Netflix decided to abandon the dispute for Warner Bros. Discovery after the company’s board considered the new offer presented by Paramount Skydance superior.
Paramount’s proposal, announced this week, provides for the purchase of 100% of WBD for US$31 per share, in cash, above the US$30 previously offered and well above the agreement already signed between Warner and Netflix, which valued only the studios and streaming assets at US$27.75 per share.
In a statement, Warner’s board reported that Netflix would have four business days to improve its proposal in light of the “superior offer” presented by Paramount Skydance. The streaming giant, however, chose not to cover the new bid.
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“The transaction we negotiated would create shareholder value with a clear path to regulatory approval,” said co-CEOs Ted Sarandos and Greg Peters. “However, we have always been disciplined and, at the price needed to match Paramount Skydance’s latest offer, the deal is no longer financially attractive.”
The movement ends, at least for now, a dispute that has been going on for months and involved successive revisions of proposals.
Paramount’s offer covers all of Warner Bros. Discovery, including pay TV networks such as CNN, TBS and TNT, while the Netflix deal was restricted to studios and streaming businesses.
Last week, Netflix had granted WBD a seven-day contractual waiver so that the company could resume negotiations with Paramount, which opened space for the new offer.
Paramount added even more security to the package by including a $7 billion termination fine if the deal is blocked by antitrust bodies, and committed to paying the $2.8 billion fine that Warner would have to pay to Netflix if the deal with the streaming platform was undone.
In the opinion of Sarandos, who had already told CNBC that granting the exemption to Warner would give “clarity and certainty” to shareholders, the combination with the company would be positive, but not essential. “This business has always been a ‘nice to have’ at the right price, not a ‘should have’ at any price,” the executives said.
