Warner Bros. Is Said to Consider Reopening Talks With Paramount

Warner Bros. Discovery had agreed to sell itself to Netflix, but its contract allows it to pursue offers that may lead to a superior deal.

Warner Bros. Discovery is weighing whether to reopen deal talks with Paramount, which last week submitted a new, improved offer, said two people who are familiar with the matter but not authorized to speak publicly about it.

In December, Warner Bros. Discovery agreed to sell its streaming and studios business to Netflix for $83 billion. At the time, Warner Bros. Discovery rejected a bid by Paramount of $108 billion for the entire company, including the cable business, saying it viewed the deal as more risky than Netflix’s. Since then, Paramount has taken its bid to shareholders and twice made improvements to it, though it has not raised the price per share.

Last week, Paramount addressed some of Warner Bros Discovery’s concerns by agreeing to a pay the $2.8 billion fee that would be owed to Netflix if its deal were terminated as well as agreeing to back Warner Bros. Discovery’s debt costs. It also said it would pay Warner Bros. Discovery’s shareholders around $650 million in cash starting in 2027 for each quarter the deal does not close.

Warner Bros. Discovery board members are now discussing whether Paramount’s bid could lead to a superior offer, the people said. (A stipulation in the contract with Netflix allows Warner Bros. Discovery to pursue such offers.)

Bloomberg earlier reported on the board’s deliberations.

If Warner Bros. Discovery decides to reopen talks with Paramount, it would have to notify Netflix, according to the terms of their deal. Netflix would then have a chance to improve its own offer. Warner Bros. Discovery has until Feb. 25 to respond to Paramount’s latest proposal.

Warner Bros. Discovery’s deal with Netflix has faced scrutiny from some shareholders, including the investment firm Ancora, which last week said it opposed a deal with Netflix. (In its presentation arguing that Warner Bros. Discovery should consider the Paramount deal, the firm used a photo of Marlon Brando from “The Godfather,” one of Paramount’s most famous movies, with a speech bubble saying, “I’m gonna make him an offer he can’t refuse.”)

Among Ancora’s concerns are the value of the cable business that Warner Bros. Discovery would carve out in a Netflix deal and whether its deal with Netflix would clear regulatory scrutiny. While the deal also needs regulatory approval outside the United States, Paramount may have a leg up when it comes to U.S. regulators. Paramount is headed by David Ellison. His father, Larry Ellison, a co-founder of Oracle and one of the richest men in the world, has a friendly relationship with President Trump, who has an interest in media deals.

Netflix, for its part, has said it is confident its deal can pass regulatory muster.

Shares of Warner Bros. Discovery have fallen about 1.8 percent since the start of the year, while shares of Netflix have fallen about 15 percent.

Warner Bros. Discovery is awaiting the Securities and Exchange Commission’s approval of its filings that would allow it to schedule a shareholder vote on the Netflix deal. That vote could come as soon as the middle of March, assuming the board goes ahead with the Netflix offer.

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