Twist in tale? Warner Bros weighs Paramount offer that covers $2.8bn Netflix break fee, says report

Warner Bros. Discovery acquired Paramount Skydance Corp. after the rival studio offered amended terms in an attempt to revive its takeover bid. It is evaluating whether negotiations with the EU will be reopened. The move could reignite a major rivalry with Netflix for one of Hollywood’s most valuable content libraries. Bloomberg It was reported Monday, citing people familiar with the matter.

Although Warner Bros. is sticking to a deal to sell its studio and HBO Max streaming business to Netflix, board members are said to be discussing whether Paramount could offer a better deal. Bloomberg. No decisions have been made and executives are still considering how to respond.

Paramount Skydance’s revised bid targets Netflix’s break fee and Warner Bros. debt concerns

Paramount’s amended proposal, submitted last week, seeks to resolve some of the most contentious hurdles that had previously hindered negotiations.

Paramount has offered to cover the $2.8 billion termination fee owed to Netflix if Warner Bros. leaves the current deal, according to people with knowledge of the matter. The company also proposed halting Warner Bros’ debt refinancing, addressing concerns about leverage and financing stability.

Paramount also said it would pay compensation to Warner Bros.. If shareholders don’t complete the deal by Dec. 31, it signals confidence that regulators will quickly approve the transaction.

Board’s calculation: Leverage Paramount to push for a sweeter Netflix deal

While Warner Bros. still has reservations about Paramount’s approach (many of which were previously aired in public statements), the latest change has altered the board’s internal assessment. The directors are discussing for the first time whether Paramount’s offer would not only lead to a better deal on their terms but also put pressure on Netflix to improve its pricing.

Warner Bros. has already agreed to sell its namesake studio and HBO Max streaming business to Netflix in a deal worth $27.75 per share.

But Paramount, which owns CBS and MTV, is trying to sideline the board by appealing directly to shareholders, including a tender offer of $30 per share, while separately lobbying regulators to keep its offer valid.

Both Paramount and Netflix have signaled they are willing to increase their bids if negotiations move again to a more formal auction phase, according to people familiar with the matter.

Shareholders are pushing Warner Bros. to at least engage

Warner Bros. has faced growing pressure from shareholders to approach Paramount rather than commit to the Netflix transaction without exploring alternatives.

Several investors, including Pentwater Capital Management and Ancora Holdings Group, have publicly argued that the board should restart talks. But Paramount’s tender offer has attracted little attention so far: At last count, only 42.3 million shares were tendered; that’s less than 2% of shares outstanding.

Investors eye ‘creative’ deal structure and higher price

Market watchers say Paramount’s revised terms appear designed to address structural hurdles rather than immediately raise the headline price; This may be a tactic aimed at keeping the offering financially disciplined while increasing its attractiveness.

Gabelli Funds co-chief investment officer Chris Marangi said he was a little disappointed that Paramount didn’t raise its offering price this week, but said recent changes to terms showed the company was finding “ways to be creative in structuring a deal.”

His company is Warner Bros. Marangi, who owns its shares, said, “Like the Warner Bros. board, I would like to see a sweeter offer.”

Warner Bros. What happens next if he rehires Paramount?

Any official re-engagement with Paramount would trigger a process defined under the Netflix deal. Warner Bros. would first need to notify Netflix, after which the board could ask Paramount for better terms, possibly pushing the offer above $30 per share.

If the board ultimately decides that Paramount’s offer is a superior offer, Netflix will reserve the right to match it.

A bidding war that never quite ends

Paramount triggered Warner Bros.’ auction with an unsolicited bid last year and then lost out to Netflix after raising its price several times.

Since then, Paramount leadership has quietly persuaded regulators and shareholders to keep the door open while continuing to argue that its offering is strategically stronger.

While Paramount Chief Executive David Ellison said that the current offer was not his last offer, Netflix management told shareholders that this offer could go even higher.

However, both companies are wary of overpaying. Netflix shares are investors’ interest in Warner Bros. It has fallen more than 40% from its peak in June, amid concerns about the scale and risk of its transaction.

Warner Bros. Moves towards shareholder vote amid uncertainty

Warner Bros. moves quickly to schedule shareholder vote on Netflix deal; This is a step that will make it difficult (if not impossible) to reverse course.

But Paramount’s amended offer introduced a new variable into what appeared to be a close situation. Warner Bros. The decision now is whether to treat Paramount’s offer as a real alternative or as leverage to get better terms from Netflix.

Either way, the latest maneuver is Warner Bros., one of the most important media assets in the United States. It shows that the agreement made with may still be in force.