Warner Bros. Discovery Weighs Whether to Kick Paramount’s Tires — and Netflix Could Get one Last Shot to up Its Bid

With input from the New York Times, CNBC, Variety, Reuters, New York Post, and Bloomberg.

Warner Bros. Discovery is quietly debating whether to reopen talks with Paramount after the rival studio sweetened its pitch, people familiar with the matter say — a move that could blow up the nearly sealed Netflix deal, or at least force Netflix to dig deeper into its pockets.

Here’s the messy play-by-play:

In December, Warner Bros. Discovery agreed to sell its streaming and studios arm to Netflix for about $83 billion. Paramount soon came back with a rival approach: an all-cash offer for the whole company that effectively valued the target much higher — roughly $108 billion including debt — and kept coming at shareholders. Warner Bros. Discovery turned that down initially, saying Netflix’s narrower, less-risky deal was the safer route.

Paramount didn’t raise the per-share price in its latest tweak, but it did sweeten the economics in ways that matter. It told Warner Bros. Discovery it would pick up the roughly $2.8 billion breakup fee that Netflix would be owed if the Netflix deal were scrapped, back WBD’s debt costs, and add a “ticking fee” — roughly $650 million in cash per quarter starting in 2027 for any quarter the deal drags on. It also pledged additional cash to shareholders tied to delays. Those fixes were aimed squarely at the board’s concerns about timing, financing and regulatory headaches.

Warner Bros. Discovery’s directors are wrestling with a legal and practical reality: their Netflix contract allows them to entertain superior offers. If Paramount’s tweaks could lead to a materially better package for shareholders, the board may have a duty to at least explore it. That doesn’t mean they’ll dump the Netflix deal — it just means they might re-engage to test whether Paramount is really all-in.

If they do reopen talks, they must notify Netflix. Under the Netflix agreement, the streaming company would then have the chance to match or sweeten its offer. The clock is ticking: Warner Bros. Discovery reportedly has until Feb. 25 to respond to Paramount’s latest proposal.

This drama isn’t just about price tags. Some investors and advisers worry the Netflix deal — which would strip out cable assets — faces an uphill regulatory fight in Washington. A handful of noisy shareholders, including the activist investor Ancora, have publicly questioned whether the board fully engaged Paramount’s earlier bids and whether the Netflix deal properly prices the carved-out cable business.

Paramount’s camp points to a potential political opening: the company’s backers include David Ellison, and his father, Larry Ellison, has known ties to the White House — a fact that supporters say could help smooth US regulatory reviews. Netflix, for its part, has said it’s confident the transaction can clear regulators.

If Warner Bros. Discovery re-opens the process, Netflix would get a formal chance to counter. That’s baked into the breakup-and-match mechanics of the Netflix contract — in short, reopening could force Netflix to either improve terms or step aside. Meanwhile, shareholders will get another high-stakes choice: stick with the cleaner Netflix deal focused on studios and streaming, or back a heftier all-in Paramount package that keeps the cable networks.

Practical constraints loom: the SEC still needs to clear WBD’s proxy filings so a shareholder vote can be scheduled — the company has said that vote could happen as soon as mid-March if the board presses ahead with the Netflix agreement. And even if a rival deal wins shareholder support, antitrust reviews and financing logistics could drag the process out for months.

Investors have already shown nerves: Warner Bros. Discovery shares have slipped modestly this year, and Netflix stock has taken a bigger hit amid broader market angst and the strain of this bidding duel. Lawyers and corporate-governance watchers are watching closely — any sign the board didn’t canvass legitimate alternatives could invite litigation from disgruntled investors either way.

This is the classic takeover poker hand: Warner Bros. Discovery has a signed deal but a contract clause that lets it chase a clearly superior offer. Paramount’s latest maneuvers are less about a higher per-share price and more about covering the practical pain points — the breakup fee, debt and delay costs — that worried the board. If Warner Bros. Discovery reopens talks, Netflix will get one more chance to prove its deal is the best — or to outbid a rival before the whole thing drags into prolonged regulatory limbo. Either way, the next couple of weeks are going to be noisy.