Back in December, Netflix officially announced that it had reached a formal agreement to acquire Warner Bros. Discovery for a record-setting $82.7 billion. At the time, Warner Brothers shareholders considered Netflix to have the superior offer compared to Paramount-Skydance Global, its bidding adversary. CEO David Ellison would not take no for an answer and threatened to sue WB if they did not hear out his next offer. After speaking with the current Trump administration for congressional approval, David Ellison and Paramount came back with an offer of $111 billion ($31 per share). In an press release, Paramount-Skydance announced:
Paramount Skydance Corporation (NASDAQ: PSKY) (“Paramount”) and Warner Bros. Discovery, Inc. (NASDAQ: WBD) (“WBD”) today announced they have entered into a definitive merger agreement under which Paramount will acquire WBD, forming a premier global media and entertainment company focused on expanding consumer choice and empowering creative talent worldwide.
CEO Ted Sarandos and Netflix were given a 4-day window to match or surpass this offer, but within only a few hours, declined to re-engage in bidding talks (via Netflix):
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.
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. 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.
Netflix’s business is healthy, strong and growing organically, powered by our slate and best-in-class streaming service. This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertainment offering. Consistent with our capital allocation policy, we’ll also resume our share repurchase program.
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.
After announcing its step away, Netflix’s stock rose about 10% as the streaming giant is looking at a $2.8 billion payday that Paramount-Skydance must pay due to Warner Brothers walking away from their original agreement (via CNBC). Many fans were uneasy about Netflix acquiring Warner Brothers simply for their trackrecord and stance on theatrical film releases. Now, with Netflix out of the way, it’s Paramount that is causing mass panic. Not only does Paramount Pictures have a really bad track record of marketing its films. On a much more important note, Paramount and the right-leaning CEO will now own two major news outlets, CNN and CBS.
This acquisition goes far beyond just movies and into the political landscape of how breaking news is disseminated nationally, shaped by its CEO’s stance. In an extreme case, these two major news networks could become state-run news outlets that are never allowed to criticize the President. CEO David Ellison has already promised more right-wing content from Paramount going into 2026 before this merger (via NPR). While this new merger deal still needs national and international approval, the California AG has already promised a thorough review and to ensure no corruption took place from the current administration.
Source: Paramount Global
