Netflix revises Warner Bros Discovery takeover to all-cash deal, WBD board approves

Netflix on Tuesday sweetened its bid for major parts of Warner Bros. Discovery, shifting to an all-cash offer in a move that sharpens its battle with rival suitor Paramount and accelerates the path toward a shareholder vote.

The Warner Bros. Discovery board has approved Netflix’s revised proposal, which raises the cash component offered to shareholders while maintaining the overall deal value at about $72 billion.

Terms of Netflix’s revised bid

Under the revised terms, Netflix will pay $27.75 per share in cash, replacing its earlier offer of $23.25 in cash and $4.50 in Netflix common stock per share.

While the structure has changed, the headline value of the transaction remains roughly $72 billion.

Netflix executives said the move was aimed at simplifying the deal and offering greater certainty to Warner shareholders.

Netflix’s modified offer would provide “greater financial certainty” for shareholders, added Ted Sarandos, the co-chief executive of Netflix.

Greg Peters, Netflix’s other co-CEO, said the revised agreement demonstrates the streamer’s commitment to the transaction and should help accelerate the process for Warner shareholders weighing competing offers.

“Today’s revised merger agreement brings us even closer to combining two of the greatest storytelling companies in the world,” David Zaslav, the chief executive of Warner Bros. Discovery, said in a statement.

Warner Bros. Discovery disclosed the changes in a preliminary proxy statement filed with the Securities and Exchange Commission, which will now review the document.

Warner said it expects the revised structure to allow shareholders to vote on the deal by April, a timeline that could prove critical as Paramount continues to apply pressure.

The simplified cash-only offer may appeal to investors who had concerns about the volatility of Netflix’s share price and the complexity of the earlier stock component.

Paramount keeps up the pressure

Netflix’s move comes as Paramount, led by chief executive David Ellison, continues to pursue Warner with a rival all-cash proposal.

Paramount has offered about $108 billion for the entire Warner Bros. Discovery group, or roughly $30 a share, and has made clear it is prepared to take its case directly to shareholders.

Earlier this month, Paramount said it planned to launch a proxy fight for seats on the Warner board.

Last week, it also filed a lawsuit seeking to force Warner to release more detailed information about its deal with Netflix, though a judge declined to expedite the case.

The legal skirmishes and rival bids have turned the contest into one of the most closely watched corporate battles in the global media industry.

Valuing the cable business

A key difference between the two offers lies in how they treat Warner’s traditional television assets.

Under Netflix’s proposal, Warner will carve out its cable networks, including CNN, TNT, and Food Network, into a separate publicly traded company.

Warner argues this structure allows shareholders to retain exposure to potential upside in the cable business, an argument Paramount has rejected.

Paramount has said it believes the carved-out business has little to no value.

In its latest filing on Tuesday, Warner also detailed how it values the cable unit, with estimates ranging from $1.33 to $6.86 a share.

That implied value would be added to Netflix’s $27.75-per-share cash offer for the rest of the company, a calculation Warner hopes will help investors compare the competing bids.

Financial outlook for networks

Warner also disclosed financial projections for its global networks business over the next five years.

The company expects the unit to generate about $17 billion in revenue and $5.4 billion in adjusted Ebitda in 2026.

By 2030, those figures are projected to decline to $15.6 billion and $3.8 billion, reflecting ongoing pressure on traditional television.

CNN was the only network for which Warner provided detailed forecasts.

The news channel is expected to generate $1.8 billion in revenue this year, rising to $2.2 billion by 2030, with adjusted Ebitda of about $600 million, roughly flat over the period.

Debt and structural changes

Warner said it is also making changes to the balance sheet of the cable business it plans to spin off.

Under the revised Netflix agreement, the amount of debt allocated to Discovery Global, the entity that will house the cable networks, will be reduced by $260 million.

The company said the reduction reflects better-than-expected cash flow performance last year and is intended to ease concerns that a heavy debt load could deter investors from backing the spun-off business.

Market reaction and next steps

The revised deal removes a so-called collar that had been designed to protect Warner shareholders from large swings in Netflix’s share price between signing and closing.

Netflix shares have been trading below the lower end of that range since the deal was announced in December and fell further after Paramount revealed its hostile bid.

Netflix shares have declined about 15% since the original announcement, though they rose after reports emerged that the company was considering an all-cash offer.

With regulators now reviewing the revised agreement and Paramount showing no sign of backing down, the coming months are likely to determine whether Netflix’s cash-rich approach is enough to secure Warner Bros. Discovery — or whether the battle for one of Hollywood’s most storied media groups will escalate further.

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