Netflix shares surged over nine percent in premarket trading on Friday following the company’s decision to withdraw from the bidding war for Warner Bros Discovery. Meanwhile, Paramount’s stock rose approximately 10 percent after securing the acquisition of some of the most sought-after TV and film assets globally.
Netflix indicated on Thursday that it was stepping back from its proposal to acquire Warner Bros. Discovery’s streaming and studio assets, citing that the deal was no longer financially appealing after Paramount Skydance revised its offer to $31 per share for the coveted Hollywood studio.
In a statement, Netflix mentioned, “We have always maintained financial discipline, and at the revised price by Paramount Skydance, the deal no longer aligns with our financial objectives, leading us to decline matching their bid.” Warner Bros. Discovery later confirmed that Paramount’s updated offer of $31 per share surpassed the terms of their existing agreement with Netflix.
Netflix had previously granted Warner Bros. a seven-day extension to solicit a “best and final offer” from Paramount. In December, Netflix had agreed to acquire Warner Bros.’ streaming and studio assets at a valuation of $27.75 per share, alongside a planned divestiture of Warner Bros.’ cable assets, aiming to enhance shareholder value.
Paramount, in its revised bid, increased the termination fee in case of regulatory approval failure to $7 billion US from the initial $5.8 billion US. The company expressed satisfaction with the Warner Bros. board’s unanimous endorsement of its superior offer.
The Ellison Trust, backed by Larry Ellison, boosted its equity commitment to $45.7 billion US, up from $43.6 billion US, to support Paramount’s bid. Additionally, Bank of America Merrill Lynch, Citi, and Apollo raised their debt financing to $57.5 billion US from the previous $54 billion US commitment.
The merger proposal between Paramount and Warner Bros has drawn attention from federal and Californian authorities. California’s Attorney General Rob Bonta announced an open investigation into the deal, emphasizing the need for a thorough review. Analysts also suggested potential scrutiny from European regulators.
The merger would bring together two major Hollywood studios, two streaming platforms (HBO Max and Paramount+), and two news operations (CNN and CBS). Paramount’s ties to Ellison’s Oracle, which holds a 15 percent stake in TikTok, further add complexity to the deal. Concerns have been raised by Democratic Senators Elizabeth Warren, Bernie Sanders, and Richard Blumenthal regarding potential political influence on the approval process for the merger.
The announcement by Netflix to withdraw from the bidding war coincided with CEO Ted Sarandos’ visit to the White House. Although Sarandos did not meet with President Trump, reports indicated that Trump was displeased with political remarks made by a Netflix board member, Susan Rice. Sarandos clarified that the deal was strictly business and not politically motivated.