antitrust review

Warner Bros. Discovery has reopened takeover discussions with Paramount Skydance after receiving a temporary waiver from Netflix, even as it continues to recommend its previously agreed merger with the streaming giant. In a regulatory filing on Tuesday, Warner said Netflix had granted it a seven-day window to re-engage with Paramount and address outstanding concerns in its latest proposal. The waiver, valid through Monday, enables the companies to clarify terms and resolve what Warner described as “deficiencies” in Paramount’s bid. Despite reopening talks, Warner’s board reiterated its support for the Netflix transaction. Shareholders are set to vote on the proposed deal at a special meeting scheduled for March 20. Netflix, in a statement, expressed confidence that its offer delivers “superior value and certainty,” while acknowledging the broader industry uncertainty sparked by Paramount’s competing bid. The company characterized the waiver as an opportunity to “finally resolve” the ongoing situation. Paramount, however, described Warner’s decision to impose a time-bound engagement as unusual. It argued that the board could have independently evaluated whether its offer was more attractive. Nevertheless, Paramount confirmed its willingness to participate in constructive discussions and continue pursuing its all-cash tender offer of $30 per share — which it maintains is more favorable than Netflix’s proposal. The company also indicated it could raise its bid to $31 per share, pending further engagement, and is pressing ahead with plans for a proxy battle. The competing offers differ significantly in scope. In December, Netflix agreed to acquire Warner’s studio and streaming operations in a deal valued at $72 billion. Including debt, the enterprise value stands at approximately $83 billion, or $27.75 per share. The transaction would follow Warner’s planned separation of its cable networks business. Paramount, by contrast, is seeking to acquire Warner in its entirety — including assets such as CNN and Discovery — through a $77.9 billion hostile bid. Including debt, that offer values the company at roughly $108 billion, or $30 per share. Analysts at Raymond James noted that if Paramount were to raise its bid to the $32–$33 range, it would become increasingly challenging to argue that the Netflix agreement offers better value. However, they added that Netflix still holds a strategic advantage and could counter with a higher offer if needed. In an effort to win over shareholders, Paramount has sweetened its proposal by introducing a “ticking fee” — 25 cents per share per quarter if the deal does not close by year-end — and has pledged to cover Warner’s $2.8 billion breakup fee owed to Netflix under the existing agreement. Support for Paramount’s tender offer remains limited. As of last week, approximately 42.3 million Warner shares had been tendered and not withdrawn — a fraction of the company’s 2.48 billion outstanding shares — and significantly lower than the 168.5 million shares reported in January. Meanwhile, activist investor Ancora Holdings has voiced opposition to the Netflix deal, adding another layer of complexity to the takeover battle. Regulatory scrutiny looms large over both proposals. Lawmakers have raised antitrust concerns given the scale of the potential consolidation in the media and entertainment sector. The U.S. Department of Justice has begun reviewing the transactions, and other global regulators are expected to examine the deals closely. Both Paramount and Netflix have confirmed they secured securities clearance from German authorities last month. Investor reaction has been measured but positive. Shares of Warner Bros. Discovery climbed more than 3% in Tuesday trading, while Paramount Skydance rose over 5%. Netflix shares edged slightly higher. Source: AP