It’s been a newsy morning for an all-consuming giant media deal as Netflix agreed to let Warner Bros. Discovery engage in a week of conversation with Paramount. Will that engaging result in a formal, feasible, best and final rival offer for WBD by David Ellison’s company?
The giant streamer hinted it does not believe so but does hopes the talks will allow everyone to move on, saying it granted the “narrow seven-day waiver … to fully and finally resolve this matter.”
A Warner statement and letter this morning seemed dubious about Par’s chances. Even as WBD announced the new talks, the David Zaslav-led company again recommended in favor of the Netflix transaction and set a March 20 meeting for shareholders to vote on it.
Warner acknowledged that Paramount’s last amended offer in particular addressed some of its concerns but implied that important assurances remain squishy. It wants all contingencies, from final price to financing to covenants, laid out clearly in a formal transaction document, not dispersed in press releases, letters and non-binding tender offers.
That include Paramount’s apparent intent to raise its offer from $30 a share in cash to $31 or higher. According to WBD, a representative of a Paramount banker relayed to a WBD board member — verbally, not in writing — that the Ellisons were willing to top the $30 if Warner agreed to engage, one example of something very key to nail down.
Paramount has not yet described any of its offers as “best and final,” which is what Warner says it requires to move forward.
Netflix has matching rights.
Paramount has insisted that it’s absolutely met every one of Warner’s requests and would assuredly disagree with any other characterization. It has slammed WBD for stalling and for refusing to engage in the past. The company has not yet responded today to a request for comment.
Paramount is offering to buy all of WBD. Netflix is taking the Warner Bros. Studios and streaming assets, with Warner spinning off linear TV to current stockholders through shares in a new standalone company called Discovery Global.
In a proxy filing with the SEC today, WBD set a virtual shareholders meeting for 8 am ET on March 20 for WBD stockholders of record as of Feb. 4 5 pm ET eligible to vote on the Netflix deal (and on executive compensation related to the transaction, although that vote is non-binding).
WBD stockholder approval is not required to complete the Discovery Global spinoff, which Warner anticipates completing in the next 5 to 8 months. Netflix and WBD currently expect their transaction will be completed in 12 to 18 months from December 4, 2025 — the day the deal was signed. It was announced Dec. 5.
WBD and Netflix filed merger documents with the DOJ on Dec. 17, starting the clock. The DOJ has 30 days to either do nothing, sue to block the deal, or ask for more details. It chose the latter, as is typical. Both WBD and Netflix received second requests for information on Jan. 16. That extends the waiting period until 11:59 pm ET 30 calendar days after both parties have “certified substantial compliance with the requests.” The timing on that is not clear.
Meanwhile, the FTC or any state attorneys general could sue to block the deal, seek divestiture of assets or other “conduct relief” including requiring the parties to license or hold separate assets, or terminate existing relationships and contractual rights, WBD said.
Outside the U.S., the deal requires pre-closing filings to around 20 or more regulatory authorities and to some 10 or more foreign investment control authorities across South America, Asia and Europe including the European Union and the European Commission. On January 27, Netflix and WBD secured clearance for the deal from the foreign investment authorities in Germany (as did Paramount).
More to come
