Paramount-Skydance raises breakup fee to $5 billion in race for Warner Bros Discovery

One of the most closely watched bids in global media--Warner Bros. Discovery (WBD), for which Netflix, Comcast and Paramount–Skydance are competing--has seen a significant development.

According to a Bloomberg report, Paramount–Skydance has increased its proposed breakup fee to $5 billion from $2.1 billion. A breakup fee is a pre-agreed penalty paid in an M&A transaction if a deal is terminated under specific conditions. It compensates the potential acquirer for time and costs spent on the transaction, and is typically paid by the target company if it walks away, often for a superior offer.

Separately, another bidder, Netflix, has said that combining its platform with WBD’s HBO Max service could create a more affordable bundled offering and reduce streaming costs for consumers.

Paramount–Skydance has reportedly bid for the entire WBD portfolio, including its cable networks. Netflix and Comcast, meanwhile, are focused on acquiring WBD’s studio and streaming operations, with Comcast also eyeing its television assets and HBO.

WBD has so far received two rounds of offers, including a mostly cash bid from Netflix. Last week, the company asked all bidders to submit improved proposals by December 1. According to Reuters, WBD’s board previously rejected Paramount’s mostly cash offer of nearly $24 per share, valuing the company at about $60 billion.