Netflix refuses to raise offer to buy Warner, says deal ‘no longer financially attractive’

Netflix is ​​refusing to raise its offer to buy Warner Bros. Discovery’s studios and streaming business, in a surprise move that effectively puts Paramount in a position to take over the fellow storied Hollywood giant.

On Thursday, Warner’s board announced that Skydance-owned Paramount’s offer was better than an earlier deal with Netflix, with the streaming giant saying the new price required to buy Warner would make it a deal that is “no longer financially attractive.”

Unlike Netflix’s bid, Paramount wants all of Warner’s operations, including networks like CNN and Discovery. This would make CNN similar to Paramount’s CBS and merge two of the five remaining Hollywood studios.

The owner of HBO Max, DC Studios and popular titles like “Harry Potter” had supported Netflix’s proposal for months. But after Skydance-owned Paramount raised its rival bid for the entire company to $31 a share, among other amendments, Warner’s board said Thursday that the offer is “a better proposition for a company.”

Paramount’s buyout of Warner’s business will drastically reshape Hollywood and the broader media landscape. Paramount’s CBS has seen significant editorial changes, notably with the installation of Free Press founder Bari Weiss at CBS News under the new Skydance ownership. And if Paramount’s acquisition of Warners is successful, many expect the reach of those changes will only increase.

The Paramount-Warner combo would also combine two of Hollywood’s five legacy studios, which remain today in addition to their theatrical channels. Beyond “Harry Potter,” Warner films like “Superman,” “Barbie,” and “One Battle After Another” — as well as hit TV series like “The White Lotus” and “Succession” — will join Paramount’s content library.

Today, Paramount’s lineup of titles includes “Top Gun,” “Titanic” and “The Godfather.” And beyond CBS, it also has networks like MTV and Nickelodeon, as well as the Paramount+ streaming service.

Paramount executives have argued that the merger would be good for consumers and the broader industry. But lawmakers and entertainment trade groups have sounded the alarm — warning that Warner’s takeover would only further consolidate power in an industry already wielded by a few major players. Critics say it could lead to job losses, less diversity in film production and potentially more headaches for consumers facing the rising costs of streaming subscriptions.

Combined, this raises tremendous antitrust concerns. The US Justice Department has already begun a review and other countries are expected to do the same.

Netflix, Warner and Paramount have spent the past few months in a heated, public debate over whose deal is the better regulatory path — and which one delivers more value for Warner shareholders. Thursday’s announcement came shortly after Paramount raised its offer on the deal.

In addition to increasing its proposed purchase price for Warner, the company also agreed to a regulatory termination fee of US$7 billion. And Paramount promised to increase “ticking fees” as previously promised. The company initially said it would pay 25 cents per share for every quarter the deal was delayed until the end of the year. Now, if a deal is not reached by the end of September, it has been agreed to pay that amount, Warner said.

But Paramount is borrowing billions of dollars to finance its offering. And David Ellison’s father, Oracle founder Larry Ellison, is heavily supporting his son’s company’s bid. Foreign sovereign wealth funds have also provided equity for the proposal, which is being examined.

Ellison also has a close relationship with President Donald Trump – bringing more politics into question. Trump previously made unprecedented suggestions about his involvement in completing the deal, before walking back those statements and maintaining that regulatory approval would depend on the Justice Department.

The push to acquire Warner also comes just months after Skydance closed its purchase of Paramount – in a controversial merger that was approved just weeks after the company agreed to pay the president US$16 million to settle a lawsuit over editing on CBS’s “60 Minutes” program. Nevertheless, Trump has continued to publicly attack Paramount and “60 Minutes.”