Paramount to Acquire Warner Bros. Discovery, Netflix Bows Out
WASHINGTON – A dramatic shift in Hollywood’s power dynamics unfolded Thursday as Paramount Global, backed by Skydance Media, secured a deal to acquire Warner Bros. Discovery, ending a weeks-long bidding war that saw Netflix withdraw its offer. The agreement, valued at $31 per share in cash, effectively hands control of iconic brands like CNN, HBO, and the DC Universe to a newly formed entertainment giant.
The Warner Bros. Discovery board determined Paramount’s revised bid was superior to Netflix’s previous offer of $27.75 per share, a decision announced after granting Netflix a brief window to respond. Instead of matching the increased price, Netflix opted to walk away, citing financial discipline.
“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 bid,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement.
The saga began with a hostile bid from Paramount to acquire Warner Bros. Discovery several months ago, escalating into a complex negotiation process. Netflix entered the fray, initially offering a deal that appeared promising, but ultimately proved insufficient to compete with Paramount’s final offer. A seven-day waiver granted to Warner Bros. Discovery to entertain Paramount’s revised bid proved pivotal.
Warner Bros. Discovery CEO David Zaslav expressed optimism about the merger, stating it would “create tremendous value for our shareholders.” He lauded Netflix as “extraordinary partners” throughout the process.
The deal includes a $7 billion breakup fee should regulatory hurdles prevent its completion, and Paramount has also agreed to cover the $2.8 billion fee Warner Bros. Discovery would have owed Netflix had that deal gone through.
The outcome marks a significant win for Paramount and Skydance, positioning them to compete more effectively in the increasingly crowded streaming landscape. Netflix, while exiting the acquisition battle, appears to be focusing on its own content strategy. The company’s stock rose 10% in after-hours trading Thursday, suggesting investor confidence in its independent path. Warner Bros. Discovery shares, however, fell 2%.
Sarandos, speaking to CNBC last week, emphasized the importance of clarity for shareholders amidst the competing offers. While he refrained from commenting on a potential bid increase, the decision to ultimately withdraw underscores Netflix’s commitment to financial prudence.
The proposed merger is now subject to regulatory review, a process that could prove challenging given the concentration of media ownership it represents. The deal’s potential impact on the entertainment industry and the future of content creation remains to be seen.
