Paramount Skydance Raises Bid for Warner Bros Discovery Amidst Competitive Bidding War
Paramount Skydance's Increased Offer
Paramount Skydance has upped its bid to acquire Warner Bros Discovery, intensifying the competition and potentially sidelining Netflix. Warner Bros, which announced its intention to sell last year, confirmed that Paramount has increased its offer by $1 per share. The board of Warner Bros indicated that this revised bid could lead to a more favorable offer, prompting further discussions before deciding whether to abandon its current agreement with Netflix.
Netflix has four days to respond with a counter-offer but has not yet provided an immediate reaction. In a recent interview with a media outlet, Netflix co-CEO Ted Sarandos refrained from commenting on the possibility of a bidding war, describing the ongoing negotiations as a standard price-discovery process. He emphasized that Netflix is satisfied with its existing agreement and highlighted the company's disciplined approach to acquisitions.
Paramount, supported by tech mogul Larry Ellison and his son David Ellison, has been actively pursuing Warner Bros since last year to bolster its presence in Hollywood. Despite previous attempts, Warner Bros had turned down Paramount's earlier offers. In December, Warner Bros opted to sell its film and streaming divisions, including HBO, to Netflix in a deal valued at approximately $82 billion, or $27.75 per share, inclusive of debt. This arrangement would see Warner Bros spin off its remaining assets, such as traditional TV networks and CNN, into a separate entity.
After the initial rejection, Paramount has steadily enhanced its proposal. The original offer was $30 per share for the entire company, but the latest revision marks the first formal commitment to a higher price. Warner Bros has stated that Paramount is now proposing $31 per share in cash, with additional payments if the deal is delayed. Furthermore, Paramount has committed to a $7 billion reverse termination fee should the deal fall through and has agreed to cover the $2.8 billion breakup fee Warner Bros would owe Netflix.
The board has yet to reach a final decision. Both acquisition proposals are under political scrutiny, with lawmakers expressing concerns about potential market concentration and the broader implications for the entertainment sector. During a recent hearing in Washington, Sarandos faced inquiries regarding the viability of cinemas and potential consumer price hikes.
Paramount's connections to the Ellison family and their perceived associations with the Trump administration have also attracted attention from Democratic lawmakers. Warner Bros has stated it will continue discussions with Paramount to see if a definitive superior proposal can be established. Analysts suggest that Warner Bros may be fostering a bidding war, with Luke Stillman from a consultancy predicting that the final price could rise to approximately $33 per share if competition heats up.