Paramount Skydance has bolstered its bid for Warner Bros. Discovery, introducing a series of financial incentives aimed at winning over shareholders in a competitive landscape that includes Netflix. The new proposal features a cash incentive for each quarter the deal remains unfinalised, alongside a commitment to cover potential breakup fees tied to Netflix. While the overall offer of US$30 per share remains unchanged, these enhancements signal Paramount’s determination to secure Warner Bros.’ valuable assets.
Enhanced Financial Offer
On Tuesday, Paramount revealed its strategy to increase the attractiveness of its offer by introducing a 25-cent per share “ticking fee.” This fee would accumulate to an estimated US$650 million in cash for every quarter that passes without the deal closing, starting from the beginning of 2027 until completion. The total bid for Warner Bros., which includes its cable assets, remains at US$108.4 billion, factoring in debt.
In a significant move, Paramount also agreed to fund a US$2.8 billion termination fee that Warner Bros. would owe to Netflix should its own US$82.7 billion deal falter. This tactic underscores Paramount’s belief that Netflix’s acquisition may face regulatory challenges, potentially paving a smoother path for its own proposal.
Competitive Landscape and Analyst Insights
Analysts have expressed mixed feelings about whether Paramount’s latest offer will sway Warner Bros. shareholders. Ross Benes, a senior analyst at eMarketer, commented that while the enhancements might demonstrate Paramount’s confidence, they are unlikely to shift Warner Bros. away from Netflix’s offer without a higher bid. “Paramount is throwing spaghetti at the wall and hoping something sticks,” he said, emphasising the need for a more substantial increase to attract investor interest.
Shareholder responses have shown some movement, with Warner Bros. shares climbing 2 per cent, Netflix up 3 per cent, and Paramount rising 1.5 per cent in trading following the announcement.
Addressing Concerns and Regulatory Compliance
In addition to the financial sweeteners, Paramount has taken steps to address criticisms from Warner Bros.’ board about its initial offer. The company plans to backstop Warner Bros.’ upcoming debt exchange, effectively mitigating the risk of a US$1.5 billion fee that could be owed to bondholders. Furthermore, Paramount has secured compliance certification with the U.S. Department of Justice, initiating a 10-day waiting period and confirming foreign-investment clearance in Germany. The company asserts that it is also engaged in discussions with antitrust regulators in the U.S., EU, and the U.K.
Paramount CEO David Ellison emphasised the company’s commitment to enhancing its bid, stating, “We are making meaningful enhancements – backing this offer with billions of dollars, providing shareholders with certainty in value, a clear regulatory path, and protection against market volatility.”
The Ongoing Battle for Warner Bros.
The ongoing competition for Warner Bros. highlights the media landscape’s shifting dynamics, as both Paramount and Netflix vie for control of its extensive film and television library, which includes iconic franchises like *Game of Thrones* and *Harry Potter*. Paramount has extended the deadline for its tender offer to February 20, allowing more time to persuade investors of its superior proposal.
Meanwhile, Netflix’s all-cash offer remains appealing, especially as it could significantly enhance the streaming giant’s portfolio, potentially solidifying its position as the largest global streaming service, with nearly half a billion subscribers.
Why it Matters
The outcome of this bidding war has significant implications for the media and entertainment sectors. Paramount’s enhancements signal its aggressive intent to reshape the industry landscape, while Netflix’s pursuit of Warner Bros. could redefine content creation and distribution in the streaming era. As the competition unfolds, the decisions made by Warner Bros. shareholders will not only impact the companies involved but will also influence the broader trajectory of media consolidation and consumer access to beloved franchises. The stakes are high, and the ramifications of this deal will resonate across the entertainment world for years to come.
