Paramount Increases Warner Bros. Discovery Bid Again, Refusing to Concede

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TLDR

  • Paramount Skydance has increased its offer for Warner Bros. Discovery to over $30 per share, surpassing Netflix’s $27.75 bid.
  • The WBD board is anticipated to evaluate the latest offer before Tuesday’s market opening, though they continue to endorse the Netflix agreement.
  • Should the WBD board favor Paramount’s proposal, Netflix will have a four-day period to submit a counteroffer.
  • Paramount CEO David Ellison has publicly declared his commitment to securing the deal.
  • The proposed transaction has the backing of Oracle’s Larry Ellison, RedBird Capital, and sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi.

Paramount Skydance has submitted a revised, higher bid for WBD, exceeding its prior all-cash offer of $30 per share. This development was reported by Bloomberg, citing anonymous sources, with the precise terms not yet disclosed.

WBD Stock Card

The new offer is projected to be above $31 per share. Paramount submitted this bid before the conclusion of its seven-day negotiation period on Monday, February 23.

According to Variety, WBD is expected to inform its shareholders that it will review Paramount’s offer prior to the market opening on Tuesday. Nevertheless, the WBD board officially continues to recommend the Netflix deal.

Netflix had previously agreed to acquire WBD’s studios, television, and streaming assets for $27.75 per share in cash. This offer specifically covers Warner’s film, television, and HBO properties, not the entire company.

In contrast, Paramount’s bid is for the entirety of WBD.

If the WBD board determines that Paramount’s latest offer is more advantageous, Netflix will have four days to either match or exceed it.

Ellison Remains Determined

Paramount CEO David Ellison has clearly stated his intentions, publicly announcing that the company will persist until it secures the deal.

On February 10, Ellison revised his bid to incorporate a quarterly ticking fee, a breakup fee payable to Netflix, and costs associated with debt refinancing, while maintaining the $30 per share price. WBD subsequently reopened discussions with Paramount after receiving a verbal commitment from Ellison’s team to increase the bid to $31 or more.

Paramount’s offer is supported by Oracle chairman Larry Ellison, private equity firm RedBird Capital, and sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi.

The political dimension has added complexity to an already intricate transaction. President Trump intensified tensions over the weekend by publicly calling for Netflix to dismiss board member Susan Rice, a former official in the Obama and Biden administrations, or “face the consequences.”

Lawmakers and filmmakers have also voiced concerns regarding media consolidation and potential job losses.

Future Outlook for WBD and PSKY

PSKY stock saw a 1.2% increase in after-hours trading following the announcement of the raised bid.

Over the past year, PSKY stock has declined by 9.5%. Analysts surveyed by TipRanks rate it as a Moderate Sell, based on zero Buy ratings, one Hold rating, and three Sell ratings. The average price target is $12.33, suggesting an approximate 16.8% potential upside from current levels.

A shareholder vote on the Netflix deal is currently scheduled for March 20.

Paramount is scheduled to release its Q4 FY2025 earnings after market close on Wednesday, February 25. Wall Street anticipates an adjusted loss of $0.01 per share, compared to a loss of $0.11 per share in the same period last year. Revenue is projected to be $8.15 billion, representing a 2.1% year-over-year increase.

The WBD board’s review of Paramount’s enhanced offer before this earnings release could influence the market sentiment for the week.