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After weeks of back and forth, the battle for control of the media company Warner Bros. Discovery may be tilting toward Paramount.
Warner Bros. directors are leaning towards opening negotiations with the Ellison-backed company, according to people familiar with the matter.
That would open the door for Paramount to further improve its bid, should Warners’ board meet and formally designate Paramount’s bid “potentially superior” to the rival Netflix offer. The news that Warner is considering opening discussions with David Ellison’s company was first reported by Bloomberg.
Warner Bros. board will likely hold further meetings to formally decide whether to open talks with Paramount, another person said.
Shareholders have been putting significant pressure on Warner to open talks — prompted in part by a public display of dissatisfaction from Pentwater Capital, a big owner. Activist investor Ancora has also amassed a position in Warner Bros., pushing the company to open discussions as well.
A spokesperson for Warner Bros. declined to comment. Representatives for Paramount and Netflix didn’t immediately return requests for comment.
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Warner Bros. refusal so far to engage with Paramount has outraged some shareholders — who see it as a lost opportunity to extract more money from Netflix or Paramount — and Paramount executives, who have privately said they believe the sale process has been influenced against them by Warner Bros. CEO David Zaslav or chairman emeritus John Malone.
Netflix would likely respond with a matching offer of its own, should Paramount submit a bid that is improved enough for Warner Bros. to switch horses.
But Warner Bros. also finds itself in a tricky position: Netflix previously threatened to pull out of bidding if they weren’t promised exclusivity, a threat which galvanized Warners’ board enough to sign a deal with them. The company has a fiduciary obligation to maximize value for shareholders, but it also cannot risk Netflix walking away.
Regulatory concerns for Netflix also loom large. The European Commission is skeptical of consolidation. And Donald Trump’s US antitrust enforcers have already signaled they will be giving the current Netflix-Warner Bros. tie up intense scrutiny, according to people familiar with the matter.