The corporate battle for Warner Bros Discovery has taken a significant turn with the new twist of Paramount SkydanceThe group controlled by the Ellison family has decided to enhance its hostile takeover bid with a series of financial incentives and regulatory guarantees that clearly aim to tip the scales against the agreement Warner has signed with Netflix.
Far from withdrawing, Paramount has chosen to strengthen its offering without touching the base price of $30 per share, all in cashInstead of increasing the main figure, the company has added additional payments, risk coverage, and financing commitments intended to dispel the doubts that Warner's board had raised about its initial offer, especially regarding the cost of breaking the agreement with Netflix and the regulatory approval timelines.
A hostile takeover bid reinforced with extra payments and hedging
Paramount's new proposal keeps the total value of the transaction around 108.000 millionbut it introduces key elements designed to make it more palatable to shareholders of Warner Bros. Discovery (WBD)The first is the incorporation of a 'ticking fee', a delay fee that will be triggered if the closing of the transaction is delayed beyond a certain date.
Specifically, the company agrees to pay An additional $0,25 per share per quarter for each period in which the transaction is not completed after December 31 (in some communications, from the end of 2026 or January 1, 2027). This mechanism would entail an additional outlay for Paramount of about $650 million in cash per quarter, an amount that, on paper, would serve as compensation for shareholders in the event of possible delays arising from scrutiny by competition authorities.
Along with this periodic payment, the entertainment group has sought to address one of the major objections raised by Warner's board: the cost of dissolving the existing agreement with Netflix. To this end, Paramount has announced that will fully assume the $2.800 billion termination fee WBD is obligated to pay the Los Gatos platform if it ultimately chooses another offer.
Furthermore, the new takeover bid includes another important commitment: to cover up to $1.500 billion in fees related to the refinancing of Warner Bros. Discovery's debtThis item would be associated with a debt exchange offer designed to facilitate the operation, so that even if the transaction with Paramount does not go through, WBD would not have to bear that additional financial cost alone.
Paramount insists that these extraordinary payments will be financed as separate items and that They will not reduce the so-called reverse rescission fee of $5.800 billion provided for in its scheme, which, according to the company, guarantees that there will be no "value leaks" for Warner shareholders in the event of a breakdown of the agreement with Netflix.
Comparison with Netflix's offering and doubts about Discovery Global
Paramount's move is best understood when compared to the agreement that Warner Bros. Discovery currently has an agreement with Netflix.
That transaction, however, does not involve the purchase of the entire group: Netflix would retain film and television studios and the business of streaming (HBO Max/Max), while the pay television channel division, encompassed in Discovery Global (which includes, among others, channels such as TNT or CNN), would be split into a new independent entity burdened with a large debt.
Paramount has been particularly critical of this plan. According to its internal analyses, the spin-off of Discovery Global would be carried out with a debt of around 17.000 milliona figure that the company considers "unsustainable" for a cable television business in decline, which anticipates a drop in EBITDA of more than 20% between 2026 and 2027 and double-digit declines in subsequent years.
The consequence, in Paramount's view, is that part of that debt could end up repositioning itself on the Studios and Streaming businessThis would trigger a "debt adjustment mechanism" included in the merger agreement with Netflix and effectively reduce the final cash amount that WBD shareholders would receive. In other words, the price per share under the Netflix structure could range from just over $21 to a maximum of $27,75, depending on how much debt Discovery Global ultimately takes on.
In response to this proposal, Paramount emphasizes that its takeover bid offers $30 per share, all in cash and for 100% of WBDwithout prior spin-offs or relocation of liabilities between divisions. The group maintains that, by avoiding the separation of assets, its proposal provides more effective direct and greater clarity on the value captured by investors, especially in a context of volatility for the linear television business.
Regulatory pressure, politics, and decision timeline
Beyond the numbers, the battle between Paramount and Netflix is ​​being fought out in the regulatory arena and, to a lesser extent, the political arena. The merger agreement between WBD and the platform... streaming It has aroused suspicion in some sectors of the United States, including Republican senators close to Donald Trumpwho have criticized both the potential resulting market power and the editorial line and type of content that, in their view, a combined company dominated by Netflix would promote.
In parallel, the The US Department of Justice has opened an investigation into the deal with Netflix to analyze the potential impact on competition in the audiovisual and on-demand content market. These steps add uncertainty to the timeline and the final outcome of the merger, at a time when regulators have tightened their scrutiny of major mergers in the technology and media sectors.
Paramount is trying to take advantage of this context by presenting itself as the option with greater "regulatory certainty"The company claims to have "substantially" complied with the second request for information from the Department of Justice Regarding its takeover bid for WBD, it claims to be working constructively with antitrust authorities and regulators in various jurisdictions. Among the progress it highlights, it cites obtaining the authorization for foreign investment in Germany, a step that serves as a calling card to European bodies and other key markets.
