Netflix announced on Tuesday that it had modified its December offer to acquire major parts of Warner Bros. Discovery, a rejoinder to Paramount and its chief executive, David Ellison, who is also in hot pursuit of Warner Bros.
In December, Warner Bros. Discovery agreed to sell its streaming and studios business to Netflix in an $83 billion cash-and-stock deal. On Tuesday, Netflix said it would pay that sum exclusively in cash, simplifying the deal for investors who will no longer have to account for Netflix’s fluctuating stock price.
“Today’s revised merger agreement brings us even closer to combining two of the greatest storytelling companies in the world,” David Zaslav, the chief executive of Warner Bros. Discovery, said in a statement. Netflix’s modified offer would provide “greater financial certainty” for shareholders, added Ted Sarandos, the co-chief executive of Netflix.
The move puts pressure on Paramount to further revise its own bid after Warner Bros. Discovery rejected its latest offer, saying it viewed the deal as more risky than Netflix’s. While Paramount has modified the terms of its bid, it has not increased its offer in the weeks since Warner Bros. Discovery chose Netflix.
For months, Hollywood has been on a cliffhanger as Paramount and Netflix duked it out for control of Warner Bros. Discovery, a messy tug-of-war that could help determine the trajectory of the entertainment industry. Paramount mounted a hostile bid for Warner Bros., appealing to the company’s investors after Warner Bros. rejected a series of increasingly sweetened offers in favor of a tie-up with Netflix.
The battle is now being waged among Warner Bros. shareholders, who must ultimately approve any sale, and in the hearts and minds of Hollywood’s besieged creative class, who are already reeling from decades of technological disruption and unending corporate consolidation.
Warner Bros. Discovery also said Tuesday that it was making changes to the business it was not selling to Netflix. As part of its planned deal, Warner Bros. Discovery is carving out its cable business, spinning off traditional TV channels like CNN and TNT into a separate publicly traded company. Paramount has questioned the value of that business, arguing it is, in effect, worth nothing. It has argued, in turn, that its proposal to buy all of Warner Bros. Discovery is better for shareholders than Netflix’s deal to buy only part.
Under the terms of the revised deal, Warner Bros. Discovery will reduce the debt that would have been on its cable business by $260 million. That change is designed to assuage shareholders who feared the cable business’s debt load would reduce investor appetite.
Warner Bros. Discovery also outlined how it valued its cable business, with calculations ranging from $1.33 to $6.86 a share. For shareholders, that purported value would be added to the $27.75 per share value of Netflix’s offer for the rest of Warner Bros. Discovery’s business.
By detailing its analysis, Warner Bros. Discovery is trying to offer a road map for investors choosing between Netflix and Paramount, which is offering $108 billion in cash for the whole company, or $30 per share.
Netflix’s shift to an all-cash offer could hasten how quickly the deal is reviewed by regulators at the Securities and Exchange Commission, which could also expedite a vote on the deal by Warner Bros. Discovery shareholders.
In the meantime, Paramount and Netflix are each trying to convince politicians in Washington — including President Trump — that its offer is better for Americans. Mr. Trump has said that he would be “involved” in the deal, and recently shared an editorial on social media that argued Paramount’s offer was superior. He has also offered praise for Mr. Sarandos of Netflix, calling him “a great person.”
Lauren Hirsch is a Times reporter who covers deals and dealmakers in Wall Street and Washington.
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