Shares of Paramount Skydance rose in U.S. premarket trading on Tuesday after media reports indicated that Warner Bros. Discovery's board members are considering reopening negotiations with Paramount.
Bloomberg reported that some directors are weighing whether the financial terms Paramount has offered may be superior to the rival proposal from streaming giant Netflix. The reported deliberations follow an amendment to Paramount's hostile takeover bid last week.
Under the amended terms, Paramount pledged to increase the cash it would pay Warner Bros shareholders beginning in early 2027 for every quarter that a transaction remains unresolved. In addition, Paramount committed to covering any penalties that Warner Bros would face for ending its existing arrangement with Netflix. Specifically, Paramount said it would fund the $2.8 billion termination fee Warner Bros would owe Netflix should Warner Bros step away from Netflix's $82.7 billion bid for the studio and streaming operations.
Importantly, Paramount did not raise the foundational element of its bid - the $30-per-share price. That unchanged price places the overall value of the offer at $108.4 billion when debt is included. Paramount's proposal, unlike Netflix's, also contemplates folding in Warner Bros' legacy television networks, among them the news broadcaster CNN.
The stakes in the contest extend to Warner Bros' core content library. The eventual acquirer would obtain the studio's catalogue of film and television properties, which includes blockbuster franchises and series such as "Game of Thrones," "Harry Potter," and the roster of DC Comics characters.
Adding a layer of shareholder pressure, activist investor Ancora Holdings has accumulated what Bloomberg described as almost a $200 million stake in Warner Bros and has signaled opposition to the Netflix arrangement. Ancora has also argued that Warner Bros' board has not sufficiently engaged with Paramount regarding its rival bid.
Despite these developments, Bloomberg reported that Warner Bros' directors have not yet determined how to respond to Paramount's amended proposal and could continue to back the existing Netflix transaction. The board's deliberations appear ongoing and no final decision has been announced.
What this means for markets
The immediate market reaction - a premarket uptick in Paramount Skydance shares - reflects investor sensitivity to potential shifts in the competitive dynamics of a multibillion-dollar sale process. The contested bids involve significant cash commitments, potential contractual termination payments, and the transfer of valuable content and broadcast assets.