When business revs back up next week, Warner Bros. Discovery looks set to reject Paramount’s amended hostile takeover bid due in part to concerns at the delay that could dog its planned cable spinoff if a deal falls through, Deadline hears.
WBD agreed earlier this month to sell its studio and streaming assets to Netflix in a cash and stock transaction worth $27.75 a share as it packages the rest into a standalone publicly traded linear television company called Discovery Global by the third quarter of next year. Paramount Skydance is offering to buy all of WBD, which would mean pencils down on a separation as the broader deal works its way through a potentially fraught regulatory process.
David Ellison-led Paramount has insisted that it has the easier path to approval and that may be, but some investors seem to feel that things are not quite as clear cut as they initially seemed. President Donald Trump, who has said outright he’ll be involved in a decision, is friendly with David Ellison’s father and Oracle co-founder Larry Ellison but recently fumed at CBS about a 60 Minutes interview with Majorie Taylor Greene, calling Ellison-owned Paramount “no better than the old ownership.” Skydance acquired CBS parent Paramount in August. Trump described Netflix co-CEO Ted Sarandos as “fantastic” but also noted that a combined Netflix-Warner would “have a very big market share” in streaming. Further confusing the issue, he also said he opposes any plan in which WBD continues to own CNN.
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WBD announced its Netflix deal in November over rivals bids from Paramount and Comcast. The NBCUniversal parent bowed out, but Paramount went over the heads of Warner’s board directly to shareholders with a hostile offer that WBD formally rejected. In an amended offer, Paramount added a $40.4 billion personal financial guarantee by Larry Ellison and raised its breakup fee to $5.8 billion, matching Netflix. But it did not sweeten the base amount of the bid, which still stands at $30 a share in cash. WBD last said Dec. 22 that it was considering the revised offer. Deadline hears the board will meet next week and no final decision has yet been made, but it seems a rejection is in the cards.
Beyond the personal guarantee, WBD’s board raised other issues including its need for financial flexibility pending the close, which Paramount said it had addressed, as well as a $2.8 billion breakup fee that WBD would owe Netflix if it switches lanes.
Some WBD shareholders have said publicly that Paramount should sweeten its offer, which has a total equity value of $77.9 billion and an enterprise value of $108.4 billion (including net debt and non-controlling interests), and many Wall Streeters believe it will. Meanwhile, Par has been urging WBD stockholders to tender their shares by the new Jan. 21, 5 pm ET deadline. They can withdraw the shares at any time before then and the tender can also be extended.
If and when Paramount raises its bid, the question is whether Netflix will counter. Several media analysts told Deadline they think Paramount will ultimately prevail because it’s smaller than Netflix and needs the deal more. One called the race “neck and neck right now.”
Reps for WBD and Paramount declined to comment.
Bloomberg first reported WBD’s board meeting and pending decision next week.