Paramount Skydance Corp (PSKY.US) has more than doubled its breakup fee to $5 billion in its proposal to acquire Warner Bros. Discovery (WBD.US), as part of a more competitive offer to outbid rivals. Under the terms, Paramount would pay this amount if the deal is agreed upon but ultimately fails to close. Sources indicate this move reflects Paramount's confidence in securing regulatory approval for the merger. Previously, Paramount had proposed a $2.1 billion breakup fee.
Warner Bros. Discovery, parent company of HBO and CNN, is currently evaluating acquisition proposals from three media firms—Paramount, Netflix (NFLX.US), and Comcast (CMCSA.US)—and may select a final buyer in the coming weeks. The company received second-round bids this Monday and has since been in discussions with potential acquirers. Paramount, owner of CBS and MTV, triggered the bidding process after multiple unsolicited offers, while Warner Bros. Discovery formally launched the sale process last October. To date, Paramount has submitted five rounds of bids.
Paramount aims for a full acquisition of Warner Bros. Discovery, whereas Netflix and Comcast’s proposals involve spinning off its cable TV assets. Paramount argues that a breakup would create tax liabilities for Warner Bros. Discovery, making its offer more attractive. All three bidders face stringent regulatory scrutiny and concerns over Hollywood job cuts, with Paramount being the smallest contender by revenue. Comcast leads in sales, while Netflix holds the highest market capitalization.
A key advantage for Paramount is its close ties to the current U.S. administration, which plays an active role in media regulation. Since merging with Skydance Media last August, Paramount is now controlled by Oracle (ORCL.US) Chairman Larry Ellison’s family, with his son David Ellison serving as CEO. Larry Ellison has been a major supporter of former President Trump, who publicly praised the Ellisons. David Ellison stated last October that he maintains a "good relationship" with the Trump administration.
Any merger with Warner Bros. Discovery would require approval from the U.S. Department of Justice. Earlier, Republican Congressman Darrell Issa raised antitrust concerns over Netflix’s bid, warning of excessive consolidation in streaming. White House officials have also expressed reservations, prompting Netflix to ramp up lobbying efforts to win support from both Warner Bros. Discovery’s board and policymakers.
However, Paramount has yet to present an offer compelling enough for Warner Bros. Discovery’s management. The board insists on a $30-per-share buyout price, valuing the company at nearly $75 billion (excluding debt). Though specific bid terms remain undisclosed, sources note Netflix’s offer exceeds Paramount’s.
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