Netflix Walking away from the contract to buy Warner Bros. Discoveries studio and streaming assets after WBD’s board considered a revised bid on Thursday Paramount Skydance That would be a great gift.
Earlier this week, Paramount raised its bid to buy the entire WBD to $31 per share, all cash, from $30 per share. It’s the latest amendment to Paramount’s multiple offers in recent months — and since it moved forward with a hostile bid to buy the company — and it has now canceled a deal between WBD and Netflix to sell the legacy media company’s studio and streaming businesses for $27.75 per share.
Last week, Netflix granted WBD a seven-day waiver to re-engage with Paramount, leading to a higher bid. Paramount’s offering is for the entire WBD, including pay-TV networks such as CNN, TBS and TNT.
Netflix had four business days to make changes to its own proposal in light of Paramount’s higher bid, WBD’s board said in a statement Thursday.
Instead, the streaming giant’s decision to walk away puts a pin in a drawn-out saga that saw amended offers from both bidders.
“Netflix is a great company and Ted, Greg, Spence and all have been extraordinary partners to us throughout this process. We wish them the best in the future,” WBD CEO David Zaslau said in a statement, citing Netflix co-CEOs Ted Sarandos and Greg Peters and CFO Spencer Newman. “Once our board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of the combined Paramount Skydance and Warner Bros. Discovery and can’t wait to work together to tell stories that move the world.”
Netflix stock rose 10% in extended trading Thursday, while Paramount stock gained 5%. Shares of Warner Bros. Discovery fell 2%.
“The transaction we negotiated creates shareholder value with a clear path to regulatory approval,” Sarandos and Peters said in a statement. “However, 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 bid.”
Paramount’s latest bid includes a $7 billion break fee if the proposed merger doesn’t win regulatory approval. The company also agreed to pay a $2.8 billion breakup fee that WBD would have owed Netflix if that deal didn’t go through.
Sarandos said in an interview with CNBC’s Julia Borstin last week that Paramount waived WBD to reopen negotiations in order to provide clarity to Netflix shareholders.
“Paramount has been making a ton of noise, filling the circle with confusion for shareholders … including floating all these hypothetical offers and talking directly to shareholders and bypassing the Warner Bros. Discovery board,” Sarandos said at the time. “So we gave those shareholders an opportunity to get what they deserve, which is complete clarity and certainty.”
Sarandos, however, stopped short of commenting on whether Netflix would make its own offer to match the revised Paramount bid.
And on Thursday, Sarandos attended meetings at the White House to discuss a potential relationship.
“Warner Bros. is a world-class organization, and we want to thank David Zaslau, Gunnar Weidenfels, Bruce Campbell, Brad Singer and the WBD board for conducting a fair and rigorous process,” the Netflix co-CEOs said in their statement.
“We believe we are a strong steward of Warner Bros.’ iconic brands, and our agreement will strengthen the entertainment industry and preserve and create more manufacturing jobs in the US,” he said. “But this transaction is always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
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