Dawn Chmilewski
Feb 23 (Reuters) – Paramount Skydance has made a higher offer to Warner Bros. Discovery Channel, a person familiar with the matter told Reuters on Monday, stepping up efforts to derail the HBO Max owner’s deal with Netflix.
A bidding war for one of Hollywood’s most coveted properties, including the “Harry Potter” and “Game of Thrones” franchises, has increased streaming’s dominance in a market dominated by streaming services.
Paramount’s new bid, which raises its original offer to $108.4 billion, or $30 per share, is aimed at addressing Warner Bros.’ concerns about the certainty of its financing, sources said.
Reuters could not immediately determine how the bid was modified. Warner Bros. and Paramount declined to comment, while Netflix could not immediately be reached.
Warner Bros.’s chosen acquirer, Netflix, offered to buy the studio and streaming assets for $27.75 per share in cash, or $82.7 billion, and was allowed to match the latest bid from David Ellison-led Paramount.
Netflix is flush with cash and may increase its offer to HBO Max owners, while rival Paramount has the backing of Oracle billionaire Larry Ellison.
The CBS parent was asked to submit its “best and final offer” after Warner Bros. rejected a higher offer that would have included a $2.8 billion termination fee to Netflix and an increased quarterly “tick fee” of 25 cents per share starting next year to compensate Warner Bros. shareholders for delays in closing the deal.
Warner Bros. has said Paramount’s February 10 offer was still lower than what its board considered a better offer and gave it a seven-day deadline until February 23 to submit a revised offer.
Analysts at MoffettNathanson have previously said Paramount’s offer of $34 per share would end the bidding war and “avoid further debate over Discovery Global’s value.”
Warner Bros. plans to spin off Discovery Global, which holds cable TV assets such as CNN and HGTV, at a price of between $1.33 and $6.86 per share, Warner Bros. estimated.
Netflix said its acquisition offer provides Warner Bros. shareholders with additional benefits from the Discovery Global spinoff, which WBD believes will add value by giving the new company greater strategic, operational and financial flexibility.
However, Paramount said the cable car spinoff at the heart of the streaming giant’s offer was effectively worthless.
Warner Bros., led by David Zaslav, has come under pressure from Ancora Capital, which took a roughly $200 million stake in the HBO owner and accused the company of failing to adequately engage with Paramount.
The investor warned that if Warner Bros. refuses to reopen discussions with Paramount, it will vote against the Netflix deal at its annual meeting and hold the company’s board accountable.
regulatory review
Warner Bros. shareholders will decide the fate of Netflix’s takeover bid on March 20, a vote expected to be a pivotal moment in a high-stakes bidding war that will determine the future of one of Hollywood’s most iconic movie studios.
Investors’ approval would push the deal forward, but it will still face intense scrutiny from U.S. and European competition regulators, who must assess whether combining Netflix’s global streaming power with Warner Bros.’ century-old studio assets would reduce competition or limit consumer choice.
Lawmakers from both parties have expressed concerns about potential harm to consumers and creatives.
Paramount said it had obtained a foreign investment license in Germany and was in talks with antitrust regulators in the United States, the European Union and the United Kingdom. Paramount has repeatedly argued that it has a clearer path to regulatory approval than Netflix.
Paramount’s bid would create a studio larger than market leader Disney and merge the two major television operators, which some Democratic senators said would control “almost everything Americans watch on television.”
The company will also hand over control of CNN to the conservative Ellison family shortly after the family acquired CBS News and named Barry Weiss its editor-in-chief.
For Netflix, a merger with HBO Max would make it the world’s largest streaming player, with about 500 million subscribers.
Netflix co-chief executive Ted Sarandos, who expressed confidence in winning approval, said the company’s bid would be better for Hollywood because it would avoid layoffs in an industry already hit by fewer productions and uneven box-office returns.
The streaming pioneer said in deal talks that a potential combination of its streaming service with HBO Max would benefit consumers by lowering the cost of the bundle.
But its argument that Warner Bros. needs to compete with YouTube, the most-watched television distributor in the United States, is likely to face pushback from the Justice Department.
The U.S. Department of Justice is examining Netflix for anticompetitive behavior as part of a regulatory review.
Netflix points to statistics from media analytics firm Nielsen showing Google’s YouTube accounts for more viewing time on U.S. television than other streaming services.
(Reporting by Harshita Mary Varghese and Aditya Soni in Bengaluru; Additional reporting by Jaspreet Singh in Bengaluru; Editing by Arun Koyyur and Alan Barona)