Netflix has revised the terms of its offer to acquire the studio and streaming business of Warner Bros Discovery, converting it into an all-cash transaction. The move comes amid an escalating standoff with Paramount, which has put forward a hostile competing bid.
On Tuesday, WBD said its board of directors had unanimously approved the revised deal. Under the new terms, shareholders will receive $27.75 per share in cash, replacing the previous mix of cash and stock. The overall valuation of the business remains unchanged at $82.7 billion, including debt.
Netflix said the shift to an all-cash structure simplifies the transaction, provides greater certainty for WBD shareholders, and speeds up the voting process. To finance the deal, the company increased the size of bank debt commitments arranged by Wall Street lenders to $42.2 billion, up from $34 billion previously.
The decision comes as Paramount intensifies the fight, advancing its hostile bid at $30 per share. The standoff could fundamentally reshape the balance of power in Hollywood and across the broader media industry—from television to film and the news business.
Paramount has threatened to launch a proxy battle, seeking to nominate its own slate of directors to WBD’s board in order to block the Netflix deal. The company has also filed a lawsuit demanding disclosure of the agreement’s financial details, though the court declined to hear the case on an expedited basis.
Paramount’s own $108.4 billion bid for the entirety of WBD has been reinforced by a personal guarantee from Larry Ellison, the co-founder of Oracle. His son, David Ellison, who runs Paramount, is a central figure in the transaction.
Pentwater Capital Management, WBD’s seventh-largest shareholder, warned last week that it would vote against the Netflix deal if Paramount improves its offer and WBD does not reopen negotiations.
According to people familiar with the thinking of Paramount’s leadership, the company is likely preparing another increase in its bid, although the timing of the next move has yet to be determined.
“We do not believe this battle for the asset is over,” said Alex Fitch, head of US research at Harris Associates. The changes in terms, he said, show that Netflix is acting with determination, while the accelerated shareholder vote is forcing Paramount to move quickly. “Now it is Paramount that must put forward clearly more attractive terms if it wants to see the transaction through,” he added.
WBD has also released a preliminary proxy statement ahead of setting a date for the shareholder vote. According to the filing, Warner’s investment banks had previously valued Discovery Global Networks—which includes CNN and is expected to be carved out as a separate entity as part of the Netflix transaction—at between $1.33 and $6.86 per share.
Paramount has argued that the value of the networks division could be as low as $0 per share, which in that case would push the implied valuation of the Netflix deal below the $30 per share offered by Paramount itself.
WBD’s proxy statement stresses that the “risk-adjusted value proposed by Paramount is insufficient and does not exceed Netflix’s offer.”