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Warner Bros. Discovery is briefly reopening takeover talks with Skydance-owned Paramount to hear the company’s “best and final” offer, while the Hollywood giant continues to back the studio and streaming deal it struck with Netflix.
Warner Bros. Discovery — which owns HBO Max and a wealth of valuable titles from the Harry Potter series to the DC superhero franchise — said in a regulatory filing Tuesday said it had received a waiver from Netflix to reopen talks with Paramount for the next seven days, or until Monday.
Warner said this will allow the companies to discuss unresolved “deficiencies” and “clarify certain terms” of Paramount’s latest bid. Netflix is also allowed to match Paramount’s offer under the terms of its merger.
The company has previously rejected Paramount’s offers, which included a hostile bid by Paramount in December. But just because talks are resuming now doesn’t mean Warner has changed its position, which the company made clear in its response.
“Our board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger,” Warner Bros. chairman Samuel DiPiazza Jr. and CEO David Zaslav said in a letter sent Tuesday to the Paramount board.
“We continue to recommend and remain fully committed to our transaction with Netflix.”
Netflix has agreed to buy Warner Bros. Discovery’s TV and film studios and streaming division for $72 billion US. If the deal gets regulatory approval, it would shift the media landscape, and some movie theatre companies are voicing concern for their future.
Warner’s leadership consistently has backed the offer from Netflix. In December, Netflix agreed to buy Warner’s studio and streaming business for $72 billion US, now in an all-cash transaction that would cover its legacy TV and movie production arms, as well as HBO Max.
Including debt, the enterprise value of the deal is about $83 billion, or $27.75 per share, and would be finalized after Warner completes a previously announced separation of its cable operations.
The decision by Warner Bros. to engage with Paramount marks a shift for the studio. Paramount has previously said the board “never meaningfully engaged” with them on six different offers that executives made in the 12 weeks before Warner Bros. announced the merger agreement with Netflix in December.
In a statement of its own, Netflix also expressed confidence in the deal it has already reached with Warner Bros.
“While we are confident that our transaction provides superior value and certainty, we recognize the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics,” Netflix said in a statement.
The streaming giant noted it had granted Warner a seven-day waiver to “finally resolve this matter.”
Paramount did not immediately respond to a request for comment from The Associated Press on Tuesday.
Unlike Netflix, Paramount wants to acquire Warner’s entire company — including networks like CNN and Discovery — and went straight to shareholders with an all cash, $77.9-billion US offer in December.
The enterprise value of Paramount’s bid stands of $108 billion US including debt, or $30 per share. But Warner disclosed Tuesday that a Paramount representative separately informed the company it would up its offer to $31 per share “pending engagement.”
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Paramount has made other attempts to sweeten its deal, too — including a “ticking fee” if the deal doesn’t go through by the end of the year, and a pledge to pay Warner’s proposed $2.8-billion breakup payout owed to Netflix under the agreement already made with the streamer.
Whichever company gets a successful deal will get ownership of Warner’s extensive film and television library, which include classics like Casablanca and Citizen Kane, as well as fan-favourite HBO TV programs like Game of Thrones. But the prospect of a deal has raised concerns about how that would shake up the entertainment industry, and any sale will face regulatory scrutiny.
Warner Bros. has a special meeting scheduled for Friday and shareholders will vote on the Netflix merger on March 20. The company’s stock rose more than two per cent before the market opened on Tuesday. Shares of Paramount Skydance climbed nearly three per cent, while Netflix’s stock rose slightly.
