Warner Bros weighs Paramount offer as Netflix deal hangs in balance

The studio previously agreed to sell its namesake film division and HBO Max streaming business to Netflix Inc. for $27.75 per share. That deal is moving toward a shareholder vote. However, Paramount has been pressing its case directly to investors with a $30-per-share tender offer while lobbying regulators to approve a competing transaction.

Paramount’s latest amended proposal includes new financial assurances. The company has offered to cover the $2.8 billion termination fee Warner Bros. would owe Netflix if it walks away from that agreement. It is also proposing to backstop a debt refinancing and compensate shareholders if the deal fails to close by Dec. 31.

Board members are now discussing whether Paramount’s revised bid could result in a superior offer or prompt Netflix to raise its price. This is the first time directors have seriously weighed whether Paramount’s approach might deliver better value, though there remain concerns about execution and regulatory clearance.

Both Paramount and Netflix have signaled flexibility. Paramount CEO David Ellison has said the current proposal is not final. Netflix leadership has also indicated it could increase its offer. Still, there are limits. Netflix shares have fallen more than 40 percent since June, reflecting investor concern over the cost of the acquisition.

If Warner Bros. chooses to re-engage with Paramount, it must first notify Netflix. Netflix would then have the right to match any improved proposal. Warner Bros. would likely push Paramount to increase its bid above $30 per share.

Some shareholders, including Pentwater Capital Management and Ancora Holdings Group, have publicly urged the board to negotiate with Paramount. But only 42.3 million shares, less than 2 percent of those outstanding, have been tendered so far.