Posted in: Movies, Netflix, Opinion, Paramount+, TV, TV | Tagged: netflix, opinion, paramount, warner bros discovery

Paramount's New Offer to WBD Shareholders Might Raise Trump Red Flag

Paramount Skydance's new offer to WBD shareholders sounds confident that a deal will be reached by the end of the year. But how?

It's been a wild couple of weeks regarding the deal between Netflix and Warner Bros. Discovery, and the efforts by David Ellison's Paramount Skydance to scuttle the agreement by pleading to shareholders, international theater owners, and pretty much anyone else who will listen. Last week, Netflix co-CEO Ted Sarandos and others testified before the Senate Judiciary antitrust subcommittee regarding the deal. Now, with ten days to go until its adjusted deadline to WBD shareholders to sell their stocks to his company, Ellison is looking to sweeten the pot in a way that raises a major red flag. Paramount's revised offer now includes a $ 0.25-per-share "ticking fee" paid to WBD shareholders for each quarter a deal between Paramount and WBD hasn't closed after December 31, 2026 (meaning Paramount would pay WBD shareholders approximately $650 million in cash value for every quarter the deal isn't finalized). In addition, Paramount agreed to fund a $2.8 billion termination fee payable to Netflix and work with WBD on its debt financing costs and obligations.

If you're like us, you might've needed to go back and reread that part about a deal between Paramount and WBD being finalized by the end of the year. "Paramount's confidence in the speed and certainty of regulatory approval for its transaction" was the company's comment on what it believes will be a speedy, 10-month regulatory approval process. Taking into account the number of members of Congress who've called into question both Netflix and Paramount's efforts to lock down WBD and the negative impact it could have on the entertainment industry, it would be hard to see how Paramount could finalize a deal in less than a year without Trump and his folks putting their thumbs on the scale to help Paramount out. We're talking about an approval process that was originally seen to take 12-18 months minimum by financial and regulatory experts, well before specific names and details were in play.

Last month, Netflix and Warner Bros. Discovery announced that the streamer has adjusted its agreement for Warner Bros. Discovery's studios and streaming service to an all-cash deal. Though the offer is still set at $82.7 billion ($27.75 per share), the $4.50-per-share Netflix stock component was removed, with the amended deal now tied directly to the successful spinoff of Discovery Global (CNN, TNT, Food Network, and other cable networks) and additional approvals.

The news came as Ellison's Paramount Skydance continued its efforts to block the Netflix/Warner Bros. Discovery deal and take its hostile offer directly to shareholders. Previously, Paramount Skydance filed a court action to force Warner Bros. Discovery to reveal the source of funding for Netflix's offer, a move that would lead to Netflix's all-cash shift. In addition, Ellison's company announced that it would back a slate of directors to challenge the WBD board at WBD's next shareholders' meeting.

Paramount Skydance Extends Hostile Bid Deadline for Warner Bros. Discovery Shareholders: Originally set for this past Wednesday, Paramount Skydance filed an extension with the SEC to February 20th. The move comes as Ellison and reps from Paramount Global continue to speak with investors, as well as reps from the global theater industry, over the past several weeks.

Warner Bros. Discovery: "93%" of Shareholders Rejected Paramount Skydance's "Inferior Scheme": In a statement responding to Paramount Skydance extending the deadline, WBD is claiming that the vast majority of its shareholders have passed on what Ellison is selling. "Once again, Paramount continues to make the same offer our Board has repeatedly and unanimously rejected in favor of a superior merger agreement with Netflix. It's also clear our shareholders agree, with more than 93% also rejecting Paramount's inferior scheme. We are confident in our ability to achieve regulatory approval for the Netflix merger and look forward to delivering the tremendous and certain value our agreement will provide to Warner Bros. Discovery shareholders," read the statement.

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