Paramount Skydance has emerged victorious in the months-long battle to acquire Warner Bros. Discovery after Netflix declined to raise its bid for the Hollywood studio, reports Reuters.
In a statement, Netflix said it would not match Paramount Skydance’s latest offer, citing financial discipline. “At the price required to match Paramount Skydance's latest offer, the deal is no longer financially attractive,” the company said, confirming it was walking away from the bidding process.
Warner Bros’ board must still formally terminate its merger agreement with Netflix before adopting Paramount Skydance’s proposal.
Warner CEO David Zaslav said the merger would create “tremendous value” for shareholders and expressed optimism about combining the two entertainment giants.
Earlier Thursday, Warner Bros said Paramount’s revised offer of $31 per share topped Netflix’s $27.75 bid for its streaming and studio assets. Paramount had mounted an aggressive campaign to secure the deal, returning to negotiations last week with the prospect of a higher cash offer.
A Netflix adviser, speaking anonymously, said the company chose not to engage in a bidding war it viewed as economically unsound. The source suggested that billionaire Larry Ellison — whose family controls Paramount through the Ellison Trust and whose son leads the company — was willing to pay a price Netflix considered irrational.
“There’s no point in playing chicken with someone who won’t turn the wheel,” the adviser said.
Following the announcement, Netflix shares jumped more than 10%, reflecting investor relief over the company’s decision to avoid overpaying.
A merger between Paramount and Warner Bros would combine two major studios, two streaming services — HBO Max and Paramount+ — and prominent news networks including CNN and CBS.
Despite expectations that federal approval may be likely in the current political climate, analysts warn the deal could face scrutiny from state and international regulators. California Attorney General Rob Bonta said the transaction is “not a done deal,” noting an ongoing investigation by the California Department of Justice.
Democratic senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal have also voiced concerns that political favoritism could influence regulatory approval.
To strengthen its proposal, Paramount raised its breakup fee to $7 billion from $5.8 billion if the deal fails to win regulatory clearance. It also agreed to cover the $2.8 billion termination fee Warner would owe Netflix.
The Ellison Trust increased its equity commitment to $45.7 billion, backed by Larry Ellison, while Bank of America Merrill Lynch, Citi and Apollo committed $57.5 billion in debt financing.
Activist investor Ancora Holdings welcomed the outcome, calling Netflix’s withdrawal a “win-win for shareholders and the industry.”
The proposed merger now shifts from the boardroom battle to what is expected to be a closely watched regulatory review.
Bd-pratidin English/ Jisan
