Warner Bros. reopening takeover talks with Paramount, but Netflix deal still favoured
CBC
Warner Bros. Discovery is briefly reopening takeover talks with Skydance-owned Paramount to hear the company's "best and final" offer, while the Hollywood giant continues to back the studio and streaming deal it struck with Netflix.
Warner Bros. Discovery — which owns HBO Max and a wealth of valuable titles from the Harry Potter series to the DC superhero franchise — said in a regulatory filing Tuesday said it had received a waiver from Netflix to reopen talks with Paramount for the next seven days, or until Monday.
Warner said this will allow the companies to discuss unresolved "deficiencies" and "clarify certain terms" of Paramount's latest bid. Netflix is also allowed to match Paramount's offer under the terms of its merger.
The company has previously rejected Paramount's offers, which included a hostile bid by Paramount in December. But just because talks are resuming now doesn't mean Warner has changed its position, which the company made clear in its response.
"Our board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger," Warner Bros. chairman Samuel DiPiazza Jr. and CEO David Zaslav said in a letter sent Tuesday to the Paramount board.
"We continue to recommend and remain fully committed to our transaction with Netflix."
Warner's leadership consistently has backed the offer from Netflix. In December, Netflix agreed to buy Warner's studio and streaming business for $72 billion US, now in an all-cash transaction that would cover its legacy TV and movie production arms, as well as HBO Max.
Including debt, the enterprise value of the deal is about $83 billion, or $27.75 per share, and would be finalized after Warner completes a previously announced separation of its cable operations.
The decision by Warner Bros. to engage with Paramount marks a shift for the studio. Paramount has previously said the board "never meaningfully engaged" with them on six different offers that executives made in the 12 weeks before Warner Bros. announced the merger agreement with Netflix in December.
In a statement of its own, Netflix also expressed confidence in the deal it has already reached with Warner Bros.
"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," Netflix said in a statement.
The streaming giant noted it had granted Warner a seven-day waiver to "finally resolve this matter."
Meanwhile, Paramount called Tuesday's actions from Warner's board "unusual" and said the company could have determined whether Paramount's offer was superior without a timed deadline. Still, Paramount said it was "nonetheless prepared to engage in good faith and constructive discussions."
Paramount added that it will continue to advance its tender offer priced at $30 US per share, which it maintained was better than Netflix's proposal, while also pursuing a proxy fight.
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