Warner Bros.’s board of directors says Discovery Paramount’s latest bid to buy the company is “superior” to the Netflix deal, opening a four-day window for the streaming giant to amend its deal if it wants to keep its bid for Warners alive.
“WBD has notified Netflix of its determination that PSKY’s proposal constitutes a ‘corporate superior proposal.’ Under the terms of the Netflix Merger Agreement, this notification triggers a four-business-day period during which Netflix has the right to propose revisions to the Netflix Merger Agreement such that PSKY’s proposal ceases to be a ‘corporate superior proposal,’” WBD’s board of directors said in a statement.
The Warners board added, “After the expiration of such period, if the Board determines in good faith, after consultation with its independent financial and legal advisors, that after considering any revisions to the terms of the Netflix Merger Agreement proposed by Netflix, the PSKY proposal continues to constitute a ‘super-corporate proposal,’ WBD shall have the right to terminate the Netflix Merger Agreement.”
In plain English: Warner Bros. has decided to Paramount’s latest offer is better than the deal it signed with Netflix. Under the terms of that deal, Netflix has the opportunity to try to match or beat the “superior” offer. If that happens, WBD’s board will stick with the Netflix deal. If not, WBD will go to Paramount, and David Ellison will claim his prize.
“We are pleased that WBD’s board of directors unanimously affirmed the high value of our offer, which provides WBD shareholders with superior value, certainty and speed to close,” Paramount CEO David Ellison said in a statement.
PSKY’s most recent proposal was $31 per share, but it had a number of other sweeteners, including a visa fee payable to shareholders equal to $0.25 per quarter beginning after September 30, 2026, as well as a $7 billion regulatory redemption in the event the deal does not close due to regulatory issues. Paramount also agreed to pay the $2.8 billion termination fee that Warner Bros. will be required to pay. It pushed Netflix to terminate the existing merger agreement.
The revised offer came after days of negotiations between PSKY and WBD, with Netflix allowing the negotiation window to open so the matter could be resolved.
As of now, WBD is still recommending the Netflix deal, which is scheduled for a shareholder vote on March 20. If Netflix refuses to increase its offer in response to PSKY, that will certainly change.
The slow burn of the deal underscores the efforts made by WBD and its board to maximize the price it gets for its shareholders, although the future of the entertainment business may also be at stake.
WBD’s announcement came just hours after Netflix co-CEO Ted Sarandos met with White House officials in Washington to discuss the deal. While their discussions remain private, some have wondered whether aggressive regulatory threats could prompt Netflix to back out of the deal, especially with PSKY making its regulatory confidence a focus of its public campaign to placate WBD shareholders.
Hollywood is split on deals, with some favoring Netflix because of its overall commitments and relative lack of overlap with WBD, while others favor Paramount, given David Ellison’s stated love of the business.
However, there is caution about layoffs and cost-cutting, and neither side’s commitments are seen as firm.
