The streaming giant Netflix will be backing out of its deal with Warner Bros. Discovery in the wake of the studio’s board deeming Paramount’s improved offer superior.
Netflix co-CEOs Ted Sarandos and Greg Peters announced in a statement on Thursday that Paramount’s improved offer made the bid for Warner Bros. “no longer financially attractive,” adding that it “was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
“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,” the co-CEOs said.
“Warner Bros. is a world-class organization, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process,” they added. “We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
The co-CEOs pledged to keep pouring cash into creating the “best-in-class streaming service,” adding that the Netflix brand will keep “healthy, strong and growing organically.”
“This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertaining offering. Consistent with our capital allocation policy, we’ll also resume our share repurchase program,” the co-CEOs said. “We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business, and drive long-term shareholder value.”
The announcement came after Warner Bros. Discovery board decided that the Paramount deal was a “superior proposal” to the original Netflix deal, per The Hollywood Reporter (THR).
PSKY’s latest proposal was for $31 per share, but had a number of other sweeteners, including a ticking fee payable to shareholders equal to $0.25 per quarter beginning after Sept. 30, 2026, as well as a $7 billion regulatory termination in the event the transaction does not close due to regulatory matters.
Paramount has also agreed to pay the $2.8 billion termination fee that Warner Bros. would be required to pay to Netflix to terminate the existing merger agreement.
Due to the promised $2.8 billion termination fee, Netflix’s shares increased by 10 percent in after-hours trading following the decision.
Paramount CEO David Ellison expressed gratitude to the Warner Bros. Discovery board prior to Netflix backing out.
“We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing,” Ellison said.
