Netflix has amended its agreement with Warner Bros. Discovery to an all-cash deal, the companies co-announced on Tuesday — a move that further disrupts attempts from Paramount Skydance from outbidding the mega-streamer in the ongoing battle for Warner Bros.
In December, Netflix announced a $82.7 billion cash-and-stock deal to acquire much of Warner Bros.’ business — including franchise juggernauts “Harry Potter,” “The Lord of the Rings” and the DC Universe.
Now, Netflix is offering an all-cash deal of $27.75 per Warner Bros. share for the company’s movie studio and streaming assets, like HBO Max, which are set to break off into a publicly traded company called Warner Bros. later this year.
The company’s cable assets, which includes channels such as CNN, TNT and TBS will become part of a separate company called Discovery Global, per CNN.
“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,” David Zaslav, president and CEO of Warner Bros. Discovery said in a Tuesday statement.
“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.”
Netflix’s latest move applies more pressure to Paramount in the messy monthslong bidding war to acquire Warner Bros.
Days after Netflix announced its December deal with the entertainment company, Paramount launched a hostile all-cash tender bid to acquire Warner Bros., offering shareholders $30 per share, a bid valued at $108 billion.
Earlier this month, Paramount CEO David Ellison announced his company had filed a lawsuit against Warner Bros. and threatened to launch a proxy fight.
Netflix previously offered Warner Bros. shareholders $23.25 per share in cash and the remainder in Netflix stock — giving Paramount room to appeal to shareholders argue it had the “superior offer.”
The amended Netflix deal leaves little space for Paramount to fight back without major changes to its bid, which has been rejected several times. And while Paramount has adjusted the terms of its offer, it has not increased its bid of $30 per share.
Netflix’s pivot to an all-cash deal could expedite the timeline to a Warner Bros. shareholder vote, said Ted Sarandos, co-CEO of Netflix. If the deal goes through, it will close in roughly 12 to 18 months, giving Netflix ownership over two of the three Warner Bros. pillars — leaving Discovery Global, which includes CNN, TNT, TBS and other networks as a separate company.
“Our amended agreement with Netflix is a testament to the Board’s unrelenting focus on representing and advancing our stockholders’ interests,” Samuel A. Di Piazza, Jr., chair of the Warner Bros. Discovery Board of Directors said in a Tuesday statement.
“By transitioning to all-cash consideration, we can now deliver the incredible value of our combination with Netflix at even greater levels of certainty, while providing our stockholders the opportunity to participate in management’s strategic plans to realize the value of Discovery Global’s iconic brands and global reach.”
What the Netflix-Warner Bros. merger means for TV favorites
If the merger between Netflix and Warner Bros. goes through, a massive library of movie and television favorites from both studios will likely be put under a single streaming umbrella — giving Netflix a mega-valuable collection of television and movies.
Warner Bros. owned franchises, including “Harry Potter,” “The Lord of the Rings,” the DC Universe (Superman, Wonder Woman, Batman etc) and the MonsterVerse (Godzilla, King Kong) would fall under Netflix’s collection.
TV favorites such as “Friends,” “Rick and Morty,” “The Big Bang Theory” and HBO series like “The Sopranos,” “Game of Thrones” and “Succession” will also be handed over to Netflix.
“Our mission has always been to entertain the world,” Sarandos said in the December press release announcing the merger.
“By combining Warner Bros.’ incredible library of shows and movies—from timeless classics like ‘Casablanca’ and ‘Citizen Kane’ to modern favorites like ‘Harry Potter’ and ‘Friends’—with our culture-defining titles like ‘Stranger Things,’ ‘KPop Demon Hunters’ and ‘Squid Game,’ we’ll be able to do that even better. Together, we can give audiences more of what they love and help define the next century of storytelling."
Cable channels getting split off into Discovery Global, like CNN, TNT, TBS, HGTV, Cartoon Network, Food Network, TLC and others will remain independent from the Netflix merger.