Netflix shifts Warner Bros offer to all-cash deal to pacify Paramount

Netflix has made a strategic move by switching to an all-cash offer for Warner Bros Discovery’s studio and streaming assets. This decision, without increasing the $82.7 billion price tag, aims to fend off Paramount’s attempts to outbid the streaming giant.

The all-cash bid of $27.75 per share has received unanimous support from Warner Bros’ board, as noted in a recent regulatory filing. Both Netflix and Paramount Skydance have been eyeing Warner Bros for its esteemed film and television studios, substantial content library, and valuable franchises like Game of Thrones, Harry Potter, and DC Comics’ superheroes Batman and Superman.

Despite Paramount’s efforts to sway shareholders with altered terms and an aggressive media campaign, Warner Bros has turned down the company led by David Ellison, whose father is Oracle founder Larry Ellison, a close ally of former US President Donald Trump. In response to Netflix’s latest offer, Warner Bros plans to hold a special investor meeting to vote on the deal, with the meeting expected to take place by April.

Netflix’s co-CEO Ted Sarandos expressed that the revised all-cash agreement will accelerate the timeline for a stockholder vote and provide greater financial certainty. Shares of Netflix have seen a slight increase, while Paramount’s shares dipped upon news of the updated offer. Warner Bros’ fifth-largest investor predicted that the bidding war may continue despite the new agreement.

The board of Warner Bros also shared details about the valuation of Discovery Global, a spin-off entity set to include television assets like CNN, TNT Sports, and the Discovery+ streaming service. Paramount Skydance’s $30-per-share cash bid is deemed inferior, as Warner Bros’ investors would have a stake in the separately traded Discovery Global as part of the Netflix deal.

While winning shareholders’ approval is a crucial step, concerns about media consolidation driving up prices and reducing consumer choices may present regulatory challenges. Despite advantages like an investment-grade credit rating, Netflix and Warner Bros face a journey ahead to secure the merger in a competitive landscape.