The corporate battle for control of Warner Bros Discovery (WBD) has taken an unexpected turn. Netflix, which already had a preliminary agreement with the study, is analyzing moving from a mixed proposal to an offer paid entirely in cash, with the aim of clearing up doubts among shareholders and gaining an advantage over the rival offensive from Paramount Skydance.
This potential change would aim to accelerate a transaction valued at around 82.700 million, with important implicationswhich threatens to drag on for months due to political pressure, regulatory scrutiny and the intense bidding war unleashed between the two major entertainment conglomerates.
From a mixed offer to a full cash payment
According to sources cited by The Wall Street Journal and BloombergNetflix is reviewing the terms of the agreement signed last December with Warner Bros. Discovery. In that initial version, the The proposal was structured as a combination de cash, shares and debt assumptionThis is common in operations of this size, but it could now change to gain appeal among WBD investors.
The initial plan envisioned a price of 27,75 dollars per share from Warner Bros. Discovery. Of that amount, $23,25 would be paid in cash and $4,50 They would be paid in Netflix common stock, in addition to including a stake in the future Discovery Global unit, which WBD plans to separate as an independent business.
The new idea being considered in Los Gatos, Netflix's headquarters, involves remove the component in actions and reformulate the proposal as a full cash payment for Warner's film and television studios and its streaming division, including HBO MaxThis move aims to offer WBD shareholders a transaction simpler, more predictable and less exposed to stock market volatility.
Since Netflix's interest in Warner Bros Discovery was leaked in October, the streaming giant's shares have reportedly lost approximately 25% of its valueThe original agreement even included adjustments if Netflix shares fell below certain levels, adding uncertainty to the final value that WBD shareholders would receive.
Several analysts cited by financial media outlets point out, however, that an all-cash offer would force Netflix to significantly increase their debt, raising its net debt to EBITDA ratio from relatively low levels to thresholds above 3 times, something the market will be watching very closely.
The financial backing of Wall Street and the role of Discovery Global
In order to undertake an operation of this magnitude, Netflix has already secured a multimillion-dollar financing with major US banksVarious reports agree that the company has obtained around 59.000 million from several Wall Street banks, intended to support the acquisition of Warner Bros Discovery's assets.
Part of this funding package would have refinanced over longer terms, around 25.000 millionwith the intention of easing short-term pressure on Netflix's balance sheet. Credit analysts at firms like Bloomberg Intelligence maintain that the company still has room to grow. add more debt without losing your solid-grade credit ratingsalthough they acknowledge that the operation would significantly increase leverage.
A key element in the negotiations is Discovery Globalthe unit that WBD plans to spin off as an independent company. Netflix's offer includes for Warner shareholders a participation in that new companyto which part of the group's debt would be transferred. Specifically, the way WBD is valuing this business and the level of liability it intends to assign to it have become one of the most delicate points of the operation.
Paramount Skydance has filed a lawsuit in a Delaware court to to compel WBD to detail how Discovery Global is being valued within the agreement with Netflix, including what portion of Warner's debt will be transferred to that unit. The rival company maintains that WBD shareholders need this information to make a fair comparison. their hostile takeover bid with the proposed merger with Netflix.
Specialized publications such as Variety They emphasize that this financial data is essential to measure the real value that each shareholder will receive according to the offer that ultimately succeeds, especially in a context of strong regulatory pressure and political concern about greater media concentration.
Paramount Skydance's counteroffer and the takeover war
Netflix's decision to consider an all-cash offer cannot be understood without the context of the Paramount Skydance (PSKY) offensiveA few days after the preliminary agreement between Netflix and WBD was made public, the company controlled by the Ellison family launched a hostile takeover about 100% of Warner Bros Discovery for a price of 30 dollars per share.
This proposal values the group around 108.400 millionclearly above the amount of Netflix's offer. Unlike the operation proposed by the streaming platform, Paramount's takeover bid is structured as a payment entirely in cash and encompasses not only the studios and the streaming business, but the entire conglomerate, including the business of cable TV where brands such as CNN and various Discovery channels are integrated.
PSKY's initiative, initially presented on December 8, was subsequently revised to strengthen its financial appeal. On December 22, Paramount introduced a asset guarantee of approximately $40.000 billion, personally endorsed by Larry Ellison, co-founder of Oracle and father of David Ellison, CEO of Paramount Skydance.
