Warner Bros. Considers Resuming Talks With Paramount...Will It Break the Netflix Deal?

On the 15th (local time), Bloomberg News reported, citing sources, that the Warner Bros. Discovery board of directors is reviewing whether to resume sale negotiations with Paramount and Skydance. The Warner Bros. board is reportedly discussing whether Paramount can propose better terms and is also considering whether Netflix is willing to increase its acquisition price.

Warner Bros. has signed an agreement with Netflix to sell its film and TV studios and the HBO Max streaming service. The price is 27.75 dollars per share, for a total of 72 billion dollars (about 104 trillion won). After signing the deal in December last year, Netflix submitted a merger and acquisition filing for Warner Bros. to the U.S. authorities and proceeded with the approval process.

However, Paramount, which had expressed interest in acquiring Warner Bros. before Netflix, did not back down and announced a hostile merger and acquisition. Paramount stated that it would launch an all-cash tender offer to purchase all Warner Bros. shares at 30 dollars per share. In addition, it made a bold proposal that if the merger with Netflix is not completed by the end of this year, shareholders will receive additional compensation. Starting next year, Warner Bros. shareholders would receive 25 cents per share every quarter, totaling 650 million dollars. Paramount also pledged to pay in advance the 2.8 billion dollars in termination fees that Warner Bros. would owe if the contract between Netflix and Warner Bros. is broken.

Amid Paramount's aggressive move, Warner Bros. shareholders such as Pentwater Capital Management and Ancora Holdings Group have publicly stated that the board should enter into negotiations with Paramount. David Ellison, Paramount Chief Executive Officer (CEO), said that the current proposal is not the final offer, and that Netflix could also increase the acquisition price for shareholders.