Paramount Skydance has submitted a higher offer to Warner Bros. Discovery, people familiar with the matter told Reuters on Monday, as efforts to derail the HBO Max owner’s deal with Netflix accelerate.
Bidding wars for some of Hollywood’s most coveted productions, including the “Harry Potter” and “Game of Thrones” franchises, are raising the stakes for dominance in the streaming-driven market.
Paramount’s new bid improves on its original offer of $108.4 billion ($30 a share) for the entire company and is aimed at addressing Warner Bros.’ concerns about financing certainty, the people said.
Reuters could not immediately reveal how the bid was revised. Warner Bros. and Paramount declined to comment, while Netflix could not immediately be reached.
Warner Bros.’ preferred suitor, Netflix, has offered to buy the studio and streaming assets for $27.75 per share in cash, or $82.7 billion, which would match the latest bid from David Ellison’s Paramount.
Netflix has deep pockets and could increase its offer to HBO Max owners, while Paramount’s rival bid is backed by Oracle billionaire Larry Ellison.
CBS’ parent company was asked to submit its “best and final offer” after Warner Bros. rejected an enhanced bid that included paying Netflix a $2.8 billion termination fee and adding a “ticking fee” of 25 cents per share each quarter starting next year to compensate Warner Bros. shareholders for delays in closing the deal.
Warner Bros. said Paramount’s Feb. 10 proposal still fell short of what the board deemed a better proposal, and set a seven-day deadline, Feb. 23, to submit revised proposals.
Analysts at MoffettNathanson previously said Paramount’s offer in the range of $34 per share would end the bidding war and “avoid further debate over Discovery Global’s value.”
Warner Bros. plans to spin off its cable TV assets, including CNN and HGTV, into Discovery Global, which Warner Bros. estimates could be priced at between $1.33 and $6.86 per share.
Netflix said the offer would provide Warner Bros. shareholders with further benefits from the Discovery Global spin-off, and WBD claims it would give the new company greater strategic, operational and financial flexibility and added value.
But Paramount said the cable spinoff at the center of the streaming giant’s proposal is virtually worthless.
Warner Bros., led by David Zaslav, came under pressure from Ancora Capital after the activist investor built up about $200 million in stake in the HBO owner and accused the company of failing to properly engage with Paramount.
The investor warned that if Warner Bros. refused to resume talks with Paramount, he would vote against the Netflix deal and hold the company’s board accountable at the company’s annual general meeting.
Paramount shares rose 1.3% to $10.70 in extended trading.
Regulatory oversight
Warner Bros. shareholders are scheduled to decide the fate of the proposed Netflix takeover on March 20, with the vote expected to be a pivotal moment in a high-stakes bidding war for the future of one of Hollywood’s most iconic film studios.
The deal would move forward if it gets the green light from investors, but it will still face intense scrutiny from competition authorities in the United States and Europe. Regulators will need to assess whether combining Netflix’s global streaming power with Warner Bros.’ century-old studio assets reduces competition or limits consumer choice.
Bipartisan lawmakers have expressed concern about the potential harm to consumers and creatives.
Paramount said it has already secured permission for foreign investment in Germany and is in talks with antitrust regulators in the United States, European Union and United Kingdom. Paramount has repeatedly argued that it has a clearer path to regulatory approval than Netflix.
Paramount’s bid would create a studio bigger than market leader Disney and combine two major television operators, but some Democratic senators argue it would give the company control of “virtually everything Americans watch on television.”
Shortly after acquiring CBS News and appointing Bari Weiss as editor-in-chief, the company will hand over control of CNN to the conservative-leaning Ellisons.
In Netflix’s case, the combination with HBO Max would make it the world’s largest streaming player with about 500 million subscribers.
Netflix co-CEO Ted Sarandos expressed confidence in winning approval and said his company’s bid would be better for Hollywood because it would avoid layoffs in an industry already suffering from declining production numbers and uneven box office returns.
The streaming pioneer said during contract negotiations that a potential combination of its streaming service and HBO Max would benefit consumers by lowering the cost of bundled services.
But the group’s argument that Warner Bros. is needed to compete with YouTube, the most-watched television distribution company in the United States, is likely to face pushback from the Justice Department.
As part of its regulatory review, the U.S. Department of Justice is investigating whether Netflix engaged in anticompetitive conduct.
Netflix pointed to statistics from media analytics firm Nielsen that show Google’s YouTube accounts for more viewing time on U.S. television than any other streaming service.
(Reporting by Harshita Mary Varghese and Aditya Soni in Bengaluru; Additional reporting by Jaspreet Singh in Bengaluru; Editing by Arun Koyyur and Alan Barona)
