Lead
Warner Bros. Discovery is reportedly weighing whether to reopen merger discussions with Paramount after the rival studio submitted an improved proposal this month. The consideration comes after WBD agreed in December to sell its streaming and studios business to Netflix for $83 billion; Paramount previously offered about $108 billion for the entire company. Paramount’s latest package addresses several of WBD’s earlier concerns by offering to cover a $2.8 billion breakup fee and back the company’s debt costs, and WBD faces a Feb. 25 deadline to respond. Board members are discussing whether Paramount’s terms could prompt a superior offer, a move that would trigger notification to Netflix and give it a chance to revise its bid.
Key Takeaways
- Warner Bros. Discovery agreed in December to sell its streaming and studios business to Netflix for $83 billion; that deal includes matching and timing provisions tied to shareholder approval and regulatory clearances.
- Paramount previously proposed roughly $108 billion for the entire Warner Bros. Discovery enterprise, a package WBD judged riskier than Netflix’s offer when it rejected that bid in December.
- Paramount’s recent improvements include agreeing to pay the $2.8 billion termination fee owed to Netflix if its offer were to be accepted and the Netflix deal terminated, plus backing WBD’s debt costs.
- Paramount also proposed paying WBD shareholders about $650 million in cash beginning in 2027 for each quarter the transaction fails to close, an additional cash-side concession intended to reduce closing risk for investors.
- A contractual stipulation tied to the Netflix agreement permits Warner Bros. Discovery to pursue superior proposals; if WBD reopens talks with Paramount it must notify Netflix, which then can attempt to improve its offer.
- WBD’s board has until Feb. 25, 2026 to respond to Paramount’s latest proposal; that deadline frames an accelerated decision window for directors and advisers.
- Some investors, including activist firm Ancora, have opposed the Netflix arrangement and urged the board to consider Paramount’s revised terms as potentially more favorable to shareholders.
- Bloomberg reported earlier on the board’s deliberations, underscoring that market and media coverage is intensifying as the response deadline approaches.
Background
The current dynamic stems from a December agreement in which Warner Bros. Discovery accepted Netflix’s offer to buy its streaming and studios business for $83 billion. That deal followed months of industry consolidation and bidding activity in which Paramount advanced a rival proposal valuing the entire company at roughly $108 billion. At the time WBD viewed Paramount’s package as carrying more execution risk, in part because it covered a broader scope of assets, including cable operations that introduce regulatory and integration complexity.
After the December decisions, Paramount continued to press shareholders, submitting a full-company bid and later enhancing that proposal twice without increasing the per-share price. The rivalry has involved both strategic calculations—control of franchises, streaming scale and distribution—and shareholder politics, with certain investors publicly questioning whether the Netflix deal maximizes value.
Main Event
Paramount’s most recent proposal seeks to neutralize two key WBD objections by committing to pay the $2.8 billion fee that would be owed to Netflix if WBD terminates its Netflix deal in favor of Paramount. It also includes an undertaking to support WBD’s interest payments on its outstanding debt, reducing the company’s immediate financing worries and making the transaction appear less disruptive to operations during a transition period.
As part of the concessions, Paramount would provide roughly $650 million in cash starting in 2027 for each quarter the transaction does not close, a mechanism designed to compensate shareholders for extended closing risk. WBD directors are evaluating whether these terms materially alter the risk-reward calculus compared with the Netflix agreement, and whether they could lead to a superior, actionable offer.
If the board elects to reopen negotiations, contract terms with Netflix require WBD to notify Netflix and allow it to revise or match terms; that could prompt a swift counteroffer or renewed talks between Netflix and WBD. The board’s discussion is confidential; two people familiar with the matter told reporters the deliberations are under way but did not speak on the record.
Analysis & Implications
Strategically, Paramount’s improved terms are aimed at removing execution and financing objections that had been central to WBD’s December decision. By offering to pay the breakup fee and underwrite debt costs, Paramount reduces a portion of the immediate financial drag that might otherwise fall to shareholders or creditors if the transaction were to pivot. Those concessions change the comparative profile of the bids but do not eliminate longer-term questions about regulatory approval and operational integration.