Despite the compelling nature of the figures, the Warner Bros Discovery board of directors He has rejected Paramount's proposal on several occasions. The chairman of the board, Samuel Di Piazza, has described PSKY's offer as "insufficient" and has criticized the “extraordinary amount” of conditions linked to debt financing, which in his opinion would increase the risks of closing and reduce shareholder protection if the deal were not completed.
Paramount, for its part, argues that its proposal is not only higher in price than Netflix's, but rather by offering cash for 100% of WBD, would overcome regulatory obstacles more easilyIn a letter to Warner investors, the company expressed its “puzzle” at WBD’s board’s refusal to negotiate the terms of its offer in depth and stated its intention to appoint new advisors to try to block the merger with Netflix.
Warner Bros Discovery's position and shareholder pressure
In the midst of this clash between giants, WBD's management has clearly leaned towards the merger agreement with NetflixThe company has reiterated in several statements that the streaming platform's proposal offers greater certainty and fewer financial risks that Paramount's hostile takeover bid, despite the latter's nominal price being higher.
Warner Bros Discovery argues that the structure of the deal with Netflix, as it is currently planned, limits the group's exposure to excessive leveraged financing and includes mechanisms to protect shareholders should the agreement fail to pass regulatory scrutiny. In this regard, commitments such as a termination clause for which Netflix would pay around 5.800 million If the transaction fails due to lack of authorization, WBD would pay approximately 2.800 million if you decide to break the agreement and accept another offer.
WBD's response to Paramount's lawsuit has been forceful. The group considers PSKY's legal action an attempt to "distract" and pressure Warner's top management, without the rival company having substantially improved the financial terms of its takeover bid. Warner emphasizes that, in recent weeks, Paramount has issued numerous statements, but the price has not increased nor has it resolved the “obvious deficiencies” of its proposal.
Nevertheless, the operation is not without internal tensions. Some significant WBD shareholders, such as the fund Pentwater Capital ManagementThey have warned that they could vote against the Netflix deal If the company does not resume negotiations with Paramount should Paramount improve its offer, these positions demonstrate that, for some shareholders, price remains a significant factor in the equation.
Meanwhile, both Netflix's and Paramount's offerings are being developed under the watchful eye of legislators and regulators In the United States and other markets, there are concerns about the effect that greater media concentration could have on competition, prices, and content diversity. This potential political opposition is one of the reasons why Netflix is reportedly considering [the possibility of media consolidation]. close the deal as soon as possible with a simpler and more direct proposal.
A move with an impact on the European entertainment market
Beyond Hollywood, Netflix's potential purchase of Warner Bros Discovery's main assets would have direct consequences for the European audiovisual marketespecially in Spain. Warner controls the rights to hugely important global franchises such as Harry Potter o Game of Thrones, whose value in pay television windows, DTT and streaming platforms is especially relevant in the region.
In Europe, WBD has thematic channels and distribution agreements Spread across multiple countries, along with their presence on video-on-demand platforms, an integration of the studios and HBO Max within the Netflix ecosystem could substantially alter the landscape. the content available on services such as Movistar Plus+, Vodafone TV or SkyShowtime, among other partners and competitors.
If the deal with Netflix comes to fruition, the streaming giant would add to its European catalog a colossal library of films and series, strengthening its position against rivals such as Disney+, Prime Video or Paramount+ itself, whose local strategy in countries like Spain relies heavily on distribution agreements with third parties.
European competition authorities would likely analyze this in detail. the impact on the diversity of the offer and the conditions of access to iconic content by other operators. The concern is to prevent a single player from concentrating too much negotiating power over key franchises that feed both digital platforms and traditional chains.
In this context, it is possible that the following may arise during the regulatory analysis: remedies or compromises specific to Europe, such as maintaining certain licensing agreements or limiting the exclusivity of some star titles, something that has already been seen in other major mergers in the audiovisual sector.
With the board still moving, the fight for Warner Bros Discovery has become one of the most closely watched deals in the entertainment businessNetflix is trying to solidify its advantage by adjusting its offer to a 100% cash payment, while Paramount Skydance is pushing forward with a higher bid and a legal offensive to gain shareholder support. What's at stake is not just control of a historic studio, but the shaping of the global—and European—television and streaming landscape for the next decade.
