Quick Summary
- Netflix abandoned its pursuit of Warner Bros. Discovery properties following the WBD board’s determination that Paramount Skydance’s enhanced $31-per-share proposal represented a better deal.
- Paramount increased its offer from $30 to $31 per share in an all-cash transaction encompassing the entire company, including assets like CNN, HBO, and cable television networks.
- Netflix refused to increase its bid, stating the transaction became “no longer financially attractive” at the higher valuation.
- Paramount committed to covering the $2.8 billion termination fee WBD must pay Netflix, while also accepting a $7 billion penalty if its transaction collapses.
- NFLX shares rose approximately 10% during extended trading hours; WBD dropped roughly 2%, while Paramount climbed about 5%.
Shares of Netflix ($NFLX) experienced a significant uptick during after-hours trading Thursday following the streaming giant’s decision to exit its agreement to purchase Warner Bros. Discovery properties, positioning Paramount Skydance to secure the approximately $111 billion transaction.
The Warner Bros. Discovery board determined that Paramount’s enhanced proposal of $31 per share in cash represented a “superior offer” compared to Netflix’s standing agreement, which offered $27.75 per share and included only WBD’s production studio and streaming operations.
Netflix received four business days to submit a revised proposal. The company declined to do so.
“The deal is no longer financially attractive,” Netflix co-CEOs Ted Sarandos and Greg Peters explained in a joint statement. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Investors responded positively to this disciplined approach. Netflix shares jumped approximately 10% during after-hours trading.
Last week, Netflix granted WBD a seven-day exemption to restart negotiations with Paramount, allowing stockholders to evaluate all available alternatives. Sarandos informed CNBC the decision aimed to provide “complete clarity and certainty.”
Ultimately, that move created space for Netflix’s departure from the deal.
Paramount’s Comprehensive Acquisition
Paramount’s $31-per-share all-cash proposal encompasses all of WBD — extending beyond production studios and streaming platforms to include CNN, TBS, TNT, HBO Max, Food Network, and numerous sports broadcasting rights.
This represents a substantially larger acquisition than Netflix’s original agreement.
Paramount has also committed to paying the $2.8 billion termination fee that WBD owes Netflix, while accepting a $7 billion penalty if the transaction fails to receive regulatory clearance.
WBD CEO David Zaslav characterized it as a transaction that would “create tremendous value” for shareholders once the board officially approves the merger agreement.
Paramount Skydance CEO David Ellison stated the proposal provides “superior value, certainty and speed to closing.”
Regulatory Challenges Loom
The transaction remains far from finalized. California Attorney General Rob Bonta announced Thursday that the merger “is not a done deal,” referencing an ongoing inquiry by the California Department of Justice.
The proposal would also require clearance from the U.S. Department of Justice and European regulatory bodies.
Paramount’s financial support — including connections to technology billionaire Larry Ellison and previous participation from Jared Kushner’s investment vehicle Affinity Partners — has attracted attention regarding political ties to the Trump administration.
Kushner’s company withdrew in December. However, concerns about the transaction’s political implications persist, especially concerning CNN, which Trump has repeatedly attacked and suggested should be divested in any WBD deal.
CNN head Mark Thompson communicated with staff Thursday, encouraging them not to “jump to conclusions about the future until we know more.”
Netflix shares increased roughly 10%, WBD declined approximately 2%, and Paramount rose about 5% during after-hours trading Thursday.
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