Netflix in exclusive talks for Warner Bros Discovery studio, streaming assets, source says

By Milana Vinn

Dec 4 (Reuters) – Netflix is in exclusive talks to buy Warner Bros Discovery’s film and television studios along with its streaming assets, in a deal valued at $28 per share that could reshape the media landscape, a source told Reuters on Thursday.

The streaming giant’s proposed acquisition of Warner Bros Discovery’s studios and streaming unit is expected to reduce streaming costs for consumers by bundling Netflix and HBO Max.

Netflix has emerged as the top bidder for Warner Bros Discovery assets, Reuters reported earlier in the day.

Bloomberg News reported that Netflix has offered a $5 billion breakup fee if regulators block the deal. The report added that the companies could announce the agreement within days.

CNBC said earlier that Netflix had presented a proposal consisting of 85% cash for the assets it seeks to acquire.

Netflix and Warner Bros Discovery did not immediately respond when contacted by Reuters for comment on the CNBC and Bloomberg reports.

The news of a potential deal has prompted a consortium of leading film industry figures to urge the U.S. Congress to intervene if Netflix’s bid succeeds, warning of looming economic and institutional crisis in Hollywood, Variety reported. 

Warner Bros Discovery is seeking another round of bids from suitors by the end of Thursday, according to the Wall Street Journal, after Paramount Skydance reportedly accused Warner Bros Discovery of running an unfair sale process that favors Netflix over other bidders.

Warner Bros Discovery reportedly received sweetened offers from potential bidders — Paramount, Comcast and Netflix — earlier this week after it asked them to improve on initial bids submitted in late November. 

In the letter to Warner Bros Discovery CEO David Zaslav, Paramount’s legal team has raised concerns over the “fairness and adequacy” of the bidding process, citing media reports that indicate Warner Bros Discovery’s management favors Netflix’s proposal, according to a copy of the letter seen by Reuters. 

David Ellison-led Paramount Skydance has requested confirmation on whether Warner Bros Discovery has formed an independent special committee of unbiased board members to evaluate offers and oversee the sale process, according to the letter.

“We strongly urge you to empower such a special committee comprised of directors with no potential appearance of bias or beholdenness to others whose interests may differ from those of the stockholders,” Paramount’s legal team said in the letter.

Paramount and Comcast did not immediately respond to Reuters’ requests for comment.  

Paramount has sought to purchase the entire company. In October, the Warner Bros Discovery board had turned down a roughly $60 billion bid from Paramount and subsequently launched a formal sales process.

(Reporting by Milana Vinn in New York, Harshita Mary Varghese and Arasu Kannagi Basil in Bengaluru, Juby Babu in Mexico City, and Dawn Chmielewski, additional reporting by Gursimran Kaur; Editing by Leroy Leo, Maju Samuel and Mrigank Dhaniwala)