Warner Bros. Discovery Reopens Talks with Paramount Amid Netflix Deal Battle
Paramount’s takeover bid was rejected in
favor of Netflix, which wanted only the streaming and
studio businesses. Paramount said it would pay more if negotiations were reopened.
1. Deal Talks
Restarted
·
Warner Bros. Discovery announced it will reopen negotiations
with Paramount Skydance.
·
Paramount has until Feb. 23 to submit its “best
and final” offer.
·
Talks were previously ended in December.
2. Background:
Netflix Deal Preferred
·
Last year, Warner Bros. Discovery rejected Paramount’s
$108 billion full-company bid.
·
Instead, it accepted an $83 billion deal from
Netflix for its streaming and studio businesses only.
·
WBD said Netflix’s offer provided better shareholder
value.
·
Paramount launched a hostile push to challenge that
decision.
3. Paramount’s
Revised Offer
·
Paramount has amended its proposal twice since
December.
·
Public offer remains $30 per share, but verbally
indicated willingness to raise to $31 per share — and potentially higher.
·
New concessions include:
o
Covering WBD’s $2.8 billion breakup fee owed
to Netflix.
o
Supporting WBD’s debt costs.
o
Paying $650 million per quarter (starting 2027)
if deal delays occur.
4. Investor
& Market Pressure
·
Some WBD investors, including Pentwater Capital Management,
urged reopening talks.
·
Shares of both WBD and Paramount rose ~3% in premarket
trading.
·
Netflix shares are down about 15% this year but rose
1.5% in premarket trading.
5. Leadership
Positions
·
WBD CEO David Zaslav and Chairman Samuel A. DiPiazza
Jr. signaled openness to a binding superior proposal.
·
Paramount CEO David Ellison questioned whether the Netflix
deal could pass regulatory scrutiny.
·
Netflix defended its bid as offering “superior value
and certainty.”
6. Contractual
Dynamics
·
Under WBD’s agreement with Netflix, it may engage with
rival bidders if a “reasonably superior offer” emerges.
·
Netflix granted a seven-day waiver to allow WBD
to clarify Paramount’s proposal.
·
If Paramount submits a superior bid, Netflix retains
the right to match or improve its offer.
7. Key Issues
Under Review
WBD has requested
clarifications from Paramount on:
·
Debt financing stability.
·
Conditions allowing Paramount to withdraw.
·
Equity backstop commitments if financing falters.
8. Next Milestones
·
Paramount must finalize its proposal by Feb. 23.
·
WBD scheduled a shareholder vote on the Netflix deal
for March 20.
·
The bidding contest could intensify if headline prices
rise further.
Conclusion
Warner Bros. Discovery’s decision to reopen negotiations
sets the stage for a renewed corporate bidding battle between Paramount and Netflix.
With shareholder pressure mounting and financial guarantees under scrutiny, the
coming days could determine whether the Netflix deal holds or Paramount succeeds
in reshaping one of the biggest media mergers in recent history.
Warner
Bros. Discovery said on Tuesday (17.02.2026) that it would restart the deal talks
with Paramount Skydance that it ended in December, giving the company another chance
at besting Netflix for a deal. Paramount will have until Feb. 23 to negotiate its
best and final offer.
Warner
Bros. Discovery last year rejected Paramount’s offer to buy the entire company for
$108 billion in favor of a deal to sell only its streaming
and studios business to Netflix for $83 billion. Warner Bros. Discovery said at
the time that Netflix offered the better deal for shareholders. Paramount disagreed
and quickly made its case to shareholders through a hostile bid.
In
the roughly two months since then, Paramount has amended its offer twice, each time
addressing some of the concerns that Warner Bros. Discovery’s board had raised.
Paramount’s chief executive, David Ellison, has also raised questions about the
Netflix bid, including whether its deal can pass regulatory scrutiny.
Some
Warner Bros. Discovery investors, including Pentwater Capital Management, have also
raised concerns, encouraging the company to restart talks with Paramount. Shares
of Warner Bros. Discovery and Paramount Skydance were both up about 3 percent in
premarket trading.
To
date, Paramount has not publicly raised its offer from $30 a share. But last week,
Warner Bros. Discovery said that a senior representative for Paramount had verbally
informed a company board member that, if the board authorized talks with Paramount,
it would agree to pay $31 a share.
In
that conversation, the Paramount representative added that it would be willing to
further improve its offer.
“It’s
about time the actual headline price bidding heated up in what has to be one of
the most inactive corporate bidding wars in history,” Eric Talley, a business professor
at Columbia Law School, said.
In
a letter to the Paramount board on Tuesday, David Zaslav, the chief executive of
Warner Bros. Discovery, and Samuel A. DiPiazza Jr., chairman of the company, said:
“We welcome the opportunity to engage with you and expeditiously determine whether
PSKY can deliver an actionable, binding proposal that provides superior value.”
In
Paramount’s latest offer, it agreed to pay the $2.8 billion fee Warner Bros. Discovery
would owe to Netflix if their agreement were terminated, as well as agreeing to
back Warner Bros. Discovery’s debt costs. Paramount also said it would pay Warner
Bros. Discovery’s shareholders around $650 million in cash, starting in 2027, for
each quarter that the deal did not close.
Warner
Bros. Discovery said Tuesday that it had requested a number of clarifications about
Paramount’s latest proposal. Among them were concerns about the extent of Paramount’s
support for Warner Bros. Discovery’s debt costs and the conditions under which Paramount
could legally walk away from a deal. It also wanted assurances that Paramount would
be willing to contribute more equity if its debt financing fell apart.
According
to the terms of Warner Bros. Discovery’s contract with Netflix, it can engage in
talks with a rival bidder if it thinks it can lead to a “reasonably superior offer.”
Warner Bros. Discovery said in its letter on Tuesday that it did not yet think that
Paramount’s offer met that bar — but that Netflix had given Warner Bros. Discovery
a seven-day waiver to see if it could clarify its concerns.
“Throughout
the robust and highly competitive strategic review process, Netflix has consistently
taken a constructive, responsive approach with WBD, in stark contrast to Paramount
Skydance,” Netflix said in a statement released on Tuesday. “While we are confident
that our transaction provides superior value and certainty, we recognize the ongoing
distraction for WBD stockholders and the broader entertainment industry caused by
PSKY’s antics.”
On
Tuesday, Paramount acknowledged Warner Bros. Discovery’s decision, saying in a statement
that it had opted to secure a waiver rather than deeming Paramount’s bid as one
that could be reasonably expected to be superior. In doing so, Paramount said, Warner
Bros. Discovery did not allow itself “an unfettered right to negotiate without a
time deadline.”
“Although
the board’s actions are unusual,” the statement said, “Paramount is nonetheless
prepared to engage in good faith and constructive discussions.”
If
Paramount makes a superior offer, Netflix has the right to improve its own bid.
Shares of Netflix have been under pressure since it announced the deal in December,
falling about 15 percent this year. Its stock rose 1.5 percent in premarket trading.
Discovery
said on Tuesday that it had scheduled a shareholder vote on Netflix’s offer for
March 20.