchase price of $31 per WBD share, plus a daily ticking fee of 25 cents per quarter beginning after Sept. 30, as well as a $7 billion regulatory termination fee payable by Paramount Skydance if the deal does not close due to regulatory matters, and payment of the $2.8 billion termination fee that Warner Bros. Discovery would be required to pay to Netflix to terminate their existing merger agreement.
Additionally, Paramount’s new proposal would include contribution of additional funding to “the extent needed to support the solvency certificate” required by Paramount Skydance’s lending banks, and a “company material adverse effect” definition that excludes the performance of WBD’s linear networks business.
A representative for Netflix declined Variety‘s request for comment Tuesday. Paramount reports its fourth quarter 2025 earnings on Feb. 25.
Monday wrapped a busy seven-day period in which the WBD board sought Netflix’s blessing to engage in discussions with Paramount to “seek clarity” on its “best and final offer.” WBD asked Paramount Skydance “to clarify your proposal, which we understand will include a WBD per share price higher than $31” in a letter from Warner Bros. Discovery CEO Zaslav and board chairman Samuel Di Piazza Jr. to Paramount’s board.
Under Netflix’s current agreement with WBD, the streamer would buy Warner Bros.’s studios and streaming businesses for $27.75 per share. WBD shareholders would retain equity in Discovery Global, the company’s proposed spin-off entity house CNN, TBS and other linear networks.
If Netflix were to up its offer above $30/share, “we have difficulty making the accretion math work,” Fishman wrote. That’s factoring in incremental debt, “likely revenue cannibalization and necessary programming spend cuts needed.”
“While we see the longer-term benefits of owning Warner Bros., HBO and HBO Max, we expect NFLX to walk away from the deal following a disciplined approach if PSKY pushes its bid well beyond $32 per share,” the MoffettNathanson analyst continued. “We think it will be difficult for PSKY to win the bidding war for WBD if it decides to take a less aggressive approach during this waiver period, giving NFLX the opportunity to match at a more modest increase from its current bid.”
Meanwhile, Donald Trump — after earlier this month saying he would not be involved in the review of the Netflix-WB pact — continues to be a wild card in the deal that will face tough scrutiny on the antitrust front. in a social media post Saturday demanded that Netflix “immediately fire” board member Susan Rice or else “pay the consequences.” Trump cited a tweet by far-right commentator Laura Loomer, who said Rice, who served as U.N. ambassador under Obama, was “threatening half of the country with weaponized government political retribution.” Loomer also bizarrely claimed that if Netflix is allowed to acquire Warner Bros., “positive messaging of the Democrats’ upcoming witch hunts against Trump from Barack Hussein Obama and his anti-White racist wife Michelle would likely be blasted across all streaming services.”
On Tuesday afternoon, it emerged that David Ellison was scheduled to attend Trump’s State of the Union address to Congress — a move that will undoubtedly draw praise from the president.
The Justice Department in recent weeks has expanded its review of the proposed Netflix-WB agreement to examine whether the combined company would violate antitrust laws with respect to the market for entertainment programming. The DOJ’s Antitrust Division has sent inquiries to independent studios inquiring whether the Netflix acquisition of Warner Bros. “may substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Act or Section 2 of the Sherman Act,” according to a copy of one of the letters reviewed by Variety.
Netflix has argued that it does not have anything close to monopoly control over any market. In a statement to Bloomberg about the expanded DOJ probe, chief legal counsel David Hyman said, “Netflix operates in an extremely competitive market. Any claim that it is a monopolist, or seeking to monopolize, is unfounded. We neither hold monopoly power nor engage in exclusionary conduct and we’ll gladly cooperate, as we always do, with regulators on any concerns they may have.”
On Friday, Paramount said its proposed WBD takeover had cleared a milestone at the DOJ, after the expiration of the statutory waiting period following Paramount Skydance’s “certification of compliance” with the Justice Department’s second request for information under the Hart-Scott-Rodino antitrust act. Netflix’s Hyman accused Paramount of continuing to “mislead stockholders and distract from the facts,” saying that “routine HSR milestones do not signal DOJ approval nor that any decision has been made.”
Todd Spangler contributed to this report.
