Warner Bros. Discovery Says Paramount’s Latest Offer Could Lead to a ‘Company Superior Proposal’

Warner Bros. Discovery announced that it has reviewed Paramount Skydance’s latest acquisition offer and determined that its proposal “could reasonably be expected to lead to a ‘Company Superior Proposal.'”

The board however has not determined whether PSKY’s offer is superior to its deal with Netflix for a merger, and for now the board has not changed its recommendation to shareholders to vote in favor of the Netflix deal.

If the WBD board determines PSKY has the better offer, Netflix has four business days to negotiate with WBD and match the offer.

Paramount’s latest offer, as detailed by WBD, includes a purchase price of $31 per share in cash, a fee of $.25 per quarter the deal doesn’t close after September 30, a $7 billion termination fee if it gets blocked by regulators, and an additional $2.8 billion termination fee that WBD would have to pay to Netflix to nix their deal.

Paramount is aiming to buy the entirety of Warner Bros. Discovery, while Netflix is offering to buy just the film and TV studios, leaving behind the cable channels, which are set to be spun off into a separate company later this year.

This latest offer came about after Netflix agreed to give Paramount a 7-day window to put forward what it hoped would be the company’s “best and final” offer and provide some clarity to shareholders amid what has been an ugly proxy fight that will culminate with a shareholder vote on March 20. PSKY though previously said it does not consider this to be the “best and final” offer.

For Paramount, this is the ninth offer to purchase Warner Bros. Discovery, and to date WBD has not felt PSKY has produced a superior offer to Netflix ever since it announced a deal with Netflix back in December. WBD had said the PSKY offers had “deficiencies” that needed to be resolved, including Larry Ellison, one of the richest men in the world, personally guaranteeing the financing, as well as other concerns about the consortium of investors that also included dollars from Saudi Arabia.

Netflix has also argued that Paramount has made a lot of noise over the last few months in an attempt to win back the rights to WBD and accused it of spreading misinformation about Netflix’s ability to close a deal with the Department of Justice. What’s more, analysts have felt Netflix has had the superior offer because Netflix’s purchase price for just the film and TV studio combined with the value shareholders would get from the cable channels was still greater than the overall purchase price PSKY was offering. We’ll see now if those scales have in fact tipped in PSKY’s favor.

Industry professionals around Hollywood have expressed reservations regardless of whom ends up winning WBD. In the case of Netflix, the fear is that it would severely damage the theatrical business if Netflix doesn’t commit to releasing Warner Bros. movies in theaters any longer. But Netflix brass have aggressively done the rounds of late to say that it would commit to a 45-day theatrical window and that the model of release of WB films wouldn’t change. On the Paramount side, CEO David Ellison has envisioned billions of dollars in cost-cutting at WBD, and that could mean enormous layoffs and potentially fewer movies in the marketplace in the long term.