Instant View: Paramount adds sweeteners to Warner Bros bid

Feb 10 (Reuters) – Paramount Skydance has enhanced its Warner Bros Discovery bid by offering extra cash for each quarter the deal fails to close beyond this year and agreeing to cover the breakup fee the HBO owner would owe Netflix if it walked away.

Here’s what analysts and market experts are saying about the latest development:

SETH SHAFER, PRINCIPAL ANALYST AT S&P GLOBAL, NASHVILLE, TENNESSEE

“I don’t believe that the latest tweak by Paramount Skydance to its offer substantially changes the situation. WBD shareholders will likely only be swayed by a significant increase in the current $30/share offer from Paramount. Paramount’s latest offer attempts to address regulatory concerns about successfully closing a deal but both bids from Netflix and Paramount Skydance could face lengthy, contentious regulatory reviews in the U.S. and internationally with no guarantee of a successful outcome.”

JONATHAN KEES, SENIOR RESEARCH ANALYST, DAIWA CAPITAL MARKETS, NEW YORK

“It certainly makes the offer sweeter and more likely. The updated offer addresses two big concerns/wants: one from WBD shareholders regarding the length of time needed to secure regulatory approval for a purchase and two from WBD management’s demand for PSKY to pay for the breakup fee with NFLX. The actual offer per share price remains the same. PSKY’s updated offer is strategic and smart.

“It will be harder for WBD management to justify NFLX’s bid which is less per share and risks regulatory delays or denial. I believe WBD management will have to review and provide strong justification for continuing with NFLX.”

PAOLO PESCATORE, ANALYST, PP FORESIGHT, LONDON

“The sweetened revised offer still appears to fall short. It does, however, raise pressure on WBD and somewhat narrows the excuses. Ultimately, to date, Netflix remains in pole position as the better home for Warner Bros. Discovery’s streaming and studio business, and it offers greater assurances for Hollywood, the creative industries, and a path of least resistance to regulatory approval.”

ROSS BENES, SENIOR ANALYST AT EMARKETER, NEW YORK

“The sweetened deal is unlikely to sway WBD away from Netflix and toward Paramount. Paramount is throwing spaghetti at the wall and hoping something sticks. Its variety of tactics have not included the one most likely to sway WBD and its investors – – raising the price of its bid. Unless Paramount raises its bid price, WBD will continue to favor Netflix. Outside of raising its price, Paramount’s best chance at stealing WBD is from outside regulators blocking Netflix.”

(Reporting by Kritika Lamba and Harshita Mary Varghese, Arpan Varghese in Bengaluru; Editing by Maju Samuel)