The battle between Paramount and Netflix to own Warner Bros. may now be over, as the Warner Bros. Discovery board has announced that Paramount Skydance’s newest offer for the studio is a “superior proposal” to the current one from Netflix. WBD gave Netflix the deadline of four business days to submit a counteroffer, per the terms of the Netflix merger agreement that was previously signed by the two companies in December. In a stunning twist, Netflix has instead bowed out of the race, leaving Paramount as the sole bidder for the historic studio.
The original Netflix-WBD merger agreement was followed by Paramount launching a hostile takeover attempt to acquire Warner Bros. The offers from Netflix and Paramount differ in dramatic ways, and the WBD statement specified the elements that made the Paramount deal the superior one at this time.
This includes a purchase price of $31.00 per WBD share in cash, a $7 billion termination fee to be paid by Paramount should the deal not close due to “regulatory matters,” and Paramount covering the $2.8 billion termination fee WBD would owe Netflix if WBD cancels the Netflix deal. It also mentions “the obligation” of Larry J. Ellison, father of Paramount Skydance CEO David Ellison, to contribute additional equity funding “to the extent needed to support the solvency certificate required by PSKY’s lending banks.”
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In a statement, Netflix co-CEOs Ted Sarandos and Greg Peters said that “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. 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.” Paramount has agreed to cover the $2.8 billion termination fee Warner Bros. would owe Netflix to exit the existing merger agreement.
Ownership over WBD has a political element to it, thanks to the Trump administration’s ability to affect the deal: The president had already issued a very chill demand that executive Susan Rice be removed from the Netflix board, and Sarandos visited Washington D.C. this week to confer with the administration. Meanwhile, Paramount has been actively courting Trump’s approval with moves like greenlighting Brett Ratner’s Rush Hour 4 and putting Bari Weiss in charge of CBS News. With Paramount now set to acquire Warner Bros., Weiss’ next role could be as as the head of CNN.
Netflix’s decision to decline a counteroffer is the most dramatic twist yet in a story that’s rocked the entertainment industry for months. Given how things have proceeded so far, though, it may not be the last surprise.