Paramount Skydance on Monday revised its hostile bid for Warner Bros. Discovery, without increasing the price, after WBD's board affirmed its backing of rival Netflix's offer.
In Paramount's new offer, the company said Larry Ellison, one of the richest people in the world and father to Paramount CEO David Ellison, agreed to provide an irrevocable personal guarantee of $40.4 billion of the equity financing for the offer. Paramount said Ellison also agreed not to revoke the long-standing Ellison family trust.
This change by Paramount directly responds to objections raised by the WBD board in response to its last offer. Paramount had previously said its bid was fully backstopped by the elder Ellison, but the WBD board said the bid relied "on an unknown and opaque revocable trust" whose assets or liabilities were subject to change.
In its new bid, Paramount also said it would match the termination fee Netflix offered, upping its fee to $5.8 billion from $5 billion if the deal doesn't get through the regulatory process.
"Paramount has repeatedly demonstrated its commitment to acquiring WBD," David Ellison wrote. "Our $30 per share, fully financed all-cash offer was on December 4th, and continues to be, the superior option to maximize value for WBD shareholders."
In the new bid, Paramount stuck with its $30 per share price for the whole company. Netflix's bid is $27.75 per share for only WBD's studios and streaming business. That excludes WBD's cable TV channels, such as CNN, which is part of a business that WBD plans to spin off in 2026. One aspect of the dueling bids is the value of those cable channels, which produce a lot of cash but are in secular decline. A high valuation favors Netflix while a lower one favors Paramount.
Raymond James analysts wrote on Monday that they still expect WBD to stick with Netflix's bid. WBD now has less reason to push back on Paramount, however, if it increases its offer. The analysts wrote that they expected Paramount would ultimately go as high as the mid $30s.
Warner Bros. confirmed receipt of the revised bid and said it stood by its recommendation to go with Netflix while it reviews the new bid.
Paramount's stock rose more than 5% on the news while WBD's ticked up about 3%. Netflix's declined less than 1%.
With its hostile bid on December 8, Paramount took its case directly to Warner Bros. shareholders after WBD's board chose Netflix. WBD laid out in detail last week why it recommended shareholders stick with Netflix's bid. Another consideration: WBD would have to pay Netflix $2.8 billion if it were to back out and go with Paramount instead at this point.
The process is expected to be drawn out. WBD board chair Sam DiPiazza said last week that a shareholder vote wouldn't happen until at least the spring.
The bidding war for some of Hollywood's crown jewels has riveted the entertainment world. The outcome would significantly reorder Hollywood. If Paramount wins, it would move up in the streaming rankings and become the owner of two major TV news outlets, CBS News and CNN. If Netflix emerges victorious, it would cement its lead as the top global paid streamer.
