Paramount Sweetens WBD Bid with $650M Fee

Paramount revised its 30-per-share Warner Bros Discovery (WBD) takeover offer Tuesday, adding a 25-cent quarterly ticking fee worth 650 million to shareholders if regulatory approval delays extend past year-end 2026.

The enhanced bid signals Paramount’s confidence in securing antitrust clearance while applying pressure on WBD’s board to accept the hostile takeover amid intensifying streaming competition.

Key Takeaways

Paramount adds 650M quarterly ticking fee to WBD bid
Payment begins January 2027 if deal remains unclosed
WBD shareholders have until March 2 to tender shares

Market reaction & context

The revised offer maintains Paramount’s 30-per-share all-cash valuation while sweetening terms through the ticking fee mechanism ¹. David Ellison-led Paramount Skydance has also added termination fee provisions to demonstrate commitment to completing the transaction ⁴.

The media consolidation battle unfolds as streaming giants face mounting content costs and subscriber growth challenges. Warner Bros Discovery’s market position includes HBO Max, CNN, and Discovery Channel assets that would complement Paramount’s CBS and Paramount+ portfolio.

Deal mechanics

The ticking fee structure begins January 1, 2027, paying WBD shareholders 25 cents per share each quarter until deal completion ³. This mechanism addresses potential shareholder concerns about prolonged regulatory review timelines that have delayed other major media mergers.

Paramount has extended its tender offer deadline to March 2, giving WBD investors additional time to evaluate the enhanced proposal ⁶. The company said the ticking fee “underscores Paramount’s confidence in obtaining regulatory approval” for the transaction ².

Regulatory outlook

The deal faces scrutiny from antitrust regulators who have challenged recent media consolidation attempts. Paramount’s willingness to commit 650 million quarterly suggests management expects approval within a reasonable timeframe despite potential Department of Justice review.

Industry analysts view the ticking fee as a strategic move to differentiate Paramount’s offer from potential competing bids while addressing shareholder time-value concerns during the approval process.

Strategic implications

The enhanced bid reflects Paramount’s urgency to scale operations amid intensifying competition from Netflix, Disney+, and Amazon Prime Video. Combining Warner Bros Discovery’s content library with Paramount’s distribution network could create a more formidable streaming competitor.

CEO David Ellison has positioned the merger as essential for competing against tech-backed streaming services with deeper content investment capabilities. The deal would create one of the largest entertainment conglomerates globally if approved.

Not investment advice. For informational purposes only.