Key Takeaways
- Warner Bros Discovery’s board has endorsed Paramount Skydance’s $111bn acquisition proposal as “superior” compared to Netflix’s competing bid
- Netflix withdrew from the bidding war, citing that a $31 per share valuation made the transaction “no longer financially attractive”
- The Paramount acquisition encompasses WBD’s complete portfolio, including HBO, CNN, and valuable franchises like Harry Potter and Batman
- The proposed merger faces significant regulatory scrutiny from California’s Attorney General and federal/international oversight bodies
- Employees at CBS News and Warner Bros Discovery are expressing serious concerns about potential layoffs and newsroom restructuring under new management
Paramount Skydance has overcome a significant obstacle in its pursuit of Warner Bros Discovery following Netflix’s decision to exit the competition, propelling Paramount shares 6% higher during extended trading hours.
On Thursday, Netflix announced it would not counter Paramount’s $31-per-share proposal following WBD’s board designation of it as the “superior” offer. Co-CEOs Ted Sarandos and Greg Peters explained that the elevated price point rendered the acquisition “no longer financially attractive” for Netflix shareholders.
This withdrawal concludes an extended bidding competition that initiated when Paramount first presented its interest in WBD last September.
Paramount Skydance Corporation Class B Common Stock, PSKY
The comprehensive $111bn Paramount proposal encompasses WBD’s entire enterprise — spanning HBO, CNN, the Harry Potter universe, Batman intellectual property, and additional assets. By contrast, Netflix’s initial $83bn agreement from December targeted exclusively WBD’s studio operations and streaming platforms.
The Ellison family, which orchestrated the merger between Skydance and Paramount in the previous year, stands to assume control over CBS News, the acclaimed 60 Minutes program, and CNN through this consolidation.
WBD Chief Executive David Zaslav endorsed the arrangement, stating it “will create tremendous value for our shareholders.”
Netflix shares surged 8.5% during after-hours trading. Market participants appeared satisfied with the streaming giant’s strategic retreat from a transaction that presented substantial antitrust complications.
Regulatory Challenges Remain
The merger is nowhere near completion. Federal approval from the US Department of Justice and European regulatory authorities remains necessary.
California’s Attorney General Rob Bonta confirmed his office maintains an active investigation and plans to conduct a “vigorous” examination. “Paramount/Warner Bros is not a done deal,” he stated on social platforms.
Paramount enhanced its proposal with an additional $1 per share versus its December submission, incorporated a $0.25-per-share quarterly payment should the deal extend beyond September, and included a $7bn breakup fee should regulators reject the merger.
Additionally, Paramount committed to assume responsibility for the $2.8bn termination penalty WBD is contractually obligated to pay Netflix upon exiting their initial agreement.
Employee Anxiety
Staff members at both CBS News and Warner Bros Discovery responded with apprehension to the announcement. Personnel worry that consolidating two prominent newsrooms will result in workforce reductions as duplicate positions are streamlined.
Certain employees voiced unease regarding Bari Weiss, who joined CBS News as editor-in-chief last October, potentially expanding her influence. Weiss lacks prior broadcast journalism experience and her leadership period has received mixed assessments.
A CBS News producer cautioned the combination would prove “a disaster for the people who work at both companies.”
Seth Stern from the Freedom of the Press Foundation delivered pointed criticism, cautioning that Ellison management would elevate business priorities above journalistic independence.
Political dynamics have factored into the proceedings. Former President Trump, who maintains ties with Larry Ellison, commented on the bidding process repeatedly. David Ellison was present at Trump’s State of the Union address Tuesday as Senator Lindsey Graham’s invited guest.
Warner Bros Discovery has scheduled an international employee town hall for Friday morning. In a Thursday internal communication, CNN leader Mark Thompson encouraged personnel to avoid premature judgments.
Paramount shares traded 6% higher in after-hours activity at the time of the disclosure.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
