Paramount raises offer to $31 per share; WBD Board signals possible ‘Superior Proposal’

Warner Bros. Discovery, Inc. (WBD) announced that its Board of Directors (the “Board”), consistent with its fiduciary duties and following consultation with its independent financial and legal advisors, has determined that the revised proposal from Paramount Skydance Corporation (Paramount Skydance or PSKY) could reasonably be expected to lead to a “Company Superior Proposal” as defined in WBD’s merger agreement with Netflix, Inc. (the “Netflix Merger Agreement”).

The revised proposal includes an increased purchase price of $31 per WBD share in cash, plus a daily ticking fee equal to $0.25 per quarter beginning after September 30, 2026, as well as a $7 billion regulatory termination fee payable by PSKY in the event the transaction does not close due to regulatory matters, payment by PSKY of the $2.8 billion termination fee that WBD would be required to pay to Netflix to terminate the existing Netflix Merger Agreement, an obligation to contribute additional equity funding to the extent needed to support the solvency certificate required by PSKY’s lending banks, and a “Company Material Adverse Effect” definition that excludes the performance of WBD’s Global Linear Networks business. 

The Board has not made a determination as to whether the revised PSKY proposal is superior to the merger with Netflix. WBD will engage further with PSKY to determine if a proposal that constitutes a “Company Superior Proposal,” as defined in the Netflix Merger Agreement, can be reached. In the event that the Board ultimately determines such a “Company Superior Proposal” has been received, Netflix will have four business days after such determination to negotiate with WBD and to propose any revisions to the Netflix transaction.

There can be no assurance that the Board will conclude that the transaction proposed by PSKY is superior to the merger with Netflix or that any definitive agreement or transaction will result from WBD’s discussions with PSKY.  The Netflix Merger Agreement remains in effect, and the Board continues to recommend in favour of the Netflix transaction and is not withdrawing or modifying its recommendation.

Allen & Company, J.P. Morgan and Evercore are serving as financial advisors to Warner Bros. Discovery and Wachtell Lipton, Rosen & Katz and Debevoise & Plimpton LLP are serving as legal counsel.

During Paramount’s fourth-quarter earnings call, CEO David Ellison said the company has raised its all-cash offer for WBD to $31 per share, up from $30. He added that Paramount plans to keep working with WBD’s board but declined to provide more details during the call. Paramount expects total revenue of about $30 billion in 2026, which would represent roughly 4% year-over-year growth.

Paramount issued the following statement in response to the announcement by WBD that WBD's Board of Directors has determined that Paramount's revised $31 per share, all-cash offer to acquire WBD could reasonably be expected to lead to a "Company Superior Proposal" under the terms of WBD's merger agreement with Netflix, Inc.:

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.

Under the terms of its revised offer, Paramount:

• Increased the purchase price to $31.00 per WBD share in cash for 100% of the company,
• Accelerated timing of the daily "ticking fee" of $0.25 per quarter to commence after September 30, 2026, until the consummation of the Paramount transaction,
• Increased the regulatory termination fee to $7 billion in the event the transaction does not close due to regulatory matters,
• Reaffirmed it will pay the $2.8 billion termination fee which WBD would be required to pay to Netflix to terminate its existing Netflix merger agreement,
• Reaffirmed it will eliminate WBD's potential $1.5 billion financing cost associated with its debt exchange offer,
• Agreed to an obligation to contribute additional equity funding to the extent needed to support the solvency certificate required by PSKY's lending banks, and
• Agreed to a "Company Material Adverse Effect" definition that excludes the performance of WBD's Global Linear Networks business.

As previously announced, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act applicable to Paramount's acquisition of WBD expired at 11:59 pm on February 19, 2026.

The entry into a transaction with WBD would require the WBD Board to determine that Paramount's revised proposal is a "Company Superior Proposal" under its merger agreement with Netflix, the expiration of a four business day match period, termination of the Netflix merger agreement and execution of a definitive merger agreement between Paramount and WBD.