Warner Bros. Discovery (WBD) has announced it will briefly reopen deal talks with Paramount Skydance, granting a seven-day waiver from Netflix to explore Paramount’s offer. This move comes as WBD navigates a complex bidding situation, aiming to secure the best possible outcome for its shareholders while a definitive agreement with Netflix is already in place.
Warner Bros. Discovery stated that the waiver from Netflix permits discussions with Paramount Skydance (PSKY) to “seek clarity for WBD stockholders and provide PSKY the ability to make its best and final offer.” The company intends to discuss unresolved “deficiencies” in Paramount’s proposed merger agreement. This strategic pause allows WBD to thoroughly evaluate if Paramount can present a binding proposal that offers superior value and certainty compared to the existing Netflix deal.
Paramount has been actively pursuing WBD with a hostile tender offer directly to shareholders, initially at $30 per share. While Paramount leadership has suggested its offer is not yet its “best and final,” it recently sweetened its proposal with additional “enhancements” without immediately raising the per-share price. However, a senior Paramount representative verbally indicated to a WBD board member that the company would agree to pay $31 per share if deal talks were to be reopened, with further potential improvements suggested.
Netflix, which has a pending transaction with WBD for its streaming and studio businesses, has expressed confidence in its own deal, calling it superior in value and certainty. The streaming giant criticized Paramount’s “antics” and the “ongoing distraction” they cause. Despite this, Netflix granted the limited waiver, emphasizing that it allows WBD to “fully and finally resolve this matter.” After the waiver period expires on February 23, Netflix will retain its matching rights, meaning it can counter any improved offer from Paramount.
Warner Bros. Discovery has scheduled a special meeting of shareholders for March 20. At this meeting, the WBD board continues to unanimously recommend the Netflix deal over Paramount’s offer. WBD has argued that the Netflix agreement, which involves selling its studio and streaming assets while spinning off its cable networks, represents the best available option for investors, contrasting it with Paramount’s all-cash takeover bid, which WBD has characterized as potentially risky.
Following the news of the reopened talks and the Netflix waiver, shares of both Warner Bros. Discovery and Paramount saw an increase in premarket trading, each rising by approximately 3%. This market reaction reflects investor interest in the unfolding M&A drama within the media and entertainment sector.