Paramount Skydance has emerged as the likely winner in a months-long battle to acquire Warner Bros. Discovery, after streaming giant Netflix refused this Thursday to increase its offer for the legendary Hollywood studio.
Netflix shares rose 10% in after-market trading.
“We have always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match Paramount Skydance’s offer,” Netflix said in a statement.
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Netflix confirmed to Reuters that it has dropped out of the dispute to acquire Warner Bros. Discovery. The Warner Bros. board still needs to terminate the contract with Netflix and approve the Paramount Skydance offer.
Earlier that day, Warner Bros. stated that Paramount’s revised offer of $31 per share was superior to the existing deal with Netflix, which offered $27.75 per share for Warner Bros.’ streaming and studio assets.
A Netflix consultant, speaking on condition of anonymity, said he advised the streaming service to withdraw from the bidding because the deal no longer made economic sense.
The consultant stated that Netflix was competing for the acquisition with a billionaire who signaled that he was willing to pay a price considered unreasonable by Warner Bros.
‘There’s no point in playing Russian roulette with someone who won’t turn the wheel,’ said the source, referring to billionaire Larry Ellison, co-founder, executive chairman and chief technology officer of Oracle and father of Paramount chief executive David Ellison.
Regulatory concerns
Paramount’s merger with 🏽 Warner Bros would unite two major Hollywood studios, two streaming platforms (HBO Max and Paramount+) and two news operations (CNN and CBS).
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The Ellisons have ties to President Donald Trump. Still, the proposal is likely to face antitrust scrutiny in Washington, in foreign countries and in U.S. states, including California.
Democratic senators Elizabeth Warren, Bernie Sanders and Richard Blumenthal expressed concern that approval of the agreement could be undermined by political favoritism.
In its revised proposal, Paramount increased the termination penalty it would pay if the deal did not receive regulatory approval from $5.8 billion to $7 billion.
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The Ellison Trust is committing $45.7 billion in equity capital, an increase from the previous $43.6 billion, with support from Larry Ellison and including any additional funds needed to meet Paramount’s bank solvency requirements, the company said.
Bank of America Merrill Lynch, Citi and Apollo are providing $57.5 billion in debt financing, an increase from the previous commitment of $54 billion.
Activist investor Ancora Holdings, which owns a small stake in Warner Bros., also increased pressure on the HBO owner, claiming the company has not adequately engaged with Paramount.
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