As Paramount continues to ramp up the pressure in its bid to acquire Warner Bros. Discovery, filing a lawsuit against the Hollywood studio earlier this week, Netflix is reportedly set to revise the terms of its agreed-upon deal with WBD.
According to a Bloomberg report on Tuesday, Netflix is set to revise its agreement to purchase Warner Bros. Discovery’s streaming and studios businesses, shifting the financials from a mix of cash and stock to an all-cash offer. Under the original terms of the deal agreed to in early December, WBD shareholders would receive $23.25 in cash and $4.50 worth of shares in Netflix stock for each share of WBD stock held. Now, Netflix is seemingly prepared to amend the agreement to make it entirely cash.
The move is a clear response to Paramount, which has proposed a $30 per share all-cash takeover bid for the entirety of WBD after the Netflix deal had been publicly announced. Paramount argues that its bid is superior, in part because it is entirely cash. Should Netflix shift its bid to match the all-cash nature of Paramount’s, one of the core tenets of Paramount’s argument would become moot.
At the heart of the debate between Paramount and Netflix is the value to put on WBD’s cable assets. Should WBD go forward with the Netflix deal, shareholders would receive equity in a future spinoff company called Discovery Global, which will hold cable assets like TNT Sports and CNN. Paramount, of course, is looking to purchase the whole of WBD, cable networks and all.
Paramount claims shares of Discovery Global, if spun out, would be worth less than $1.00, putting the total value of Netflix’s offer under its $30 per share mark. Conversely, Netflix and WBD argue Discovery Global shares could be worth between $3.00 and $4.00, thereby surpassing the value of Paramount’s offer.
There are other aspects for WBD’s board to consider as well, including how each competing deal is being financed, and the likelihood either can pass regulatory muster.
Netflix’s latest reported move would seem to indicate that it is at least taking the threat of Paramount’s takeover bid seriously, and is considering sweetening its own deal to stave off any uncertainty that WBD shareholders might ultimately opt to side with Paramount.
About Drew Lerner
Drew Lerner is a staff writer for Awful Announcing and an aspiring cable subscriber. He previously covered sports media for Sports Media Watch. Future beat writer for the Oasis reunion tour.