The corporate battle for control of Warner Bros. Discovery has escalated dramatically, with Paramount extending its hostile takeover deadline into next month while simultaneously launching a proxy fight against the entertainment giant's board.
Extended Deadline and Shareholder Pressure
Paramount has pushed back the deadline for its $77.9 billion offer to February 20th, marking the second extension since challenging Warner's proposed merger with Netflix last month. The cash offer remains at $30 per share, valuing Warner Bros. Discovery at over $108 billion including debt.
Despite these aggressive moves, Paramount has secured tenders for just over 168.5 million Warner shares as of Wednesday, significantly short of the 50 per cent required to gain effective control of the company, which has approximately 2.48 billion outstanding shares.
Warner's Firm Rejection
Warner Bros. Discovery has maintained its firm opposition to Paramount's advances. In an emailed statement, the company declared: "Once again, Paramount continues to make the same offer our Board has repeatedly and unanimously rejected in favor of a superior merger agreement with Netflix."
The company added that it is "clear our shareholders agree," noting that more than 93 per cent have so far rejected "Paramount's inferior scheme."
Netflix's Competing Proposal
The rival bid from Netflix, agreed in December, represents an all-cash deal worth $72 billion for Warner's studio and streaming business, $83 billion including debt, or $27.75 per share. The companies describe this proposal as more straightforward and expect to expedite a shareholder vote by April.
Paramount's Counterarguments
Paramount maintains its offer is superior to Netflix's and has accused Warner's leadership of lacking transparency with stockholders. The company claimed on Thursday that Warner's board was "rushing to solicit shareholder approval" for the Netflix merger, warning this could lead to reduced payouts if debt from a previous spinoff of Warner's networks business impacts studio and streaming operations.
Proxy Fight Escalation
In a significant escalation, Paramount is pursuing a proxy fight against Warner's board. Earlier this month, it announced plans to nominate its own slate of directors and has now filed preliminary materials to solicit proxies in opposition to the Netflix merger.
Structural Differences in Bids
The complexity of the competing bids lies in their structural differences. Netflix's proposed acquisition focuses solely on Warner's studio and streaming assets, encompassing production arms and platforms like HBO Max. Paramount, conversely, seeks to acquire the entire company, which would bring news and cable operations including CNN under the same corporate umbrella as CBS.
Should Netflix succeed, Warner's current networks would be spun off into a new entity called Discovery Global, creating a fundamentally different corporate structure than Paramount's proposed complete acquisition.
Regulatory and Market Implications
Regardless of which suitor prevails, industry analysts anticipate a protracted sale process for Warner Bros. Discovery, likely attracting considerable antitrust scrutiny from regulatory bodies. Political considerations are also expected to play a role, with former President Donald Trump having previously suggested personal involvement in approving such major media deals.
Market reactions on Thursday showed slight declines in shares for both Warner Bros. Discovery and Netflix, while Paramount-Skydance shares rose by nearly 3 per cent, reflecting investor uncertainty about the outcome of this high-stakes corporate battle.
