Paramount’s Race Against Time: What You Need to Know About the Netflix Competition and WBD Situation
In a significant development in the media landscape, Netflix has agreed to a week of discussions with Warner Bros. Discovery (WBD) concerning a potential transaction with Paramount. This move raises questions about whether Paramount will present a formal, competitive offer for WBD, which is led by CEO David Zaslav.
Netflix appears skeptical of the outcome but hopes that these discussions will allow for a resolution, stating it has granted a “narrow seven-day waiver … to fully and finally resolve this matter.”
WBD’s official communication indicates doubt surrounding Paramount’s ability to significantly alter its proposal. Although WBD has initiated talks, the company continues to support the Netflix deal, scheduling a shareholder meeting for March 20 to vote on the transaction.
In its statements, WBD acknowledged that Paramount’s latest offer addresses some of its concerns but emphasized the need for clarity. The company seeks all critical details—ranging from final pricing to financing—clearly outlined in a formal agreement rather than scattered across press releases and informal communications.
Paramount has indicated a willingness to increase its offer from $30 per share to $31 or higher. However, WBD reported that a representative of Paramount’s financial team communicated this verbally, rather than in writing, raising questions about its formality.
Crucially, Paramount has not labeled any of its offers as “best and final,” a designation that Warner says is essential before moving forward.
In the midst of these negotiations, Netflix retains matching rights.
Paramount insists it has met all of WBD’s requests, and disputes claims that its counterpart has stalled negotiations. The company has not responded to recent requests for comment.
Paramount’s offer entails acquiring all of WBD, while Netflix plans to take over the Warner Bros. studios and streaming assets, with WBD intending to distribute its linear television operations to shareholders as part of a new entity called Discovery Global.
In a recent filing with the SEC, WBD announced a virtual shareholders meeting scheduled for March 20 at 8 a.m. ET to discuss the Netflix deal and related executive compensation. Only shareholders of record as of 5 p.m. ET on February 4 will be eligible to vote.
WBD shareholders’ approval is not necessary for completing the Discovery Global spinoff, which the company expects to finalize within the next five to eight months. WBD and Netflix anticipate concluding their transaction within 12 to 18 months from the signing date of December 4, 2025. This date marks when the deal was first announced.
The merger documents filed with the DOJ on December 17 initiated a review process, giving the department 30 days to respond—either by taking no action, filing a lawsuit to block the deal, or requesting additional information. As expected, the DOJ opted for the latter, issuing a second request for information to both WBD and Netflix on January 16, which extends the review period until compliance is certified.
Additionally, there is the possibility that the FTC or state attorneys general may challenge the deal, potentially seeking asset divestiture or other forms of relief.
Internationally, the agreement requires submissions to more than 20 regulatory bodies and several foreign investment control authorities across South America, Asia, and Europe. On January 27, both Netflix and WBD secured necessary approvals from foreign investment authorities in Germany.
Discovery Global Center of the Storm
The WBD proxy, heavily anticipated, is likely to provide insights into how the company will manage its substantial debt between Discovery Global and the studio and streaming segment. Paramount has highlighted that debt levels could influence the cash consideration Netflix ultimately pays to WBD, with higher debt potentially leading to a reduced payout.
On Tuesday, WBD indicated that any net debt reduction for Discovery Global remains uncertain, with estimates ranging from $0 to $2 billion, affecting merger consideration estimates between $27.75 and $26.98.
WBD further noted that in a highly unlikely scenario where no debt is allocated to Discovery Global, the agreement permits a maximum net debt reduction, which could yield a minimum consideration of $21.23. This uncertainty may bolster Paramount’s claims regarding the lack of clarity for WBD shareholders about the ultimate price.
The variance in share value is attributed to the equity value of Discovery Global stock that WBD stockholders will receive post-separation. WBD explained that any net debt reduction at Discovery Global is expected to enhance the entity’s equity value, benefiting new stockholders.
WBD’s board suggested that analyses from financial advisors point to an implied equity value range for Discovery Global between $1.33 and $3.24 per share. A separate assessment indicates a potential range of $2.41 to $3.77 per share. Additionally, it suggests that the value could reach between $4.63 and $6.86 per share in the event of a takeover.
The board concludes that these figures imply greater value for WBD stockholders in the Netflix deal compared to the latest tender offer from Paramount’s PSKY. PSKY has vehemently contested this assessment, arguing that its valuation of Discovery Global is considerably lower.
