The Warner Bros studios in Burbank, California, US. Photo / Bloomberg
Netflix reached an amended, all-cash agreement to buy Warner Bros Discovery’s studio and streaming business as it battles Paramount Skydance to acquire one of Hollywood’s most iconic entertainment companies.
Netflix, which previously agreed to pay US$27.75 ($47.43) a share in cash and stock for the Warner assets, will pay the full amount in cash, according to a filing confirming an earlier Bloomberg News report on the revised terms.
Warner Bros plans to call a special meeting of shareholders to approve the deal. Netflix said stockholders should be able to vote on the transaction by April.
The changes are designed to expedite a sale and address claims by Paramount that its US$30-a-share cash tender offer – for all of Warner, including cable channels like CNN and TNT – is superior. Paramount, the parent of CBS and MTV, has been urging investors to tender their shares.
The battle for Warner Bros, known for films from Casablanca to Batman, is one of the biggest media deals in years and has the power to reshape the entertainment industry. Paramount has been aggressively pursuing Warner Bros since September, while streaming leader Netflix emerged as a surprise suitor, entering the chase after Warner Bros put itself up for sale in October.
The new terms neutralise one of the primary criticisms from Paramount – that the stock portion of the Netflix offer makes its bid inferior.
The Warner Bros board “continues to support and unanimously recommend our transaction, and we are confident that it will deliver the best outcome for stockholders, consumers, creators and the broader entertainment community”, Netflix co-chief executive officer Ted Sarandos said in a statement.
Warner Bros shares were down less than 1% in pre-market trading in New York to US$28.50. Netflix was up 1.2%.
Warner Bros also addressed another criticism by outlining how it values its cable networks, which would be spun off to its stockholders in a separate company called Discovery Global.
Warner Bros has spurned multiple offers from Paramount. Its unwanted suitor has threatened to launch a proxy fight and has sued to force Warner Bros to disclose more information about the Netflix bid and the value of the cable properties.
Warner Bros’ advisers value the cable networks from as little as US72c a share to as much as US$6.86 a share, according to the filing. Paramount has claimed those properties have no value even though cable networks account for the most its own sales and profit.
Under the spinoff plans, Discovery Global would have US$17 billion of debt as of June 30, 2026, decreasing to US$16.1b by the end of the year. Warner and Netflix also amended the agreement so that Discovery Global will have US$260 million less debt than initially planned as a result of stronger-than-expected cashflow last year.
The filing projects 2026 revenue of US$16.9b for the new Discovery Global networks and adjusted earnings of US$5.4b before interest, taxes, depreciation and amortisation (ebitda).
A combination of Warner Bros and Netflix would marry two of the world’s biggest streaming providers, with some 450 million combined subscribers, and provide Netflix with a deep library of programming to counter challengers like Walt Disney Co and Amazon.com Inc. Hollywood labour unions and movie theatre owners have expressed concern that the deal will hurt their members and businesses.
Sarandos and Netflix co-CEO Greg Peters told investors at a UBS conference on December 8 that they were “super confident” their deal will be approved. Leaders of Netflix and Warner Bros were in Europe last week meeting with regulators to convince them of the merits of a deal.
Netflix is scheduled to report fourth-financial results on Tuesday after markets close.
Paramount’s CEO David Ellison has argued that a merger with his company would preserve a more traditional Hollywood structure and keep some of Warner Bros’ legacy intact. He has posited that his all-cash offer, backed by his family trust, is financially superior and said it would have an easier time getting approved by regulators.
Ellison has been mounting a charm offensive of his own but has yet to convince the Warner Bros board or an overwhelming majority of the company’s shareholders. Institutional investors are divided and have called for Paramount to increase its offer.
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