Bidding War Intensifies for Control of Warner Bros. Discovery

The board of Warner Bros. Discovery (A) is facing mounting pressure as a hostile takeover attempt gains significant momentum. Paramount Skydance, which merged in August 2025, has substantially improved its all-cash bid for the media giant, directly challenging an existing merger agreement with Netflix.

In a move to sway shareholders, Paramount Skydance unveiled an enhanced offer on Tuesday, February 10. The core cash price remains $30.00 per share. However, the bidder has now incorporated a "ticking fee" mechanism. This provision guarantees shareholders an additional $0.25 per share for each quarter the transaction remains incomplete beyond December 31, 2026. Paramount Skydance estimates this fee represents approximately $650 million in value per quarter, intended to compensate for potential regulatory delays.

Furthermore, the company has committed to covering the full $2.8 billion breakup fee that Warner Bros. Discovery would owe Netflix for terminating their current arrangement. Paramount Skydance asserts that financing for the offer is fully secured, with backing from the Ellison family and RedBird Capital Partners, alongside committed debt financing from major banks.

Strategic Pressure on the Netflix Agreement

This revised proposal is positioned as a superior alternative to the planned Netflix merger. Paramount Skydance contends that the value of the Netflix transaction falls between $21.23 and $27.75 per share, a range dependent on the leverage ratio at the time of separation. In contrast, the firm $30.00 cash offer is presented as providing certainty and a premium of roughly 12 percent.

Should investors sell immediately? Or is it worth buying Warner Bros. Discovery (A)?

To bolster confidence in a swift regulatory approval, Paramount Skydance also stated it has already satisfied the U.S. Department of Justice's information requests and has obtained clearances from foreign investment authorities, including those in Germany.

Board Review Underway, But Current Stance Holds

The Warner Bros. Discovery board confirmed receipt of the revised Paramount Skydance offer and announced it will undertake a careful review with its financial advisors, which include Allen & Company, J.P. Morgan, and Evercore. Despite the escalated bid, the board has not withdrawn its recommendation for the Netflix merger agreement at this time. Shareholders have been advised to take no immediate action while the evaluation is conducted.

This escalating contest underscores the rapid pace of consolidation within the media and entertainment sector. The battle for one of the largest remaining U.S. media conglomerates is now in a critical phase, with the board's upcoming decision likely to set a precedent for the entire industry.