Warner Bros turns down Paramount’s revised bid, seeks ‘best and final’ proposal

New Delhi: Warner Bros Discovery on Tuesday rejected a $30-per-share hostile bid from Paramount Skydance but allowed the rival studio seven days to submit a “best and final” offer to surpass its existing agreement to sell businesses including HBO Max and the “Harry Potter” franchise to Netflix, Reuters reported.

Paramount had informally suggested a higher per-share price of $31, apparently prompting the board to engage. However, Warner Bros’ response indicates a preference for the Netflix deal, with the likelihood of a switch considered low. Warner Bros Discovery shares rose 3.4% to $28.93, while Paramount gained nearly 5%, and Netflix shares remained largely unchanged. Paramount has until February 23, to make a new offer, which Netflix may match under the terms of its merger agreement.

In a letter to Paramount, Warner Bros Chairman Samuel DiPiazza Jr and CEO David Zaslav wrote, “Our Board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger. We continue to recommend and remain fully committed to our transaction with Netflix.”

The two media companies have been competing for control of Warner Bros, including its flagship film and television studios and extensive content library, reflecting the high stakes of a rapidly evolving entertainment industry.

Paramount described Warner Bros’ seven-day window as “unusual” but said it would continue pursuing its tender offer, oppose the Netflix merger, and nominate directors for the upcoming Warner Bros annual meeting.

As per the news report, a successful acquisition would provide control over Warner Bros’ film and television library, encompassing classics such as Casablanca and Citizen Kane as well as popular titles like Friends and Batman.

Warner Bros indicated it expects a bid above $31 per share, noting that a Paramount adviser had previously signalled willingness to match that price if talks reopened, which is not considered the studio’s best offer.

Paramount’s current proposal for the entire company totals $108.4 billion, while Netflix’s offer of $27.75 per share, or $82.7 billion, covers only Warner Bros’ studio and streaming operations. A shareholder vote on the Netflix deal is scheduled for March 20, following the planned spin-off of Warner Bros’ Discovery Global cable operations, including CNN, TLC, Food Network, and HGTV, into a separate publicly traded company.

The negotiations come amid pressure from activist investor Ancora Holdings, which has criticised Warner Bros for not engaging sufficiently with Paramount and intends to oppose the Netflix transaction.

Paramount has also pushed to add directors to Warner Bros’ board, including Matt Halbower, CEO of Pentwater Capital Management, which owns around 50 million shares and supports Paramount’s bid.

Financing concerns remain a key factor for Warner Bros, including potential junior lien fees, debt financing uncertainty, and assurances of equity funding. Both Paramount and Netflix are engaging with regulators worldwide, including the U.S. Department of Justice, in anticipation of scrutiny over consumer pricing and potential impacts on creative talent.