According to reports by the New York Post and the Associated Press, streaming company Netflix announced on Thursday, Feb. 26 that it has decided not to move forward with its proposal to acquire the film studio and streaming businesses of Warner Bros. Discovery. The move means that Paramount Pictures, under Skydance Media, has become the leading bidder to acquire Warner Bros.
On Thursday, Warner Bros. Discovery’s board of directors announced that Paramount Pictures’ offer of $31 per share was superior to the previous agreement reached with Netflix at $27.75 per share. Paramount’s latest bid includes the assumption of debt, valuing the company at approximately $111 billion. In contrast, Netflix’s earlier proposal primarily targeted Warner’s film production and streaming divisions, with a total value of about $83 billion.
It is understood that Warner’s board gave Netflix four business days to submit a counteroffer. Netflix responded within two hours, declining to raise its bid and stating that the new valuation level was no longer financially attractive.
Netflix co-CEOs Ted Sarandos and Greg Peters said in a joint statement: “We believe we could manage the Warner Bros. brand well, but this transaction is a ‘nice to have’ for us, not a ‘must-have.’”
Scope of the merger and asset integration
A key difference in the acquisition proposals lies in the scope. Netflix’s offer focused on specific business units, while Paramount is seeking to acquire the entirety of Warner Bros. Discovery’s assets.
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If completed, the deal would merge two of Hollywood’s five major traditional film studios. Paramount’s Paramount+ streaming service, CBS television network, MTV, and Nickelodeon would be integrated with Warner Bros.’ HBO Max, the Harry Potter franchise assets, and the CNN news network.
Warner Bros. Discovery CEO David Zaslav stated that, if approved, the merger would create significant value and expressed optimism about the combined company’s potential. He also thanked Netflix executives for their cooperation during negotiations.
Regulatory review and political attention
The proposed transaction still requires approval from Warner shareholders and regulatory authorities. The U.S. Department of Justice has already initiated a review.
Market analysts noted that the structure of the merged company and the consolidation within the news sector have drawn public attention. Paramount Pictures CEO David Ellison’s father, Oracle founder Larry Ellison, maintains close ties with the current administration. Previously, Paramount reached a settlement in a lawsuit involving CBS’s “60 Minutes.”
Industry associations have also expressed concerns about potential layoffs and reduced market competition.
To advance the deal, Paramount has pledged that if the transaction fails to close before the end of September due to regulatory reasons, it will pay termination and extension fees. The specific terms include up to $7 billion in regulatory termination fees, as well as additional quarterly payments if the deal is delayed beyond a specified date.
It is reported that Paramount’s financing structure for the acquisition includes debt financing and equity investment from foreign sovereign wealth funds. As of press time, Paramount Pictures has not issued further comment.
By Tian Jingxin
