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Paramount Skydance has triumphed in its months-long campaign to scupper Netflix’s deal to buy Warner Bros Discovery, after its $111bn bid for the Hollywood studio drove the streaming giant to walk away.
Netflix on Thursday said it would not match Paramount’s $31-a-share offer after WBD’s board declared it “superior” to the deal agreed with the streaming company. The price required to match Paramount’s offer meant “the deal is no longer financially attractive”, Netflix said.
The decision by Netflix clears the way for Paramount to wrest control of assets including HBO, CNN and film franchises such as Harry Potter and Batman in a takeover that will have sweeping ramifications for Hollywood and the wider media landscape.
Before its latest bid, WBD had rejected eight offers from Paramount, after the media group — run by David Ellison and backed by his father, Oracle billionaire Larry Ellison — first approached it in September.
David Zaslav, WBD chief executive, said the merger with Paramount “will create tremendous value for our shareholders”. The deal will need to be approved by regulators in the US and Europe.
Shares in Netflix jumped nearly 11 per cent in post-market trading, as investors welcomed the news of the streamer walking away from one of the biggest media deals in history that would have come with huge antitrust risks. Netflix first struck a nearly $83bn deal to buy WBD’s studio and streaming business in December.
Netflix co-chief executives Ted Sarandos and Greg Peters argued they would have been “strong stewards” of WBD’s iconic brands but said “this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price”.
Netflix’s bid faced scrutiny from regulators and among some in Hollywood, who remain angry at the disruption the streaming pioneer unleashed on the industry. Sarandos had promised that Netflix would release more films in cinemas if it bought Paramount, but many were sceptical.
After the WBD board backed the Netflix deal, Paramount launched an all-out pressure campaign to force WBD back to the negotiating table, appealing to the Trump administration and threatening to launch a proxy fight to overturn WBD’s board.
Paramount bumped up its latest offer by $1 a share to $31 compared with the offer WBD rejected in December, as well as offering guarantees over financing of the deal. Its improved approach also included a $0.25-a-share fee for every quarter the deal does not close after the end of September and a guarantee of a $7bn break fee if it is not approved by regulators.
Paramount also offered to pay the $2.8bn fee owed to Netflix if WBD terminates the original deal.
The merger talks have also been affected by politics, as Donald Trump — who counts Larry Ellison as a strong supporter — weighed in on the deal.
The US president said in December that Netflix would “have a very big market share” in streaming, adding: “It could be a problem”. At the weekend, Trump called on Netflix to sack former Democratic national security official Susan Rice from its board or “pay the consequences” after she criticised corporate executives who “bent the knee” to the president.
Paramount argued to investors that it had a clearer path towards regulatory approval than Netflix — charges that Netflix continued to reject even as it pulled out of the deal. “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Sarandos and Peters said in a statement.
Unlike Netflix, Paramount’s offer is for the entire WBD business, including CNN, HBO and other cable networks.
