Warner Bros. Discovery Inc. is considering a new takeover bid from Paramount Skydance Corp., the latest salvo in a months-long battle for control of one of Hollywood's most famed studios.
The parent of HBO and CNN said its board will review the proposal and respond, according to a statement Tuesday. Warner Bros. didn't specify the terms of the new offer, but Bloomberg News reported on Monday that it was higher than the $30 a share Paramount was offering previously.
If the Warner Bros. board deems the new Paramount bid superior to the one it has already accepted from Netflix Inc., then Netflix will have four days to make a counteroffer, according to the terms of their merger agreement.
The fight for Warner Bros., the century-old studio behind films from Casablanca to Batman and hit TV series like Friends, is one of the biggest media deals in years. Whichever company wins, it will likely have significant influence on the entertainment industry in the years ahead. The sale has stirred controversy from Hollywood to Washington. Lawmakers, filmmakers and industry professionals are concerned about concentration in the media business and the impact of a merger on jobs.
Paramount has submitted multiple bids for Warner Bros. since last year and has been repeatedly rebuffed. Instead, Warner Bros. reached an agreement in early December to sell its studios and streaming business to Netflix for $27.75 a share, a transaction worth $82.7 billion, including debt. Their plans involve a spinoff of Warner Bros.' cable-TV channels like CNN and TNT to investors.
Warner Bros. told investors Tuesday that it still has a deal with Netflix and stockholders shouldn't take any action at this time.
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“The Netflix merger agreement remains in effect, and the board continues to recommend in favor of the Netflix transaction,” Warner Bros. said.
Shares of Netflix rose 1.3% as trading got underway in New York while Paramount rose less than 1%
Paramount, which is led by technology heir David Ellison, has repeatedly tweaked the terms of its offer, which valued Warner Bros. as a whole at $108 billion, including debt. Ellison has taken his proposal directly to shareholders and threatened a proxy battle.
While Warner Bros.' board considers Paramount's revised proposal, ”Paramount will continue to maintain its previously announced tender offer and its solicitation in opposition to the inferior Netflix merger,” Paramount said in a statement.f
Paramount Skydance, which was formed in August as the result of a combination with Ellison's Skydance Media, sees buying Warner Bros. as an opportunity to transform itself quickly into a Hollywood powerhouse. A victory for Netflix would be a crowning achievement for the industry's great disruptor, making it possibly the most dominant player ever in entertainment history.
In a revised offer earlier this month, Paramount addressed some of Warner Bros.' concerns by agreeing to pay the $2.8 billion fee that would be owed to Netflix if its deal fell through, as well as agreeing to back some of Warner Bros.' debt costs.
Last week Warner Bros. reopened talks with Paramount for a seven-day period in order to give Paramount an opportunity to submit its “best and final” offer. At the time, Warner Bros. said Paramount indicated that if discussions resumed, the company would agree to pay at least $31 a share.
The fact that Warner Bros. continues to recommend Netflix's proposal suggests Paramount “didn't clear a likely $34-$35-per share bar,” analysts at Bloomberg Intelligence wrote. “The key question is how Netflix responds. Though the streamer has the financial firepower for a higher offer, it comes with the risk of overpaying and elevated leverage.”
Both suitors face regulatory scrutiny in the US and Europe, and executives from both companies are trying to convince Warner Bros. shareholders that their offer would have a smoother path to completion.
The two corporate leaders have been jockeying to win the favor of US President Donald Trump. Ellison's father, tech billionaire Larry Ellison, is personally backing Paramount's bid and is friendly with the president. Netflix co-Chief Executive Officer Ted Sarandos has also discussed Netflix's bid personally with Trump, saying he is mostly concerned about the impact of any deal on jobs in the US.
Sarandos told Bloomberg TV on Feb. 19 that he was “highly confident we're going to reach this deal to a close.”
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