Key Takeaways
- Warner Bros Discovery’s board deemed Paramount Skydance’s $111bn proposal “superior” to Netflix’s competing offer
- Netflix withdrew from the bidding war, citing that the $31 per share price point made the acquisition “no longer financially attractive”
- The Paramount proposal encompasses WBD’s complete operations, including HBO, CNN, and major franchises like Harry Potter and Batman
- Significant regulatory scrutiny remains, with approvals still pending from California AG and US/European regulatory bodies
- Employees at CBS News and WBD express serious concerns regarding potential layoffs and shifts in editorial direction under Ellison leadership
Paramount Skydance has overcome a significant obstacle in its pursuit of Warner Bros Discovery, with Netflix’s withdrawal from the competition driving Paramount shares up 6% during after-hours trading.
On Thursday, Netflix announced it would not counter Paramount’s $31-per-share proposal following WBD’s board designation of the offer as “superior.” Co-CEOs Ted Sarandos and Greg Peters explained that the elevated valuation rendered the acquisition “no longer financially attractive.”
This development concludes several months of competitive bidding that initiated when Paramount first made overtures to WBD in September.
Paramount Skydance Corporation Class B Common Stock, PSKY
The $111bn Paramount proposal encompasses WBD’s entire portfolio — spanning HBO, CNN, the Harry Potter franchise, Batman properties, and additional assets. By contrast, Netflix’s initial $83bn December agreement targeted solely WBD’s studio operations and streaming platforms.
The Ellison family, which merged Skydance with Paramount in the previous year, stands to assume control over CBS News, 60 Minutes, and CNN should the merger proceed.
WBD’s chief executive David Zaslav praised the arrangement, stating it “will create tremendous value for our shareholders.”
Netflix shares rose 8.5% in after-market activity. Market participants appeared satisfied with the streaming giant’s exit from a transaction laden with potential antitrust complications.
Regulatory Challenges Remain
The transaction faces substantial hurdles before completion. Approval is required from the US Department of Justice alongside European regulatory authorities.
California’s Attorney General Rob Bonta indicated his office maintains an active investigation and plans a “vigorous” assessment. “Paramount/Warner Bros is not a done deal,” he stated via social media.
Paramount enhanced its proposal with a $1 per share increase from its December submission, introduced a $0.25-per-share quarterly payment should the deal extend beyond September, and proposed a $7bn termination fee if regulatory authorities reject the merger.
Additionally, Paramount committed to assuming the $2.8bn breakup fee WBD owes Netflix should it abandon the initial arrangement.
Employee Anxiety
Staff members at CBS News and WBD responded with significant apprehension to the announcement. Personnel worry that consolidating two substantial newsrooms will trigger workforce reductions as duplicate positions are eliminated.
Certain employees voiced unease regarding Bari Weiss, named CBS News editor-in-chief last October, potentially assuming expanded responsibilities. Weiss lacks previous television industry experience, and her leadership period has been characterized as inconsistent.
A CBS News producer cautioned the combination would prove “a disaster for the people who work at both companies.”
Seth Stern from the Freedom of the Press Foundation delivered harsh criticism, cautioning that Ellison would emphasize corporate objectives above journalistic independence.
Political considerations have factored into the situation. Trump, a Larry Ellison ally, commented on the bidding process repeatedly. David Ellison attended Trump’s State of the Union address Tuesday as Senator Lindsey Graham’s guest.
WBD has scheduled a worldwide employee town hall for Friday morning. In Thursday correspondence, CNN leader Mark Thompson encouraged personnel to avoid premature judgments.
Paramount shares traded 6% higher in after-hours activity at the announcement time.
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