Streaming giant Netflix has abandoned its pursuit of Warner Bros.
Discovery’s studio and streaming assets after the latter’s board deemed a rival all-cash offer from Paramount Skydance superior, the companies announced Thursday, in a shake-up poised to reshape the entertainment landscape.
The decision follows Warner Bros. Discovery granting Netflix four days to match Paramount’s revised $31 per share bid for the entire company, including its pay-TV networks like CNN and TBS — a premium over Netflix’s $27.75 per share proposal limited to the studio and streaming operations.
Paramount also committed to covering a $2.8 billion breakup fee owed to Netflix if the original deal collapsed, plus a $7 billion fee should regulators block the merger.
Netflix co-CEOs Ted Sarandos and Greg Peters explained the withdrawal in a joint statement: “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.”
They praised Warner Bros. Discovery: “Warner Bros. is a world-class organization, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process. We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Warner Bros. Discovery CEO David Zaslav expressed goodwill toward Netflix while looking ahead: “Netflix is a great company and throughout this process Ted, Greg, Spence and everyone there have been extraordinary partners to us. We wish them well in the future. Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”
The shift came after Netflix waived a seven-day clause last week to allow Warner Bros. Discovery to reengage with Paramount, amid what Sarandos described in a CNBC interview as disruptive tactics: “Paramount had been making a ton of noise, flooding the zone with confusion for shareholders … including floating all these hypothetical offers and talking directly to the shareholders and bypassing the Warner Bros. Discovery board. So we’ve given the opportunity to get those shareholders exactly what they deserve, which is complete clarity and certainty.”
Market reactions were swift: Netflix shares surged 10 percent in after-hours trading, Paramount gained 5 percent, while Warner Bros. Discovery dipped 2 percent.