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- Warner Bros. Discovery's board said it thinks Paramount's latest offer is better than Netflix's.
- Paramount raised its bid to $31 per share for all of WBD on Tuesday morning.
- Netflix must decide whether it's willing to offer more for the Warner Bros. studio and HBO assets.
Paramount Skydance may finally have the upper hand on Netflix in the bidding war for Warner Bros. Discovery.
The WBD board announced on Thursday afternoon that it believes Paramount's offer to buy the entire company for $31 per share is better than Netflix's proposal to buy its streaming and studio assets for $27.75 per share. Both offers are all cash.
Paramount's bid also includes a so-called "ticking fee," which will pay WBD shareholders $0.25 per share, or about $650 million, for every quarter that its deal doesn't get regulatory approval, starting on September 30.
Netflix now has four business days to raise its bid, if it chooses. It could also decide to walk away and collect a $2.8 billion breakup fee from WBD, which Paramount has said it will cover.
"While Netflix has the opportunity to increase its bid and reclaim WBD, the bigger question is if it's in Netflix's interest to continue pursuit," said Ross Benes, a senior analyst at EMARKETER, Business Insider's sister company. "Netflix and Paramount stocks have taken a hit since this bidding war started. Investors will not be keen on increasing bids further."
If Netflix doesn't improve its offer, WBD's board will formally change its recommendation and kill its Netflix deal. WBD shareholders will vote on March 20 to approve the transaction with the highest bidder.
Paramount and Netflix have each been on a mission to convince Hollywood, consumers, and government officials that they'd be the better buyer of Warner Bros.
David Ellison's Paramount is willing to pay WBD a $7 billion breakup fee if its deal is blocked by regulators, a sign of his confidence in winning over the US Department of Justice under President Donald Trump. Ellison would also need regulatory approval in Europe and could face challenges at the state level in the US.
Paramount has warned that Netflix would become an overpowering juggernaut if it bought HBO and the Warner Bros. studio. Netflix has argued that it competes with YouTube and traditional TV, not just paid streamers.
Netflix co-CEO Ted Sarandos has been on a charm offensive, telling politicians, the creative community, and the public that Netflix would create jobs if it bought Warner Bros. Sarandos visited the White House on Thursday, Politico reported.
Paramount has promised investors $6 billion in savings if it wins the bidding war. WBD's board, as recently as last week, expressed concern could lead to an employee exodus if Paramount won control of the company.
This story is developing and will be updated.
