Netflix has stepped back from its proposal to acquire Warner Bros Discovery, after the studio’s board said Paramount Skydance’s latest offer was superior, clearing the path for a deal that could reshape parts of Hollywood and the US media sector. Netflix executives said they declined to raise their bid, calling the transaction no longer financially attractive at the higher price.
Board Backs Paramount’s Sweetened Offer
Warner Bros, which put itself up for sale last year, said on Thursday that Paramount’s revised proposal exceeded Netflix’s offer. Paramount increased its bid by $1 per share, offering $31 per share in cash to acquire the entire company, up from $30 per share. Paramount also agreed to pay $7bn if the deal falls through and to cover the $2.8bn break-up fee Warner Bros had agreed to pay Netflix under an earlier merger plan.
Netflix co-chief executives Ted Sarandos and Greg Peters said in a statement that the transaction they negotiated would have created shareholder value with a clear path to regulatory approval, but that they had always been disciplined. They added that the deal was a “nice to have” at the right price, not a “must have” at any price. The announcement came hours after Sarandos visited the White House.
Paramount is backed by technology billionaire Larry Ellison and led by his son, David Ellison. David Ellison said in a statement that the sweetened proposal offers Warner Bros shareholders superior value, certainty and speed to closing.
Previous Agreement With Netflix
In December, Warner Bros said it had agreed to sell its film and streaming divisions, including HBO, to Netflix in a deal valued at $27.75 per share, or about $82bn including debt. Under that plan, Warner Bros would have spun off the remainder of its business, including traditional television networks and CNN, into a separate company. Paramount had previously been rebuffed in its approach to Warner Bros before returning with a higher bid.
Assets At Stake And Industry Impact
The winning bidder would gain control of Warner Bros’ film library and media networks. If regulators approve Paramount’s proposal, the company would integrate Warner Bros’ HBO Max streaming subscribers into its portfolio and take ownership of CNN, the Food Network, and sports properties. Paramount’s existing traditional networks include Nickelodeon, CBS, and Comedy Central.
The bidding contest has been viewed in Hollywood as one with significant consequences. Some critics of a Netflix deal raised concerns that Warner Bros would be absorbed by a streaming company, while others have expressed unease about Paramount’s political connections and what that could mean for media assets such as CNN. US President Donald Trump said in December that he believed CNN should be sold as part of any Warner Bros transaction, calling its leadership corrupt or incompetent and saying they should not run the network.
As reports of the near-certain deal circulated, CNN head Mark Thompson sent an email to staff urging them not to jump to conclusions about the future until more details are known, according to US media.
Regulatory Outlook And Market Ramifications
If regulators approve the Paramount Skydance takeover, it would mark the conclusion of a months-long contest that could alter the structure of major film and television companies. Across the industry, observers expect workforce reductions as consolidation proceeds in a city already affected by production cuts.
Featured image credits: Wikimedia Commons
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