Key Takeaways
- Netflix withdrew from its proposed acquisition of Warner Bros. Discovery assets following WBD’s board acceptance of Paramount Skydance’s enhanced $31-per-share proposal as the superior transaction.
- Paramount increased its offer from $30 to $31 per share, an all-cash deal encompassing WBD’s complete portfolio including CNN, HBO, and cable television networks.
- Netflix chose not to counter the higher bid, stating the transaction was “no longer financially attractive” at the elevated valuation.
- Paramount has committed to covering the $2.8 billion termination fee WBD owes Netflix, while also posting a $7 billion reverse breakup fee for its own agreement.
- In after-hours trading Thursday, Netflix shares surged approximately 10%; WBD declined roughly 2%, while Paramount advanced about 5%.
Netflix ($NFLX) shares experienced a significant rally during after-hours trading Thursday following the streaming giant’s decision to abandon its proposed acquisition of Warner Bros. Discovery properties, positioning Paramount Skydance as the frontrunner in a transaction estimated at approximately $111 billion.
The Warner Bros. Discovery board designated Paramount’s enhanced proposal of $31 per share in cash as a “superior offer” compared to Netflix’s standing agreement, which was priced at $27.75 per share and exclusively encompassed WBD’s studio operations and streaming platforms.
Netflix was granted four business days to submit a revised proposal. The company declined to do so.
“The deal is no longer financially attractive,” stated Netflix co-CEOs Ted Sarandos and Greg Peters in a joint announcement. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Investors responded favorably to the strategic restraint. Netflix shares jumped approximately 10% in extended-hours trading.
The previous week, Netflix had granted WBD a seven-day exemption to resume discussions with Paramount, allowing stakeholders a more transparent evaluation of available alternatives. Sarandos explained to CNBC that the decision aimed to provide “complete clarity and certainty.”
Ultimately, it paved the way for Netflix’s withdrawal.
The Scope of Paramount’s Acquisition
Paramount’s $31-per-share all-cash proposal encompasses the complete WBD portfolio — extending beyond studio and streaming operations to include CNN, TBS, TNT, HBO Max, Food Network, and various sports broadcasting rights.
This represents a substantially broader acquisition than Netflix’s original agreement.
Paramount has also committed to paying the $2.8 billion termination fee WBD owes Netflix, while posting its own $7 billion reverse termination fee should regulatory approval fail.
WBD CEO David Zaslav characterized it as an agreement that would “create tremendous value” for shareholders following the board’s formal adoption of the merger agreement.
Paramount Skydance CEO David Ellison stated the proposal provides “superior value, certainty and speed to closing.”
Regulatory Challenges Remain
The transaction remains far from finalized. California Attorney General Rob Bonta announced Thursday that the merger “is not a done deal,” referencing an ongoing California Department of Justice investigation.
The proposed deal requires clearance from the U.S. Department of Justice along with European regulatory authorities.
Paramount’s financial backers — including connections to technology billionaire Larry Ellison and prior involvement from Jared Kushner’s Affinity Partners investment firm — have attracted examination regarding political ties to the Trump administration.
Kushner’s firm withdrew in December. However, concerns about the deal’s political implications persist, particularly surrounding CNN, which Trump has consistently criticized and stated should be divested as part of any WBD transaction.
CNN chief Mark Thompson sent staff correspondence Thursday advising them not to “jump to conclusions about the future until we know more.”
Netflix shares climbed approximately 10%, WBD declined around 2%, and Paramount advanced roughly 5% during after-hours trading Thursday.
