WBD mails definitive proxy statement to finalise Netflix merger

Ahead of this vote, Netflix has provided WBD with a seven-day waiver of certain obligations under its merger agreement to finalise Paramount Skydance (PSKY) “antics”. Until it ends on February 23, 2026, this waiver will enable WBD and PSKY to discuss the deficiencies that remain unresolved, clarify certain terms of PSKY’s proposed merger agreement, and provide PSKY the ability to make its best and final offer.

This is because, as revealed today in a letter from WBD to PSKY, a senior representative of PSKY’s financial advisor communicated orally to a member of WBD’s board that PSKY would agree to pay $31 per WBD share, but that $31 is not PSKY’s best and final proposal.

Nevertheless, Netflix retains its matching rights as defined by the merger agreement, and the WBD board of directors continues to unanimously recommend that shareholders reject the PSKY offer in favour of the Netflix merger.

Beyond this, WBD's letter specified that PSKY’s latest tender offer for WBD common stock only addressed “some of the concerns that WBD had identified several months ago” and “still contains many of the unfavourable terms and conditions that were… twice unanimously rejected by [WBD’s] board.”

The board also wrote: “We seek your best and final proposal. To be clear, our board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger. We continue to recommend and remain fully committed to our transaction with Netflix and have scheduled a special meeting of our shareholders on 20 March 2026 to vote on the Netflix merger agreement.”

“As you know, it is typical and expected for a would-be overbidder to accept the substantive terms of the merger agreement that the target company has already agreed with its existing merger party… We encourage you to be direct and transparent with your best and final value and other terms in that binding proposal.”

Attached alongside the letter, WBD included a summary of favourable terms missing from PSKY’s formal offer. According to the board, many of these reflect terms proposed by PSKY in its public statements but not reflected in its merger agreement, while others align the draft agreement with the terms of the Netflix merger agreement.

For example, the Netflix merger agreement does not require WBD to bear any refinancing and Junior Lien Notes costs, which will amount to a $1.5bn financing fee to WBD when on December 30, 2026. Additionally, WBD asked for formal assurances that “additional equity will be funded to enable closing to occur” if the transaction is prevented “due to the debt financing being unavailable” – beyond PSKY’s repeated statements on “the personal wealth of [its] lead equity sponsor and the credibility of [its] lending banks”.

“Throughout the entire process, our sole focus has been on maximising value and certainty for WBD shareholders,” said David Zaslav, President and Chief Executive of WBD. “Every step of the way, we have provided PSKY with clear direction on the deficiencies in their offers and opportunities to address them. We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.” 

Samuel A. Di Piazza, Jr., Chair of the WBD board of directors, added, “As announced today, we continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides, our clear path to achieve regulatory approval, and the transaction’s protections for shareholders against downside risk. With Netflix, we will create a brighter future for the entertainment industry – providing consumers with more choice, creating and protecting jobs, and expanding US production capacity while increasing investments to drive the long-term growth of our industry.”

Likewise, Netflix has issued a statement on its agreement to acquire Warner Bros., including its film and television studios, HBO Max, and HBO:  

“Throughout the robust and highly competitive strategic review process, Netflix has consistently taken a constructive, responsive approach with WBD, in stark contrast to PSKY. While we are confident that our transaction provides superior value and certainty, we recognise the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics.”

The streamer also drew comparisons between the two offers’ likelihood of gaining regulatory approval, as Netflix and WBD have both reportedly submitted their Hart-Scott-Rodino (HSR) filings and are engaged with competition authorities across the world, including the US Department of Justice (DOJ), state Attorneys General, the European Commission, and the UK Competition and Markets Authority (CMA).

Netflix’s statement continued: “By contrast, PSKY has repeatedly mischaracterised the regulatory review process by suggesting its proposal will sail through, misleading WBD stockholders about the real risk of their regulatory challenges around the world. WBD stockholders should not be misled into thinking that PSKY has an easier or faster path to regulatory approval – it does not.

“PSKY is also quick to publicise routine checkpoints to exaggerate ‘progress.’ For example, PSKY cited securing German FDI clearance on 27 January 2026, as evidence of their ‘regulatory certainty.’ In fact, Netflix received German FDI clearance on the very same day.  

“Separately, the foreign funding behind PSKY’s bid is already raising serious national security concerns. We expect government reviewers globally, including the Committee on Foreign Investment in the United States (CFIUS) and Team Telecom in the US, as well as European authorities, to scrutinise the Middle Eastern investors in PSKY’s consortium and to be sceptical of claims that they are purely passive investors. 

“In reality, PSKY is far from obtaining all of the regulatory clearances required. Enforcers will focus on the impact of PSKY’s proposal on competition, job losses, reduced output, and downward pressure on wages for film and television workers. PSKY’s offer results in significant horizontal overlaps that will concern antitrust enforcers globally by combining: two of the five major Hollywood studios; two major theatrical distribution channels; two of the major TV studios; two major news networks; and two major sports distributors.”

Netflix rounded out its statement by highlighting PSKY’s history of job cuts and even called on WBD stockholders to vote on a dedicated website. It concluded: “PSKY has promised to rapidly de-lever following its proposed transaction, which can only be achieved through unprecedented job cuts (on top of the previous PSKY layoffs). A business plan that is dependent upon $16bn in cost savings should be an unmistakable red flag for regulators, policymakers, union leaders, and creatives.”

David Ellison, Chairman and CEO of Paramount Skydance, recently wrote an open letter to the UK creative community setting out a series of commitments should Paramount succeed in acquiring WBD. Discover more here.