Paramount Offers To Pay $2.8 Netflix Termination Fee, Pay Shareholders Fee

Paramount has intensified its bid to acquire Warner Bros. Discovery, adding incentives for shareholders and committing to cover financial obligations related to competing offers. The move comes as Paramount wages a “hostile bid” following Warner Bros. Discovery’s acceptance of a $72 billion offer from Netflix.

Paramount Sweetens the Deal

On Tuesday, Paramount announced it would continue to offer $30 per share for Warner Bros. Discovery. A “ticking fee” of $0.25 per share will be paid to WBD shareholders for each quarter the transaction remains unclosed after December 31, 2026. Paramount also pledged to cover a $2.8 billion termination fee owed to Netflix should Warner Bros. Discovery reject Netflix’s bid.

Did You Know? Paramount has secured $43.6 billion in equity commitments from the Ellison Family and RedBird Capital Partners, and $54.0 billion in debt commitments from Bank of America, Citigroup and Apollo.

Financial Commitments and Regulatory Progress

Paramount also stated it would “offer solutions” for Warner Bros. Discovery’s financing costs and obligations, including covering $1.5 billion in fees associated with debt refinancing. The company confirmed it has complied with the Department of Justice’s information request regarding its tender offer, initiating a 10-day waiting period for regulatory response.

Despite Paramount’s revised offer, the Warner Bros. Discovery board has not changed its recommendation that shareholders approve the Netflix deal. Netflix’s offer is an all-cash deal valued at $72 billion, or $27.75 per share.

Expert Insight: Paramount’s willingness to cover termination fees and offer financial solutions demonstrates a strong commitment to completing this acquisition, even amidst regulatory scrutiny and a competing bid. The “ticking fee” is a strategic move to incentivize Warner Bros. Discovery shareholders to favor their offer, providing additional value as the process unfolds.

Paramount’s offer is backed by a personal guarantee from Larry Ellison, father of Paramount CEO David Ellison, for $43.3 billion as of December. The company has extended the expiration date of its tender offer to February 20.

Frequently Asked Questions

What is a “ticking fee”?

A “ticking fee” is a per-share payment that Paramount will make to Warner Bros. Discovery shareholders for each quarter the deal remains unclosed after December 31, 2026. It is currently valued at $0.25 per share per quarter.

What is the current status of the regulatory review?

Paramount has complied with the Department of Justice’s information request related to its tender offer, which initiates a 10-day waiting period for a regulatory response.

What does Warner Bros. Discovery’s board currently recommend?

The Warner Bros. Discovery board is currently recommending that shareholders approve the Netflix deal.

How will the outcome of this bidding war shape the future of the media landscape?