00:00Paramount is trying to sweeten its Warner Brothers bid. The media giant saying it will cover a $2.8 billion termination fee that Warner Bros. would pay Netflix if it terminates an already agreed upon deal. Bloomberg's Lucas Shaw, who leads the screen time team, is with us. This was interesting, right? So the headlines here and it's a sweetener, an improvement on their deal. But actually the specifics are very interesting. They're not just they're not boosting the offer price.
00:28Go into detail. Explain how we unpick this. Yeah. So they are addressing and they being Paramount two of the concerns that Warner Brothers has had about their deal. One is this question of the breakup. The right. So Warner Brothers has been had been debating between two main offers between Netflix and Paramount. They picked Netflix. But if they walk away from Netflix to, you know, we can reengage with Paramount. They have to pay Netflix a bunch of money. Paramount had is now offering to cover that.
00:57And Warner Brothers had been very worried about it because they said that one of the reasons that the deals weren't equivalent was Paramount wasn't kind of covering Warner Brothers downside on that, which would have come out of the money that they get.
01:08The other the other the other thing here is Warner Brothers have been really concerned about their ability to refinance their debt going forward. Paramount has now or David Ellison, both first in swallowing Paramount and now trying to swallow Warner Brothers has a history of trying to impose really onerous covenants on what the company he's acquiring can do, which would have limited Warner Brothers in that respect.
01:28And now Paramount is saying basically we'll cover you on whatever costs are related to that debt financing. To your point, they still haven't actually raised the thirty dollars a share offer.
01:38This does increase the total net value of the bid. And so we're waiting to see what what the Warner Brothers board has to say about it.
01:45What credence do investors give at the moment, Lucas, to that this would pass through regulators more easily?
01:50This whole ticking fee, the idea that if it goes past the quarter expected, they get a chunk of change in return if it's delayed. I mean, that really just speaks to the bravado here.
02:01Yeah, well, Paramount has been adamant all along that it stands a better chance of getting its deal approved, which on its face makes some sense.
02:09Netflix is a much larger company, a more powerful company. It's the number one player in streaming.
02:13Netflix, of course, has countered that, you know, they're very confident in getting their deal approved and raised issues with with Paramount's offer, because Paramount plus Warner Brothers Discovery combined would account for technically a larger share of television viewing than Netflix would under the deal.
02:29But both sides are trying to plead their case. Paramount obviously is sort of coming from behind here.
02:34And what they are trying to do is inject enough doubt in the minds of shareholders that they will not vote for the Netflix deal next month.
02:41Lucas, both sides are trying to plead their case. There's been a lot of recent reporting from us on what's also happening kind of in the background.
02:48There's obviously been an interest from Washington, D.C. What else do we need to know about how this is going from a regulatory perspective or at least interest from from government as well?
02:59I don't know. Right. We've we've had Paramount shareholders or we've had kind of Paramount and David Ellison lobbying people in D.C. and Europe.
03:12We've had Netflix going ahead of the Senate last week. President Trump had said he'll be involved.
03:18Then he said he's not involved. What we do know just as a as a basic set of facts is that the DOJ is looking into both cases and has yet to say whether or not it's going to change.
03:29either of them. In terms of timing, is there anything pressuring? Is there any date, any number, any any time frame that we look to for the next?
03:41Yeah, the next big one is the is the shareholder vote. Really, we're expecting Warner Brothers to arrange a vote of its shareholders sometime probably in mid to late March, kind of at the latest early April.
03:52That's something of a deadline for Paramount because they need to convince a bunch of shareholders before then to to change their mind.
03:59Otherwise, then they're really up to the whims of regulators, because if it gets to shareholders and shareholders do approve that Netflix deal, there's not much Paramount can do besides hope that the government in the U.S.
04:10or Europe blocks the deal.
04:12Remains we go. Sure. We appreciate you on the story.
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