Key Takeaways
- Netflix abandoned its pursuit of Warner Bros. Discovery properties following the WBD board’s determination that Paramount Skydance’s enhanced $31-per-share proposal was more attractive.
- Paramount increased its offer from $30 to $31 per share, an all-cash transaction encompassing WBD’s entire portfolio including CNN, HBO, and cable networks.
- Netflix opted not to counter the higher bid, stating the acquisition had become “no longer financially attractive” at the elevated valuation.
- Paramount committed to covering the $2.8 billion termination fee WBD must pay Netflix, while also accepting a $7 billion penalty if the transaction fails to complete.
- After-hours trading saw Netflix shares rise approximately 10%; WBD declined roughly 2%, while Paramount advanced around 5%.
Netflix ($NFLX) shares experienced a significant rally during Thursday’s extended trading session following the streaming platform’s decision to abandon its proposed acquisition of Warner Bros. Discovery properties, paving the way for Paramount Skydance to emerge as the frontrunner in a transaction estimated at approximately $111 billion.
The Warner Bros. Discovery board determined that Paramount’s enhanced proposal of $31 per share in cash represented a “superior offer” compared to Netflix’s standing agreement of $27.75 per share, which targeted exclusively WBD’s studio operations and streaming platforms.
Netflix was granted a four-day window to submit a revised proposal. The company declined to do so.
“The deal is no longer financially attractive,” Netflix co-CEOs Ted Sarandos and Greg Peters stated jointly. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Investors appeared to appreciate this fiscal restraint. Netflix shares advanced approximately 10% during after-hours trading.
Just last week, Netflix voluntarily granted WBD a seven-day waiver permitting renewed discussions with Paramount, enabling shareholders to evaluate all available alternatives. Sarandos explained to CNBC that the decision aimed to deliver “complete clarity and certainty.”
Ultimately, that waiver facilitated Netflix’s withdrawal from the bidding process.
The Paramount Proposition
Paramount’s $31-per-share all-cash proposal encompasses WBD in its entirety — extending beyond the studio and streaming operations to include CNN, TBS, TNT, HBO Max, Food Network, and various sports broadcasting rights.
This represents a considerably broader acquisition than Netflix had originally negotiated.
Paramount additionally committed to paying the $2.8 billion termination fee WBD owes Netflix, while accepting a $7 billion termination penalty should the transaction fail to receive regulatory clearance.
WBD CEO David Zaslav characterized the agreement as one that would “create tremendous value” for shareholders pending the board’s formal approval of the merger arrangement.
Paramount Skydance CEO David Ellison described the proposal as delivering “superior value, certainty and speed to closing.”
Regulatory Challenges Loom
The transaction remains far from finalized. California Attorney General Rob Bonta stated Thursday that the merger “is not a done deal,” referencing an ongoing investigation conducted by the California Department of Justice.
The agreement would additionally require clearance from the U.S. Department of Justice and European regulatory authorities.
Paramount’s financial backers — including connections to technology entrepreneur Larry Ellison and previous involvement from Jared Kushner’s investment vehicle Affinity Partners — have attracted examination regarding political ties to the Trump administration.
Kushner’s firm withdrew its participation in December. However, concerns about the transaction’s political aspects persist, particularly concerning CNN, which Trump has frequently criticized and suggested should be divested as part of any WBD deal.
CNN chief Mark Thompson communicated to employees Thursday, encouraging them not to “jump to conclusions about the future until we know more.”
Netflix shares climbed approximately 10%, WBD declined around 2%, and Paramount advanced roughly 5% during Thursday’s after-hours trading session.
