The long and intricate negotiation for the sale of Warner Bros. Discover , which began last October and involved two potential buyers – Netflix and Paramount Skydance – finally entered its final definition phase this Tuesday, February 17th, with an ultimatum from Warner to Paramount to present its "best and final" offer within a week.
Otherwise, the studio warns, Warner must formalize the $83 billion sale agreement already reached with Netflix. The deadline is an attempt by Warner's board to force Paramount to improve its offer or abandon the acquisition. The seven-day period for a response meets the deadline stipulated by Netflix so that Warner can negotiate with Paramount and "resolve this issue definitively."
A series of factors complicated the outcome of the Warner sale, which seemed settled after Netflix offered US$83 billion for a stake in its competitor, the studios, and the streaming arm, including HBO Max . The channels and traditional TV, with assets such as CNN and TNT Sports, would remain in a separate company, Discovery Global, which would be spun off before the deal was finalized.
Paramount, however, attempted to turn the tables in early December by making a hostile $108 billion offer for the entire company, including the cable TV assets not included in the Netflix deal.
Since Warner's board had shown itself to be in favor of the deal with Netflix, recommending that shareholders reject Paramount's offer, the sale seemed set until last week, when two moves by Netflix's competitor once again put the completion of the deal on hold.
Paramount first made its hostile $108 billion offer more attractive by offering to pay Warner shareholders if regulators delayed the completion of the transaction.
Meanwhile, a "senior representative" from Paramount approached a Warner executive suggesting that the company could increase its offer from $30 to $31 per share, with the possibility of further increasing the offer, according to a Warner statement.
Since the new proposal to increase the share price did not materialize, according to Warner, the legendary studio – which owns some of the world's most valuable film and TV properties, from Harry Potter to Friends – decided to give Paramount an ultimatum.
David Zaslav, CEO of WBD, stated in a press release that his company will hold negotiations for a week to determine if Paramount can address the "deficiencies" in its offer and present "a viable and binding proposal that offers superior value." Warner also confirmed that it will hold a vote on the Netflix deal on March 20.
Netflix also spoke out on Tuesday, stating that Paramount did not have an "easier or faster path to regulatory approval."
"Throughout the robust and highly competitive strategic review process, Netflix has consistently adopted a constructive and responsive approach with Warner, in stark contrast to Paramount Skydance," reads part of the Netflix statement.
He also added that "while we are confident that our transaction offers superior value and security, we recognize the ongoing distraction caused by Paramount's stock for WBD shareholders and the entertainment industry in general."
Netflix had already warned that its $83 billion offer was final during initial negotiations last year. However, should Paramount make a higher offer, Netflix has the right to improve its own proposal.
