Netflix Withdraws From Warner Bros Bid as Paramount Emerges With ‘Superior’ Offer

The streaming heavyweight had been considered the frontrunner in recent weeks, offering $27.75 per share for Warner’s film studio and HBO Max streaming operations. That proposal valued the divisions at nearly $83bn (£61.6bn), including debt, per Sky News. However, the bidding process intensified after Paramount submitted a higher, all-encompassing offer of $31 per share for the entire WBD business.

Paramount’s latest proposal placed a total valuation of $111bn (£82.4bn), including debt, marking a significant escalation in the contest. Warner’s board said late Thursday that while it continued to back Netflix’s existing offer, it had determined Paramount’s bid to be “superior” — the first formal indication that it was leaning toward the previously hostile bidder, according to Sky News.

Shortly after that assessment became public, Netflix confirmed it would not increase its offer and would exit the process. In a statement, co-CEOs Ted Sarandos and Greg Peters said: “We believe we would have been strong stewards of Warner Bros’ iconic brands. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

While Paramount Skydance now appears to be in a strong position, the transaction is not yet finalized. WBD’s board has not formally approved the deal, though its tone has shifted in favor of Paramount’s proposal. Chief executive David Zaslav said the offer “will create tremendous value” and added that WBD was “excited about the potential of a combined Paramount Skydance and Warner Bros Discovery,” per Sky News.

Any agreement would still require approval from shareholders and regulators. The potential merger is expected to draw scrutiny over competition concerns, particularly in the news sector. If successful, Paramount Skydance would gain control of CNN alongside CBS News, raising questions about media concentration among companies connected to allies of former US president Donald Trump, according to Sky News.

Read more: Paramount Raises Offer for Warner Bros Discovery as Bidding Battle Intensifies

Paramount’s chair and chief executive, David Ellison, is the son of billionaire Larry Ellison, who is reported to have provided tens of billions of dollars in funding guarantees for the WBD bid. Larry Ellison has been described as an ally of the US president, adding a political dimension to the takeover battle.

A merger between Paramount and Warner would unite two of Hollywood’s five major legacy studios. Warner’s catalogue — which includes franchises such as Harry Potter, Superman and Barbie, along with television hits like Succession — would combine with Paramount’s library featuring titles such as Top Gun and The Godfather, as well as its Paramount+ streaming service.

Financial markets reacted swiftly to the latest developments. Netflix shares rose 8.5% in after-hours trading in what analysts described as a relief rally, while Paramount stock climbed 6.2%. Meanwhile, WBD shares slipped nearly 2% to $28.80, trading below Paramount’s $31 offer price, per Sky News.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “While there was clearly scope for Netflix to push higher, management chose discipline over empire building, removing a major acquisition overhang that had been weighing on the shares.

“The bid always looked like a mix of offence and defence – shoring up content and scale, while keeping competition from gaining any edge, but at a very high price – and with that risk now off the table, investors are free to refocus on Netflix’s core strengths: pricing power, margins and execution.

“For now, at least, the market seems to be pricing this as a win for everyone.”

Source: Sky News