Paramount Raises Warner Bros. Discovery Bid Breakup Fee to $5 Billion

Paramount has raised its proposed breakup fee in its bid to acquire all of Warner Bros. Discovery from $2.1 billion to $5 billion, according to Bloomberg.

The breakup fee would be paid to Warner Bros. in the event that the two companies agree to a deal that is ultimately not consummated. Representatives for Paramount and Warner Bros. Discovery declined to comment.

The move comes as the media giant’s latest bid is an all-cash offer primarily backed by the Ellison family. It also includes contributions from three Middle Eastern sovereign wealth funds, as well as debt financing from Apollo Global Management.

TheWrap previously reported that Paramount was in talks with Saudi Arabia’s Public Investment Fund (PIF), the Qatar Investment Authority (QIA) and the Abu Dhabi Investment Authority (ADIA) about investing in its bid despite the media giant’s previous public denials.

The involvement of foreign investors in the latest bid could require approval from the Committee on Foreign Investment in the United States (CFIUS) if they were to obtain 25% or more voting interest in a U.S. company and a foreign government holds a 49% or greater voting interest in that foreign investor.

The Ellisons are expected to maintain majority ownership in the combined company and foreign investors’ involvement is not expected to reach the level that would trigger a regulatory review, a person familiar with the bid told TheWrap.

Paramount has submitted multiple bids for the entire company, while Netflix and Comcast have submitted bids for Warner’s studio and streaming business, which is on track to split from its linear networks business in April. In addition to the breakup fee, Paramount has previously offered WBD CEO David Zaslav a co-CEO and co-chairman title at the combined company.

The trio submitted a second round of bids on Dec. 1 after WBD asked them to submit improved offers following the first round of non-binding bids last month. It is unclear if the board will ask for a third round of bids or enter exclusive talks with one of the companies as a next step.

Specific financial terms of the bids could not be immediately learned, though Netflix’s latest offer is a majority cash bid. Comcast’s bid would look to merge Warner Bros.’ streaming and studio business with NBCUniversal in a deal that would be a combination of cash and stock. It has also offered Zaslav a management role at the combined company.

In addition to continuing on with its planned split into Warner Bros. and Discovery Global, which is on track for completion in April, the company’s board is also considering separate transactions for the two companies or a deal for the entire combined company. WBD said it would also consider an alternative separation structure that would enable a merger of Warner Bros. and spin-off of Discovery Global to its shareholders.

A final decision is expected to be made by Christmas.

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