Paramount’s New Bid ‘Not Sufficient,’ Warner’s Fifth-Largest Shareholder Says

Paramount Skydance amended its offer for Warner Bros. Discovery on Monday. (Mario Tama/Getty Images)

Key Points

• Harris Associates, a Warner Bros. Discovery shareholder, stated Paramount’s amended bid is “not sufficient” to secure their backing.
• Paramount’s revised offer includes a $40.4 billion equity financing guarantee from Larry Ellison and a $5.8 billion regulatory breakup fee.
• Netflix’s earlier bid for Warner’s streaming and studio assets was a $27.75 per share cash and stock deal.

Paramount Skydance needs to offer more than just Larry Ellison’s personal guarantees to beat Netflix in the bidding war for Warner Bros. Discovery, Warner’s fifth-largest shareholder told Barron’s.

Harris Associates portfolio manager Alex Fitch said that the amended bid Paramount made on Monday wouldn’t be enough to convince him to back the CBS parent’s bid.

“The changes in Paramount’s new offer were necessary, but not sufficient,” Fitch wrote in an email. “We see the two deals as a toss-up, and there is a cost to changing paths. If Paramount is serious about winning, they’re going to need to provide a greater incentive.”

Harris Associates owns a 3.9% stake in Warner Discovery. The position had a market value of $2.76 billion as of Monday’s close. That makes Harris Associates the media company’s fifth largest shareholder behind Vanguard, State Street, BlackRock, and media investor Newhouse Broadcasting Corp.

Fitch said previously that Harris Associates “would be very open to a revised Paramount offer that addresses the key issues around terms and closing certainty, and which comes with clearly superior financial consideration.”

Warner stock climbed 1.4% to $29.15 on Tuesday. Paramount slipped 0.6% to $13.53, and Netflix rose 0.3% to $93.50.

Paramount didn’t raise its tender of $30 a share for all of Warner Discovery on Monday, but it did amend the bid to include a $40.4 billion guarantee of equity financing from Oracle executive chair Ellison, whose son David Ellison is Paramount’s CEO. Paramount also raised the fee it will pay if regulators block the deal to $5.8 billion from $5 billion, matching Netflix’s offer.

Warner’s board said in a statement on Monday that it would “carefully review and consider” Paramount’s amended offer.

Netflix agreed earlier this month to buy Warner’s streaming and studios assets in a $27.75 a share cash and stock deal, with cable being spun off as Discovery Global.

Write to George Glover at george.glover@dowjones.com