Netflix plans to change the terms of its agreement to acquire Warner Bros. Discovery (WBD) assets, switching to an all-cash payment. This is reported by Reuters, citing sources familiar with the negotiations. This move is aimed at accelerating the sale process, which has been ongoing for several months and faces resistance from regulators and competitors. This is reported by UNN.
Details
Currently, Warner Bros. is the subject of a fierce battle between Netflix and Paramount Skydance. Netflix's initial offer was valued at $82.7 billion (cash plus stock) for the film studios and streaming assets. At the same time, Paramount is offering $108.4 billion in cash for the entire company, including cable networks.
Despite Paramount's higher price, the WBD board of directors is leaning towards a deal with Netflix. Warner Bros. management considers Paramount's offer risky due to a significant share of debt financing and calls it "inadequate."
Valuable assets and risks
The object of interest is Warner Bros.'s vast content library, which includes the "Harry Potter," "Game of Thrones," "Friends" franchises, the DC Comics universe, and cinema classics.
However, the deal faces serious challenges:
- Lawsuits: Paramount has filed a lawsuit against Warner Bros., demanding details of the deal with Netflix, and plans to nominate its representatives to the company's board of directors.
- Political pressure: US lawmakers express concern that further consolidation of the media market will lead to higher prices for consumers.
- Penalties: Netflix has agreed to pay a $5.8 billion penalty if the deal is blocked by regulators. In turn, WBD must pay $2.8 billion if it rejects the agreements in favor of another buyer.
After the information about the new offer was released, Netflix shares rose by 1.02%, and Warner Bros. shares by 1.62%. Netflix representatives declined to comment officially, and Warner Bros. has not yet responded to press inquiries.