Warner Bros Discovery, board considers reopening the door to Paramount Skydance

Warner Bros Discovery is reportedly considering reopening talks with Paramount Skydance, rekindling a game that seemed to be on the way to conclusion with the deal already signed with Netflix. In fact, the board of directors would be discussing whether the updated terms presented by the Los Gatos giant's rival group could provide a basis for a more advantageous deal or, alternatively, trigger a new competitive relaunch by the streaming giant.

The existence of this scenario is reported by Bloomberg, which reports of a discussion within the board of Warner Bros. Discovery on the possibility of resuming negotiations with the company led by David Ellison.

The Netflix deal remains the linchpin of the strategy at the moment: Warner Bros. Discovery has agreed to divest its film studio and streaming business HBO Max at $27.75 per share - in a deal that over time became all cash - and is accelerating to bring the proposal to a shareholder vote. However, Paramount's latest move has introduced new elements of valuation.

The group has in fact presented an updated version of the offer in recent days, intervening on some of the main knots that had previously held up the talks. In particular, Paramount expressed its willingness to cover the $2.8 billion penalty due to Netflix in the event of withdrawal from the deal and to support a refinancing operation of Warner's debt. In addition, it proposed a compensation mechanism in favour of shareholders should the deal not be completed by 31 December, signalling confidence in the timing of the eventual regulatory green light.

According to sources close to the dossier, the board has not yet made any formal decision, and some concerns expressed in the past about the overall structure of the offer remain. However, for the first time, the board is reportedly considering the possibility that Paramount's proposal could lead to better economic conditions or push Netflix to revise its position upwards. Moreover, the pressure from some investors, from Pentwater Capital Management to Ancora Holdings Group, who have openly asked not to liquidate Paramount without even talking to it, has become increasingly evident. At the moment, however, take-up of the $30 per share public offering launched by the rival group remains limited: 42.3 million shares have been contributed, less than 2% of the total outstanding.