Warner Bros. Discovery is starting a seven-day period ending Feb. 23 to hold discussions with Paramount. It is seeking clarity for WBD stockholders and “providing PSKY the ability to make its best and final offer.”
Meanwhile, the continues to recommend in favor of a Netflix merger and set a March 20 date for a special shareholders’ meeting to vote on that transaction. It started mailing out definitive proxy materials Tuesday.
Paramount last amended its offer in a Feb. 10 letter to WBD, sticking to a $30-a-share all cash bid but addressing enough Warner concerns that shareholders wanted to hear more.
According to WBD today, a senior PSKY representative indicated to a Warner director that, if Warner engaged in talks, PSKY could boost its offer above the $30.
PSKY’s February 10 overture, WBD acknowledged, indicates a willingness to address specific concerns but “does not do so in its proposed merger agreement, leaving WBD with vague assurances of intention.”
“During this seven-day period,” WBD said, the two companies will “discuss the deficiencies that remain unresolved and clarify certain terms of PSKY’s proposed merger agreement.”
“We welcome the opportunity to engage with you and expeditiously determine whether PSKY can deliver an actionable, binding proposal that provides superior value, transaction certainty and interim protection for WBD’s businesses to Warner Bros. Discovery shareholders,” it wrote in the letter.
The Paramount camp has accused WBD of a biased process and of refusing to engage. It has insisted that the Ellison family met every objection that Warner raised.
WBD said Netflix provided it with a limited waiver to engage with Paramount under the terms of their merger agreement. Deadline understands that WBD’s Netflix deal allows it to switch horses and accept a rival offer outright (paying a termination fee), but not to engage in conversations. For that, it needed Netflix to sign off. The Paramount offer, as described by WBD, has major gaps and is in no sense ready to sign.
It its own statement on Tuesday, Netflix said: “While we are confident that our transaction provides superior value and certainty, we recognize the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics. Accordingly, we granted WBD a narrow seven-day waiver of certain obligations under our merger agreement to allow them to engage with PSKY to fully and finally resolve this matter.”
The streamer run by Ted Sarandos and Greg Peters retains matching rights.
To kick off the talks, WBD set out key issues it wants to address along with drafts of full transaction agreements for PSKY to formally enhance and confirm the terms of its offer.
“As part of your binding proposal, the WBD Board needs confirmation that you are prepared to sign our proposed agreements. We encourage you to be direct and transparent with your best and final value and other terms in that binding proposal,” the WBD letter said.
Issues include how the sides deal with refinancing costs and consent; with material adverse effect based on the performance of Discovery Global; with an equity cure to support debt (in case debt financing becomes unavailable); with certain interim operating covenants; and with details around equity syndication to outside parties, like Middle East sovereign funds.
“Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders,” said CEO David Zaslav. “Every step of the way, we have provided PSKY with clear direction on the deficiencies in their offers and opportunities to address them. We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”
“We continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides, our clear path to achieve regulatory approval and the transaction’s protections for shareholders against downside risk,” said Warner board chair Samuel Di Piazza. “With Netflix, we will create a brighter future for the entertainment industry – providing consumers with more choice, creating and protecting jobs and expanding U.S. production capacity while increasing investments to drive the long-term growth of our industry.”
WBD’s letter to PSKY:
“Dear Members of the PSKY Board:
The Board of Directors of Warner Bros. Discovery (WBD) is fully committed to delivering a superior transaction to our shareholders. Since our decision last year to separate our Streaming & Studios businesses from our Global Linear Networks business, we have actively explored a wide range of alternatives, including through a publicly announced strategic review process in which Paramount Skydance (PSKY) participated, having initially approached WBD in September 2025. Our agreed transaction with Netflix offers superior value for our shareholders, allows us to achieve our strategic goal to separate WBD’s businesses, offers a high degree of certainty with minimal risk to the businesses in the interim and has essentially no financing risk. The WBD Board continues to unanimously recommend that our shareholders approve the Netflix transaction, as reflected in the definitive proxy statement we have filed with the SEC today.
“On February 10, PSKY amended its tender offer for WBD common stock. While this amendment addresses some of the concerns that WBD had identified several months ago, it still contains many of the unfavorable terms and conditions that were in the draft agreements submitted by PSKY on December 4, 2025 and December 22, 2025 and twice unanimously rejected by our Board. PSKY indicated in its February 10 letter to the WBD Board a willingness to address some of those concerns, but does not do so in its proposed merger agreement, leaving WBD with vague assurances of intention. Other important issues raised several times with PSKY are unchanged from your prior submissions.
“On February 11th, a senior representative of your financial advisor communicated orally to a member of our Board that PSKY would agree to pay $31 per WBD share if we engage with you, and that $31 is not PSKY’s best and final proposal.
We are writing to inform you that Netflix has agreed to provide WBD a waiver of certain terms of the Netflix merger agreement to permit us, through February 23, to engage with PSKY to clarify your proposal, which we understand will include a WBD per share price higher than $31. We seek your best and final proposal.
“To be clear, our Board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger. We continue to recommend and remain fully committed to our transaction with Netflix and have scheduled a special meeting of our shareholders on March 20, 2026 to vote on the Netflix merger agreement. As you know, it is typical and expected for a would-be overbidder to accept the substantive terms of the merger agreement that the target company has already agreed with its existing merger party.
“To provide you with specific clarity in this regard, we have prepared, and our legal counsel will deliver to you today, copies of transaction agreements that conform to this approach, address key issues for the WBD Board in prior PSKY offers and incorporate the terms and assurances reflected in your February 10 letter, as well as certain other changes to reflect matters unique to your proposal. Attached at the end of this letter is a business summary of these changes. As part of your binding proposal, the WBD Board needs confirmation that you are prepared to sign our proposed agreements. We encourage you to be direct and transparent with your best and final value and other terms in that binding proposal.
“During this seven-day period – as we consistently did during the strategic review process last year – we welcome the opportunity to engage with you and expeditiously determine whether PSKY can deliver an actionable, binding proposal that provides superior value, transaction certainty and interim protection for WBD’s businesses to Warner Bros. Discovery shareholders.”
