Although the takeover of Warner Bros. Discovery by Netflix was considered almost certain just a few weeks ago, the billion-dollar deal fell through on the home stretch – and Paramount Skydance was awarded the contract.
Paramount outperforms Netflix
Last December, Warner Bros. agreed to a takeover offer from Netflix for part of its assets, with the total value of the transaction including debt amounting to around $82 billion.
Only a little later, the US media group Paramount Skydance also expressed interest in acquiring Warner Bros. and also submitted an offer. However, this referred to the entire group including the television business, which would have previously been spun off in the event of a takeover by Netflix.
Warner Bros. rejected the offered $108.4 billion, or $30 per WBD share, citing the agreement it had already reached with Netflix, but Paramount was apparently not satisfied with that.
Later this week, Paramount improved its bid again and increased it by one US dollar per WBD share, which ultimately brought the total volume to approximately US$111 billion and finally persuaded Warner Bros. officials to accept the “Company Superior Proposal”.
Netflix is exiting
Although Netflix still had a four-day deadline to match its own offer, the streaming service announced just a few hours later that it would not increase its offer because, according to the two co-directors Ted Sarandos and Greg Peters, the deal was no longer financially attractive at this price:
»The transaction we negotiated would have created value for our shareholders and provided a clear path to regulatory approval. We have always been disciplined and at the price that would be required to match Paramount Skydance’s recent offer, the deal is unfortunately no longer financially attractive, so we are refraining from doing so.«
It was also emphasized that Netflix is thanks to its “outstanding program” is in a very stable economic situation and continues to grow.
Accordingly, the possible takeover was simply an attractive opportunity at the right price – but not an absolute necessity at any price.
Exam still pending
By terminating the deal with Netflix at short notice, Warner Bros. has to pay a hefty contractual penalty of $2.8 billion, which will also be taken over by Paramount – and it could be even more expensive.
A deal this big still needs to be approved by multiple regulators, so the takeover is far from set in stone.
If the completion, scheduled for the third quarter of 2026, fails due to regulatory hurdles, penalties of seven billion US dollars would be incurred. From September 30, 2026, a “ticking fee” calculated pro rata to the day would be added for each quarter without a closing. This amounts to 25 cents per share, which could quickly get out of control with almost 2.5 billion WBD shares.
But Warner Bros. Discovery is already making its presence known »very satisfied with the result we achieved for WBD shareholders and the entire entertainment industry«as CEO David Zaslav explained.
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Via Netflix
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