Warner Bros. Discovery Declares New Paramount Bid A ‘Superior Proposal’; Netflix Has Four Business Days To Match

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The board of Warner Bros. Discovery said Thursday it has determined that the latest offer from Paramount Skydance is a “superior proposal” to its existing merger pact with Netflix. The move sets off a four-day clock for Netflix to make a counteroffer to the nearly $83 billion deal that it reached with WBD in early December.

Netflix has four business days, or Wednesday, March 4 at 11:59 p.m. ET, to come up with a new proposal to salvage the deal.

In a statement Thursday, WBD said, “Following the conclusion of this 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 ‘company superior proposal,’ WBD would be entitled to terminate the Netflix merger agreement.”

As it stands, Warner Bros. Discovery’s Netflix agreement remains in effect, and the WBD board says it is continuing to recommend in favor of that deal, which is up for a vote on March 20. 

Paramount Skydance chief David Ellison issued a statement Thursday in response to WBD’s announcement, saying: “We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing.”

Netflix co-CEO Ted Sarandos is believed to be in Washington, D.C. today in an effort to lobby Trump administration officials on the deal. Amid the fractious national political environment, the Netflix-WBD deal has become a lightning rod for critics. The Justice Department has embarked on a regulatory review that promises to probe all aspects of Netflix’s business, exposing the streaming giant to more scrutiny in D.C. that it has ever faced before.

In its statement, Warner Bros. listed the elements of the revised Paramount Skydance bid that turned the tables:

• Increased the purchase price to $31 a share in cash; 

• Accelerated timing of the daily “ticking fee” of $0.25 per quarter to begin after September 30, 2026, until the consummation of the Paramount transaction, rather than starting in January.

• Increased the regulatory breakup fee to $7 billion in the event the transaction does not close due to regulatory matters;

• Reaffirmed it will pay the $2.8 billion termination fee which WBD would be required to pay to Netflix to terminate its existing Netflix merger agreement,

• Reaffirmed it will eliminate WBD’s potential $1.5 billion financing cost associated with its debt exchange offer,

• Agreed to an obligation to contribute additional equity funding to the extent needed to support the solvency certificate required by PSKY’s lending banks, and 

• Agreed to a “Company Material Adverse Effect” definition that means the price won’t be dropped if WBD’s linear networks decline faster than expected before the deal closes.

The Netflix deal, which includes buying Warner Bros. and HBO Max, is valued at nearly $83 billion. Paramount’s latest bid was a $108 billion all-cash offer for the entirety of WBD, including its linear cable channels. With the addition of $1 to the per-share price to reach $31 per share, the Paramount proposal submitted Feb. 24 amounts to approximately a $111 billion bid, including the $33 billion in debt that WBD is currently shouldering on its books.