In a shocking development today, Netflix has dropped its bid to acquire Warner Bros. Discovery (WBD). Netflix declined to match David Ellison’s Paramount Skydance bid, paving the way for Ellison to move forward with his acquisition of the media giant. Last December, Netflix reached an $83 billion deal to acquire a significant portion of Warner Bros. Discovery, including Warner Bros. movie studio, its streaming service, and HBO.
The deal will not be finalized until after a WBD shareholder vote scheduled for March 20. Also, both parties must agree to release specific, detailed terms of the agreement. And finally, the deal must be approved by government regulators.
Netflix Statement and Decision to Decline
Netflix’s co-CEOs Ted Sarandos and Greg Peters said this about the decision. “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, we’ve always been disciplined, and 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 Paramount Skydance bid.”
Netflix has the financial wherewithal to raise its offer but has received significant pushback from shareholders who have questioned the company’s move. The company has lost more than $60 billion in market value since the deal with Warner Bros. Discovery was announced. Netflix stock rose nearly 10 percent in trading today, a signal that investors were pleased with the decision.
Paramount Enters Fray to Purchase WBD
Ellison, backed by his billionaire father, Larry, the founder of Oracle, started a bidding war last fall when it began making unsolicited bids for WBD. This continued even after the December announcement was made regarding Netflix’s intent to acquire Warner Bros. Discovery.
Paramount with their additional bids remained in the WBD conversation. The Ellisons used their political ties to strengthen their position. They are friends of President Trump’s, and David attended Tuesday’s State of the Union address on an invite from Sen. Lindsey Graham (R-S.C).
Paramount’s final revised bid for WBD was $111 billion, which the Warner Bros. board deemed a “superior deal.” Unlike Netflix’s, Paramount’s bid was for the entire company. And even though Paramount is a much smaller company than Netflix, they were the far more aggressive suitor of WBD, taking its offer to the company’s shareholders in a hostile bid.
Details, Details
Obviously, many details need to be decided before this deal is finalized. Besides the regulatory hurdles, there are issues such as CNN becoming part of Paramount, which already owns CBS News. Also. HBO would join the same company that owns Showtime, a competing cable channel. Finally, HBO Max and Paramount+ streaming services would have to find a way to coexist.
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