Warner Bros. Discovery said Tuesday that it will consider a revised offer by Paramount Skydance to upend its nearly sealed Netflix deal after the hostile bidder upped its $78 billion offer by another $2.6 billion.
The real reason for the company’s softening position to the offer by Paramount Skydance appears to have little to do with money and more with the uncertain regulatory environment faced by Netflix, On The Money has learned.
WBD investors must ultimately approve any transaction and they are growing increasingly worried that the Netflix deal, one that layers its No. 1 streaming service with WBD’s No. 3, won’t pass regulatory muster here and in Europe.
As The Post has reported, White House antitrust regulators are scrutinizing the deal and whether Netflix is growing into a monopoly under Section 2 of the Sherman Act. For Netflix to take total control of the deal, and for them to get paid, investors could wait out two years of investigations and then litigation that the streaming giant might not win.
If, on the other hand, they just take what Paramount is offering with few regulatory hurdles, they can bank their winnings and go home.
Bankers for Paramount Skydance have been hammering these points for weeks now, with a hostile offering appealing directly to investors after the Warner Bros. board announced in December it had landed on Netflix’s proposed $73 billion deal to buy its streamer and studio. And they are gaining converts including famed value investor Mario Gabelli, who previously told The Post he favors the Paramount deal because it’s clean, has regulatory certainty and believes “cash is king.”
Warner Bros. made no mention of these machinations in its press release late Tuesday announcing that its board has determined the “revised proposal from Paramount Skydance could reasonably be expected to lead to a ‘company superior proposal.’”
Rather, the company stated that Paramount Skydance — known as PSKY and run by David Ellison, an indie producer, his father, the mega billionaire Oracle co-founder Larry Ellison, and their deal partners at RedBird Capital — had both fine-tuned their originally rejected proposed deal, covering the break-up fee, and raised their bid a buck, to $31 a share.
With that, the WBD board will now “engage further with PSKY to determine if the proposal really is superior to Netflix.” If it does, the streaming giant will have four days to match.
Warner Bros. Discovery is run by one of the best dealmakers in the media business — CEO David Zaslav, a veteran of NBCU and later Discovery Inc. who merged that property into the AT&T’s spinout of Warner Media.
After rebuilding WBD’s studio and streaming service and slashing debt, Zas created a bidding war for the company and his stock soared from $12 a share to now on the precipice of $30 as investors bet on the final deal price.
But complicating factors in getting Netflix to bid even higher — and convince investors its bid is indeed superior — are those aforementioned regulatory headwinds.
Netflix only recently began to recognize the serious battle it faces in Washington. As The Post first reported, the big streamer this week is launching a charm offensive with Trump regulators to convince them the antitrust implications of its bid and its business model are overblown given the competition for programming eyeballs posed by social media including YouTube.
CEO Ted Sarandos is said to be seeking a second sit-down with President Trump to mollify his concerns. On top of the antitrust issues, the exec has to clean up a PR mess created by one of his board members.
Trump recently lashed out on social media after Susan Rice, a Netflix board member and top Democrat, warned that corporations that “take a knee” to the Trump administration should expect to be “held accountable” if Dems return to power.
The president threatened to throttle the deal if Rice was fired. Netflix declined to comment on Rice’s remarks.
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