Feb 10 - Paramount Skydance raised the stakes in its challenge for Warner Bros Discovery on Tuesday, sweetening its proposal by adding extra cash tied to deal delays and agreeing to absorb a breakup fee Warner Bros would owe Netflix if the studio walks away from the existing Netflix agreement. Warner Bros selected Netflix last year and rejected Paramount Skydance’s hostile approach.
The table below sets out how the Netflix and Paramount Skydance bids compare across key deal metrics, financing, timing and strategic assets.
Price, structure and synergies
- Offer: Netflix proposed an all-cash bid of $27.75 per share. Paramount Skydance has offered an all-cash tender of $30.00 per share plus a ticking fee of $0.25 per share for each quarter the transaction does not close beginning January 1, 2027.
- Premium to Sept. 10 price: Netflix’s bid represents a 121.3% premium to Warner Bros Discovery’s undisturbed closing price of $12.54 on September 10. Paramount Skydance’s proposal represents a 139% premium to Warner Bros’ stock price on September 10.
- Projected cost savings: Netflix’s proposal cites $2 billion to $3 billion in annual savings. Paramount Skydance projects the combined business would realize more than $6 billion in annual cost synergies.
Timeline and leadership
- Expected closing: Netflix’s transaction timetable is framed as between 12 months and 18 months. Paramount Skydance anticipates a closing timeline of more than 12 months.
- Management: Netflix’s listed operating leaders in this context are co-CEOs Ted Sarandos and Greg Peters. Paramount Skydance is associated with David Ellison as an executive lead in the bid.
Financing, backers and enterprise value
- Financing and backers: The materials cite financing commitments of up to $59 billion through banks including Wells Fargo, BNP Paribas and HSBC, together with commitments involving the Ellison family and RedBird Capital Partners, and other financing support. The record also references a personal guarantee from Larry Ellison of $43.3 billion, and $54 billion of debt commitments from Bank of America, Citigroup and Apollo. Additional financing partners named include Saudi Arabia’s Public Investment Fund, Abu Dhabi-based L’imad Holding Company PJSC and the Qatar Investment Authority. Separately, Paramount Skydance’s amended offer is described as fully financed by an increased $43.6 billion of equity cash on hand.
- Value: The Netflix proposal is presented with an enterprise value of $108 billion and an equity value of $72.0 billion. Paramount Skydance’s offer is shown with an enterprise value of $82.7 billion and an equity value of $78 billion.
Breakup fees and protections
- Under the existing arrangements, Netflix would be responsible for a $5.8 billion breakup fee. Paramount Skydance has agreed to an equivalent $5.8 billion breakup fee and has further committed to cover a separate $2.8 billion breakup fee that Warner Bros would owe Netflix. Paramount Skydance also said it would backstop Warner Bros’ planned debt exchange, removing the risk of a potential $1.5 billion fee owed to bondholders, and would provide Warner Bros Discovery the same interim operating flexibility that was negotiated with Netflix.
Subscriber base and assets
- Streaming subscribers: Netflix is listed with over 325 million subscribers. Warner Bros Discovery is reported to have 79.1 million U.S. streaming subscribers.
- Assets cited: The assets described in the filings and reports include Warner Bros’ film and television studios, videogame developers and gaming assets, HBO and HBO Max streaming, and the company’s cable television networks including CNN.
Market values and other notes
- Market capitalization: The documents show Netflix valued at $343.98 billion as of the close on February 9. Warner Bros Discovery is shown as valued at $11.45 billion as of the close on February 9.
Contextual comments
The materials referenced include a set of public comments attributed to former President Donald Trump that both criticize CBS and its new owners and offer remarks praising Netflix. The filings and media reports cited in the comparison contain a mixture of direct quotes and paraphrased remarks attributed to Trump and others; the items above focus only on the deal terms, financing and asset descriptions laid out in those materials.
Summary
Paramount Skydance increased its bid by raising the per-share price, adding a ticking fee for delays and agreeing to assume multiple potential breakup liabilities that could otherwise fall to Warner Bros or Netflix. Netflix’s earlier all-cash offer remains the preferred bid selected by Warner Bros Discovery. The two proposals differ on per-share price, projected synergies, financing structures, and contingent protections related to breakup costs and debt-exchange obligations.
Key points
- The two offers differ materially on per-share price and premium to the Sept. 10 stock price, with Paramount Skydance bidding $30.00 per share and Netflix offering $27.75 per share.
- Paramount Skydance proposes higher run-rate synergies (more than $6 billion) versus Netflix’s $2 billion to $3 billion annual savings estimate.
- Paramount Skydance has taken on additional contingent liabilities, including covering a $2.8 billion fee Warner Bros would owe Netflix and backstopping a potential $1.5 billion bondholder fee tied to a debt exchange.
Risks and uncertainties
- Timing risk - both deals are expected to take more than a year to close, with Netflix framed as between 12 and 18 months and Paramount Skydance projecting more than 12 months, leaving regulatory, financing and operational execution uncertainties in play. Impacted sectors: media, banking and legal advisory.
- Financing and commitment clarity - the financing descriptions reference a large suite of bank and investor commitments and guarantees; complexity of those arrangements could affect deal certainty. Impacted sectors: banking and capital markets.
- Breakup and contingent liabilities - the shifting of breakup fees and the backstop of a planned debt exchange create potential fee exposures and contractual complexity that could influence shareholder outcomes and bondholder positions. Impacted sectors: corporate bonds, equity markets and legal counsel.