Netflix Prepping All-Cash Bid for Warner Bros. Studios and HBO Max Amid Paramount Skydance Pressure: Report

Netflix is readying a revised offer — in all cash — to acquire Warner Bros. Discovery‘s streaming and studios businesses, according to a report by the Wall Street Journal.

Under the terms of Netflix’s original agreement, each Warner Bros. Discovery shareholder would receive $23.25 in cash and $4.50 worth of shares of Netflix common stock for each share of WBD common stock outstanding at the closing of the transaction. With those parameters, that deal has an enterprise value of $82.7 billion.

Now, Netflix is prepared to switch to an all-cash offer, according to the Journal, which cited anonymous sources. Bloomberg News previously reported that Netflix was contemplating such a move.

A Netflix rep declined to comment. A WBD spokesman referred inquiries to Netflix.

Netflix’s reported change-up on the deal terms comes as David Ellison’s Paramount Skydance has continued to press its case to shareholders for why its $30/share all-cash hostile bid is superior to the Netflix pact. On Monday, Paramount filed a lawsuit seeking to compel WBD to disclose financial details of the Netflix deal including how WBD is valuing the proposed Discovery Global cable TV networks spin-off. Paramount also officially declared that it would launch a proxy fight, with plans nominate its own WBD board candidates for election at Warner Bros. Discovery’s annual shareholder meeting who would back the Paramount bid.

Shares of Netflix have dropped more than 12% since the Warner Bros. deal was announced Dec. 5 — falling below the “collar” of $97.91/share in the WBD agreement that would reduce the total value of the acquisition. (In that case, under the terms of the original agreement, WBD shareholders will receive 0.0460 Netflix shares for each WBD share, instead of $4.50 worth of Netflix stock per WBD share.) Netflix’s stock closed at $90.32/share Tuesday, up 1% on the day.

According to Paramount’s Jan. 8 analysis, the total value of the Netflix transaction to WBD shareholders is $27.42/share, given the decline in Netflix’s share price. Paramount Skydance alleges that shares of Discovery Global would be worthless, based on an analysis comparing it with Comcast’s recent Versant spin-off.

Under Netflix’s deal with WBD, the streaming giant would acquire the Warner Bros. film and television studios, HBO and HBO Max, and its games division. Netflix’s original bid included $59 billion in debt financing from Wells Fargo, BNP and HSBC.

Meanwhile, Paramount Skydance is offering to buy Warner Bros. Discovery in its entirety, with the backing of David Ellison’s father, Oracle co-founder Larry Ellison, and other partners including RedBird Capital Partners and the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi.