Netflix is abandoning negotiations to acquire Warner Bros. Discovery’s studio and streaming properties after the WBD board determined on Thursday that a revised bid from Paramount Skydance was a more advantageous proposition.
Earlier this week, Paramount increased its offer for the complete acquisition of WBD to $31 per share, up from $30 per share, in cash only. This was another revision of Paramount’s numerous proposals in recent months — and after advancing with a hostile attempt to acquire the firm — and it has now displaced the arrangement between WBD and Netflix for selling the legacy media corporation’s studio and streaming assets for $27.75 per share.
Last week, Netflix provided WBD with a seven-day waiver to reinitiate discussions with Paramount, which led to the increased offer. Paramount’s proposition encompasses the entirety of WBD, including its paid TV channels, such as CNN, TBS, and TNT.
Netflix was allotted four business days to amend its own bid based on Paramount’s superior offer, as stated by the WBD board on Thursday.
Instead, the streaming giant’s decision to withdraw concludes a prolonged narrative that featured revised propositions from both parties.
“Netflix is an outstanding company and during this ordeal Ted, Greg, Spence, and all the team there have been remarkable collaborators to us. We wish them the best in the future,” WBD CEO David Zaslav expressed in a statement, referring to Netflix co-CEOs Ted Sarandos and Greg Peters, along with CFO Spencer Neumann. “Once our Board casts its vote to approve the Paramount merger agreement, it will generate significant value for our shareholders. We are enthusiastic about the prospects of a united Paramount Skydance and Warner Bros. Discovery and are eager to commence our collaboration in narrative creation that captivates the globe.”
Netflix’s stock surged 10% in after-hours trading on Thursday, while Paramount’s shares rose by 5%. Shares of Warner Bros. Discovery dipped by 2%.
“The arrangement we deliberated would have delivered shareholder value with a clear pathway to regulatory confirmation,” Sarandos and Peters stated in a declaration. “Nonetheless, we have always adhered to our principles, and at the price needed to meet Paramount Skydance’s latest proposal, the agreement is no longer financially appealing, hence we are opting not to match the Paramount Skydance offer.”
The latest Paramount proposition included a $7 billion breakup fee should the suggested merger fail to secure regulatory approval. The firm also consented to cover the $2.8 billion breakup fee that WBD would owe Netflix if that arrangement did not materialize.
Sarandos informed CNBC’s Julia Boorstin in an interview last week that Netflix provided WBD the waiver to resume discussions with Paramount to offer shareholders transparency.
“Paramount had been creating a lot of noise, inundating the situation with confusion for shareholders… including presenting all these hypothetical proposals and communicating directly with the shareholders while bypassing the Warner Bros. Discovery board,” Sarandos remarked at that time. “Thus, we granted the chance to deliver those shareholders precisely what they merit, which is comprehensive clarity and certainty.”
However, Sarandos had refrained from commenting on whether Netflix would raise its own offer to match the revised Paramount proposal.
And on Thursday, Sarandos participated in meetings at the White House to discuss the potential collaboration.
“Warner Bros. is a premier organization, and we thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer, and the WBD Board for conducting a fair and rigorous process,” the Netflix co-CEOs articulated in their statement.
“We believe we would have been strong guardians of Warner Bros.’ iconic brands, and that our agreement would have bolstered the entertainment industry while preserving and creating more production jobs in the U.S.,” they expressed. “But this transaction was always a ‘nice to have’ at the appropriate price, not a ‘must have’ at any cost.”
