The fight for Warner Bros. Discovery Inc. gained more traction Tuesday as Paramount Skydance Corp. announced a “ticking fee” of $650 million for each quarter the $108.4 billion all-cash tab stays open after 2026, pending late regulatory approvals.
Paramount said the $0.25 per share ticking fee is to highlight its confidence to clear regulatory pathways with speed and certainty. It will also pay the $2.8 billion termination fee if Warner Bros. Discovery rejects the existing $82.7 billion all-cash agreement with Netflix Inc.
“The additional benefits of our superior $30 per share, all-cash offer clearly underscore our strong and unwavering commitment to delivering the full value WBD shareholders deserve for their investment,” said Paramount Chief Executive David Ellison in a statement. “We are making meaningful enhancements – backing this offer with billions of dollars, providing shareholders with certainty in value, a clear regulatory path, and protection against market volatility.”
Since the announcement, Warner Bros. Discovery’s shares rose 0.43% Tuesday to close at $27.8 per share. Paramount’s also rose by 0.65% to close at $10.84 while Netflix’s dropped by 0.62% to close at $82.21. All three declined in the past month, with Netflix dropping by 10.94% and Paramount by 9.38%.
The battle rolls on
The saga kicked off last September when Paramount sent Warner Bros. Discovery an unsolicited offer to acquire its entire business at $19 a share. Netflix has since entered the ring and sealed a definitive agreement last December with Warner Bros. Discovery to acquire its streaming and studios business for $72 billion in equity value. The deal also includes retained equity in Discovery Global, an upcoming spinoff of Warner Bros. Discovery’s cable and network assets.
Paramount then took a $30 per share all-cash tender offer directly to shareholders while suing Warner Bros. Discovery board for not disclosing key financial information. It also threatened a proxy boardroom war during the shareholder vote, which can happen as early as April.
In addition, Paramount compared Discovery Global with Comcast Corp.’s cable networks spinoff Versant Media Group Inc., arguing that if it follows Versant’s stock market performance, then Warner Bros. Discovery’s shareholders will get less from the Netflix deal. Versant’s share prices dropped about 40% since the separation.
“Assuming both a multiple and leverage ratio in line with Versant, Discovery Global’s equity value would be ~$3.55 per share, resulting in a total package value of only ~$26.75 for the Netflix deal,” Paramount said in a statement. “Paramount’s $30.00 all-cash offer is 12% higher.”
Despite almost 10 rejections from the Warner Bros. Discovery board and rounds of revisions, Paramount’s offer rattled more than a few stakeholders. Pentwater Capital Management, who held the seventh largest stake in the HBO owner, has argued that the board ignored what it considered a superior offer from Paramount, calling it a “lost opportunity» if Paramount goes away.
Cleveland-based activist investor Ancora Holdings Group also opposed the Netflix merger. It acquired a $200 million minority stake in Warner Bros. Discovery and will potentially increase its holdings and push the studio to negotiate with Paramount, Wall Street Journal reported.
The Netflix-Warner megamerger, in addition, faced regulatory questioning on Capitol Hill. The Senate Judiciary Committee probed into what the deal means for consumers and the market as Netflix grows its reach in the show business Tuesday.
Sen. Cory Booker (D-New Jersey) asked about the consolidation between “one of the largest content producers” and “one of the largest distributors,” voicing “major concerns about this for both our artists and art.”
“This is not a typical media merger. We’re buying a company that has assets we do not,” Netflix Chief Executive Ted Sarandos told the panel. “We will support theaters and keep growing the American entertainment industry.”
