Paramount Submits Higher Offer For Warner Bros Discovery in Bid To Block Netflix: Report

Paramount Skydance has stepped up efforts to derail the HBO Max owner’s deal with Netflix by submitting a higher bid for Warner Bros. Discovery, a source with knowledge of the matter told Reuters on Monday.

A bidding war for one of Hollywood’s most coveted assets, including the “Harry Potter” and “Game of Thrones” franchises, has boosted its chances of dominance in the streaming-focused market.

Paramount’s new offer, which increases its initial offer for the entire company by $108.4 billion, or $30 per share, is aimed at allaying concerns about the certainty of Warner Bros. financing, the source said.

Reuters could not immediately determine how the proposal was revised. Warner Bros. and Paramount declined to comment, while Netflix could not immediately be reached.

Netflix, the suitor chosen by Warner Bros., which has offered to buy the studios and streaming assets for $27.75 per share or $82.7 billion in cash, was allowed to match the latest offer from David Ellison-led Paramount.

Warner Bros. will likely consider the Paramount offer while recommending the Netflix deal to its shareholders, Variety magazine said in a report late Monday.

Netflix has enough cash and could increase its bid for owner HBO Max, while Paramount’s rival bid Oracle (ORCL.N) is backed by billionaire Larry Ellison.

The CBS parent company was asked to submit its “best and final offer” after Warner Bros. rejected the advanced offer, which included paying Netflix a $2.8 billion termination fee and adding a quarterly “sign fee” of 25 cents per share starting next year to compensate Warner Bros. shareholders for any delay in closing the deal.

Warner Bros. said Paramount’s offer on February 10 still fell short of what the board would consider a superior offer and set a seven-day deadline, until February 23, to submit a revised offer.

MoffettNathanson analysts had previously said Paramount’s offer in the $34-per-share range would end the bidding war and “avoid further debate over the value of Discovery Global.”

Warner Bros. plans to spin off its cable TV assets, such as CNN and HGTV, to Discovery Global, which Warner Bros. estimates could return between $1.33 and $6.86 per share.

Netflix says its offer is from Warner Bros. He said that it brought added value to its shareholders thanks to the Discovery Global spin-off. WBD argues that this will add value to the new company by providing greater strategic, operational and financial flexibility.

But Paramount said cable, which is at the center of the streaming giant’s bid, is essentially worthless.

Warner Bros., led by David Zaslav, has come under pressure from Ancora Capital after the activist investor bought nearly $200 million worth of stock from the owner of HBO and accused the company of not engaging adequately with Paramount.

The investor warned that if Warner Bros. refused to re-enter talks with Paramount, he would vote against the Netflix deal and hold the company’s board accountable at its annual meeting.

Paramount shares rose 1.3% to $10.70 in extended trading.

Chart shows price drops for Netflix and Paramount as they try to acquire WBD

Regulatory review

Warner Bros. shareholders were to decide the fate of Netflix’s bid on March 20; The vote was expected to be a pivotal moment in the high-stakes bidding war that will determine the future of one of Hollywood’s most iconic movie studios.

The green light from investors will move the deal forward, but it will still face intense scrutiny from US and European competition authorities, which must evaluate whether combining Netflix’s global streaming power with Warner Bros’ century-old studio assets would reduce competition or limit consumer choice.

A bipartisan set of lawmakers have expressed concern about the potential harm to consumers and creators.

Paramount said it has already obtained a foreign investment permit in Germany and is in talks with antitrust regulators in the United States, the European Union and the United Kingdom. Paramount has repeatedly argued that it has a clearer path to regulatory approval than Netflix.

Paramount’s bid would create a studio larger than market leader Disney and combine two major TV operators that some Democratic senators said would control “pretty much everything Americans watch on TV.”

He would also hand over control of CNN to the conservative-leaning Ellisons shortly after purchasing CBS News and appointing Bari Weiss as editor-in-chief.

For Netflix, the merger with HBO Max would make it the largest global streaming player with nearly half a billion subscribers.

Netflix co-CEO Ted Sarandos expressed confidence that the company’s proposal would win approval, saying it would be better for Hollywood because it would avoid layoffs in an industry already hit by fewer productions and erratic box office receipts.

The streaming pioneer said during deal talks that the streaming service’s potential combination with HBO Max would benefit consumers by lowering the cost of the bundled offering.

But his claim that he needs Warner Bros. to compete with YouTube, America’s most-watched TV distributor, will likely face backlash from the Justice Department.

As part of the regulatory investigation, the US Department of Justice is examining whether Netflix engaged in anti-competitive practices.

Netflix pointed to statistics from media analysis firm Nielsen and stated that Google’s YouTube provides more viewing time on US televisions than other streaming services.