Paramount raises Warner Bros breakup fee to $5 billion — who are the bidders in acquisition race?
Paramount Skydance Corp has more than doubled the proposed breakup fee in its bid to buy Warner Bros Discovery Inc to $5 billion, in a move aimed at outshining rival bids.
The US-based media company will pay this amount to Warner Bros. if the agreement is reached but not completed. A separation fee is usually paid to compensate the disappointed party for expenses and missed opportunities.
The significant increase from the previous $2.1 billion breakup fee indicates Paramount’s confidence that the proposed merger will pass regulatory reviews. Bloomberg reported.
Who are the other bidders in this race?
Warner Bros., the parent company of HBO and CNN television channels, is evaluating offers from three major media companies:
—Paramount Skydance Corp.
The winner will likely be chosen within the next few weeks, according to Bloomberg. Warner Bros. received a second round of offers on Monday, December 1, and has been in talks with interested parties since then.
How many offers has Paramount made so far?
Paramount, the parent company of CBS, MTV and several other media properties, triggered the Warner Bros. auction after making several unsolicited offers to the company. However, Warner Bros. It only started the formal bidding process in October this year.
So far in the race to acquire Warner Bros., Paramount has made a total of five offers. By contrast, Netflix and Comcast’s offerings include a spinoff of Warner Bros’ cable networks. Paramount argued that such a spinoff would be a taxable event for Warner Bros. and positioned its own offering as the more financially advantageous option.
Paramount has yet to submit an offer that would influence Warner Bros.’ leadership. The board wants $30 per share, valuing the company at about $75 billion excluding debt.
While specific details of the bids are not yet publicly available, Netflix’s bid is reportedly higher than Paramount’s, according to some people with knowledge of the development. Bloomberg.
Will this acquisition trigger job losses in Hollywood?
While all three bidders are expected to face regulatory scrutiny and voice concerns about job losses in Hollywood, Paramount remains the smallest of the three. Comcast is the largest in terms of sales, while Netflix has the highest market cap.
Paramount also has the closest relationship with the current US administration, which plays an active role in media regulation. Since merging with Skydance Media in August, Paramount has been controlled by the family of Oracle Corp Chairman Larry Ellison, a big supporter of President Donald Trump.
Republican Congressman Darrell Issa expressed antitrust concerns about Netflix’s acquisition of Warner Bros., warning that it could further concentrate power in the streaming market. White House officials also expressed their discomfort with Netflix’s offer. New York Post reported. Meanwhile, Netflix management is actively working to attract both the Warner Bros board and politicians.
