The board’s determination marks a pivotal moment in a high-stakes bidding war set to reshape the US media landscape, acknowledging that the new bid meets the legal threshold required to commence formal negotiations with Paramount, according to AFP.
Paramount’s revised offer includes a cash purchase price of USD$31.00 per share – a one-dollar increase from its previous bid – valuing the transaction at approximately USD$108 billion. To further incentivize the deal, Paramount has offered to cover the USD$2.8 billion termination fee Warner Bros. Discovery would owe Netflix if it exits its current agreement. Additionally, Paramount pledged a USD$7 billion fee payable to Warner Bros. should the transaction fail to close due to regulatory hurdles.
In contrast, Netflix is currently offering USD$83 billion for a more limited merger. The Netflix proposal excludes Warner Bros. television properties, such as CNN and Discovery, which would be spun off into a newly created publicly traded company if that deal is sealed.
The potential merger has drawn significant political attention, with President Donald Trump insisting he will be “involved” in the decision.
Questions are swirling regarding the future independence of CNN – often a target of Trump’s criticism – should it pass to the control of the Ellison family.
Read more: Netflix considers changing offer for Warner Bros to 100% cash payment
Paramount is run by David Ellison, and the transaction is financed largely by his father, Oracle tycoon Larry Ellison, a longtime ally of the President.
Despite the political pressure, including Trump’s recent demand for Netflix to fire board member Susan Rice, executives are attempting to keep the focus on economics.
“He likes to do a lot of things on social media. This is a business deal. It’s not a political deal,” Netflix co-CEO Ted Sarandos told BBC Radio 4 when asked about the President’s involvement.
Warner Bros. Discovery stressed that it has not yet concluded that Paramount’s offer is definitively superior to Netflix’s, noting that the board “continues to recommend in favor of the Netflix transaction” while the review is ongoing. However, if the Paramount bid is ultimately declared superior, Netflix will have four business days to submit a counteroffer.
As the US Department of Justice and European regulators continue to review the proposals, Warner Bros. Discovery has advised shareholders to take no action regarding the Paramount offer until further notice.
