Key Takeaways
- Netflix exited its agreement to purchase Warner Bros. Discovery properties following the WBD board’s determination that Paramount Skydance’s updated $31-per-share proposal represented a better value.
- Paramount increased its proposal from $30 to $31 per share, offering all cash for the complete company, encompassing CNN, HBO, and various pay-TV properties.
- Netflix chose against matching the price, stating the transaction became “no longer financially attractive” at the elevated valuation.
- Paramount committed to covering the $2.8 billion termination fee WBD owed Netflix, while also posting a $7 billion breakup fee should its transaction fail to complete.
- Netflix shares jumped approximately 10% during after-hours sessions; WBD declined roughly 2%, while Paramount advanced around 5%.
Netflix ($NFLX) shares experienced substantial gains in after-hours trading Thursday following the streaming giant’s decision to abandon its proposed acquisition of Warner Bros. Discovery properties, positioning Paramount Skydance as the frontrunner in a transaction worth approximately $111 billion.
The WBD board designated Paramount’s updated proposal of $31 per share in cash as a “superior offer” compared to Netflix’s standing agreement, which stood at $27.75 per share and encompassed exclusively WBD’s studio and streaming properties.
Netflix received four business days to submit a revised proposal. The company declined to do so.
“The deal is no longer financially attractive,” Netflix co-CEOs Ted Sarandos and Greg Peters stated jointly. “This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Investors responded favorably to the strategic discipline. Netflix shares rose approximately 10% during extended trading hours.
During the previous week, Netflix had granted WBD a seven-day waiver allowing re-engagement with Paramount, enabling shareholders to evaluate all available options comprehensively. Sarandos explained to CNBC the decision aimed to provide “complete clarity and certainty.”
The waiver ultimately facilitated the streaming company’s withdrawal.
Paramount’s Acquisition Scope
Paramount’s $31-per-share all-cash proposal encompasses all of WBD — extending beyond the studio and streaming operations to include CNN, TBS, TNT, HBO Max, Food Network, and numerous sports broadcasting rights.
The acquisition scope significantly exceeds what Netflix had originally contracted to purchase.
Paramount additionally committed to covering the $2.8 billion termination fee WBD owed Netflix, while posting a $7 billion breakup fee should the transaction fail to receive regulatory clearance.
WBD CEO David Zaslav characterized the agreement as one that would “create tremendous value” for shareholders following the board’s formal adoption of the merger agreement.
Paramount Skydance CEO David Ellison stated the proposal delivers “superior value, certainty and speed to closing.”
Regulatory Review Process
The transaction faces substantial regulatory review ahead. California Attorney General Rob Bonta stated Thursday that the merger “is not a done deal,” referencing an ongoing investigation conducted by the California Department of Justice.
The proposed acquisition requires approval from both the U.S. Department of Justice and European regulatory authorities.
Paramount’s financial backing — which includes connections to technology billionaire Larry Ellison and previous involvement from Jared Kushner’s investment firm Affinity Partners — has attracted attention regarding political ties to the Trump administration.
Kushner’s firm withdrew in December. However, questions surrounding the transaction’s political aspects persist, particularly concerning CNN, which Trump has repeatedly targeted and suggested should be divested during any WBD transaction.
CNN head Mark Thompson communicated with staff Thursday, advising them against “jump to conclusions about the future until we know more.”
Netflix shares advanced approximately 10%, WBD declined around 2%, and Paramount rose about 5% during after-hours trading Thursday.
