Warner Bros. Discovery Faces Uncertainty in Netflix Acquisition Amid Paramount's Aggressive Bid

The anticipated major merger in the global media industry between Warner Bros. Discovery and Netflix has hit a snag due to Paramount's aggressive counteroffer.

Bloomberg reported on the 15th, citing insiders, that the Warner Bros. board is considering reopening negotiations with Paramount regarding a potential sale.

The board is currently evaluating the enhanced terms that Paramount might offer and Netflix's willingness to increase its payment.

Initially, Warner Bros. had agreed to sell its movie and TV studios, along with the streaming service HBO Max, to Netflix. The agreed share price was $27.75, with the total deal valued at approximately $72 billion.

Since the agreement in December last year, Netflix has submitted a merger notification to U.S. authorities and is undergoing the necessary approval processes. However, Paramount, which had been pursuing the acquisition earlier, has not backed down and has formalized a hostile takeover bid.

Paramount has proposed an all-cash offer of $30 per share and promised additional compensation to shareholders if the deal with Netflix does not conclude by the end of 2026. This includes a plan to distribute 25 cents per share each quarter, totaling $650 million to shareholders.

Additionally, Paramount has pledged to cover the $2.8 billion termination fee that would result from breaking the contract with Netflix. In light of Paramount's actions, major Warner Bros. shareholders, including Pentwater Capital Management and Ancora Holdings Group, have publicly urged the board to engage in discussions with Paramount.

Should negotiations resume, a full-scale bidding war between Netflix and Paramount is expected. CEO David Ellison has stated that the current offer is not final, and Netflix has hinted at the possibility of increasing its acquisition price to shareholders.

Reported by Min-Kyung Lee, TenAsia 2min_ror@tenasia.co.kr