Paramount Skydance has put forward a revised, higher offer for Warner Bros. Discovery, a source familiar with the situation said on Monday, intensifying an already heated contest to acquire the studio and its streaming asset HBO Max. The package of film and television properties at stake includes major franchises such as "Harry Potter" and "Game of Thrones," elevating the strategic importance of the outcome for the streaming market.
The new Paramount bid improves on the company's initial proposal of $108.4 billion - equivalent to $30 per share for the entire company - and was specifically crafted to address Warner Bros Discovery's stated concerns about the certainty of Paramount's financing, the source said. It was not immediately clear how the updated offer had been changed in dollar terms or structure.
Warner Bros Discovery previously selected Netflix as its preferred buyer. Netflix has an outstanding agreement to acquire the studios and streaming assets for $27.75 per share in cash, equal to $82.7 billion. Under the terms governing the competing proposals, Netflix retains the right to match any superior offer submitted by Paramount.
Paramount's rival bid is backed by Oracle co-founder Larry Ellison. Netflix is known to have substantial cash resources and could raise its price to retain its position as Warner Bros Discovery's chosen suitor.
Warner Bros Discovery had earlier asked the CBS parent to submit its "best and final offer" after rejecting an enhanced Paramount proposal. That prior improved bid included an agreement by Paramount to pay the $2.8 billion termination fee owed to Netflix if Paramount prevailed, and to begin paying a 25-cent per share quarterly "ticking fee" starting next year to compensate Warner Bros shareholders for delays in completing a transaction.
Warner Bros Discovery said Paramount's February 10 offer still fell short of what the board would deem a superior proposal and set a seven-day deadline, through February 23, for any revised submissions. Analysts at MoffettNathanson indicated that a Paramount offer in the area of $34 per share would likely end the auction and avoid continued debate over the valuation of Discovery Global.
Warner Bros Discovery plans to spin off Discovery Global - the unit holding cable television brands such as CNN and HGTV. In its public estimates, Warner Bros Discovery indicated the spin-off could be worth between $1.33 and $6.86 per share to holders of the combined company.
Netflix has argued that its offer provides shareholders with additional upside tied to the Discovery Global spinoff and that the separation would permit the newly formed cable-focused company greater strategic, operational, and financial flexibility. Paramount, by contrast, has contended that the cable spinoff which is central to Netflix's pitch is effectively worthless.
The Warner Bros Discovery board has faced pressure from activist investor Ancora Capital, which built a stake of roughly $200 million in the company and criticized the board for not sufficiently engaging with Paramount. Ancora signaled it would vote against the Netflix deal and hold the board accountable at the annual meeting if Warner Bros Discovery declined to re-enter talks with Paramount.
Shareholders are scheduled to vote on Netflix's proposed acquisition on March 20. That shareholder decision is expected to be a pivotal milestone in the bidding process. Even if investors approve Netflix's offer, any deal would still confront vigorous scrutiny from competition authorities in the United States and Europe, who will evaluate whether a combination of Netflix's global streaming footprint and Warner Bros Discovery's legacy studio assets could lessen competition or reduce choices for consumers and creators.
A bipartisan group of lawmakers has voiced apprehension about the potential negative effects on consumers and creative industries should the deal proceed without restrictions. Separately, Paramount said it has already secured foreign-investment clearance in Germany and that discussions are underway with antitrust regulators in the United States, the European Union, and the United Kingdom. Paramount has argued repeatedly that it faces a clearer path to regulatory approval than Netflix.
Paramount's offer, if consummated, would create a studio operation larger than market leader Disney and would bring together two major television operators. Some Democratic senators have warned such a transaction would concentrate control over a very large share of what Americans watch on television. The bid also would transfer ownership of CNN to the Ellison family, following their recent acquisition of CBS News and the installation of Bari Weiss as editor-in-chief there.
For Netflix, a deal combining its streaming platform with HBO Max would produce the largest global streaming service, with roughly half a billion subscribers under its umbrella. Netflix co-CEO Ted Sarandos has expressed confidence the company can obtain regulatory approval, asserting the combination would better serve the industry by avoiding further job cuts in a creative sector already facing reduced production volumes and mixed box-office returns.
Netflix has also argued during negotiations that a merged streaming offering with HBO Max would benefit consumers by lowering the cost of a bundled subscription. However, regulators are likely to scrutinize claims that access to Warner Bros Discovery's content is necessary for Netflix to compete effectively with the most-watched TV distributor, YouTube. Nielsen data cited by Netflix indicate YouTube accounts for more viewing time on U.S. televisions than any single streaming service, a point the U.S. Department of Justice is reviewing as part of its probe into whether Netflix engaged in anti-competitive conduct.
Warner Bros Discovery, Paramount, and Netflix were contacted about the revised bid and competitive dynamics. Warner Bros Discovery and Paramount declined to comment, while Netflix could not immediately be reached.
Summary
Paramount Skydance submitted an improved offer for Warner Bros Discovery to address concerns about the certainty of its financing, challenging Netflix's existing $27.75-per-share cash agreement. The competing bids hinge on the valuation and prospective spin-off of Discovery Global, raise questions over shareholder preferences ahead of a March 20 vote, and are likely to prompt intensive antitrust review in multiple jurisdictions.
Key points
- Paramount raised its offer above an initial $108.4 billion ($30 per share) to address financing certainty concerns and has backing from Larry Ellison.
- Netflix holds a $27.75-per-share cash agreement ($82.7 billion) and can match Paramount's latest proposal; shareholders vote on March 20.
- The bids center on the value and prospective spinoff of Discovery Global, and either deal would face close regulatory review in the U.S. and Europe, with implications for the streaming and cable media sectors.
Risks and uncertainties
- Regulatory risk - Both proposed combinations would be subject to intense antitrust scrutiny in the United States and Europe, which could delay or block a transaction and materially affect expected outcomes for media and streaming companies.
- Shareholder reaction - The March 20 shareholder vote is pivotal; activist investor pressure and differing assessments of the Discovery Global spinoff's worth could sway the result and alter the negotiation dynamics for broadcast and cable assets.
- Financing certainty - Warner Bros Discovery cited concerns about Paramount's financing. Any lingering doubt over how an offer is financed could impact deal credibility and timing, with implications for equity and debt markets exposure to media M&A.