Paramount has previously criticised Netflix’s bid as overly complex and warned that the value to shareholders was dependent on fluctuations in the streaming giant’s share price.
The studio has also criticised a lack of clarity over how Warner Bros values its traditional cable business, which owns networks such as CNN.
Under the terms of the Netflix deal, Warner Bros will spin off the cable business into a separate company called Discovery Global prior to the deal taking place. By contrast, Paramount has tabled a bid for the entire group.
In a stock market filing on Tuesday, Warner Bros said its advisers had valued Discovery Global at a broad range between 72c and US$1.65 per share. It said shareholders would receive this additional value once the spin-off had been completed.
Warner Bros also said Discovery Global’s debt would be reduced by US$260m thanks to improved cashflow. As a result, the division is expected to have net debt of US$17b, falling to US$16.1b by the end of the year.
Netflix’s all-cash bid will increase pressure on Paramount to improve its own approach. The company has previously sweetened its bid by saying Larry Ellison would provide a personal guarantee for US$40b in equity, but has not increased the value of the offer.
Paramount argues that a merger between Netflix and Warner Bros would pose significant competition risks as it would lead to the merger of two major streaming services – Netflix and HBO Max.
It has also warned of a risk to cinemas, arguing that Netflix could reduce the number of films released theatrically.
Ellison last week met Culture Secretary Lisa Nandy as the company ramps up its lobbying efforts across Europe. Senior executives have also held meetings with Ofcom and the Competition and Markets Authority (CMA).
Netflix has played down competition concerns and insisted it is committed to releasing films in cinemas. Nevertheless, it has acknowledged that regulatory reviews could take up to 18 months.
David Zaslav, the president and chief executive of Warner Bros Discovery, said: “Today’s revised merger agreement brings us even closer to combining two of the greatest storytelling companies in the world, and with it, even more people enjoying the entertainment they love to watch the most.
“By coming together with Netflix, we will combine the stories Warner Bros has told that have captured the world’s attention for more than a century and ensure audiences continue to enjoy them for generations to come.”
Sign up to Herald Premium Editor’s Picks, delivered straight to your inbox every Friday. Editor-in-Chief Murray Kirkness picks the week’s best features, interviews and investigations. Sign up for Herald Premium here.
