NEW YORK — Warner Bros. Discovery has determined that Paramount’s latest takeover offer is superior to the streaming and studio agreement it struck with Netflix, marking a stark shift in momentum in the fight for the storied Hollywood giant.
The owner of HBO Max, DC Studios and popular titles like "Harry Potter" had backed Netflix's proposal for months. But after Skydance-owned Paramount upped its rival bid for the entire company to $31 per share, in addition to other revisions, Warner's board on Thursday said that the offer "constitutes a 'company superior proposal.'"
That could mean the start of a fresh bidding war over Warner. Netflix now has four business days to try and match Paramount’s proposal to further revise its offer — which currently stands at $27.75 per share for Warner’s studio and streaming business.
Warner on Thursday maintained that Netflix's bid remains on the table. And despite Thursday's decision, the board noted that it “has not withdrawn or modified" its previous recommendation in favor of that transaction.
Netflix did not immediately respond to a request for comment.
Meanwhile, Paramount CEO David Ellison applauded the news — noting in a statement that the company was “pleased WBD’s Board has unanimously affirmed the superior value of our offer.”
A buyout of all or parts of Warner's business would vastly reshape Hollywood and the wider media landscape. And today's takeover fight is complicated because Netflix and Paramount want different things. Unlike the streaming giant, Paramount wants all of Warner’s operations, including networks like CNN and Discovery.
That would put CNN under the same roof as Paramount's CBS — which has seen significant editorial shifts, notably with the installation of Free Press founder Bari Weiss at CBS News, under new Skydance ownership. And if Paramount's acqusition of Warner is successful, many expect the reach of those changes to only grow.
A Paramount-Warner combo would also combine two of Hollywood’s five legacy studios that remain today, in addition to their theatrical channels. Beyond “Harry Potter,” Warner movies like “Superman,” “Barbie,” and “One Battle After Another” — as well as hit TV series like “The White Lotus” and “Succession” — would join Paramount’s content library.
Today, Paramount’s lineup of titles include “Top Gun,” “Titantic” and “The Godfather.” And beyond CBS, it owns networks like MTV and Nickelodeon, as well as the Paramount+ streaming service.
Executives at Paramount — and Netflix, in its separate bid for Warner — have argued that merging will be good for consumers and the wider industry. But lawmakers and entertainment trade groups have sounded the alarm about the prospect of both deals — warning that a buyout of all or parts of Warner’s business would only further consolidate power in an industry already run by just a few major players.
Critics say that could result in job losses, less diversity in filmmaking and potentially more headaches for consumers who are facing rising costs of streaming subscriptions as is.
Combined, that raises tremendous antitrust concerns — and a Warner sale could come down to who gets the regulatory green light. The U.S. Department of Justice has already initiated reviews, and other countries are expected to do so, too.
The companies have spent the last couple of months in a heated, public back and forth over whose deal has a better regulatory path — and offers more value for Warner shareholders. Thursday's announcement arrived shortly after Paramount upped the ante on its offer.
Beyond increasing its proposed purchase price for Warner, the company also agreed to a regulatory termination fee of $7 billion. And Paramount pledged to move up a previously-promised "ticking fee." The company initially said it would pay 25 cents per share for every quarter the deal drags on past the end of the year. Now it's agreed to pay that amount if the deal doesn't go through by the end of September, Warner said.
But Paramount is taking on billions of dollars in debt to finance its offer. And David Ellison's father, Oracle founder Larry Ellison, is heavily backing the bid for his son's company. Foreign soverign wealth funds have also provided equity for the offer, drawing scrunity.
The Ellisons also have a close relationship with President Donald Trump — bringing more politics into question. Trump previously made unprecedented suggestions about his involvement in seeing a deal through, before walking back those statements and maintaining that regulatory approval will be up to the Justice Department.
The push to acquire Warner also arrives just months after Skydance closed its own buyout of Paramount — in a contentious merger approved just weeks after the company agreed to pay the president $16 million to settle a lawsuit over editing at CBS' "60 Minutes" program. Still, Trump has continued to publicly lash out at Paramount and "60 Minutes" since.
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