The high-stakes Paramount WBD bidding war appears ready to escalate once again, with Paramount Skydance expected to increase its offer for Warner Bros. Discovery — potentially forcing Netflix to decide whether to match or exit the fight altogether.
According to a new Variety report, Paramount faces a Monday deadline to submit what could be its strongest bid yet as the months-long merger battle enters a critical phase.
Paramount Preparing a Higher Bid
Insiders told Variety that Paramount Skydance is likely to return with an offer above its previous $30-per-share proposal, with expectations the revised bid could land around $32 per share.
David Ellison in an interview with Bloomberg – YouTube, Bloomberg Podcasts
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The Warner Bros. Discovery board opened a seven-day negotiating window — with Netflix’s permission — to allow Paramount to clarify and potentially improve its offer. That window is set to expire at 11:59 p.m. ET on Feb. 23rd.
If Paramount formally raises its bid, Netflix will then have four days to either match the offer or walk away from the deal entirely.
Netflix Signals Willingness To Walk
Netflix co-CEO Ted Sarandos has already hinted the company may not get drawn into an aggressive bidding war.
Netflix Co-CEO Ted Sarandos – YouTube, WSJ News
“The next move is up to somebody else. We have a signed deal with Warner Bros. Discovery,” Sarandos said in a Feb. 20th interview with Variety. “If someone wants to make a better deal, which the Warner Bros. Discovery board has said has not happened yet, then we’ll see what happens down the road… we’re super-disciplined buyers… so that I’m willing to walk away and let someone else overpay for things. We have a rich history of that.”
That comment is widely being interpreted as a signal that Netflix may not chase Paramount indefinitely if the price climbs too high.
The $2.8 Billion Breakup Fee Looms
One major complication is the massive breakup fee built into the current Netflix agreement.
If Warner Bros. Discovery accepts Paramount’s higher bid, the company would owe Netflix a $2.8 billion termination payment. Paramount has previously indicated it would cover that cost as part of its proposal — a move clearly designed to keep pressure on the WBD board.
A graphic showing the Netflix and Warner Bros. Logos – Netflix
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Meanwhile, Warner Bros. Discovery leadership has already suggested Paramount’s previous offer was not its final number.
In a letter cited by Variety, CEO David Zaslav and board chairman Samuel Di Piazza Jr. wrote that Paramount had indicated it would “agree to pay $31 per share and that the offer was not PSKY’s ‘best and final’ proposal.”
Analysts Expect Bidding To Heat Up
Wall Street analysts are now closely watching how far Paramount is willing to go — and whether Netflix will respond.
MoffettNathanson analyst Robert Fishman wrote: “The question now becomes how high PSKY is willing to go — and whether Netflix will exercise its matching rights and increase its offer as well.”
The logo for Paramount Skydance – Paramount
Fishman added that Paramount is expected to push the price higher: “In short, we do expect PSKY to go to at least $32 per share to put the pressure back on NFLX to increase its bid likely to the $30 per share range.”
However, he also warned the math may not work for Netflix at higher levels, noting the firm has “difficulty making the accretion math work” if Netflix raises its offer beyond $30 per share.
The analyst ultimately predicted Netflix could step away if the price climbs too far.
The Logo for Netflix – Netflix
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“While we see the longer-term benefits of owning Warner Bros., HBO and HBO Max, we expect NFLX to walk away from the deal following a disciplined approach if PSKY pushes its bid well beyond $32 per share,” the analyst said. “We think it will be difficult for PSKY to win the bidding war for WBD if it decides to take a less aggressive approach during this waiver period, giving NFLX the opportunity to match at a more modest increase from its current bid.”
Political Noise Enters The Picture
The merger drama has also drawn outside attention.
President Trump recently called for Netflix to “immediately fire” board member Susan Rice, though Sarandos pushed back when asked about the remarks.
“He likes to do a lot of things on social media,” Sarandos said. “This is a business deal. It’s not a political deal.”
Donald Trump speaks at a rally the night before being inaugurated as the 47th President of the United States of America – YouTube, Washington Post
At the same time, the Justice Department has expanded its review of the proposed Netflix-Warner Bros. Discovery transaction, examining whether the combined company could reduce competition in the entertainment market.
Netflix has strongly rejected monopoly concerns.
Chief legal counsel David Hyman said: “Netflix operates in an extremely competitive market. Any claim that it is a monopolist, or seeking to monopolize, is unfounded. We neither hold monopoly power nor engage in exclusionary conduct and we’ll gladly cooperate, as we always do, with regulators on any concerns they may have.”
A Pivotal Week Ahead
With Paramount expected to raise its bid and Netflix signaling financial discipline, the Paramount WBD showdown is approaching a decisive moment.
David Ellison talks to Bloomberg – YouTube, Bloomberg Podcasts
If Paramount comes in aggressively and Netflix holds firm, Warner Bros. Discovery shareholders could soon be forced to choose between the certainty of Netflix’s signed agreement and the possibility of a richer — but riskier — alternative.
Do you think Paramount will ultimately own WBD? Sound off in the comments and let us know!
“Disciplined buyers,” right, Netflix. You’re just trying to avoid admitting you can’t win and are terrified of regulatory inspection. Your investors sure are if their messages on financial boards are any indication. Especially after what happened with Versant last month pouring cold water on your plans for spinning off CNN and Discovery.
No one wants Wokeflix to destroy the IP. No one.
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