- Paramount Skydance outbids Netflix for Warner Bros Discovery.
- Board calls $31-per-share offer superior proposal.
- Netflix declines to match; shares rise over 10%.
- Deal faces antitrust review from state regulators.
Paramount Skydance emerged as the buyer of Warner Bros Discovery on Thursday after Netflix declined to raise its offer less than two hours after being given four business days to do so ending one of Hollywood's most dramatic bidding wars in years.
Warner Bros Discovery's board formally declared Paramount's revised all-cash offer of $31 per share a "superior proposal" over Netflix's existing $27.75-per-share agreement for the studio's streaming and film assets.
Paramount's bid, backed by the Ellison family, values the entire company at approximately $111 billion up from the earlier $108 billion offer compared with Netflix's $82.7 billion deal struck in December.
Netflix Walks Away, Shares Surge 10%
Netflix co-CEOs Ted Sarandos and Greg Peters confirmed the exit in a joint statement Thursday: "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." They added that "this transaction was always a 'nice to have' at the right price, not a 'must have' at any price."
Netflix shares jumped more than 10% in after-hours trading, reversing a decline of more than 20% since the WBD-Netflix deal was first announced in December. Earlier Thursday, Sarandos had been in Washington to lobby Trump administration officials on the deal's merits, but Netflix pulled out within hours.
Zaslav Embraces Paramount; Ellison Trust Commits $45.7 Billion in Equity
Warner Bros Discovery CEO David Zaslav welcomed the outcome. "Once our board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of a combined Paramount Skydance and Warner Bros Discovery and can't wait to get started working together telling the stories that move the world," he said.
Board Chair Samuel Di Piazza said he was "extremely proud of the rigorous process this Board has run over the past five and a half months." The Ellison Trust is committing $45.7 billion in equity, up from $43.6 billion, while Bank of America Merrill Lynch, Citi and Apollo are providing $57.5 billion in debt financing, increased from $54 billion.
Paramount also agreed to pay the $2.8 billion termination fee Warner Bros would owe Netflix, and raised its regulatory breakup fee to $7 billion from $5.8 billion.
Antitrust Scrutiny Looms Over CNN-CBS-HBO-Paramount+ Combination
The deal which would unite CNN with CBS News, HBO Max with Paramount+, and two major film studios faces significant regulatory hurdles. California Attorney General Rob Bonta said Thursday: "These two Hollywood titans have not cleared regulatory scrutiny the California Department of Justice has an open investigation, and we intend to be vigorous in our review."
TD Cowen analysts noted that while federal approval "seems likely given the political environment," state regulators and European authorities could yet challenge the deal. Senator Elizabeth Warren called the merger "an antitrust disaster threatening higher prices and fewer choices for American families," and questioned what Trump administration officials told Sarandos at the White House earlier in the day.
The WBD board has not yet formally adopted Paramount's merger agreement; shareholder and regulatory approvals remain outstanding.
