Warner Bros. Says Paramount’s New Offer Is “Superior.” Netflix Has Four Days to Respond

Warner Bros. Discovery‘s board of directors says that Paramount‘s latest offer to buy the company is “superior” to the Netflix deal, kicking off a four-day window for the streaming giant to modify its deal if it wants to keep its bid for Warners alive.

“WBD has notified Netflix of its determination that the PSKY proposal constitutes a ‘Company Superior Proposal.’ Under the terms of the Netflix merger agreement, this notice triggers a four business day period during which Netflix has the right to propose revisions to the Netflix merger agreement so that the PSKY proposal would cease to constitute a ‘Company Superior Proposal,’” WBD’s board said in a statement.

The Warners board added, “Following the conclusion of this period, if the Board determines in good faith, after consultation with its independent financial and legal advisors, that, after considering any revisions to the terms of the Netflix merger agreement proposed by Netflix, the PSKY proposal continues to constitute a ‘Company Superior Proposal,’ WBD would be entitled to terminate the Netflix merger agreement.”

In plain English: Warner Bros. has determined Paramount’s latest sweetened bid is better than the signed deal they have with Netflix. Under the terms of that deal, Netflix has a window to try and match or beat the “superior” offer. If it does, WBD’s board will stick with the Netflix deal. If it doesn’t, WBD will go with Paramount, and David Ellison will claim his prize.

“We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing,” Paramount CEO David Ellison said in a statement.

PSKY’s latest proposal was for $31 per share, but had a number of other sweeteners, including a ticking fee payable to shareholders equal to $0.25 per quarter beginning after Sept. 30, 2026, as well as a $7 billion regulatory termination in the event the transaction does not close due to regulatory matters. Paramount has also agreed to pay the $2.8 billion termination fee that Warner Bros. would be required to pay to Netflix to terminate the existing merger agreement.

The revised offer came after days of negotiations between PSKY and WBD, with Netflix allowing for the negotiating window to be opened so that the matter could be resolved.

As of now, WBD is still recommending the Netflix deal, which is slated for a March 20 shareholder vote. Should Netflix decline to up its bid in response to PSKY, that would assuredly change.

The slow burn of the deal underscores the effort that WBD and its board have been putting into maximizing the price that its shareholders get, though the future of the entertainment business may be at stake as well.

The announcement from WBD came just hours after Netflix co-CEO Ted Sarandos met with White House officials in Washington to discuss the deal. While their discussions remain private, some have wondered whether aggressive regulatory threats could push Netflix to back away from the deal, especially with PSKY making its regulatory confidence a centerpiece of its public campaign to assuage WBD shareholders.

Hollywood is divided on the deals, with some preferring Netflix because of its public commitments and a relative lack of overlap with WBD, and others Paramount, given David Ellison’s professed love for the business.

There is wariness around layoffs and cost-cutting, however, and neither side’s commitments are seen as being set in stone.