The battle for one of Hollywood’s most coveted entertainment empires has entered a dramatic new chapter. Paramount Skydance has sharpened its takeover proposal for Warner Bros Discovery, unveiling a series of financial incentives aimed at convincing shareholders to reconsider backing Netflix’s rival offer.
Although Paramount has not increased its headline price, the company has added substantial sweeteners, including a quarterly ‘ticking fee’ and a commitment to absorb a costly breakup charge, reported Reuters.
This decision underscores how high the stakes have become in this contest for global media dominance. At issue is control of Warner Bros’ treasure trove of assets: its storied film and television studios, a deep content catalogue, and blockbuster franchises such as “Game of Thrones,” “Harry Potter,” and DC Comics icons Batman and Superman.
The Ticking Fee: Paying Shareholders To Wait
Paramount announced that it is offering Warner Bros shareholders a 25‑cent‑per‑share “ticking fee” for every quarter the transaction fails to close after this year.
The measure, which would amount to roughly $650 million in cash each quarter from early 2027 until completion, is designed to compensate investors for any delays.
Crucially, the company has not revised its overall offer of $30 per share, valuing the transaction at $108.4 billion including debt. Instead, Paramount is seeking to reassure shareholders that even if regulatory reviews slow progress, they will continue receiving incremental value.
In a further escalation, Paramount has pledged to cover the $2.8 billion termination fee Warner Bros would owe Netflix should it abandon the existing $82.7 billion agreement for its studio and streaming operations.
Netflix Versus Paramount: A Clash For Cultural Capital
Netflix and Paramount are vying for ownership of one of the world’s most recognisable entertainment portfolios. For Netflix, acquiring Warner Bros would reinforce its dominance in streaming and potentially elevate its subscriber base to around half a billion globally.
The streaming giant would gain access to franchises that have shaped popular culture for decades, from “Friends” to “Batman”, enabling it to build new spin‑offs, sequels and streaming‑first adaptations.
Paramount, owner of CBS, has a different vision. Under its proposal, Warner’s television networks, including CNN and TNT, would be spun off into a separately traded entity called Discovery Global ahead of the merger with Netflix.
Activist Investor Enters The Fray
The takeover drama has also drawn in activist investor Ancora Holdings, which has reportedly built a stake worth roughly $200 million in Warner Bros. According to a Wall Street Journal report, Ancora intends to oppose the Netflix transaction and may publicly outline its stance shortly.
The firm is said to have privately informed Warner CEO David Zaslav that it could initiate a proxy fight if the board does not secure what it considers the most favourable deal with Paramount.
With Warner Bros’ market capitalisation at approximately $69 billion, Ancora’s reported holding represents less than 1 per cent of the company. Nevertheless, the activist’s involvement adds further pressure on the board as it weighs competing proposals.
Additional Financial Backstops And Regulatory Moves
Paramount also introduced measures to address specific concerns raised by Warner’s board. It has committed to backstopping Warner Bros’ proposed debt exchange and to reimbursing up to $1.5 billion that may be owed to bondholders if the transaction fails, without reducing the separate $5.8 billion reverse termination fee linked to Netflix.
The company confirmed that it has complied with the US Department of Justice’s second information request, initiating a 10‑day waiting period, and has secured foreign‑investment clearance in Germany. Discussions with antitrust authorities in the United States, European Union and United Kingdom are ongoing.
Chief Executive David Ellison described the revised proposal as a strengthened offer supported by significant financial backing. He emphasised that the enhancements aim to provide shareholders with clearer value, a more straightforward regulatory pathway and insulation from market volatility.
Paramount has increased the personal guarantee from Oracle co‑founder Larry Ellison to $43.3 billion and expects to finance the deal with $54 billion in debt arranged by Bank of America, Citigroup and Apollo.
The Discovery Global Debate
A major sticking point between the rival bidders revolves around Discovery Global’s financial outlook. Paramount has argued that Netflix’s structure leaves shareholders exposed to uncertainty because the cash they ultimately receive depends on Discovery Global’s performance at the time of its spin‑off.
Paramount estimates that if Discovery Global were structured with leverage similar to Comcast’s spinoff of most NBCUniversal cable networks to Versant, the effective cash consideration under Netflix’s offer could fall to $23.20 per share.
Netflix recently converted its proposal to an all‑cash offer without increasing the $82.7 billion price tag. Warner Bros’ board has maintained that the Netflix deal remains superior, partly because investors would retain a stake in Discovery Global.
What Happens Next?
Paramount has extended the deadline for its tender offer to February 20 in an effort to persuade investors that its bid is the stronger alternative. Warner Bros, however, has repeatedly rejected Paramount’s overtures.
Meanwhile, the US Department of Justice is reportedly examining potential anti‑competitive aspects of the Netflix transaction as part of its regulatory review.
Warner Bros is expected to hold a special investor meeting by April to vote on the Netflix deal.
With billions of dollars, regulatory scrutiny and Hollywood’s crown jewels at stake, the outcome of this corporate showdown could reshape the global entertainment landscape. Whether shareholders prioritise immediate certainty or back Netflix’s streaming‑centric vision will soon determine the next act in this unfolding drama.
