For months, Netflix was considered the favorite to close its deal to acquire Warner Bros. Discovery, one of Hollywood’s biggest entities. Ever since the streaming giant revealed its $72 billion bid for the studio and its titles, the industry has been bracing for a takeover. But Netflix suddenly backed out of the deal on Thursday after rival Paramount Skydance lifted its offer. This surprise move effectively puts Paramount in a position to overtake its famous Hollywood rival.
Netflix drops out of Warner Bros. race
The Warner Bros. board announced Thursday that Skydance-owned Paramount’s latest offer to buy the entire company for $31 a share was better than the deal it previously made with Netflix. Almost immediately thereafter, Netflix announced that it would not be increasing its offer. It said the new price it would have to pay to acquire Warner would make the deal “no longer economically attractive.”
In a joint statement, Netflix co-CEOs Ted Sarandos and Greg Peters said, “We believe we would have been stronger stewards of Warner Bros.’s iconic brands. But this transaction was always a ‘good one’ at the right price, not a ‘must have’ at any price.”
Netflix’s decision to part ways Thursday marks the latest development in a months-long messy corporate battle over Warner’s future. Sarandos and Peters thanked Warner’s leadership regardless of the final outcome.
Paramount became the winner
Warner Bros. had backed Netflix’s original $83 billion offer as of December as of Thursday evening. But on Thursday, rival Paramount raised its bid to buy all of Warner to $31 a share, valuing the deal at about $111 billion, including debt along with other amendments. This effectively meant that Paramount was interested in acquiring Warner Bros. in its entirety, while Netflix had its sights set on Warner’s studios and streaming business. The streaming giant was given 4 business days to submit a counter-offer. Netflix’s original bid for Warner’s studios and streaming business was based on a $27.75 per share offer, totaling about $83 billion including debt.
Given that Paramount wants the entire company, that means cult-favorite titles like HBO Max, Harry Potter, and even CNN could soon find themselves under the same roof as Paramount’s CBS, Top Gun, and the Paramount streaming service.
The combination would still require the green light from both Warner shareholders and regulators, raising antitrust concerns and questions about political influence.
In a statement Thursday night, Warner Bros. CEO David Zaslav said Netflix executives have been “exceptional partners” and that he wishes them “well in the future.” Warner’s board has not yet officially adopted Paramount’s merger agreement, but once it does, Zaslav said it will “create tremendous value.”
(with AP input)