Warner Bros. Discovery said Tuesday that a revised bid from Paramount, valuing the company at $31 a share, could reasonably be expected to lead to a “superior proposal” to the deal it has signed with Netflix.
The announcement, which signals further talks, is the latest twist in a monthslong battle between two media companies to buy a piece or all of Warner Bros. Discovery. In December, Warner Bros. Discovery’s board announced an agreement to sell a large portion of its business to Netflix, the streaming giant, for $83 billion, spurning an offer from Paramount Skydance to acquire the whole company for $108 billion.
But Paramount persisted, taking its pitch directly to shareholders, also known as a hostile takeover bid. It made tweaks to its offer but had not raised the $30 per share it was willing to spend — until this week.
After a clamor from shareholders, Warner Bros. Discovery reopened talks with Paramount last week, saying it wanted to clarify details about the most recent bid. It gave Paramount until Monday to deliver its best and final proposal.
Now, Warner Bros. Discovery says it will continue talks with Paramount. If it determines that Paramount’s bid is indeed superior to Netflix’s, it will give Netflix four days to put forward a counterproposal, as agreed to in their deal.
In a statement on Tuesday, Warner Bros. Discovery said that “there can be no assurance that the board will conclude that the transaction proposed by” Paramount is “superior” to the Netflix deal.
“The Netflix Merger Agreement remains in effect, and the board continues to recommend in favor of the Netflix transaction and is not withdrawing or modifying its recommendation,” Warner Bros. Discovery added. The company is asking shareholders to vote on the Netflix deal on March 20.
Under the revised bid, Paramount would pay shareholders a so-called ticking fee of 25 cents a share per quarter if the deal didn’t close by Sept. 30. It would also pay a $7 billion termination fee if the deal failed to close because of regulatory obstacles. In addition, it would cover the $2.8 billion fee owed to Netflix if Warner Bros. Discovery broke off their original deal.
Paramount has also agreed to contribute additional equity to the deal if its lenders require it. And it dropped a stipulation from its earlier offer that would have allowed it to walk away from the deal if it found that Warner Bros. Discovery’s cable business was performing poorly, undermining the company’s value.
“Paramount welcomes the WBD board’s determination,” the company said in a statement, “and looks forward to continuing to engage constructively with WBD to deliver the benefits of Paramount’s proposal to WBD shareholders, the creative community and consumers.”
The disclosure from Warner Bros. Discovery could set up the next chapter in a fierce bidding war between two media rivals. Netflix has ample cash to raise its own offer, though its shareholders seemingly have concerns about its effort to buy a large part of Warner Bros. Discovery. Shares of Netflix, which have fallen more than 14 percent this year, climbed a little more than 1 percent in after-hours trading on Tuesday.
A decision by Warner Bros. Discovery shareholders to support Netflix’s bid or Paramount’s may be about more than dollars. A central question is which of the deals is more likely to close, a necessary step for shareholders to get their money.
As part of discussions over regulatory approval, politics have taken center stage, given President Trump’s interest in media deals. While Mr. Trump has been unclear in public statements on whether he would weigh in on an antitrust review by the Justice Department, he has met with the chief executives of both Paramount and Netflix in recent months.
The billionaire Larry Ellison, the father of David Ellison, the chief executive of Paramount, is friendly with Mr. Trump. Larry Ellison backed his son’s acquisition of Paramount in August and his attempted deal with Warner Bros. Discovery. Last year, Paramount settled a $16 million lawsuit with Mr. Trump as it was waiting for regulatory approval for its sale to David Ellison’s Skydance.
On Saturday, Mr. Trump called on Netflix to oust Susan Rice from its board. Ms. Rice held high-ranking positions in Democratic presidential administrations.
“He likes to do a lot of things on social media,” Netflix’s co-chief executive Ted Sarandos told the BBC’s “Today” program on Monday when asked about Mr. Trump’s social media post. “This is a business deal. It’s not a political deal. This deal is run by the Department of Justice in the U.S. and regulators throughout Europe and around the world.”
Still, the timing of Mr. Trump’s comment, before the deadline for Paramount’s revised bid, made some on Wall Street wonder whether he was trying to indicate his preferred bidder. Mr. Sarandos plans to head to Washington this week to meet with White House officials and others, three people familiar with the situation said.
On Tuesday night, David Ellison was a guest of Senator Lindsey Graham, Republican of South Carolina, at Mr. Trump’s State of the Union address.
Antitrust experts have questions about whether either bid could secure regulatory approval in the United States and abroad. But Paramount’s may be further along. The company filed for antitrust approval of its hostile bid shortly after announcing it, and Paramount officials said last week that they had achieved a key milestone toward Justice Department clearance. The department, however, could still sue to block Paramount’s proposed deal.
As part of its review of the Netflix deal, the Justice Department has been asking Netflix’s rivals about whether its deal with Warner Bros. Discovery could create a monopoly, which may indicate it is eyeing an expansive antitrust case. In a statement on Monday, Netflix’s chief legal officer, David Hyman, said the company “operates in an extremely competitive market,” adding that “we’ll gladly cooperate, as we always do, with regulators on any concerns they may have.”
Nicole Sperling contributed reporting from Los Angeles.
Lauren Hirsch is a Times reporter who covers deals and dealmakers in Wall Street and Washington.
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