Netflix’s stock price surged over nine percent in premarket trading on Friday following its decision to withdraw from the bidding war for Warner Bros Discovery. Meanwhile, Paramount saw a ten percent increase in its stock value after securing a deal for some of the most coveted TV and film assets globally.
On Thursday, Netflix indicated that it was stepping back from its attempt to acquire Warner Bros Discovery’s streaming and studio assets, citing Paramount Skydance’s revised offer of $31 per share as the reason for no longer finding the deal financially appealing. In a statement, Netflix stated that they have always maintained financial discipline and, at the new price set by Paramount Skydance, the deal no longer made sense for them to pursue.
Warner Bros Discovery acknowledged that Paramount’s revised offer was superior to Netflix’s existing agreement. Previously, Netflix had granted Warner Bros a seven-day waiver to negotiate a better deal with Paramount, leading to the revised bid.
In the updated proposal, Paramount increased the termination fee in case the merger faces regulatory challenges to $7 billion US from the initial $5.8 billion US. Paramount expressed satisfaction with the Warner Bros board’s unanimous endorsement of their offer as the stronger bid.
The Ellison Trust, supported by Larry Ellison, raised its equity commitment to $45.7 billion US, up from $43.6 billion US, and pledged additional funds to meet Paramount’s bank solvency requirements. Financial institutions like Bank of America Merrill Lynch, Citi, and Apollo are providing $57.5 billion US in debt financing, up from the previous commitment.
Paramount CEO David Ellison, son of Oracle’s Larry Ellison, will lead the combined entity. The merger will face antitrust scrutiny, with potential challenges from California’s Attorney General Rob Bonta and European regulators. The deal would unite two major studios, streaming platforms, and news operations, raising concerns among some Democratic senators about political influence.
Netflix’s announcement came after CEO Ted Sarandos visited the White House, where he did not meet with President Trump. The president’s involvement in the merger process raised questions of political favoritism, prompting criticism from senators like Elizabeth Warren, Bernie Sanders, and Richard Blumenthal.
In response to concerns about political interference, Sarandos emphasized that the deal was purely a business decision and not influenced by politics.
These recent developments reflect a dynamic shift in the entertainment industry landscape, with major players vying for valuable assets and facing regulatory and political challenges in the process.