Netflix has withdrawn its bid for a portion of Warner Bros. Discovery (WBD), paving the way for Paramount Skydance to potentially acquire the entire media company. The decision came after WBD's board deemed Paramount's offer superior. This shift marks a significant development in the ongoing bidding war for the media giant.
Netflix announced on February 26th that it would not be submitting a higher offer for Warner Bros. Discovery (WBD), following the company's board deeming Paramount Skydance 's latest offer as superior. This significant shift leaves Paramount Skydance , under the leadership of David Ellison, as the sole remaining bidder, positioning them to potentially take control of the renowned media conglomerate.
The original bid from Paramount encompassed the entire company, while Netflix had aimed to acquire only WBD's streaming service, the HBO cable channel, and its film studio operations. Netflix stated that the deal they had negotiated would have generated shareholder value and provided a clear path to regulatory approval. However, they cited their disciplined approach to acquisitions, stating that at the price needed to match Paramount Skydance's bid, the deal was no longer financially attractive. Consequently, they decided to decline matching the offer. Ted Sarandos and Greg Peters, co-CEOs of Netflix, emphasized that the transaction was a 'nice to have' at the right price, not a 'must have' at any cost. Upon this announcement, Netflix shares experienced a surge in after-hours trading, increasing by as much as 15%. This surge indicated relief from shareholders who had witnessed a decline of over 20% in the stock price since the initial announcement of the WBD-Netflix bid in December.\Paramount's revised offer, released on February 24th, increased the purchase price to $31 per share, up from the original $30. This would value Warner Bros. Discovery at approximately $77 billion. The proposal also included a $7 billion reverse termination fee in case regulators blocked the deal, along with reimbursement for any costs WBD might incur due to canceling its agreement with Netflix. Taking WBD's debt into account, the overall takeover bid surpasses $110 billion. David Ellison, CEO of Paramount, expressed satisfaction with the WBD board's affirmation of their offer's value, highlighting the certainty and speed to closing that his deal would provide. However, the deal is not yet finalized. A shareholder vote for Warner Bros. Discovery is scheduled for March 20th, requiring both WBD and Paramount Skydance to agree on specific terms and release detailed information promptly. The WBD board of directors must also formally approve the termination of the Netflix agreement, potentially as early as February 27th, according to sources. Furthermore, the transaction would require approval from government regulators. David Zaslav, president and CEO of Warner Bros. Discovery, acknowledged Netflix's positive collaboration throughout the process and expressed his anticipation for the value the Paramount merger would bring to shareholders. Warner Bros. Discovery Chairman Samuel Di Piazza expressed pride in the board's rigorous process, leading to the potential combination of the two companies, and the benefits it would bring to audiences.\Paramount initially triggered a bidding war last fall when it initiated unsolicited offers for WBD. WBD, which owns CNN and HBO, had previously declined multiple bids before reaching an agreement in December to sell portions of the company to Netflix for $72 billion. Netflix actively campaigned for its bid and, despite Paramount's previous unsuccessful attempts, remained involved in discussions concerning WBD's future within Washington and beyond. David Ellison was present at President Donald Trump's State of the Union address this week as a guest of Sen. Lindsey Graham. Ted Sarandos of Netflix was also seen arriving at the White House on February 26th. Last year, Sarandos visited Trump in the Oval Office, with Trump describing him as 'fantastic' on December 7. However, Trump later expressed concerns about a potential Netflix and Warner Bros. Discovery combination, citing potential market share issues. Sarandos also testified before a Senate Judiciary subcommittee, arguing that the proposed deal would promote economic growth, emphasizing that it was not a typical media merger scenario. The subcommittee had scheduled a second hearing on Netflix and WBD for February 25th. Although the panel's focus may shift to the Paramount deal, an aide to Sen. Cory Booker indicated that David Ellison had previously expressed Paramount's willingness to testify before Congress following the acquisition of Warner Bros. Discovery
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