Key Takeaways
- Netflix abandoned its pursuit of Warner Bros. Discovery assets following WBD’s board determination that Paramount Skydance’s enhanced $31-per-share proposal was superior.
- Paramount increased its offer from $30 to $31 per share cash, encompassing all WBD assets including CNN, HBO, and cable networks.
- Netflix refused to counter the bid, stating the transaction became “no longer financially attractive” at the elevated valuation.
- Paramount committed to covering the $2.8 billion termination fee WBD must pay Netflix, alongside posting its own $7 billion breakup fee.
- After-hours trading saw Netflix shares rise ~10%; WBD dropped ~2%, while Paramount climbed ~5%.
Shares of Netflix ($NFLX) experienced a significant surge during Thursday’s after-hours session following the streaming giant’s decision to abandon its proposed acquisition of Warner Bros. Discovery properties, positioning Paramount Skydance to complete the approximately $111 billion transaction.
Warner Bros. Discovery’s board determined that Paramount’s enhanced proposal of $31 per share cash constituted a “superior offer” compared to Netflix’s standing agreement of $27.75 per share, which targeted only WBD’s entertainment studio and streaming operations.
Netflix received a four-day window to submit a revised proposal but declined to participate.
“The deal is no longer financially attractive,” stated Netflix co-CEOs Ted Sarandos and Greg Peters jointly. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Investors responded positively to the measured approach. Netflix shares advanced approximately 10% during extended trading hours.
Just last week, Netflix granted WBD a seven-day exemption allowing renewed discussions with Paramount, enabling stakeholders to evaluate all available alternatives comprehensively. Sarandos explained to CNBC that the decision aimed to deliver “complete clarity and certainty.”
Ultimately, this strategy facilitated Netflix’s withdrawal from the bidding process.
Details of Paramount’s Acquisition
Paramount’s all-cash $31-per-share proposal encompasses all of WBD — extending beyond entertainment studios and streaming platforms to include CNN, TBS, TNT, HBO Max, Food Network, and various sports broadcasting rights.
This represents a considerably more expansive scope than Netflix’s original agreement.
Additionally, Paramount committed to assuming the $2.8 billion termination fee that WBD must remit to Netflix, while establishing a $7 billion termination fee should its own transaction fail to secure regulatory clearance.
WBD CEO David Zaslav described it as an agreement that would “create tremendous value” for investors once the board officially approves the merger arrangement.
Paramount Skydance CEO David Ellison emphasized the proposal provides “superior value, certainty and speed to closing.”
Regulatory Challenges Loom
The transaction remains far from finalized. California Attorney General Rob Bonta announced Thursday that the merger “is not a done deal,” referencing an ongoing California Department of Justice investigation.
Federal approval from the U.S. Department of Justice and authorization from European regulatory bodies will also be required.
Paramount’s financial support structure — featuring connections to technology entrepreneur Larry Ellison and previous participation from Jared Kushner’s Affinity Partners investment firm — has attracted attention regarding potential political influences tied to the Trump administration.
Kushner’s organization withdrew in December. Nevertheless, concerns about the transaction’s political implications persist, especially concerning CNN, which former President Trump has repeatedly targeted and suggested should be divested in any WBD deal.
CNN chief Mark Thompson sent a message to employees Thursday encouraging them not to “jump to conclusions about the future until we know more.”
During Thursday’s after-hours session, Netflix shares increased roughly 10%, WBD declined approximately 2%, and Paramount advanced about 5%.
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