Netflix walks away from Warner Bros. bid, clearing path for Paramount

Warner Bros. Discovery says it has received a revised acquisition proposal from Paramount Skydance, even as the US media giant's board reaffirmed its support for a previously announced buyout deal with Netflix. Photo / Robyn Beck, AFP

Netflix has said it would not raise its takeover offer for Warner Bros. Discovery, effectively ceding the media giant to a rival bid from Paramount Skydance after deciding the deal was no longer financially attractive.

The streaming giant’s co-CEOs, Ted Sarandos and Greg Peters, said they were “declining to match” Paramount Skydance’s latest offer after Warner Bros. Discovery’s board declared it a “Superior Proposal” under the terms of its existing merger agreement with Netflix.

The development will likely see the storied Hollywood studio and a group of TV properties that includes CNN fall into the hands of Paramount, reshaping US media.

Without a Netflix counteroffer, the Warner Bros. Discovery board is now free to terminate its agreement with the streaming giant and proceed with Paramount.

The sweetened offer, made on Monday, was the latest instalment of a bidding war that has drawn White House attention, with President Donald Trump insisting he had a say in the outcome.

The revised Paramount offer included a purchase price of US$31 per share in cash, a US$1 increase from its earlier bid, which valued the company at around US$108 billion.

Paramount has also offered a US$7 billion ($11.7b) regulatory termination fee should the deal fail to close on regulatory grounds, and agreed to cover the $2.8 billion breakup fee Warner Bros. Discovery would owe Netflix if it walked away from their agreement.

Crucially, the proposal also includes a commitment from Oracle founder Larry Ellison to contribute additional funding if needed to support solvency requirements from Paramount’s lending banks.

Ellison is the father of Paramount Skydance CEO David Ellison, a Hollywood producer, and largely financed his son’s takeover of Paramount and his subsequent bid for Warner Bros. Discovery.

Larry Ellison is also a long-time ally of President Trump, and both Paramount and Netflix have sought to curry favour with the White House.

Creating headwinds for Netflix, Republican lawmakers came out against the company during the deal process, accusing it of promoting pro-trans content on its platform, something co-CEO Ted Sarandos strenuously denied.

Just hours before withdrawing from the bidding war, Sarandos was filmed entering the White House on Thursday for talks with officials although not the President, according to CNBC.

A victory by Paramount would see CNN – often the target of Trump’s threats and criticism – pass to Ellison family control, amid criticism that their takeover of Paramount-owned CBS brought personnel changes more to the White House’s liking.

- Agence France-Presse