Warner Bros. gives Paramount one week to outbid Netflix

The seven days of discussions, scheduled to end February 23, are designed to give Paramount Skydance a chance to make its "best and final offer," Warner Bros. Discovery said in a statement that stressed it prefers the Netflix merger and has scheduled a special shareholders meeting to vote on it on March 20.

Television and film titan Warner Bros. Discovery, which owns CNN, announced in late October that it was open to acquisition offers. Its board subsequently accepted a bid from Netflix to buy only its streaming and studio business.

Paramount Skydance, which first approached Warner in September, is seeking to buy all of Warner Bros. Discovery for $108 billion. Netflix is offering $83 billion for its more limited merger.

During the talks that opened Tuesday, Warner Bros. Discovery said it will discuss "deficiencies that remain unresolved and clarify certain terms of PSKY's proposed merger agreement."

The rival Netflix offer does not include Warner Bros. Discovery's television properties such as CNN and Discovery. Those would belong to a newly created, publicly traded company called Discovery Global if the deal goes through.

Paramount CEO David Ellison insists that his offer, largely financed by his father, multi-billionaire Larry Ellison, will not face the regulatory scrutiny in the US and Europe that could derail or seriously delay the Netflix deal.

With that in mind, Paramount has offered to pay Warner Bros. Discovery shareholders a "ticking fee" of 25 cents per share — roughly $650 million per quarter — for every quarter the deal is not closed beyond December 31, 2026.

Paramount has also pledged to cover the $2.8 billion termination fee owed if Warner Bros. Discovery walks away from the Netflix agreement.
'Antics'
Netflix hit back furiously at the development, saying in its own statement Tuesday that the negotiating window was designed to end what it called Paramount Skydance's "antics."

The streaming giant said it granted Warner Bros. Discovery "a narrow seven-day waiver of certain obligations under our merger agreement to allow them to engage with PSKY to fully and finally resolve this matter."

Paramount's offer is fully financed by $43.6 billion in equity commitments from Larry Ellison and RedBird Capital Partners, alongside $54 billion in debt financing from Bank of America, Citigroup, and Apollo Global Management.

The bid also reportedly includes backing from three Middle Eastern sovereign wealth funds, structured specifically to avoid them taking board seats that might trigger additional regulatory scrutiny.

In its Tuesday statement, Netflix said that the foreign funding "is already raising serious national security concerns," and that regulators are likely "to be skeptical of claims that they are purely passive investors."

Critics say Netflix's acquisition of Warner Bros. would give the streaming giant too much control over Hollywood production, which is already under pressure from the streaming revolution and Netflix's lack of commitment to theatrical releases.

To address those concerns, Netflix has committed to giving Warner Bros. films a 45-day theatrical window if the acquisition goes through.

A successful buyout by Paramount would see a major media property that includes CNN fall under the control of the Ellison family, which has close ties to the Trump administration.

David Ellison's recent takeover of CBS, part of the Paramount empire, has brought major editorial changes to its news coverage that are widely seen as more sympathetic to conservative criticisms of mainstream media in the United States.

Larry Ellison is also a major investor in the US operations of TikTok, at the invitation of President Donald Trump.

At a recent Senate hearing, Netflix co-CEO Ted Sarandos faced questions from Republicans about alleged political bias, telling lawmakers that "Netflix has no political agenda of any kind."