Paramount Skydance has won the months-long battle to acquire Warner Bros Discovery after Netflix refused to raise its bid for the Hollywood studio.
“We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” Netflix said in a statement.
Earlier, Warner Bros confirmed that Paramount’s revised $31-per-share offer was superior to Netflix’s $27.75 per share bid for the company’s streaming and studio assets. A Netflix adviser said the streaming service had been advised to bow out, as the deal no longer made economic sense. Netflix co-CEO Ted Sarandos had previously hinted the company would not substantially increase its offer, describing the service as a «very disciplined buyer.»
The adviser added that Netflix was bidding against a billionaire willing to pay what it considered an irrational price for Warner Bros. «There’s no point in playing chicken with someone who won’t turn the wheel,» the source said, referring to Oracle co-founder Larry Ellison, father of Paramount CEO David Ellison. Netflix shares jumped more than 10% after the company declined to raise its offer.
Regulatory scrutiny ahead
Paramount’s merger with Warner Bros would combine two major studios, two streaming platforms (HBO Max and Paramount+), and two news operations (CNN and CBS). The deal is expected to face antitrust review in the U.S., Europe, and states including California.
California Attorney General Rob Bonta said the deal is not guaranteed.
«These two Hollywood titans have not cleared regulatory scrutiny — the California Department of Justice has an open investigation, and we intend to be vigorous in our review,» he said.
Democratic senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal have raised concerns that approval could be influenced by political connections.
Paramount raised the termination fee to $7 bn from $5.8 bn if the deal fails to gain approval and agreed to cover Warner Bros’ $2.8 bn fee owed to Netflix for walking away. The Ellison Trust is committing $45.7 bn in equity, with additional funding provided by Larry Ellison to meet bank solvency requirements. Bank of America Merrill Lynch, Citi, and Apollo are providing $57.5 bn in debt financing.
Activist investor Ancora Holdings, which owns a stake in Warner Bros, welcomed the deal.
«Netflix’s decision to not raise its offer has paved the way for shareholders to receive meaningfully more cash and a truly viable path to government approvals. This is a win-win for shareholders and the industry,» the firm said.
