Netflix has withdrawn from the bidding battle for Warner Bros Discovery after the WBD board deemed Paramount Skydance’s latest proposal a “superior” offer, clearing the way for Paramount to press ahead with its hostile takeover attempt.
The surprise move comes less than three months after the streamer had agreed to buy most of WBD.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a joint statement. “However, we’ve 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 the Paramount Skydance bid. Warner Bros. is a world-class organisation, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process. We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the US. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
The rival offers differed both in terms of the bid and what the would-be purchasers were prepared to offer. Paramount’s cash offer of $31 (€26.24) per share values WBD at about $111bn (€93.94bn) including net debt, and crucially targets the entire group rather than carving out the studio and HBO Max assets.
Netflix had been pursuing a narrower deal for Warner’s studio and streaming operations, priced at $27.75 (€23.49) per share and valuing those assets at roughly $82.7bn (€70.25bn) including debt.
Attention will now shift to what a Paramount-WBD tie-up would mean operationally. A combined Paramount Skydance and WBD would bring together two Hollywood studios, two major streaming operations (Paramount+ and HBO Max) and sizeable linear networks, all the conditions for a cost cutting exercise.
Reuters reports WBD CEO David Zaslav has publicly welcomed the Paramount proposal, describing the combination as value-creating and signalling readiness to move into deal execution once the board formally adopts the new merger agreement.
The Paramount package also leans heavily on deal protections designed to address financing and regulatory risk. It includes a $7bn (€5.92bn) reverse termination fee if regulators block the deal, and commitments around costs tied to unwinding the existing Netflix arrangement, including the $2.8bn (€2.37bn) termination fee WBD would owe Netflix if it walks away.
WBD’s board still needs to terminate its existing agreement with Netflix and formally adopt the Paramount Skydance deal. The transaction will also face shareholder votes and a potentially tougher regulatory review given the scale of consolidation across US film, TV networks and streaming.
