The media industry is currently witnessing a high-stakes acquisition battle for Warner Bros. Discovery (WBD), involving two major players: Netflix and Paramount Skydance. The situation intensified as Paramount Skydance made an unsolicited offer, challenging Netflix's existing $83 billion sale agreement with WBD from December.

Paramount Skydance, led by David Ellison, initially proposed an all-cash offer of $30 per share for WBD. However, a senior representative from Paramount later communicated a willingness to increase the offer to $31 per share if the WBD board authorized formal M&A talks. Paramount further sweetened its bid by including a "ticking fee" of 25 cents per share, payable quarterly to WBD shareholders after December 31, 2026, if a merger hasn't closed by then. Paramount has consistently asserted that its offer is superior to Netflix's deal, promising a more expeditious and certain path to closing the transaction. The company also intends to advance its tender offer, solicit opposition to the Netflix merger, and nominate a slate of directors for WBD's upcoming annual meeting.

Warner Bros. Discovery's board finds itself in a complex position. While it opened a seven-day negotiating window with Paramount to "seek clarity" on its "best and final offer," specifically expecting a price higher than $31 per share, the board simultaneously maintained its unanimous recommendation for the Netflix merger. WBD's CEO David Zaslav and board chairman Samuel Di Piazza Jr. directly requested Paramount to clarify its proposal, implying an expectation of a raised bid.

Netflix CEO Ted Sarandos openly expressed his frustration regarding Paramount Skydance's aggressive tactics, accusing the company of "flooding the zone with misinformation" and creating "wild" scenarios designed to destabilize the Netflix transaction. Despite the ongoing uncertainty, Sarandos reiterated his confidence that Netflix would successfully complete the deal and dismissed any concerns about federal government intervention to block it. He emphasized Netflix's intention to maximize cash for WBD shareholders.

Sarandos also directly countered Paramount's assertions about having an easier regulatory path. He stated unequivocally that Paramount Skydance "does not have a faster regulatory path" and questioned why the Ellisons would insinuate an "inside track" with the Department of Justice. Furthermore, he highlighted Netflix's global standing as a "known and trusted entity" with regulators in Europe and worldwide. Sarandos explained that Netflix's deal, by not acquiring Discovery Global, would not disrupt the European broadcast system, simplifying regulatory approval.

In an effort to provide "complete clarity and certainty" to WBD shareholders, Netflix granted the seven-day waiver, allowing WBD to engage in discussions with Paramount despite the signed acquisition agreement. Sarandos affirmed that Netflix believes its deal offers the best value for WBD shareholders, a belief he claims is shared by the WBD board, which continues to recommend the Netflix offer. A special shareholder meeting is scheduled for March 20 for investors to vote on the Netflix deal, with WBD's proxy materials stating the merger consideration range from $21.23 to $27.75 per share.

Paramount, observing WBD's actions, noted that the WBD board chose to "avoid making the customary determination" under the Netflix merger agreement that Paramount's $30 per share all-cash offer "could reasonably be expected to result in" a superior proposal. Such a determination would have granted WBD an unfettered right to negotiate without a deadline, suggesting Paramount views WBD's current approach as cautious and still leaning towards Netflix.