Warner Bros. will reject Paramount/Skydance’s $108 billion offer and stick with the Netflix acquisition, according to Bloomberg. Paramount is expected to either sue or increase its offer, which could set off a bidding war.
Warner Bros. had been given 10 business days — as required by law — to respond to Paramount’s hostile $30-a-share bid for the company. That apparently won’t be enough to sway the Warner Bros. board, who have “no plans” to cancel the merger agreement signed last week with Netflix. Had the deal been canceled, Warner Bros. would have been required to pay Netflix a $2.8 billion termination fee.
Now all eyes on Paramount/Skydance, which is expected to up the ante—offering more money, and maybe even suing Warner Bros. Fun times. The big winner here is Warner CEO David Zaslav, who stands to make around $1 billion whenever a deal goes through, whether it is with Netflix or Paramount. It’s not hard to see that rejecting yet another offer from Paramount is tactical; Warner Bros. knows how desperate the Ellisons are and figures the offers will keep getting higher and higher.
The report further adds that, much to the shock of nobody, shareholders of Warner Bros. are “hoping” for a bidding war that could further boost the price of the deal. Both Netflix and Paramount have communicated that they are willing to increase their offers.
This all aligns with Charles Gasparino’s reporting that Zaslav has told people if Paramount/Skydance can come up with an extra $5 a share, it could upend the sale to Netflix.
Paramount’s backer Larry Ellison is worth more than $270 billion, Netflix has a market value of $441 billion, so money shouldn’t be a problem for Netflix to counteroffer — if that’s the road they want to take — but since their Warner Bros deal went through last week, their stock has gone down 6% and a potential bidding war would further dwindle it.
So who will prevail? According to Puck’s Matt Belloni, Paramount/Skydance holds the edge:
Netflix will let Paramount have Warner Bros. Discovery ‘at a certain point […] The Ellisons can go up as much as they want, and that is the key here. Netflix at some point will bow out.
It helps that Larry Ellison’s close relationship with Trump and Paramount’s relatively limited overlap with WBD’s businesses have led many to viewing them as the more realistic option, even though the deal would still merge two major film studios. Netflix, by contrast, faces steeper scrutiny; if its offer wins, it would command about 30% of the streaming market—an outcome that has already drawn concern from the Trump administration.