Warner Bros. Reportedly Reconsiders Paramount Negotiations
Warner Bros. Discovery is reconsidering negotiations with Paramount following a recent, improved proposal from the latter. This development comes amid pressures related to their existing deal with Netflix.
Recent Developments in Warner Bros. and Paramount Negotiations
Two unnamed sources confirmed that Warner Bros. Discovery may reopen discussions with Paramount. Last week, Paramount submitted a revised proposal aimed at addressing Warner Bros. Discovery’s concerns.
Previous Offers and Current Situation
- In December, Warner Bros. Discovery agreed to sell its streaming and studios business to Netflix for $83 billion.
- Paramount previously made an offer of $108 billion for Warner Bros. Discovery, which the company rejected due to perceived risks.
Since then, Paramount has sought shareholder support and introduced enhancements to its bid without increasing the per-share price.
New Proposal Insights
- Paramount is now willing to cover a $2.8 billion fee owed to Netflix if the deal is terminated.
- Additionally, Paramount has agreed to assume Warner Bros. Discovery’s debt costs.
- The proposal includes a commitment to pay Warner Bros. Discovery’s shareholders approximately $650 million in cash starting in 2027 for each quarter the deal remains unclosed.
Board members at Warner Bros. Discovery are evaluating whether this proposal from Paramount could lead to a more advantageous deal.
Regulatory and Shareholder Considerations
Warner Bros. Discovery is obligated to notify Netflix if it chooses to engage with Paramount. This notification gives Netflix an opportunity to enhance its own offer. The deadline for Warner Bros. Discovery to respond to Paramount’s latest proposition is February 25.
- Meanwhile, some shareholders, notably Ancora, have expressed skepticism about the Netflix deal.
- Ancora has highlighted concerns regarding the valuation of Warner Bros. Discovery’s cable segment and possible regulatory hurdles.
Director Relationships and Market Reactions
Paramount, led by David Ellison, may have advantages with U.S. regulators, partly due to his father, Larry Ellison, a prominent figure in the tech industry. Larry Ellison is known for his connections with influential political leaders.
On the market front, Warner Bros. Discovery’s shares have decreased by around 1.8% since the beginning of the year, whereas Netflix shares have seen a sharper decline of about 15%.
Currently, Warner Bros. Discovery is waiting for approval from the Securities and Exchange Commission to proceed with scheduling a shareholder vote on the Netflix deal, which is expected to occur by mid-March.
