Warner Bros. Reopens Talks as Paramount Signals Higher Bid

Warner Bros Discovery Inc. has agreed to reopen negotiations with rival Hollywood studio Paramount Skydance Corp. after the suitor proposed raising its bid and sweetened other terms of its offer, setting the stage for a renewed showdown with Netflix Inc.

Netflix, which Warner Bros. still described as its preferred bidder, has granted the board seven days to discuss Paramount’s most recent proposal, according to a statement Tuesday. The decision came after a Paramount banker told a Warner Bros. board member that Paramount would offer at least $31 a share, or $1 a share higher than its previous offer, if the company agreed to reopen talks. Warner Bros. now wants to see that, and other aspects of Paramount’s new bid, in writing. Bloomberg's Stephen Flynn joins to discuss on Bloomberg Intelligence.  Warner Bros Discovery Inc. has agreed to reopen negotiations with rival Hollywood studio Paramount Skydance Corp. after the suitor proposed raising its bid and sweetened other terms of its offer, setting the stage for a renewed showdown with Netflix Inc.

Netflix, which Warner Bros. still described as its preferred bidder, has granted the board seven days to discuss Paramount’s most recent proposal, according to a statement Tuesday. The decision came after a Paramount banker told a Warner Bros. board member that Paramount would offer at least $31 a share, or $1 a share higher than its previous offer, if the company agreed to reopen talks. Warner Bros. now wants to see that, and other aspects of Paramount’s new bid, in writing.

WATCH: Warner Bros. is talking to Paramount Skydance again after the studio sweetened its offer setting up a showdown with Netflix.

“Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders,” Warner Bros. Chief Executive Officer David Zaslav said in the statement. “We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”

Warner Bros. said the board still unanimously recommends shareholders vote in favor of its binding agreement to sell its namesake studios and HBO Max streaming business to Netflix for $27.75 a share, or $72 billion. Paramount’s all-cash $77.9 billion bid, which is backed by billionaire Larry Ellison, is for the entirety of Warner Bros., including its cable TV channels such as CNN and TNT that are otherwise planned to be spun off under a deal with Netflix. Warner Bros. has scheduled a shareholder vote on the Netflix deal for March 20.

Warner Bros. shares rose 2.2% Tuesday morning in New York. Paramount was up 6.9% while Netflix slumped 1.7%.

The decision to reengage with Paramount, which confirms Bloomberg’s reporting Sunday, adds another twist in the long drawn-out saga over control of one of Hollywood’s most iconic properties. The fight for Warner Bros., the century-old studio behind films from Casablanca to Batman, and hit TV series like Friends, is one of the biggest media deals in years and has the power to reshape the entertainment industry.

Paramount Skydance, which was only formed last August as the result of a combination with David Ellison’s Skydance Media, sees the deal as an opportunity to transform itself quickly into a Hollywood powerhouse. A victory for Netflix, meanwhile, would be a crowning achievement for the tech disruptor, making it possibly the most dominant player in entertainment history.

Both deals face significant regulatory hurdles that each bidder is convinced it will overcome more easily than the other.

Under the terms of the waiver granted by Netflix, Warner Bros. can engage with Paramount until Feb. 23. It has asked Paramount for its best and final proposal, and in that time it plans to discuss unresolved deficiencies in the latest offer, according to the statement. If, after that negotiating period, the Warner Bros. board determines that Paramount has put forth a superior proposal, Netflix will have the right to match Paramount’s most recent offer to keep its existing agreement intact.

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