Paramount Skydance increased its offer to purchase Warner Bros Discovery in order to beat Netflix’s initial bid. New proposal includes $31 in cash per share, plus additional payments should the deal be delayed. Paramount also has agreed to cover the $7 billion in the event of the deal falling through, and to pay Warner Bros’ $2.8 billion payment to Netflix if the breakup occurs.
Netflix Response
Ted Sarandos, the co-chief executive of Netflix, recently stated that it is carefully evaluating all its options. However, he declined to confirm whether or not Netflix would be involved in a bid war. Ted Sarandos described the current situation as a “part of a process”, and said that Netflix preferred disciplined agreements over speculative ones.
Paramount’s Ambitions
Since last year, Paramount is actively seeking to acquire Warner Bros. The company has the backing of tech billionaire Larry Ellison. His son David leads this pursuit. It hopes that the deal will make it a major Hollywood force. Warner Bros rejected Paramount’s initial proposals despite repeated offers. Instead, the company agreed in December to sale its film and streaming units, which includes HBO, to Netflix at $27.75 a share. This is approximately $82 billion, debt included.
Warner Bros Strategy
Warner Bros intends to spin-off its remaining assets such as CNN and traditional TV networks into an independent firm. Paramount has increased its offer, but the board is still deciding. Discussions will continue to see if there can be a better proposal.
Industry concerns
Both deals have raised concerns among lawmakers, who cite potential monopolies as well as the impact on the entertainment sector. Democrats have been paying attention to the political connections of the Ellison family.
Market Predictions
Luke Stillman suggested that Warner Bros could be creating a bid war. He believes the final bid could be $33 per share.
