Paramount raises offer for Warner Bros Discovery to counter Netflix bid: Report

In an escalation of one of Hollywood’s biggest takeover battles, Paramount Skydance has submitted a higher offer for Warner Bros Discovery, seeking to derail the HBO Max owner’s agreed deal with Netflix, Reuters reported on Monday, citing a source familiar with the matter.

The revised proposal improves on Paramount’s earlier $108.4 billion all-cash offer, or $30 per share, for the entire company, the report said. Details of the sweetened bid were not immediately clear, but the report said the changes were aimed at addressing Warner Bros’ concerns over financing certainty.

High-stakes streaming showdown

The bidding war underscores the strategic value of Warner Bros’ crown jewels — including the “Harry Potter” and “Game of Thrones” franchises — in an increasingly streaming-led media landscape.

Netflix had agreed to acquire Warner Bros’ studios and streaming assets for $27.75 per share in cash, valuing the deal at $82.7 billion. Under the terms of that agreement, Netflix is allowed to match any superior proposal.

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A report by Variety late Monday said that Warner Bros’ board was likely to review the revised Paramount offer while continuing to recommend the Netflix deal to shareholders.

Investors are scheduled to vote on Netflix’s proposal on March 20, in what could prove to be a decisive moment in the future ownership of one of Hollywood’s most storied studios.

Pressure mounts on Warner board

The contest has intensified after activist investor Ancora Capital built a roughly $200 million stake in Warner Bros and urged the company to re-engage with Paramount. Ancora has warned it would vote against the Netflix deal and seek to hold directors accountable at the company’s annual meeting if discussions with Paramount are not reopened.

Earlier this month, Warner Bros rejected a revised February 10 offer from Paramount that included covering a $2.8 billion termination fee payable to Netflix and offering a 25-cent quarterly “ticking fee” from next year to compensate shareholders for delays in closing. The board had given Paramount until February 23 to submit what it described as a superior proposal.

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Analysts at MoffettNathanson have said a bid in the region of $34 per share could end the standoff and avoid prolonged debate over the value of Warner Bros’ planned cable spinoff.

Spinoff dispute at the heart of valuation

A key sticking point in the negotiations is Warner Bros’ plan to spin off its cable television assets — including CNN and HGTV — into a new entity, Discovery Global. The company estimates the spinoff could add between $1.33 and $6.86 per share in value.

Netflix has argued its offer provides shareholders with upside from the Discovery Global separation, saying the transaction would give the spun-off business greater strategic and financial flexibility.

Paramount, however, has dismissed the proposed cable spinoff as effectively worthless, contending that the long-term decline in linear television undermines its valuation.

Regulatory hurdles loom

Even if shareholders approve Netflix’s offer, the deal would face intense scrutiny from US and European competition authorities.

Regulators will examine whether combining Netflix’s global streaming footprint with Warner Bros’ century-old studio assets would reduce competition or limit consumer choice. A bipartisan group of US lawmakers has already raised concerns about potential harm to consumers and creative professionals.

Paramount has said it has secured foreign-investment clearance in Germany and is in discussions with antitrust regulators in the United States, the European Union and the United Kingdom. It has repeatedly argued that its proposal offers a clearer path to regulatory approval than Netflix’s.

Still, a Paramount-Warner combination would create a studio larger than market leader The Walt Disney Company, and merge two major television operators — a prospect that some Democratic senators have warned could concentrate too much control over American viewing habits.

With inputs from agencies.