Netflix Updates Warner Bros. Deal to All-Cash Offer

Netflix has restructured its acquisition bid for Warner Bros. Discovery (WBD), pivoting to an all-cash transaction to solidify its position against a competing offer from Paramount. The move aims to streamline the process and provide shareholders with immediate certainty regarding the value of the deal.

Simplifying the Acquisition Terms

While the proposal structure has shifted from a mix of cash and stock to an all-cash payment, the financial fundamentals remain unchanged. The agreement continues to value WBD at $82.7 billion, maintaining the previously established price of $27.75 per share for the company’s streaming platforms and movie studio assets.

In a formal statement released Tuesday, the companies noted that the revised terms are intended to accelerate the timeline for a shareholder vote. Netflix confirmed it plans to fund the acquisition through a combination of existing cash reserves, new debt, and committed financing arrangements.

Rising Competition from Paramount

The adjustment follows an aggressive push by Paramount, which has sought to disrupt the Netflix-WBD deal with a $30-per-share all-cash bid for the entirety of Warner Bros. Discovery. Paramount’s strategy includes a $40 billion guarantee backed by Oracle co-founder Larry Ellison, father of Paramount CEO David Ellison.

Tensions between the parties have escalated significantly. Last week, Paramount initiated legal action, demanding further transparency regarding Netflix’s offer and attempting to place new nominees on the WBD board. While the court denied Paramount’s request to fast-track the lawsuit, the move underscores the intensity of the bidding war.

Board Concerns Over Debt and Stability

The board of Warner Bros. Discovery has consistently favored the Netflix proposal, rejecting Paramount’s overtures on multiple occasions. WBD leadership has argued that a merger with Netflix offers a more stable path forward, citing concerns that Paramount’s financial structure poses significant risks.

According to WBD, the Paramount offer would burden the combined entity with approximately $87 billion in debt. Furthermore, Warner Bros. has raised alarms regarding:

• The potential for further downgrades to Paramount’s existing “junk” credit rating.
• Paramount’s current negative free cash flow, which WBD executives claim would be worsened by the acquisition.

Warner Bros. Discovery first began assessing sale options in October, following unsolicited interest from several suitors. Facing a shifting media landscape characterized by declining traditional cable viewership and fierce streaming competition, the company sought a partner capable of managing its substantial debt load. Netflix emerged as the frontrunner after prevailing in a bidding process that included Comcast and Paramount.