Paramount Tries to Outbid Netflix for Warner Bros With Extra Cash Incentives

Paramount Skydance has boosted its bid for Warner Bros Discovery by offering shareholders extra cash if the deal drags beyond 2026 and agreeing to cover Netflix’s breakup fee if Warner Bros walks away.

The move is the latest in Paramount’s ongoing battle with Netflix for the Hollywood studio’s prized film and TV assets.

The new incentives include a 25-cent-per-share “ticking fee,” worth about $650 million per quarter from early 2027 until the deal closes.

According to CNA, Paramount has not increased its $30-per-share offer, totaling $108.4 billion including debt, but pledged to fund the $2.8 billion termination fee Warner Bros would owe Netflix if their $82.7 billion merger collapses.

Both Netflix and Paramount covet Warner Bros for its blockbuster franchises, including “Game of Thrones,” “Harry Potter,” and DC Comics superheroes like Batman and Superman.

Paramount, which owns CBS, would also acquire Warner Bros’ television networks, including CNN and TNT, which are expected to spin off into a separately traded company, Discovery Global.

Paramount CEO David Ellison said, “We are making meaningful enhancements – backing this offer with billions of dollars, providing shareholders with certainty in value, a clear regulatory path, and protection against market volatility.”

The company has also raised Ellison’s personal guarantee to $43.3 billion and secured $54 billion in debt financing from Bank of America, Citigroup, and Apollo.

Warner Bros Board Reviews Paramount Offer

Despite the sweetened offer, analysts say Paramount may struggle to win over Warner Bros shareholders.

Ross Benes, senior analyst at Emarketer, called the move “throwing spaghetti at the wall and hoping something sticks,” noting that Paramount’s best chance may come from regulatory hurdles blocking Netflix.

Activist investor Ancora Holdings, which owns roughly $200 million in Warner Bros shares, has expressed opposition to the Netflix deal and could push for Paramount if the board fails to secure a better offer, Reuters reported.

Warner Bros said its board will review the updated offer but maintains support for Netflix’s merger.

Paramount has also addressed other concerns by offering to backstop Warner Bros’ planned debt exchange and certifying compliance with US antitrust regulators.

It is in talks with regulators in the US, EU, and UK and has secured foreign investment approval in Germany.

Netflix’s $82.7 billion all-cash offer remains in place. Gaining Warner Bros’ assets could give Netflix cultural and streaming power, with nearly half a billion subscribers worldwide. A Warner Bros shareholder vote on the Netflix deal is expected by April.

Originally published on vcpost.com