For Netflix, reopening the process would present a clear downside: the company would risk losing exclusive access to WBD’s studios and catalog unless it is willing to raise its offer. Netflix’s original agreement and the associated protections give it a lead position, but the contract also contemplates a matching process, so Netflix may be forced to improve terms to retain the business. Any bidding escalation would transfer value from WBD’s creditors and counterparties into a higher acquisition price for shareholders, and could increase regulatory scrutiny.
Regulatory considerations matter materially. Paramount’s full-company bid historically raised additional antitrust and public interest questions because it included cable networks and other legacy assets. In contrast, the Netflix transaction focuses on studios and streaming, which present their own but distinct regulatory questions related to market concentration in streaming content and distribution. Either path will invite scrutiny from antitrust authorities in the United States and potentially abroad, lengthening timelines and increasing uncertainty.
Comparison & Data
| Bid | Approx. Value | Scope | Key Terms |
|---|---|---|---|
| Netflix (Dec. agreement) | $83 billion | Streaming & studios business | Exclusive sale agreement; breakup protections; regulatory review expected |
| Paramount (revised proposal) | ~$108 billion (full company) | Entire company including cable assets | Would pay $2.8B breakup fee, back debt costs, $650M cash starting 2027 per quarter not closed |
The table contrasts headline values and principal concessions. Netflix’s $83 billion package narrows the target to content and streaming operations; Paramount’s roughly $108 billion approach covers broader assets and has now been tweaked to reduce closing risk for shareholders. The practical difference for WBD investors depends on near-term cash mechanics, longer-term strategic control of franchises, and the probability and duration of regulatory reviews.
Reactions & Quotes
Investor reaction has been vocal in some corners. Activist investor Ancora publicly objected to the Netflix deal and urged the board to consider Paramount’s improved offer, illustrating shareholder pressure that directors must weigh alongside legal and strategic obligations.
“I’m gonna make him an offer he can’t refuse.”
Ancora presentation (reference to a cultural image used in its pitch)
Media coverage has underscored the procedural stakes: if WBD reopens discussions it must alert Netflix and allow the streaming giant to respond. That sequence would create a compressed negotiation window and potentially spur another bidding round or a revised Netflix proposal.
“Warner Bros. Discovery has until Feb. 25 to respond to Paramount’s latest proposal.”
Reporting based on company deadlines
Unconfirmed
- Whether Warner Bros. Discovery’s board will formally reopen negotiations with Paramount remains undecided and unannounced.
- It is not confirmed whether Netflix will submit a revised offer if notified; any matching bid from Netflix is speculative until filed or publicly disclosed.
- The exact impact of Paramount’s cash-per-quarter proposal on shareholder returns and discount rates is unquantified pending full financial modeling and disclosures.
- Potential regulatory remedies or timelines for either transaction path have not been published and remain subject to agency review.
Bottom Line
The next week will be decisive: Warner Bros. Discovery must weigh a narrow set of tradeoffs—cash certainty and simplicity under Netflix versus broader strategic control but added complexity under Paramount. Paramount has materially narrowed some execution objections by agreeing to absorb the $2.8 billion termination fee and support debt costs, but significant questions about regulatory risk and integration remain.
Shareholder activism and market reaction will shape outcomes as the Feb. 25 response deadline nears; if WBD reopens talks, Netflix will have a contractual chance to improve its offer, likely accelerating a bidding or negotiation phase. Observers should watch board statements, any revised proposals from Netflix, and early regulatory signals to assess which path is more probable.
Sources
- The New York Times — media reporting on board deliberations and deal terms
- Bloomberg — media reporting referenced regarding board discussions
- U.S. Securities and Exchange Commission (SEC) — regulatory filings and corporate disclosures (for deal filings and 8-Ks)