Paramount Enhances Offer for Warner Bros. Discovery in the ongoing battle for control

The hostile takeover offer that Paramount Skydance Corporation has made against Warner Bros. has been "enhanced." Discovery (WBD) in a renewed attempt to woo shareholders and compete with Netflix’s rival acquisition offer — yet it stopped short of raising the core price per share. The move is indicative of an intensifying competition for one of Hollywood's most coveted media conglomerates, but it is still unknown whether these "sweeteners" will be sufficient to sway investors or torpedo the current Netflix agreement. In contrast to its initial hostile proposal, Paramount's most recent offer maintains its cash offer of $30 per share, but it adds a number of significant new incentives to make the offer more appealing. These include agreements to "cover the $2.8 billion termination fee Warner would owe Netflix if it exits that deal" and to backstop substantial debt financing costs, as well as a "ticking fee" of $0.25 per share (roughly $650 million in total per quarter) for any delay in closing after December 31, 2026.

Despite Paramount's refusal to raise the headline price per share, the enhanced offer includes a number of financial guarantees:

Ticking Fee: Paramount will pay an additional $0.25 per share for each quarter that passes without the merger being completed by December 31, 2026. This shows that it is confident that its deal can close sooner than Netflix's.

Coverage for Termination Fees: If Warner Bros. Discovery terminates its agreement with Netflix in favor of Paramount’s offer, Paramount will pay the full $2.8 billion termination fee owed to Netflix.

Debt and Financing Support: Paramount has pledged to take on potential debt exchange costs — estimated at $1.5 billion — and ensure Bridge Loan refinancing if needed, reducing financial risk for Warner shareholders.

These enhancements, backed by $43.6 billion in equity commitments and $54 billion in debt financing, along with personal guarantees from Paramount’s controlling Ellison family and partners, are designed to address some earlier concerns about deal certainty and regulatory risk.

Warner Bros., despite Paramount's efforts, Discovery’s board has repeatedly rejected Paramount’s offers as inferior — most recently reaffirming that its recommended merger agreement with Netflix represents superior value and certainty for shareholders. In a December proxy statement, the board emphasized that Paramount’s bid did not meet the criteria of a “Superior Proposal,” citing financing risk and potential additional costs to shareholders if the transaction failed to close.

The Netflix deal — originally agreed in December 2025 — offers WBD shareholders a mix of cash and equity and involves the separation of Warner’s cable assets into a standalone company. The board of Warner contends that this strategy avoids the significant leverage and financing risk associated with Paramount's proposal and increases long-term value.

Nevertheless, Paramount’s revised offer has sparked reactions in the market: WBD stock rallied modestly after the enhancement was announced, reflecting investor interest in the added cash incentives and reduced risk profile.

The method by which Paramount acquired Warner Bros. Discovery has been aggressive from the start. It made its "hostile tender offer" in December 2025, just a few days after Netflix and WBD agreed to merge. The strategy of Paramount is based on directly convincing shareholders that its all-cash offer is superior to the more complicated Netflix transaction and that Netflix's deal could be delayed or stalled by regulatory obstacles. The "certainty of cash" — avoiding equity exposure or future value uncertainty — and the anticipated expedited regulatory path are highlighted in Paramount's pitch. Netflix's offer, on the other hand, includes stock components and is subject to a lot of regulatory scrutiny, especially given its dominance in streaming. Paramount executives argue this could present antitrust challenges not faced by their cash bid.

Investor response has been mixed. Some shareholders and analysts view Paramount’s sweetened incentives as a credible attempt to narrow the value and certainty gap with Netflix’s offer. Others remain skeptical because the core per-share price remains unchanged, and the ticking fee and financing assurances may not outweigh Netflix’s established merger agreement and board endorsement.

WBD's institutional investors had previously stated that Paramount's offer lacked compelling value. However, some of them also noted that deal terms could be improved, which could make the bid more appealing if Paramount offered more direct incentives or price adjustments. Additionally, Paramount has been overcoming regulatory obstacles, such as antitrust review procedures. It has secured clearance for its tender offer from Germany’s foreign investment authorities and reported compliance with key U.S. Requests from the Department of Justice point to progress on the regulatory front.

However, the tender offer has been extended, giving Paramount until February 20, 2026 to convince shareholders. Warner Bros. by April 2026, Discovery is expected to hold a "special shareholder vote" to approve the Netflix merger, giving Paramount a small window of opportunity to gain additional support. Not only is the ownership of one of Hollywood's most storied media companies at stake, but there are also larger ramifications for "M&A dynamics in the entertainment industry." A Paramount victory — in a hostile takeover of this scale — would mark a rare and bold corporate maneuver, potentially reshaping how bidders compete in complex media mergers.

For now, the contest remains alive, with Paramount’s enhancements raising the stakes but not yet altering the fundamental valuation stand-off with the Netflix deal.