Warner Bros. Discovery board backs Paramount bid as Netflix declines to raise offer

The board of Warner Bros. Discovery has determined that a revised acquisition proposal from Paramount Global constitutes a “Company Superior Proposal” under the terms of its existing merger agreement with Netflix, reshaping the trajectory of one of the media industry’s most closely watched transactions.

In a statement Paramount said, “Paramount welcomes the WBD Board's determination and looks forward to continuing to engage constructively with WBD to deliver the benefits of Paramount's proposal to WBD shareholders, the creative community and consumers.”

The determination triggered a contractual matching period for Netflix. After reviewing the updated terms, Netflix confirmed it would not increase its bid.

Netflix said it would not exercise its right to submit a revised proposal following the board’s conclusion that Paramount’s offer was superior.

According to reporting by The Wall Street Journal, WBD said Paramount’s latest bid surpassed Netflix’s existing deal, effectively clearing the way for Paramount to move forward if final agreements are reached.

The Journal reported that the board’s decision came after evaluating Paramount’s enhanced financial terms and deal structure against Netflix’s previously agreed transaction. With Netflix opting not to revise its proposal, Paramount’s offer now stands as the leading transaction under consideration.

While specific financial details were outlined in company filings and press materials, the key development centers on the board’s formal determination that Paramount’s proposal could reasonably be expected to result in a superior outcome for shareholders.

The situation underscores the competitive dynamics among legacy studios and streaming platforms seeking scale, intellectual property depth and global distribution reach. With Netflix stepping aside, attention now turns to next steps between Paramount and Warner Bros. Discovery, including definitive agreements and regulatory review.

For investors, the board’s determination and Netflix’s decision not to counter marks a pivotal moment in the evolving consolidation landscape across the media and entertainment sector.

Under the terms of Paramount's proposed merger agreement:

• Paramount will acquire WBD for $31.00 per WBD share in cash for 100% of the company;
• A daily "ticking fee" of $0.25 per quarter will accrue after September 30, 2026, until the consummation of the Paramount transaction;
• A regulatory termination fee of $7 billion would be payable in the event the transaction does not close due to regulatory matters;
• Paramount will pay the $2.8 billion termination fee which WBD is required to pay to Netflix to terminate its existing Netflix merger agreement;
• Paramount will eliminate WBD's potential $1.5 billion financing cost associated with its debt exchange offer;
• The "Company Material Adverse Effect" definition excludes the performance of WBD's Global Linear Networks business;
• The Ellison Trust is providing a $45.7 billion equity commitment, and Larry Ellison is guaranteeing such commitment, including an obligation to contribute additional equity funding to Paramount to the extent needed to support the solvency certificate required by Paramount's lending banks, and
• Bank of America Merrill Lynch, Citi and Apollo are providing a $57.5 billion debt commitment.