Warner Bros. reopens talks as Paramount signals higher bid

The decision to reengage with Paramount adds a twist in the saga for control of one of Hollywood’s most iconic propertiesAuthor of the article:You can save this article by registering for free here. Or sign-in if you have an account.Warner Bros Discovery Inc. has agreed to reopen negotiations with rival Hollywood studioParamount Skydance Corp. after the suitor proposed raising its bid and sweetened other terms of its offer, setting the stage for a renewed showdown with Netflix Inc.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Netflix, which Warner Bros. still described as its preferred bidder, has granted the board seven days to discuss Paramount’s most recent proposal, according to a statement Tuesday. The decision came after a Paramount banker told a Warner Bros. board member that Paramount would offer at least US$31 a share, or US$1 a share higher than its previous offer, if the company agreed to reopen talks. Warner Bros. now wants to see that, and other aspects of Paramount’s new bid, in writing.“Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders,” Warner Bros. chief executive David Zaslav said in the statement. “We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Warner Bros. said the board still unanimously recommends shareholders vote in favour of its binding agreement to sell its namesake studios and HBO Max streaming business to Netflix for US$27.75 a share, or US$72 billion. Paramount’s all-cash US$77.9 billion bid, which is backed by billionaire Larry Ellison, is for the entirety of Warner Bros., including its cable TV channels such as CNN and TNT that are otherwise planned to be spun off under a deal with Netflix. Warner Bros. has scheduled a shareholder vote on the Netflix deal for March 20.Warner Bros. shares rose 2.5 per cent in premarket trading in New York. Paramount was up about 2.7 per cent while Netflix gained 1.2 per cent.The decision to reengage with Paramount, which confirms Bloomberg’s reporting Sunday, adds another twist in the long drawn-out saga for control of one of Hollywood’s most iconic properties. The fight for Warner Bros., the century-old studio behind films from Casablanca to Batman, and hit TV series like Friends, is one of the biggest media deals in years and has the power to reshape the entertainment industry.Paramount Skydance, which was only formed last August as the result of a combination with David Ellison’s Skydance Media, sees the deal as an opportunity to transform itself quickly into a Hollywood powerhouse. A victory for Netflix, meanwhile, would be a crowning achievement for the tech disruptor, making it possibly the most dominant player in entertainment history.Both deals face significant regulatory hurdles that each bidder is convinced it will overcome more easily than the other.Under the terms of the waiver granted by Netflix, Warner Bros. can engage with Paramount until Feb. 23. It has asked Paramount for its best and final proposal, and in that time it plans to discuss unresolved deficiencies in the latest offer, according to the statement. If, after that negotiating period, the Warner Bros. board determines that Paramount has put forth a superior proposal, Netflix will have the right to match Paramount’s most recent offer to keep its existing agreement intact.Paramount has been trying to buy Warner Bros. since September of last year, an effort that resulted in Warner Bros. formally putting itself up for sale. The company increased its bid several times before ultimately losing to Netflix. Three days later, Paramount mounted a hostile tender offer for Warner Bros. at US$30 per share and has twice amended its offer since then, each time addressing some concerns but never raising its price.“While we are confident that our transaction provides superior value and certainty, we recognize the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics,” Netflix said in a statement. “This does not change the fact that we have the only signed, board-recommended agreement with WBD, and ours is the only certain path to delivering value to WBD’s stockholders.”Paramount has insisted its deal is better for shareholders and has spent the last couple months wooing regulators and investors.In Paramount’s most recent proposal, it agreed to cover a US$2.8 billion fee owed to Netflix if Warner Bros. terminates its agreement and offered to backstop a Warner Bros. debt refinancing. Paramount also said it will compensate Warner Bros. shareholders if the deal doesn’t close by Dec. 31, underscoring its confidence that the deal will get swift regulatory approval.Some investors have come out in support of Paramount’s offer. Last week Ancora Holdings Group urged the Warner Bros. board to reject the Netflix deal and reconsider Paramount’s offer, and Pentwater Capital Management, the seventh-largest Warner Bros. shareholder, has also encouraged the board to engage with Paramount. But just 42.3 million shares were tendered to Paramount at last count, less than two per cent of those outstanding.Bloomberg.comPostmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.