Key Takeaways
- Warner Bros Discovery’s board has designated Paramount Skydance’s $111bn proposal as “superior” to the competing Netflix offer
- Netflix has withdrawn from the bidding process, citing the $31-per-share price point makes the acquisition “no longer financially attractive”
- The comprehensive Paramount offer encompasses WBD’s entire portfolio, including HBO, CNN, and iconic franchises like Harry Potter and Batman
- Significant regulatory scrutiny awaits, with approvals needed from California’s Attorney General and federal regulators in the US and Europe
- Employees at both CBS News and WBD express serious concerns regarding potential layoffs and editorial independence under new Ellison leadership
Paramount Skydance has overcome a significant obstacle in its pursuit of Warner Bros Discovery following Netflix’s decision to exit the competition, resulting in a 6% surge in Paramount’s stock during after-hours trading.
On Thursday, Netflix officially announced it would not counter Paramount’s $31-per-share proposal after Warner Bros Discovery’s board determined it represented a “superior” value proposition. Netflix co-CEOs Ted Sarandos and Greg Peters explained that the elevated price point rendered the acquisition “no longer financially attractive” for the streaming giant.
This announcement concludes several months of competitive bidding that commenced when Paramount initially approached WBD in September.
Paramount Skydance Corporation Class B Common Stock, PSKY
The comprehensive $111bn Paramount proposal encompasses WBD’s complete operations — including premium assets like HBO, CNN, and valuable intellectual property such as Harry Potter and Batman franchises. By contrast, Netflix’s initial $83bn proposal from December focused exclusively on WBD’s studio operations and streaming platforms.
The Ellison family, who merged Skydance with Paramount in the previous year, stands to gain oversight of prestigious news operations including CBS News, 60 Minutes, and CNN through this proposed consolidation.
WBD CEO David Zaslav expressed optimism about the agreement, stating it “will create tremendous value for our shareholders.”
Netflix shares experienced an 8.5% increase in after-market trading. Market observers suggest investors welcomed the company’s decision to avoid a transaction laden with antitrust complications.
Navigating the Regulatory Landscape
The transaction remains far from finalized. Approval is required from both the US Department of Justice and regulatory authorities across Europe.
California Attorney General Rob Bonta revealed his office maintains an active investigation and promises a “vigorous” examination. “Paramount/Warner Bros is not a done deal,” he declared on social media platforms.
Paramount enhanced its proposal by increasing the offer by $1 per share compared to its December submission, introduced a $0.25-per-share quarterly payment if completion extends beyond September, and committed to a $7bn breakup fee should regulators reject the merger.
Additionally, Paramount has committed to absorbing the $2.8bn termination fee WBD is obligated to pay Netflix upon exiting their original arrangement.
Employee Uncertainty
Workers at both CBS News and WBD responded with apprehension to the announcement. Staff members worry that consolidating two major news organizations will inevitably result in significant layoffs as redundant positions are eliminated.
Several employees voiced anxiety about Bari Weiss, who was appointed CBS News editor-in-chief last October, potentially assuming expanded responsibilities. Weiss lacks television journalism experience, and her leadership has received mixed reviews.
A CBS News producer cautioned the consolidation would prove “a disaster for the people who work at both companies.”
Seth Stern from the Freedom of the Press Foundation issued sharp criticism, cautioning that Ellison’s ownership would emphasize corporate priorities over journalistic independence.
Political dynamics have also influenced the process. Trump, known to support Larry Ellison, has commented on the bidding competition multiple times. David Ellison appeared at Trump’s State of the Union address this Tuesday as Senator Lindsey Graham’s guest.
WBD has scheduled an all-staff global town hall for Friday morning. In a Thursday memo, CNN chief Mark Thompson counseled employees against premature assumptions.
Paramount shares showed a 6% increase in after-hours trading when the announcement was made.