Politically, Paramount had even touted the supposed sympathy of Trump's circle toward its offer as an advantage, given the more conservative profile of some of its partners and editorial changes at media outlets like CBS. However, Trump himself has distanced himself in recent weeks, stating that it will not interfere with the work of the regulators, which has somewhat weakened that argument.
Meanwhile, the clock is ticking. The Warner Bros. Discovery board has reiterated its support for the Netflix deal and anticipates submit it to a shareholders' vote at an extraordinary meeting that could be held between March and April. Market sources indicate that if Paramount decides to introduce new improvements (beyond those already announced), it will have to do so in the coming weeks to influence that decisive vote.
Secured financing and criticisms of leverage
One of the most sensitive points of Paramount's offer is the financing structureWarner itself described the proposal at the time as "the largest leveraged buyout in history", warning that the resulting company could reach about $87.000 billion of debt pro forma gross and leverage of approximately seven times the estimated EBITDA for 2026 before synergies.
To counter fears of excessive debt, Paramount Skydance has sought to detail the origin of the funds backing the operation. According to its most recent communications, the takeover bid is "fully funded" through $43.600 billion in capital commitments contributed by the Ellison family and the RedBird Capital Partners fund, as well as $54.000 billion in debt commitments from entities such as Bank of America, Citigroup and Apollo Global Management.
Own Larry EllisonOracle co-founder and main financial backer of the offer, went so far as to offer a personal guarantee of more than 40.000 billion dollars in one of the phases of the process, with the aim of dispelling doubts about Paramount's ability to close the deal. However, Warner's board has continued to emphasize that, despite its competitor's apparent strength, it considers The deal with Netflix is ​​less risky. from the point of view of execution and regulatory risk.
In its latest public update, Paramount acknowledged that acceptance among WBD shareholders was still limited, around 7% of the capital, very far from 51% required to gain control of the company. Hence, the current strategy involves increasing pressure on Warner's top management to withdraw their recommendation in favor of the Netflix deal or, at least, adopt a neutral stance before the board meeting.
As part of that effort, David Ellison insists that the "significant improvements" to the offer—the additional payments for delays, the assumption of the penalty to Netflix, and the coverage of refinancing fees—are intended to provide investors with "certainty in value, a clear regulatory path, and protection against market volatility"Ultimately, the aim would be to offer a more predictable package in terms of remuneration and risks than the one posed by the merger structure with Netflix.
Industrial commitments and nods to Europe and the creative sector
Beyond the numbers, Paramount is also trying to play the industrial and cultural card, in a discourse aimed at both regulators and European creators and the international audiovisual community. In a recently released open letter, Ellison pledges that, if the takeover bid is successful, Paramount Studios and Warner Bros. Studios produce at least 15 feature films each per year, in other words, a minimum of 30 films per year between both seals.
In that same message, the executive declares himself a defender of a pluralistic ecosystem, promising licensing content to third parties and acquiring independent productions to foster a more diverse offering. The proposal aims to dispel the specter of absolute content concentration on a single platform and send a direct message to competition authorities, including European ones, which are traditionally stricter with large vertical integration operations in the audiovisual sector.
Another point that Ellison emphasizes is the commitment to movie theatersThe proposal involves all the films from the combined studios enjoying a full theatrical release, with a minimum global window of 45 days before reaching platforms of streaming or other on-demand formats, while also respecting the specific release windows of each market. This promise aligns with the demands of the industry in Europe, where exhibitors and cultural authorities are lobbying to protect the theatrical circuit against the rise of video on demand.
Regarding streaming platforms, Paramount assures that, should the operation be successful, HBO will maintain its independent brand and serviceOne of WBD's most valued assets in Europe and Spain, thanks to its catalog of original series and productions, is Netflix. This commitment contrasts sharply with Netflix's strategy, which Paramount accuses of pursuing a more closed model focused on its own platform.
In its arguments, the company insists that the acquisition of WBD would be "pro-consumer, pro-creative talent and pro-competitive"by strengthening Hollywood's ability to compete against large technology and entertainment groups streaming which have increased their power in the last two decades. The message clearly seeks to resonate with regulators on both sides of the Atlantic concerned about the growing influence of digital giants in content production and distribution.
In this context, Paramount's improved proposal is presented as more than just a battle for a major studio: it aspires to be a reconfiguration of the global entertainment mapWith a higher cash offer per share, safeguards against regulatory delays, assumption of penalties for Netflix, production commitments, and nods to theatrical exhibition, the Ellison company is trying to convince Warner shareholders, regulators, and the creative sector that its takeover bid is not only more profitable in the short term, but also more stable and competitive in the long term.