TLDR
- Paramount Skydance submitted a $111 billion proposal for Warner Bros Discovery that WBD’s board deemed “superior” compared to Netflix’s competing offer
- Netflix withdrew from the bidding process, citing the $31 per share valuation made the transaction “no longer financially attractive”
- The Paramount proposal encompasses WBD’s complete portfolio, including HBO, CNN, and valuable franchises like Harry Potter and Batman
- Significant regulatory approvals are still pending from California’s Attorney General and federal regulators in the US and Europe
- Employees at CBS News and Warner Bros Discovery express concerns about potential layoffs and editorial direction under Ellison leadership
Paramount Skydance has overcome a significant obstacle in its pursuit of Warner Bros Discovery following Netflix’s decision to exit the bidding competition, propelling Paramount shares 6% higher in after-hours market activity.
On Thursday, Netflix announced it would not counter Paramount’s $31-per-share proposal after Warner Bros Discovery’s board determined it represented a “superior” transaction. Netflix co-chief executives Ted Sarandos and Greg Peters stated the valuation rendered the acquisition “no longer financially attractive.”
This development concludes several months of competitive bidding that initially began when Paramount approached Warner Bros Discovery in September.
Paramount Skydance Corporation Class B Common Stock, PSKY
Paramount’s $111 billion proposal encompasses Warner Bros Discovery’s entire operation — including HBO, CNN, the Harry Potter franchise, Batman intellectual property, and additional assets. By comparison, Netflix’s initial $83 billion agreement from December focused exclusively on WBD’s studio operations and streaming platforms.
The Ellison family, having merged Skydance with Paramount in the previous year, would assume control of CBS News, the iconic 60 Minutes program, and CNN through this proposed combination.
Warner Bros Discovery CEO David Zaslav endorsed the transaction, stating it “will create tremendous value for our shareholders.”
Netflix shares climbed 8.5% during post-market hours. Market participants seemed relieved the streaming giant abandoned a transaction carrying substantial antitrust complications.
Regulatory Hurdles Remain
The transaction faces substantial remaining obstacles. Approval is required from the United States Department of Justice along with European regulatory authorities.
California’s Attorney General Rob Bonta confirmed his office maintains an active investigation and plans to conduct a “vigorous” examination. “Paramount/Warner Bros is not a done deal,” he stated on social platforms.
Paramount enhanced its proposal by increasing the price $1 per share versus its December submission, included a $0.25-per-share quarterly payment if closing extends beyond September, and proposed a $7 billion termination fee should regulators prevent completion.
Paramount additionally committed to assuming the $2.8 billion breakup fee Warner Bros Discovery owes Netflix upon terminating the original arrangement.
Employee Uncertainty
Personnel at CBS News and Warner Bros Discovery responded with apprehension to the announcement. Staff members worry combining two prominent newsrooms will result in workforce reductions as duplicate positions are consolidated.
Several employees voiced concerns regarding Bari Weiss, who was appointed CBS News editor-in-chief last October, potentially expanding her influence. Weiss lacks previous television journalism experience and her performance has received mixed assessments.
A CBS News producer cautioned the combination would represent “a disaster for the people who work at both companies.”
Seth Stern from the Freedom of the Press Foundation offered sharp criticism, cautioning that Ellison leadership would emphasize corporate priorities above journalistic independence.
Political factors have influenced proceedings. Former President Trump, known as a Larry Ellison ally, commented on the competitive bidding process multiple times. David Ellison attended Trump’s State of the Union address this Tuesday as Senator Lindsey Graham’s guest.
Warner Bros Discovery has scheduled an all-staff global meeting for Friday morning. In Thursday correspondence, CNN leader Mark Thompson encouraged employees to avoid premature conclusions.
Paramount shares traded 6% higher in after-hours sessions at the time of the disclosure.
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