Global streamer describes US studio as as ‘a ‘nice to have’ at the right price, not a ‘must have’ at any price’
Netflix has conceded the fight for Warner Bros Discovery following Paramount’s improved $31-per-share bid for the HBO owner, leaving the Top Gun and Yellowstone company the victor in the long-running Hollywood takeover saga.
Ted Sarandos and Greg Peters confirmed they would not make an improved bid for WBD late on Thursday, following news that the David Zaslav-led company viewed the latest Paramount offer - its ninth in total - as superior to Netflix’s $83bn deal for its streaming and studio assets agreed in late December.
The Netflix co-chief execs described WBD as a ”transaction [that] was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” with the global streamer now set to receive a $2.8bn termination fee for its troubles, payable by Paramount on behalf of WBD.
Wall Street approved, sending Netflix and Paramount shares up almost 10% in after-hours trading.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Sarandos and Peters continued.
“However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.”
The Netflix duo added that they would “have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the US,” but pointed to organic growth as their major focus.
“Netflix’s business is healthy, strong and growing organically, powered by our slate and best-in-class streaming service. This year, we’ll invest approximately $20bn in quality films and series and will expand our entertainment offering.” The streamer said it would also resume its share buyback scheme.
Zaslav ‘excitement’ at Paramount deal
WBD chief exec David Zaslav paid tribute to Netflix hierarchy as “extraordinary partners”, but said that once it board votes to adopt the Paramount merger agreement, it would “create tremendous value for our shareholders.”
He continued: “We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”
Zaslav will hold a town hall with staffers on Friday, with the mood among Warner Bros employees described as sombre and contemplative on Thursday evening, according to Broadcast sister title Screen. Over at Paramount, it was more a case of “jubilant and committed”.
Shortly after Netflix said it would not raise its offer, Cory Booker, the Democratic senator for New Jersey, called on Paramount chief exec David Ellison to appear before a Senate hearing into the merger on 4 March.
The shift in fortunes for Ellison and Paramount has been swift, with many industry watchers expecting a Netflix deal to progress as late as last week.
However, a shift of momentum came over the weekend, with US president Donald Trump again commenting on Netflix by urging it to sack former Obama official Susan Rice from its board, followed by Paramount’s revised offer of $31-per-share and additional sweeteners.
The Paramount deal, which is being backstopped by David Ellison’s father, Oracle owner Larry Ellison, amounts to around $111bn and includes additional payments around debt that have swung the WBD board.
It is some coup for Ellison, who last year pulled off the $8bn merger between Paramount and Skydance Media, and means he is now set to take ownership of a Hollywood giant that includes brands ranging from HBO and CNN, to DC Studios and Warner Bros.
All eyes will be on how Paramount incorporates WBD’s streamer HBO Max into its existing Paramount+, with most expecting the services to be combined.
WBD also operates hundreds of cable channels globally, as well as production operations, with industry watchers keen to see how overlapping interests will be consolidated.
Job cuts look inevitable if the deal makes it past US and European regulators, with Paramount previously identifying $6bn in cost savings, were the merger to close. Around 2,000 redundancies have already been scheduled in the wake of the Skydance-Paramount merger.
There are also questions around how cable news channels CNN and broadcast CBS news network will be integrated into the Paramount ecosystem, while the film sector is focused on the exclusive theatrical window that could affect cinema going.
Netflix’s decision to back away marks a remarkable reversal in fortunes for Ellison’s Paramount, which has made almost a dozen approaches for WBD since its initial approach in September.
It had appeared to have lost the battle when Netflix’s $83bn offer was accepted in late December, but an aggressive approach has now seemingly set the Top Gun, Landman and Star Trek owner as frontrunner to take ownership of the studio giant and reshape Hollywood.
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