As expected, Warner Bros. Discovery is mulling over Paramount Skydance's latest acquisition offer, despite setting a date—March 20—for shareholders to vote on its planned deal with Netflix.
By re-engaging with David Ellison and Paramount, the hope is to secure a "best and final" offer from the company...which, ultimately, may force Netflix to pay significantly more for WBD. Either way, it's a win/win situation for David Zaslav and his fellow executives.
While Netflix is currently looking to acquire Warner Bros.' film and television assets for $27.75 per share, Paramount is willing to go upwards of $31 per share. It's unclear whether Paramount will accept WBD's offer to re-engage; the alternative is pursuing a proxy fight to get board members to vote down the Netflix deal next month.
Paramount is clearly determined to derail the previously agreed $82.7 billion Netflix deal. Netflix's offer is only for Warner Bros. Pictures and HBO/HBO Max. The Ellisons, meanwhile, are eyeing up the entire company, including cable channels like CNN, TNT, Discovery, HGTV, and Food Network.
Zaslav said today "Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders. Every step of the way, we have provided PSKY with clear direction on the deficiencies in their offers and opportunities to address them."
"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."
Netflix has the right to match any offer Paramount makes, and the chair of the Warner Bros. Discovery board of directors, Samuel A. Di Piazza, Jr., reaffirmed today that "we continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides."
It's not all about money, though, as he pointed out, "With Netflix, we will create a brighter future for the entertainment industry – providing consumers with more choice, creating and protecting jobs."
Netflix has issued a statement of its own. Here's an excerpt from the press release, which also argues that a WBD/Paramount merger would lead to concerts about "competition, job losses, reduced output, and downward pressure on wages for film and television workers":
Throughout the robust and highly competitive strategic review process, Netflix has consistently taken a constructive, responsive approach with WBD, in stark contrast to Paramount Skydance (PSKY). 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. Accordingly, we granted WBD 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.
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. In its press release today, WBD reaffirmed its recommendation that WBD stockholders vote to approve the Netflix transaction at WBD's special meeting.
Together, Netflix and Warner Bros. will deliver more choice and greater value to audiences worldwide with expanded access to exceptional films and series – both at home and in theaters. Our transaction also expands production capacity and increases investment in original content, leading to long-term job creation. The Netflix transaction is centered on growth, opportunity, and a reinforced commitment to creating world-class films and television – not consolidation and layoffs.