Paramount Explores New Offer That Could Outshine Netflix in Ongoing Talks with David Ellison’s Team
In a significant development, Warner Bros. Discovery (WBD) has announced that its board is evaluating a revised proposal from Paramount. The board believes this new offer could potentially constitute a “Company Superior Proposal,” as outlined in WBD’s merger agreement with Netflix. This revelation opens the door for ongoing discussions with the David Ellison-led team.
The revised bid features an increased purchase price of $31 per share in cash, along with a daily ticking fee of $0.25 per quarter starting after September 30, 2026. It also includes a $7 billion termination fee that Paramount would owe if the deal fails due to regulatory issues, a $2.8 billion termination fee that WBD must pay to Netflix if they terminate their deal, and additional equity funding to meet solvency requirements set by Paramount’s lending banks. Additionally, it proposes a definition of “Company Material Adverse Effect” that excludes WBD’s Global Linear Networks performance.
A Material Adverse Effect clause in merger and acquisition agreements allows buyers to withdraw or renegotiate terms if a significant negative event occurs, such as financial underperformance.
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Paramount and WBD confirmed the revised offer earlier today, though specific details were not disclosed. Although Paramount was expected to increase its initial offer of $30 per share, the exact amount remained uncertain until the additional $1 increment prompted further negotiations.
WBD clarified that its board has not yet determined whether Paramount’s revised proposal is superior to its existing agreement with Netflix but acknowledges that it holds potential for further discussion. This assessment allows WBD to continue engaging with Paramount to explore a possible agreement.
Should the board ultimately conclude that it has a superior proposal from Paramount, Netflix will receive four business days to negotiate and possibly amend its own agreement with WBD.
“There can be no assurance that the Board will conclude that the transaction proposed by PSKY is superior to the merger with Netflix or that any definitive agreement or transaction will result from WBD’s discussions with PSKY,” stated the board. In the meantime, the existing agreement with Netflix remains in effect, and the board continues to support that transaction.
Netflix has refrained from commenting. The streaming giant’s deal entails acquiring Warner’s studio and streaming assets for $27.75 in cash, while spinning off its cable networks into a separate public entity, with shareholders receiving stock in the new company.
Paramount has been pursuing Warner Bros. Discovery since last fall, shortly after its merger with Skydance was finalized in August. After WBD opted for a bidding process, they ultimately selected Netflix over several other contenders, announcing their deal on December 5. Following this announcement, Paramount attempted a hostile tender offer aimed directly at WBD’s shareholders, revising its offers multiple times. Up until now, these overtures had been consistently rejected by WBD.
