Key Takeaways
- The board at Warner Bros Discovery has deemed Paramount Skydance’s $111bn offer as “superior” when compared to Netflix’s competing bid
- Netflix pulled out of the race, citing that the $31-per-share price makes the deal “no longer financially attractive”
- Paramount’s bid includes WBD’s entire media empire, featuring HBO, CNN, and beloved properties such as Harry Potter and Batman
- Major regulatory hurdles remain, with California’s Attorney General alongside federal and European regulators continuing their examination
- Staff members at CBS News and WBD have raised substantial worries about job cuts and journalistic integrity under Ellison’s control
Paramount Skydance has cleared a major hurdle in its bid for Warner Bros Discovery after Netflix withdrew from the race, driving Paramount stock up 6% in after-hours trading.
Netflix revealed on Thursday that it would not match Paramount’s $31-per-share offer following WBD’s board declaration of it as the “superior” proposal. Co-CEOs Ted Sarandos and Greg Peters stated the higher valuation made the deal “no longer financially attractive.”
This marks the end of months of competitive negotiations that began when Paramount first approached WBD last September.
Paramount Skydance Corporation Class B Common Stock, PSKY
Paramount’s $111bn offer covers all of WBD’s assets — encompassing HBO, CNN, and prized franchises like Harry Potter and Batman. Meanwhile, Netflix’s earlier $83bn proposal from December focused solely on WBD’s studio division and streaming services.
The Ellison family, which combined Skydance with Paramount last year, would gain control over CBS News, 60 Minutes, and CNN if this merger proceeds.
WBD CEO David Zaslav applauded the deal, declaring it “will create tremendous value for our shareholders.”
Netflix stock jumped 8.5% after hours, with market participants apparently relieved the company avoided a transaction with significant regulatory risks.
Regulatory Challenges Lie Ahead
The deal is nowhere near complete. Clearance from the Department of Justice and European competition authorities is still needed.
California Attorney General Rob Bonta announced his office has an ongoing investigation and will perform a “vigorous” examination. “Paramount/Warner Bros is not a done deal,” he posted on social media.
Paramount sweetened its offer by raising the share price by $1 from December’s proposal, added a $0.25-per-share quarterly dividend if the deal extends past September, and included a $7bn termination fee should regulators block it.
Furthermore, Paramount agreed to cover the $2.8bn breakup fee WBD owes Netflix for abandoning their initial agreement.
Employee Anxiety
Staff at both CBS News and WBD have reacted to the news with substantial concern. Employees expect that merging two prominent news divisions will lead to significant job losses as overlapping roles are eliminated.
Multiple employees have expressed anxiety about Bari Weiss, appointed CBS News editor-in-chief last October, potentially taking on greater authority. Weiss has no prior television journalism experience, and her leadership style has generated controversy.
One CBS News producer warned the merger would be “a disaster for the people who work at both companies.”
Seth Stern of the Freedom of the Press Foundation issued strong criticism, warning that Ellison would prioritize business interests over editorial independence.
Political dynamics have also entered the picture. Trump, who has connections to Larry Ellison, has publicly weighed in on the bidding war several times. David Ellison attended Trump’s State of the Union speech Tuesday as Senator Lindsey Graham’s invitee.
WBD has arranged a company-wide town hall for Friday morning. In a Thursday memo, CNN chief Mark Thompson urged employees not to jump to conclusions.
Paramount stock rose 6% in extended trading following the announcement.
