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With the possibility of a shareholder vote coming soon, or at least once the snow melts in New York City, the battle for Warner Bros. Discovery kicked into high gear this week with David Ellison’s Paramount Skydance enhancing its bid to compete with Netflix while an activist showed up to scuttle the existing Netflix-WBD deal.
The enhanced Paramount proposal, unveiled Tuesday, was aimed at addressing some of the concerns from WBD’s board and potentially bringing the company to the negotiating table. In this latest attempt by Paramount to get WBD to abandon its deal with Netflix, David Ellison’s company is offering to cover the $2.8 billion termination fee WBD would owe Netflix. Paramount also introduced a "ticking fee" of 25 cents per share (roughly $650 million) for every quarter the deal remains open beyond year-end.
Personally guaranteed by Oracle co-founder Larry Ellison and backed by $43.6 billion in equity from the Ellison family and RedBird Capital Partners, along with $54 billion in debt commitments, Paramount is showcasing its commitment to handling WBD's debt financing obligations and bridge loans.
The next day shareholder activist Ancora entered the fray with a stake in WBD and an argument that Paramount’s bid is superior. The press release and presentation outline the firm’s vote-no campaign against the WBD-Netflix deal while calling on the WBD board to negotiate with Paramount. Ancora argues that Netflix's deal is asking shareholders to accept uncertain cash consideration tied to the financial condition of a cable networks spinoff called Discovery Global.
This structure of the WBD-Netflix deal is not as simple as the Paramount deal for the whole megillah. Paramount noted that SpinCo would need to allocate $17 billion in debt to Discovery to hit the high end of the merger consideration range, if the separation occurred on June 30, 2026. Ancora pointed to CNBC owner Versant Media, Discovery Global's closest comparable, which has seen its valuation slide since debuting in January, as a cautionary tale about what WBD shareholders might actually receive.
As a next step, the WBD board said it would review Paramount's amended offer but isn't changing its recommendation for the Netflix deal. This has some shareholders expecting Paramount to bump its bid by another $2 to $3 per share, which could restart serious talks. Both deals face regulatory reviews although President Trump recently said he will let the Justice Department handle the decision.
Except that now we don’t have a head of antitrust at DOJ. It appears politics between the White House and DOJ prompted Gail Slater, DOJ’s head of antitrust, to announce her resignation this week, suggesting perhaps that politics will indeed play a more prominent role in the contest. This comes after the number two in antitrust walked as well, according to Liz Hoffman at Semafor.
The WBD saga is just one example of what promises to be a busy year for M&A, activism and antitrust, all hot topics at the upcoming Tulane Corporate Law Institute in mid-March in New Orleans. We are once again polling dealmakers on their outlook for M&A and activism. Please let us know what you think will happen this year. We will share the results in Tulane and buy you beignets and chicory coffee at Café du Monde.
Lastly, in what could only be described as a feel-good story for middle-aged people like some of us, we cheered the personal injury lawyer who has shot to great fame being on the USA’s Men’s curling team —indeed we are a bit jealous. Perhaps with the cold weather Mayor Mamdani can add a curling rink to Central Park.
Have a great weekend,
GPP Team
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