Paramount Skydance Nears Warner Bros Deal as Netflix Exits
Paramount Skydance is the likely winner for Warner Bros after Netflix withdrew its bid. Netflix shares rose 10% as the firm cited financial discipline.
Paramount Skydance has emerged as the frontrunner in the acquisition of Warner Bros. Discovery, Inc. after Netflix, Inc. declined to increase its bid for the Hollywood studio. Following the announcement, shares of the streaming giant rose 10% in extended trading as investors reacted to the company's decision to maintain financial discipline.
"Weve always been disciplined, and at the price required to match Paramount Skydances latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid," Netflix stated in a formal release.
The board of Warner Bros. Discovery is now expected to terminate its existing arrangement with Netflix to adopt the offer from Paramount Skydance, which is valued at $31 per share. This revised bid is significantly higher than the $27.75 per share previously offered by Netflix for the studio’s assets. Industry insiders noted that the decision to exit the bidding was influenced by the aggressive stance of Larry Ellison, the co-founder of Oracle Corporation and father of Paramount CEO David Ellison.
"Theres no point in playing chicken with someone who wont turn the wheel," an adviser commented regarding the elder Ellison’s commitment to the deal.
The proposed merger would consolidate major media properties, including the HBO Max and Paramount+ streaming platforms, as well as news networks CNN and CBS. However, the transaction is likely to face intense antitrust scrutiny within the United States and other global markets. Democratic lawmakers have already voiced concerns regarding potential political favoritism and the impact on competition.
In its revised bid, Paramount increased the termination fee to $7 billion should the deal fail to clear regulatory hurdles. The Ellison Trust is committing $45.7 billion in equity, while a group of lenders including Bank of America Corporation, Citigroup Inc., and Apollo Global Management, Inc. is providing $57.5 billion in debt financing. Activist investor Ancora Holdings has also pressured Warner Bros. to engage more effectively with the Paramount offer.
