Warner Bros. Discovery said on Thursday that Paramount’s $111 billion offer to buy the company was a “superior deal” to the one it had signed with Netflix in December, opening up the next chapter in what has become a fierce bidding war for the media giant.
Netflix, now has four business days to decide whether it wants to counter Paramount’s offer and try to continue with its plan to take over Warner Bros.
Netflix had beat out Paramount in December and signed an $83 billion deal to acquire a large portion of Warner Bros. Discovery’s business. But earlier this week, Paramount countered with the new $111 billion offer.
Netflix has the cash arsenal to raise its offer, but it must also carefully weigh the regulatory and shareholder implications of doing so.
Shareholders have seemingly questioned Netflix’s move to buy a legacy movie business — and the costs that has come with it: It has lost more than $60 billion in market value since announcing the deal with Warner Bros. Discovery.
Regulators have also scrutinized the deal, and Ted Sarandos, Netflix’s co-chief executive, was in Washington on Thursday to discuss the transaction with White House officials and the Justice Department.
Netflix executives are expected to head back to Washington next week for their second hearing on the potential antitrust implications of the transaction.
Mr. Sarandos, who gave a spree of interviews last week highlighting the strategic benefits of the deal to the entertainment industry, has also expressed caution about how much Netflix is willing to pay. “We’re super-disciplined buyers,” Mr. Sarandos said earlier this month. “I’m willing to walk away and let someone else overpay for things.”
Paramount, while one-thirtieth the size of Netflix, may be the more determined of the two, analysts say. It has aggressively pursued Warner Bros. Discovery since its roughly $108 billion offer was rejected in December, taking its offer to Warner Bros. shareholders in what is known as a hostile bid. After several revisions to its offer, Warner Bros. Discovery reopened talks with Paramount last week.
As part of its pitch to Warner Bros. Discovery shareholders, Paramount has cast doubt as to whether Netflix’s deal would be approved. Paramount is now offering to pay Warner Bros. Discovery $7 billion if its own deal is blocked by regulators, underscoring the studio’s confidence that it can get the deal done.
David Ellison, the chief executive of Paramount Skydance, said in a letter to investors Wednesday that a deal with Warner Bros. Discovery would be an “accelerant” to its strategic and financial goals.
Nicole Sperling contributed reporting
Lauren Hirsch is a Times reporter who covers deals and dealmakers in Wall Street and Washington.
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