Warner Bros. Discovery (WBD) is making waves with its ongoing sale process. They recently announced a March 20 vote on their deal with Netflix. Meanwhile, they’re looking to reconnect with Paramount’s Skydance, hoping to resolve issues and secure a strong final offer.
WBD reported that Netflix provided a week-long waiver for these discussions. Paramount had previously shown interest, offering $31 per share but left the door open for more. It’s unclear whether Paramount will accept WBD’s invitation to talk or try to convince shareholders to block the Netflix deal. A potential proxy fight could emerge, especially as the March deadline approaches.
Interestingly, under their deal, Netflix holds the right to match any offer from Paramount. WBD’s CEO, David Zaslav, emphasized their commitment to maximizing value for shareholders.
Recently, discussions within WBD’s board suggested they might re-engage with Paramount. This is particularly significant given that Paramount has been openly courting WBD’s shareholders to challenge the Netflix agreement, initially valued at $82.7 billion.
To sweeten the deal, Paramount proposed covering a hefty $2.8 billion fee if WBD ended its Netflix agreement and outlined plans to reduce costs significantly. “We’re providing billions of dollars to offer shareholders certainty in value and a clear path through regulatory checks,” said David Ellison of Paramount.
Despite these enticing offers, WBD remains focused on their Netflix deal. Some smaller shareholders are pushing WBD to consider Paramount’s bid more seriously. However, WBD’s board is still backing the Netflix option.
Moreover, WBD has outlined unresolved issues with Paramount’s bid, including concerns regarding debt and clarity on funding. WBD aims to send a detailed term sheet to eliminate any doubts about the deal’s feasibility.
Paramount is banking on potential regulatory hurdles for the Netflix transaction in both the U.S. and Europe, believing they provide a clearer path for approval. They even hired Rene Augustine, a former Trump administration lawyer, to navigate these challenges.
Samuel A. Di Piazza Jr., chair of the WBD board, reaffirmed their support for the Netflix merger, deeming it beneficial for shareholders and the industry.
On the other hand, Netflix expressed confidence in their merger’s regulatory approval, countering claims that Paramount’s proposal would be smoother. They pointed out that their deal is mostly vertical, involving complementary assets.
However, the ongoing negotiations have impacted Netflix’s stock, as analysts predict uncertainty in the market. For instance, Guggenheim Securities analyst Michael Morris noted that the protracted negotiation process could limit share appreciation for Netflix in the coming months.
The bidding battle between Netflix and Paramount is a noteworthy saga in the media landscape, particularly as it unfolds in a rapidly shifting regulatory environment. As of now, it’s a waiting game to see how these negotiations will shape the future of WBD and its assets.
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