Netflix walks out of Warner Bros Discovery deal, clears path for Paramount Skydance — ‘No longer financially attractive’

Netflix pulled out of a deal to acquire Warner Bros. Discovery on Thursday after WBD’s board determined Paramount Skydance’s offer was the superior bid.

Having faced a three-way dilemma for months over who would buy WBD’s studio and streaming assets, Netflix’s withdrawal from the deal paves the way for Paramount Skydance to take control of Warner Bros. Discovery in a historic $111 billion deal.

“The transaction we are negotiating would create shareholder value with a clear path to regulatory approval,” Netflix said in a statement Thursday. he said.

However, with Paramount Skydance’s latest offer, the match was said to have diminished.

“However, we have always been disciplined and the deal at the price required to match Paramount Skydance’s latest offer is no longer financially attractive, so we decline to match the Paramount Skydance offer.”

In December last year, streaming giant Netflix signed an $82.7 billion deal, including assumed debt, to acquire Warner Bros. Discovery. However, Paramount Skydance continued to make repeated offers. Last week, Netflix granted the historic Hollywood studio permission to hold talks with Paramount Skydance over a seven-day period; which resulted in a higher bid and subsequent outcome.

What does the Paramount-WBD deal look like?

The Paramount-WBD deal puts media outlets from CNN to Nickelodeon to HBO under the control of the family led by Oracle businessman and White House ally Larry Ellison.

Earlier in the day, Warner Bros. Discovery announced it would reject Netflix’s offer.

“Netflix is ​​a great company, and Ted, Greg, Spence and everyone there have been outstanding partners for us throughout this process. We wish them success in the future,” WBD CEO David Zaslav said in a statement, referring to Netflix co-CEOs Ted Sarandos and Greg Peters and CFO Spencer Neumann.

The company said its deal with Paramount Skydance will create better value for its shareholders.

“Our Board of Directors’ vote to accept the Paramount merger agreement will create tremendous value for our shareholders. We are excited about the potential of the combination of Paramount Skydance and Warner Bros. Discovery and can’t wait to begin working together to tell the stories that move the world.”

Without Netflix’s counteroffer, Warner Bros. Discovery’s board is now free to terminate its deal with the streaming giant and move on with Paramount.

Deal may face regulatory issues

Paramount’s merger with Warner Bros. would combine two major Hollywood studios, two streaming platforms (HBO Max and Paramount) and two news operations (CNN and CBS).

The Ellisons have connections to President Donald Trump. Still, the proposal is likely to face antitrust scrutiny in Washington, foreign countries and U.S. states including California.

Democratic Senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal worry that ratification of the agreement could be tainted by political favoritism.

In its revised offer, Paramount increased the termination fee it would pay WBD if the deal fails to gain regulatory approval from $5.8 billion to $7 billion.

Paramount also promised to give Warner Bros. $2.8 billion to pay Netflix in exchange for terminating the deal.