Netflix’s stock surged over nine percent before market opening on Friday following its decision to step back from the competition for Warner Bros Discovery. Meanwhile, Paramount saw a ten percent increase after securing the acquisition of some of the most coveted TV and film assets globally.
In a recent move, Netflix indicated it was retracting its bid to acquire Warner Bros Discovery’s streaming and studio assets, citing financial reasons, particularly after Paramount Skydance revised its offer to $31 per share for the esteemed Hollywood studio.
“We have always maintained financial discipline, and at the price necessary to match Paramount Skydance’s latest proposal, the deal no longer aligns with our financial interests, prompting us to decline matching Paramount Skydance’s bid,” Netflix stated in a release.
Warner Bros Discovery confirmed earlier the same day that Paramount’s revised offer of $31 per share surpassed the existing agreement with Netflix. Previously, Netflix had granted Warner Bros a seven-day waiver to seek a “best and final offer” from Paramount.
In its revised bid, Paramount increased the termination fee in case the deal fails to secure regulatory approval to $7 billion US from the initial $5.8 billion US. Paramount expressed satisfaction with Warner Bros board’s unanimous confirmation of the strength of its offer.
The Ellison Trust has raised its equity commitment to $45.7 billion US, supported by Larry Ellison, with additional funds available to meet Paramount’s bank solvency requirements. Bank of America Merrill Lynch, Citi, and Apollo are offering $57.5 billion US in debt financing, up from the previous $54 billion US commitment.
Paramount’s CEO, David Ellison, who is Larry Ellison’s son, will face antitrust scrutiny in Washington, despite ties to President Donald Trump, who has shown support for the merger. California’s Attorney General Rob Bonta has hinted at a potential challenge to the deal, stating that regulatory review by the California Department of Justice will be thorough.
Democratic Senators have raised concerns about the merger, highlighting potential political interference. The merger between Paramount and Warner Bros would combine two major Hollywood studios, streaming platforms, and news operations.
Netflix’s announcement came after CEO Ted Sarandos visited the White House, although he did not meet with Trump. Reports suggest that Trump was displeased with political comments made by a Netflix board member, Susan Rice, demanding her removal. Sarandos clarified that the deal was purely business-oriented and not politically motivated.
Senator Elizabeth Warren questioned whether political influence was involved in the merger approval process, expressing concerns about possible favoritism towards the Ellison family.
