Paramount Enhances Offer to Counter Netflix’s Move
In a strategic move, Paramount has revised its proposal in the ongoing acquisition battle against Netflix over Warner Bros. Discovery (WBD). The entertainment giant, led by David Ellison, is intensifying its efforts to win over WBD shareholders.
Paramount’s Enhanced Offer
On Tuesday, Paramount announced plans to pay WBD shareholders approximately $650 million for every quarter that the Netflix deal remains unclosed, starting from 2027. This comes in addition to a commitment to cover the $2.8 billion breakup fee WBD would incur if its agreement with Netflix falls through, as disclosed in a recent SEC filing.
Context of the Acquisition
WBD is currently working towards finalizing an $83 billion deal to sell its studios and streaming assets to Netflix. Last month, Netflix shifted its proposal to an all-cash offer, which may have influenced WBD’s shareholders. Importantly, WBD’s remaining cable networks, including CNN, will be spun off into a new entity called Discovery Global.
No Increase in Initial Offer
Despite enhancing its terms, Paramount has not increased its existing cash offer of $30 per share for the entire company, which includes CNN. Ellison remarked that these enhancements are designed to provide WBD shareholders with certainty of value and assurance against market volatility.
Reactions from WBD Shareholders
Following the announcement, WBD’s shares rose by approximately 1%. However, evidence suggests a lack of significant support for Paramount’s proposal among shareholders. WBD has reported that over 93% of its shareholders are rejecting what they deem as Paramount’s inferior offer. A special meeting for WBD’s shareholders is expected to take place in late March or early April.
Netflix’s Counteractions
Amidst these developments, Netflix is heightening its public relations efforts to counter Paramount’s hostile bid. Clete Willems, Netflix’s chief global affairs officer, expressed concerns about Paramount’s proposal during a recent interview on the Fox Business Network. He pointed out that Paramount’s claimed synergies of $6 billion imply potential job cuts.
Willems also addressed ongoing concerns regarding a Department of Justice investigation into Netflix’s business practices, asserting that such reviews are standard during merger evaluations.
