Warner Bros. Discovery Gives Paramount (Yet) Another Chance

Anderson Cooper is leaving 60 Minutes but could be back at CBS before long. 

On Tuesday, CNN parent Warner Bros. Discovery confirmed that it is reopening negotiations on a potential sale to Paramount, putting its tie-up with Netflix on hiatus for at least seven days ending February 23 as it awaits Paramount’s “best and final offer.” 

Paramount Plus What?

In a statement Tuesday, WBD’s board said it still unanimously recommends Netflix’s offer over Paramount’s. Inside the house, pressure is rising somewhat. Last week, activist investor Ancora announced it had acquired a $200 million stake in the roughly $69 billion company, while saying it would vote against the Netflix deal if WBD’s board doesn’t take another look at Paramount’s latest offer. 

According to Ancora, Netflix’s offer leaves WBD shareholders to grapple with two major unknowns:

• The first is the value of WBD’s cable properties, such as TNT and CNN, which would not be included in the Netflix deal but would be part of a sale to Paramount; in the event of a Netflix deal, the cable properties would likely be bundled up and spun off. Last month, Comcast completed the spinoff of its own cable companies into Versant Media Group, whose shares have already tumbled approximately 35%.
• The second unknown is whether antitrust regulators will even allow Netflix to complete its acquisition. In the same week earlier this month that Netflix co-CEO Ted Sarandos got grilled by a Senate panel, Paramount CEO David Ellison reportedly had a one-on-one meeting at the White House with President Trump.

House of Cards: WBD’s board apparently took Ancora’s recommendation to heart. On Tuesday, the board said that Paramount had floated raising its $ 30-per-share all-cash bid to $31. That’s after Paramount last week said it would cover the $2.8 billion termination fee WBD would owe Netflix if it walked away now, and that it would throw in a “ticking fee” worth roughly $650 million per quarter in which the deal goes unclosed — a sort of bet against significant regulatory roadblocks. Netflix, meanwhile, retains the ability to match any Paramount offer moving forward, while WBD may not have shareholders vote on either bid until April. Which means that Paramount’s next “final” bid could be about as final as the file on your computer titled “Final_FINAL_submission_Part_2_withnotes_v4_USETHISONE(6).PDF”.