Warner Bros. Discovery Evaluates Revised Paramount Skydance Offer

Warner Bros. Discovery announced on Tuesday that it will consider a revised proposal to potentially cancel its nearly finalized agreement with Netflix. This comes after Paramount Skydance increased its offer from $78 billion by an additional $2.6 billion.

A report indicated that the shift in Warner Bros. Discovery’s stance regarding the Paramount Skydance bid seems less about financial incentives and more tied to the unpredictable regulatory landscape Netflix is dealing with.

For any deal to go through, investors at WBD will need to give their approval. There are growing worries that the Netflix deal, which conflicts with WBD’s streaming service, could face significant scrutiny from regulators in both the U.S. and Europe.

Additionally, the Post noted that White House antitrust regulators are examining whether Netflix might be crossing into monopoly territory as defined by Section 2 of the Sherman Act. If Netflix wants to gain full control, it may face prolonged investigations and potential litigation, a scenario that seems risky.

In contrast, accepting Paramount’s offer, which is expected to encounter fewer regulatory challenges, might mean quicker gains.

Recently, bankers for Paramount Skydance have been emphasizing these points through a direct appeal to investors. This push comes after Warner Bros. cemented a deal in December to acquire the streamer and studio that Netflix proposed for $73 billion. They’ve attracted support from key investors, like Mario Gabelli, who believes the Paramount option is straightforward and offers clarity on regulations—essentially, “cash is king.”

In a press release on Tuesday, Warner Bros. did not delve into specifics but did mention that a “revised offer from Paramount Skydance could reasonably be expected to result in a superior offer for the company.”

According to reports, Paramount Skydance, backed by David Ellison and Oracle co-founder Larry Ellison, modified its original rejected proposal to include breakup fees and upped the bid to $31 per share.

The WBD board will now evaluate whether this new proposal is indeed more advantageous than Netflix’s. Should they find it so, Netflix will have four days to adjust its bid.

David Zaslav, the CEO of Warner Bros. Discovery, is recognized as a savvy dealmaker in the media industry. He built his reputation at NBCU before founding Discovery and merging its assets with WarnerMedia.

Following his efforts to revamp WBD’s studio and streaming operations while reducing debt, Zaslav has sparked considerable interest in the company, driving its stock from $12 to around $30 as investors anticipate the final outcome.

However, Netflix’s challenge in making a competitive offer is compounded by regulatory issues noted earlier.

Recently, Netflix appears to be waking up to the significant challenges it faces in Washington. As reported, the streaming service is intensifying its outreach to regulators, aiming to downplay claims that its business model could raise antitrust issues while highlighting competition from platforms like YouTube.

In light of these concerns, CEO Ted Sarandos is reportedly seeking a follow-up meeting with President Trump to address potential apprehensions. He also needs to manage a public relations challenge stemming from comments made by one of Netflix’s board members.

The president has expressed frustration on social media following remarks from Susan Rice, a Netflix board member and prominent Democrat, suggesting that companies too accommodating to the Trump administration could face repercussions should Democrats regain power.

In response, the president hinted at the possibility of trade restrictions if Rice remains on the board, though Netflix has chosen not to comment on her statements.